Thank you for standing by. This is the conference operator. Welcome to the Obsidian Energy’s First Quarter 2025 Results and Annual General and Special Meeting Webcast. [Operator Instructions] The conference is being recorded. I would now like to turn the conference over to Mark Hawkins, Vice President, Legal. Please go ahead.

Yes, and thank you for joining us on our call today. First, I’d like to point out that we will be referring to forward-looking information in connection with Obsidian Energy and the subject matter of today’s call. By its nature, this information contains forecasts, assumptions and expectations about future outcomes, so we remind you that it’s subject to the risks and uncertainties affecting every business, including ours. Please refer to the disclosure at the end of the presentation, along with our public disclosure filings available on both SEDAR+ and EDGAR systems for a full discussion of significant factors and risks that could affect Obsidian Energy or that could affect future outcomes for the company. Thank you for your time. And now I’d like to turn it over to President and CEO, Stephen Loukas.

Thank you, Mark. Good afternoon, everyone, and thank you for joining today’s call. I would like to turn your attention to Page 3, where I’ll quickly go through a corporate overview. Our second quarter 2025 estimated production midpoint is approximately 29,200 BOEs a day, and that is pro forma for the sale of our Pembina assets, which we closed during the first week of April. Our production mix is approximately 72% oil and liquids. We currently have approximately 71 million shares outstanding as of April 30, which translates to a market capitalization of approximately $385 million. We have forecasted net debt of approximately $255 million at the end of the second quarter, which translates to net debt to FFO of approximately 1.1x. The map on the right basically dictates our production by geographic area, and you’ll see that it’s basically itemized across Peace River, our light oil business, which consists of Willesden Green, PCU #11 and our Viking position. Turning your attention to Page 4 outlines our strategy. Our strategy is to deliver superior shareholder returns, and it’s really driven by a couple of key pillars. One, the ultimate goal is to drive per share growth via combination of production growth, share buybacks and the reduction of debt. The strategy has been to utilize the free cash flow generation from our light oil assets and reinvest that into growing our Peace River asset. We always look to further grow the intrinsic value of the business via targeted bolt-on transactions farm-ins or potential activity at land sales. And we look to achieve all that via maintaining a prudent leverage position as well as having ample liquidity. Turning your attention to Page 5. We outline our strategic advantages. First, we have a high-quality asset base with an established light oil – with…

Thanks, Steve. So, in these next few slides, I’d like to cover off on a reminder of some of the key attributes on our recent operated Pembina sale. So, as our stakeholders will know, we closed this transaction early last month for a total consideration of some $320 million. That consideration consisted of $211 million in cash after closing adjustments, which was deployed to reduce debt, approximately 9.1 million in-play shares, which represents around one-third of the outstanding shares of in-play and the acquisition of a 34.6% working interest in the Willesden Green Unit production Unit #2, which takes our ownership in this operated unit to close to 100%, where we have extensive future development plans. Just in terms of some of the key metrics, the disposition represented 10,300 barrels of oil equivalent per day as an average number for 2024, and we sold the asset for what we consider as full and fair value based on the recent present transactions and the strong 2.7 multiple that we achieved based on 2024 net operating income. Coming out of this transaction then at a high level, this strengthens our balance sheet in a material way and allows us an increased level of focus and optionality on our two key operated banner assets, being namely our heavy oil Peace River asset and our light oil Willesden Green position. Next slide, please. I drop down into some additional specificity around what we see as some – as the primary merits of the disposition. Post transaction, on an operated basis, we like the effective balance in production between our light and heavy oil positions at Willesden Green and Peace River, respectively. Beyond that, our operated Viking asset continues to provide good additional optionality in our portfolio, and we retain our working interest in the…

Thanks, Gary. I appreciate that. Good afternoon, everybody. I’ll take you through some of the results of the company for Q1. As a reminder, this does include the Pembina assets that we sold immediately post the quarter. And you can see that readily in the production profile in the chart on the right – there as well as see it on the net debt chart as well. So, just taking you through some of our results for Q1, it was a good quarter for us. Production was 38,400 BOEs a day. That’s up 12% over Q1 last year. The growth is all from heavy oil as we executed on our Peace River program. Capital expenditures for the quarter were $128 million. Q1 for us is usually a heavy capital quarter, as is typical. Last year, we were $114 million. So, again, still a pretty heavy capital expenditure level, decommissioning expenditures on ARO, $6.6 million. And as we look at our operating costs, they are up a little bit Q1 this year at $1,572 versus $1,391 last year. The reason for that is the Peace River activity and as the wells initially come on stream and we have more water handling there than is typical so we have higher water handling costs. With the Pembina disposition, we also had some land survey costs that we were required to update. And then to the benefit, actually, we had some lower power costs in the quarter. So, that helped us out on that front. So – but overall, a decent operating cost level. Just talking about G&A for a second. G&A came in at $1.61. Again, G&A is usually a little higher in the first quarter given all the benefits that are paid to the government, etc., which is early in the quarter…

Yes. Thank you very much, Peter. As we move on to Slide 12, it represents an overview of our Peace River asset. First thing I noticed when I look at a map like this is that it can really fail to portray the size of the region. The map you look at on this slide is nearly 70 miles across, or for context, more than the distance of Calgary to Canmore. As a result, there are massive parts of this area that are yet to be explored. Following the consolidation of our ownership in Peace River in late 2021, Obsidian, after a thorough technical review of the established Bluesky play and the emerging Clearwater play, concluded that our Peace River asset contained a significant amount of unrealized value. The asset had previously been developed with a focus on future secondary recovery, and as a result, it had been over a decade since a meaningful round of exploration has taken place in the area. Since that time, we’ve not been alone in this conclusion and competitor activity has continued to increase. However, the foundational land position and our decision to move early have both been a definitive advantage for Obsidian. Our land position is now approximately 700 square miles, and we are working diligently to develop the value of this vast resource. That journey is best portrayed on Slide 13. The drastic increase in our land position is the most obvious overall change in the asset. We have taken an aggressive position on acquiring prospective land in the area, supported not just by our exploration program, but importantly, by the 15-year plus land tenure for the Peace River oil sands that allows us to retain this value for decades to come. Not easily seen in the table is our change in…

Thanks Jay. So, I will turn your attention to Page 8, where I will quickly walk you through our reserves and our pro forma NAV value. Looking at the lower left-hand corner, you can see our pro forma reserves. That’s pro forma for the disposition of our Pembina asset, which occurred in April. I think the overarching takeaway is that even at a $60 WTI assumption, we continue to trade below our PDP value. Turning your attention to the right-hand corner, lower right-hand corner of the slide, you will see the growth in reserves, and that is as of year-end 2024, so it does encompass the Pembina asset. Looking at the upper right-hand corner, it’s basically our pro forma net asset value per share. That does include the market value of our in-place shares, which is approximately $60 million as of last night’s close versus our current share price. And you can see the discount that it trades to in various price scenarios as well as across a PDP, 1P and 2P basis. And with that, I will turn your attention to the final slide on Page 19, which is why invest in Obsidian Energy. There is a number of reasons for that. First, we have a strategy directed at unlocking the potential for both our heavy and light oil asset. The overarching goal is to basically drive production and funds flow per share growth, while continuing to return capital via share buybacks. We have a low decline asset base that is oil and liquids weighted with significant underlying reserve value. We trade at a significant discount to our peers across a variety of metrics. And we have been very active via our NCIB program, having effectively purchased and canceled approximately 16% of the total shares outstanding since we commenced the NCIB program approximately 2 years ago. We also have significant tax pools that put us in a position where we won’t be a cash taxpayer for approximately 10 years at $70 WTI. Obviously, it will be longer than that at these prices. And lastly, we are dedicated to making a material and positive difference to all of our stakeholders and communities where we live and operate. And with that, we will pause and we will open it up for Q&A.

Thank you very much. And just to remind everybody who is listening in, if you have a question to submit to the management team, please do it through the webcast portal, and we will do our best to answer all the questions in the time allocated. Alright. First question right now is around Peace River and Peace River program, and one question that our shareholder would like to know, for Jay probably, is what is a waffle well, how do they differ from the usual multilateral wells, and what’s the theory behind why they appear to work better?

Yes. Thank you, Susan. So, we have drilled our fifth waffle well as part of this most recent program. And I would say the name kind of says it all. It’s not particularly clever. It’s a series of conventional horizontal legs, still 11 as per our booth guide, where we then drill some subsequent legs that come across on the same well perpendicular to the primary producing leg, essentially making a waffle pattern if you were to view it aerially from above. There is some complicated pressure drawdown reasons why we think this is potentially successful. But the simplistic reason I used to explain is simply imagine trying to exit downtown in a traffic jam, and you only have one direction of flow. The waffle well allows for hydrocarbons and pressure to move multiple directions in that reservoir before they reach the pump, as opposed to having a single and potentially blockaded or limited path of flow. So, we are basically giving more avenues for the hydrocarbons to produce. It results in slightly more open hole conditions. And thus far, we have been pleased with the results we are seeing from it.

Thank you very much, Jay. One, another question here is around actually some February well results that our update at that time said we noted several wells in Peace River that were underperforming. Could you provide some more information about it in terms of what operational geological adjustments have you done to improve results? And have the wells started performing?

Jay you can take that.

No, I appreciate that. Thanks Steve. So, we released a couple of results in February 2025 that were focused on the Cadotte portion of our field. And for the context, that is the westernmost extent of our field that we are testing the flank edges of that portion of the field. In short, the wells encountered higher viscosity oil than we expected. So, while there is hydrocarbons in the well, its willingness to flow preferentially were challenged. As a result, we saw higher than expected gas rates on one and higher water rates on some. So, we still have mitigation strategies we may employ to try to salvage that to either produce the gas or subsequently dispose of the water on site and continue to produce the wells at a slightly higher water cut than expected. But as of currently, the wells are shut in while we approach a strategy to manage those solutions.

Alright. Thanks very much. I got several questions that surround the capital allocation post the Pembina sale related to the in-play shares. With proceeds from this IPO, how does Obsidian balance debt reduction, share buybacks and reinvestment in Peace River delineation? Are there plans to accelerate shareholder returns now that the portfolio is streamlined? And what is the overall plan with the IPO shares?

Yes, I will take that. I mean I think we have been fairly prescriptive in that post the sale, in the proceeds, the cash proceeds from that transaction went to pay down debt. We were extremely active in the buyback during the month of April and purchased over 2 million shares, which is approximately 3% of the shares outstanding during the month of April alone. Candidly, it was in the last three or so weeks. And we have updated our capital plan such that we have cut some capital out from the first half plan in response to market conditions and have also signaled our intent to directionally keep our production flat to the extent that prices were to kind of hover around these levels. I think the overarching takeaway should be that, that is a financially superior decision that we have an opportunity to buy our shares at a material discount. We don’t forgo the opportunity to grow our production when we so choose to. I have read some of the research. And candidly, I have been surprised that it’s been positioned as if it’s a negative. There is no reason to force production growth in the $60 world, specifically – even more so when you can buy your shares back at material discounts to intrinsic value and candidly have better economics than primary development economics kind of sit today. So, I think that’s how we think about it. In regards to our in-place shares, we are kind of very pleased with the transaction, and we have been on record that the Cardium, specifically kind of the Pembina portion of the field was in need of consolidation. We feel that we effectuated a transaction that both offered fair value to Obsidian shareholders, but also put those assets in the hand of a management team that we think we will do quite well with them. I think it’s fair to say that we are not long-term shareholders of in-play, but at the same time, we see a significant amount of upside from the current trading levels, and we will just have to see how things evolve over the next couple of months as it relates to what our ultimate strategy will be.

Thank you, Steve. Related to that in the Pembina transaction is a question about if there are any plans to monetize additional non-core assets or Peace River assets or Viking to fund buybacks, or are we looking to bid on any other companies out there?

Yes. We are not looking to sell any additional assets. We are very comfortable with the portfolio today, and take it a step further, we just don’t need to. We have got it down effectively to two core areas and the Viking can offer short cycle kind of light oil drilling opportunities that allow you to quickly respond to prices where it’s conducive to do so. In regards to looking at other M&A opportunities, I think it’s fair to say that it’s incumbent upon us to look at everything that may become available in our area. It doesn’t necessarily mean that, that’s something that we are keen to do. I mean some of it is for benchmarking purposes. Some of it is because there is sometimes values where it might be interesting. But right here right now, we are quite comfortable allocating capital towards share buybacks and so it would be a very high bar.

Thank you. A quick question on how we get our product to market. Do we deliver it via oil and gas, Trans Mountain or via pipeline?

Yes, so the short answer is, ultimately, our product gets there via pipelines. The light oil business, quite a bit simple, the vast majority of production is tied into pipeline. At Peace River, just given the nature of the heavy oil and the winter conditions, generally speaking, a significant portion, not all of it, but a significant portion is trucked to dedicated terminals, which are pipeline connected and ultimately end up in Edmonton.

Great. Thank you, Gary. We have several questions around basically our plans in relation to oil prices and production, including what is our maintenance capital or what is our capital to hold production flat at 29,000 barrels a day? And if oil prices further stagnant, we have stated that we would likely stick to a maintenance program. How do you think about capital in that scenario? How would it play out into 2026? And what WTI price would you need to grow production again to that 35,000 barrels, 40,000 barrels range?

Yes. So, look, there is a number of questions kind of embedded within that. So, I will take them and if I forget, just remind me. But look, I think the way to think about it is we stated that at these prices, we are quite content to stay at 29,000 BOEs a day. We are not going to answer as to kind of what the maintenance capital is to hold that production flat. It’s really kind of a – there is a dynamic answer. I think it’s somewhat contingent on what kind of program do you want to drill, where are your service costs? I think it’s fair to say that industry is going to be having some spirited discussions with the service cost providers if we are in a $60 world or potentially even below that. And so I think it’s fair to say there is a lot of fluidity to that. But we have outlined that. We will release a second half budget at the end of June. In regard to kind of if prices were to stagnate, I mean we are assuming prices in the short-term will stagnate. And so, by extension, what we have chosen is a path that does grow production. It grows production per share, and it grows FFO per share. So, I think it’s a mistake to say that we are not growing. The ultimate end goal of a growth program is to have it manifest into per share growth. It makes no sense if you grow your production profile, but you are issuing a bunch of shares in that process and it’s ultimately dilutive. So, we are quite content at 29,000 BOEs. We have the balance sheet strength to see that through, and we will react to market conditions as they evolve.

Thank you, Steve. A quick question related to our news release today. Overall, that we stated that we experienced constructive results, and Jay spoke to this on five of the seven pads. And just wondering which pads did not show constructive results or if you have any additional insight to provide to shareholders?

Sure. So, the two pads we didn’t mention, one of which was the most Southeasternly test we have ever done in the field in one of our Clearwater wells. It’s been producing steadily at a sub-economic rate of about 24 barrels of oil per day, flat. So, while we are interested in that, the inflows related to higher viscosity. And as such, we are evaluating, but don’t see that as a constructive economic rate at this time. The other is a Bluesky pad up in Nampa, basically on where it would be a road into our Clearwater results. It was showing hydrocarbons and cleaning up, but we didn’t get a constructive test out there to make anything from a conclusionary point of view on that. So, that will be pending the next winter analysis.

Thank you. Question regarding somewhat Peace River, but overall is what is the current breakeven oil price for Peace River delineation drilling? And if WTI remains below $60 a barrel WTI or less, would Obsidian halt exploration to focus on shareholder return? What is the price where you stop drilling?

Yes. I mean I think the way to think about it is we have already outlined that the first part of our capital program this year was more skewed towards exploration drilling due to the fact that we had winter access. I think it’s a fair assumption that for the balance of the year, we are going to be much more focused on drilling in areas where kind of there more development wells. So, I don’t think you will see an emphasis on exploration or delineation wells in any form.

Thank you. Do you have an approximate budget for share buybacks in May and June?

I am not going to answer that question. It would be stupid of us to answer that question, I mean…

Thank you. Another question is, at what level – when you get share count down to the low $50 million range, would you consider a dividend? And what is your process or thinking for ongoing shareholder returns?

Yes. I think what we would say is I don’t know that, that question should be indexed to a share count range. I think it’s fair to say that it’s a function of the strategy. We have been returning capital aggressively to our shareholders. It’s been in the form of share buybacks. We think that’s a much kind of superior option at this juncture. And there could be a time when it may make sense to put a dividend in place, and we will evaluate that at the appropriate time and at the appropriate price that potentially makes the dividend truly sustainable.

Thank you very much. This was answered in today’s news release, but the question was asked was after the Cardium sale, how much debt has been repaid? And what’s the current net debt to fund flow ratio?

Can you take it?

Go ahead.

We have already outlined that kind of the debt to funds flow ratio is 1.1x at using 2Q annualized. We think it’s a conservative approach. A lot of our companies – our peers use EBITDA. It obviously will be lower than that on an EBITDA basis. It also does not attribute any value to our in-place share position. So, we think it’s a fairly conservative read of kind of where our leverage is today.

Thank you very much.

And just to add to that, I think what’s an important point to add is, what’s our liquidity that we have, when you look at our debt stack, we still have the $112 million of bonds outstanding. We have our syndicated credit facility at $235 million. And again, post the disposition, we only had $30 million drawn, so $200 million of liquidity sitting on there. So, I think that’s an important thing to keep in mind in this environment.

Thank you. Question about our asset retirement obligation, they would like some clarity that with the ARO that was part of the Pembina transaction, that’s now the response to the [ph] IPO, does Obsidian have any responsibility for the ARO expense for 2025 for these assets?

Sure. Cliff, do you want to answer that?

Yes, happy to. Okay. The situation with the ARO that’s part of the transaction is that it becomes the responsibility of the owner of the asset once it transfers over to them. So, it is in-play’s responsibility at this point. But to be more specific on the answer, the AER sets the ARO minimum spend obligations in the prior year, which includes the assets that are owned by the licensee at that time. So, Obsidian retains responsibility for the spend target for 2025, but has the discretion to deploy that as we see fit.

Thank you. A question if the company can provide any more detail on what plans do you have to convert winter road access to all year road access in Nampa and North Dawson based on the results to-date.

Yes. I think it’s fair to say that’s something that we are evaluating and something that we are considering in real time, and we will have more to say about that when we put out our second half budget.

Thank you. There is a couple of questions around our future strategy and plans. As per the news release today, we have stated that we are not going to be reissuing a 3-year growth plan at this time. Is there any plans for the future to do so, or has this changed the new look of the company? And what are you doing for a revised strategy?

Yes. The strategy hasn’t changed, which is to maximize shareholder value. And you can do that in a number of different ways. And what we have said is in response to prices, it doesn’t make sense to burn inventory at $60 a barrel or sub-$60 a barrel, even more so when you can buy your shares back at more attractive metrics. And so that is not a function. There is no strategy shift. We are pulling the 3-year plan on the basis that we sold the Pembina asset, and that was approximately 11,000 BOEs out of what was a 50,000 BOE a day target. We will lay out our second half budget at the end of June, and we will be thoughtful about kind of what we say about ‘26 and beyond when we feel we are in a position to do so.

Thank you, Steve. Related to that is what specific actions are you taking to increase shareholder value in the current environment? What is the new shareholder proposition?

Yes. I mean look, I think the company has taken a number of actions, which is a combination of delineating its Peace River asset base, selling an asset in the way of Pembina at what we felt was a very fair value and that significantly streamlined the company while also strengthening the balance sheet in a higher price environment, we would have recycled that capital into kind of new production, and we have been buying back our shares. So, I think to think about it in the way of a share – a value proposition, it’s just we are going to continue to grow the intrinsic value of the business and you either believe that you have got a management team and Board that will ultimately harvest value or you don’t. And so – and if you don’t, you can sell your stock and there is an active buyback program to buy it. So, I think I couldn’t be more direct than that.

Thank you very much, Steve. I believe we have answered this, but we have another question about what we are going to do with the IPO shares.

That’s already been answered.

Thank you. One question around why are we reducing our drilling? And is it an impact of the assets or more of the commodity prices?

It’s a combination, as we have outlined, it’s a combination of the commodity prices, not wanting to burn our inventory in this commodity environment and the opportunity to buy back shares at a material discount to intrinsic value.

Thank you. Just a question about the Peace River water slide, there is some information on the news release today, but can you provide a little bit more information on the status in terms of your further plans for the Clearwater?

Sure. Gary touched on where we are at from a status point of view, but we are drilling our first waterflood pilot, we call integrated, in that we are drilling the injectors and producers at the same time down in Dawson. We are currently drilling the first of these single leg injectors. The three producers have been drilled, two of them are currently on production and cleaning up, and we look forward to the start of water injection down there in the near future.

Great. Thank you very much. Just a reminder to people on the webcast, that if you have a question, please do send it in. And at this point, otherwise, we are ready to close up the call.

Thank you, Susan. I want to thank everyone for their interest in the company. Thank you for the questions, and we look forward to talking to you in the near future. Have a good afternoon.

This concludes today’s conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.