Reflections on OBE's Sept 9 News ReleaseObsidian Energy issued a News Release on the morning of Sept 9.
These are my reflections.
1. They averaged ~40,000 boe in August. That is fantastic. Back on May 28, they announced a theoretical production level of 40,000 boe if their Harmon Valley South Oil field were not shut in at that time by the Woodland Cree (loss of ~4500 bbls). This May 28 announcement was probably a 1 day event.
Here we are today, being told that just two months later, in August, OBE actually averaged about 40,000 boe for the entire month of August!
40,000 boe is a major milestone on the path to 50,000 (Spring 2026 target).
It is also a huge (11.8%) increase from the Q2 average of 35,773 boe.
2. For those following along on Twitter, you’ll know OBE presently has two rigs drilling Bluesky wells. They’ve drilled 6 wells (three each) since break-up ended. They are each currently drilling a 4th well. These wells take about 2 weeks to drill. Today, OBE shared the early results from the first well drilled by each rig (shows how fast they are getting put onto production)
One rig drilled its first well on what I call Walrus Pad 3 (Pad 6-20). This well produced at ~400 bbls oil in the week ended Sept 6.
The other rig drilled its first well extending the northern edge of their Harmon Valley South Oil field. This Well’s initial results were 453 bbls oil over 26 days.
These results are not the standard IP30 rates because they havn’t yet been producing long enough. OBE has shared what they have so far. In both cases, the initial results are excellent. The type curve for these wells has an initial production rate of around 250 bbls. Its also worth noting these wells take a while to clean up – their peak rates often happen in their second month – so both wells may get better.
3. The Dawson Clearwater oil field is doing very well – the results so far range from good, to excellent. There were no new results (new to me and those following on Twitter) reported today. OBE has one Clearwater oil rig drilling. It takes about 2 weeks to drill each well. It is currently drilling the second of two step-out wells at West Dawson. These wells are follow-ups to a vertical test well, and adjacent to Lineup’s 3 well pad, so they are likely to be successful.
4. The Pembina oil rig is the fourth rig currently drilling. Pembina is a well understood oil field. OBE has been getting solid results from this rig. When this rig finishes its scheduled Pembina wells, it is going to move a little south to drill the Willesden Green wells
5. A pleasant surprise is the Viking oil field (which has not been drilled for a while), is still producing at about 2,300 boe/day. This is unexpected, because these wells decline, and normally you need to continue drilling to maintain production. OBE has been tinkering with these wells and as a result, maintained production.
6. For those of you looking for something negative to latch onto, there is Walrus Pad 2 (15-19). There are 6 wells on this pad. They were drilled in Jan, Feb and March. They were Ok and Poor. Two of these wells were drilled into a shallower pay zone that has not produced well. However, even at Walrus Pad 2, there is a silver lining. These wells all came online below type curve initial rates, but apparently their production has been steady, with little to no decline.
These Bluesky wells last for a long time – 10 years plus is typical. When it comes to analysis, there is the initial oil rate, and the total oil produced. Because they produce for such a long period, even a low initial producing well, may pay for itself somewhere down the road – sooner rather than later if production declines are minimal. For example, a well that produces at just 60 bbls oil per day, each day, will pay for itself in about 2 ¾ years.
Apparently the Walrus oil field has turned out to be a little finicky. These Bluesky wells often produce both oil and water. The water is sent back into the ground, and the oil goes off to market. OBE has discovered that oil production from Walrus is linked to water production. Apparently, the more water the Well produces, the more oil it produces. This discovery resulted in OBE adjusting how it produces from its new Walrus Pad 3 well (Pad 6-20). That is how they got this well to go from 197 bbls/day to ~400 bbls/day.
Those are my thoughts.
As always, they may be completely wrong, so please double check anything I say for yourself.
Sincerely,