Obsidian Energy Ltd T.OBE

Not a Fan of the update

[Flush11]

Thanks for the update John. nice work.

To me it is back to the future with oil companies that announce a budget, run into some higher prices, accelerate first half spending and then announce a big increase for the second half.

It is basically verbatim on the management style that Nuttall always throws under the bus.

I would have liked stay flat production spending in the Cardium/Pembina with spending to fill out facilities in the Prop area - and a bit of exploration money spent in Clearwater. Instead we have money thrown at everything, including Viking wells which apprear to be more expensive and slower than all of their competitors.

unless they are raising production on the viking assets so they can monetize it from a sale to Saturn or someone similar this is really disappointing.

this management team is not making choices. They are throwing money around like it wont end.

Decline rates will be increasing dramatically, we will need to spend more to maintain production and who wins? Did someone get a nice big options bonus for hitting growing production targets?

not a fan.

[kavern23]

It acrtually makes the most logical sense if you are in OBE for the long term like OBE's management team is with amount of shares they own.  I have expected big capex for months was coming. The trick is companies should scale back drilling to basically zero if oil falls under 75 bucks. The paybacks per well get really sh*tty when oil is under 75 bucks. Get as many wells as you can

[JohnJBond]

The dividend model may not have worked in the past for medium sized oil/gas companies. However, this is not the past. In the past growth came with increased debt. You have repeatedly stated your fear that increased oil prices will result in rapid increased production, and rapid oil price reduction.    That is how it was, it is not how it is now. Loukas even spelled that out

[JohnJBond]

It may be your position that OBE's Viking wells are more expensive and slower than all of their competitors. Today's presentation states the Viking wells have a payback of 0.6 years (thats 219 days, or 7 months and 9 days).     In simple terms, it means if they spend a million on a Viking well, that million is back in their bank account just over 7 months later. 

[Flush11]

small piece of the whole picture but I think all of the companies I have ever followed managed to get viking wells drilled for well under a million dollars the last few years. I have not bothered to look this year because outside of TVE the Viking does not really interest me. Small wells, lots of drilling and more of a manufacuring approach and a nasty treadmill to get stuck on. It just confirms

[AtomicForce]

I am also not a fan. I think WTI falls back to $90 sometime in 2023 and $70 in 2024. I like obsidian because their holdings are so good, but I think they are better off returning cash to shareholders. Yes the economics are great, and yes the payback period is only a year but I'd rather see buybacks.