Obsidian Energy has announced a definitive agreement to sell its operated Pembina assets to Calgary-based InPlay Oil for approximately C$320m ($225.2m).
The transaction includes C$220m in cash, C$85m in InPlay shares and a 34.6% working interest in the Willesden Green Cardium Unit #2, valued at C$15m.
The Pembina assets include 498 net sections of land with reserves of 32.5 million barrels of oil equivalent (mboe) proved developed producing (PDP), 52.2mboe (1P – proved reserves), and 72.6mboe (2P – probable reserves).
Obsidian will drill four wells in the Pembina area at InPlay's expense, with rights transferred to InPlay upon transaction close.
Obsidian Energy president and CEO Stephen Loukas said: “The successful execution of our growth plan to date has put us in a position to rationalise our asset portfolio at a value that we believe to be accretive to our shareholders, while securing increased financial flexibility and meaningfully reducing asset retirement obligations.
“Upon Transaction close, we emerge as a significantly more focused company with an ability to accelerate our shareholder value creation strategy.”
The transaction is valued at approximately 2.7-times the 2024 estimated net operating income of Obsidian Energy.
The cash proceeds from the transaction will be used to reduce debt, improving Obsidian Energy's balance sheet and liquidity.
InPlay will assume all assets and liabilities associated with the Pembina assets.
“We also expect to secure additional future share price appreciation from our InPlay Share position as the addition of the Pembina Assets is both financially and strategically accretive to InPlay. During the second half of 2025, Obsidian Energy will consider different monetisation options for our InPlay Share position with the goal of recycling that capital,” Loukas added.
Obsidian Energy will sell approximately 10,300 barrels of oil equivalent per day (boepd) of average production, reducing net operating costs by C$2.20/boe on a pro forma basis.
The transaction streamlines Obsidian's light oil assets, allowing a focus on Willesden Green while retaining non-operated holdings in the Pembina Cardium Unit #11.
The additional interest in Willesden Green increases production by approximately 150boepd (net), enhancing future development prospects.
The deal will also allow the company to focus on its Peace River development and exploration.
Post-transaction, Peace River assets will account for more than 42% of total production and 33% of total 1P plus 2P reserves.
The transaction is effective from 1 December 2024 and is expected to close in the second quarter of 2025, subject to shareholder and regulatory approvals.
RBC Capital Markets is acting as exclusive financial advisor, with Burnet, Duckworth & Palmer and Stikeman Elliott as legal counsel to Obsidian Energy.
