OBSIDIAN SHOULD MERGE BNE 2 FOR 1Obsidian should Merge bne (I) Approximately $50 million in year one and $100 million over the first three years in G&A and operating expense reductions,
capital cost savings and incremental cashflow from recycling capital from the pro forma operations to Obsidian Energy's
higher-return Willesden Green drilling inventory, resulting in significantly greater free cash flow available to accelerate debt
repayment resulting in improved financial performance;
(II) A significantly lower 2021 break-even WTI price of ~ $US37 WTI to maintain exit to exit production levels while achieving
free-cash flow neutrality, with further break-even price improvement in 2022 and beyond due to lower interest expense from debt
repayment;
(III) Significant improvement in credit metrics due to improved cashflow and lower debt resulting in a lower risk profile and
forecasted 2022 year-end Debt / EBITDA of 2.0x;
(IV) Increased size and scale that we believe would allow the combined entity to access alternative debt financing to refinance
existing first lien debt resulting in a more stable and diversified capital structure that would not be reliant on and exposed to
semi-annual bank redeterminations;
(V) Robust accretion across all equity metrics resulting in significant per share value appreciation;
(VI) Increased efficiency in managing asset retirement obligations, the majority of which reside in our respective Pembina
holdings;
(VII) Bonterra shareholders realizing significant equity participation in a pro forma entity optimally positioned to drive further
accretive consolidation in the Cardium;
(VIII) The eventual reinstatement of a dividend to shareholders after sufficient debt pay down; and
(IX) An outcome far superior with regards to all financial measures compared to what either company could achieve on a
stand-alone basis.
We would note that we have shared our assumptions with our banking syndicate, our noteholders and their respective financial
advisors.
Based on the information we have had available to us, Obsidian Energy's Board would be prepared to offer an exchange ratio of
2.0 common shares of Obsidian Energy per common share of Bonterra, representing total ownership by Bonterra shareholders in
the pro forma entity of approximately 48%.