Obsidian Energy Smaller But Better
Mid 2017, Penn West Petroleum limited re-branded to Obsidian Energy with the intention with the intention of beginning a new chapter in the company’s operations. Founded in 1979, Obsidian was among the top players in the oil and gas industry. After the 2014 decline in crude oil prices, the Obsidian energy effaced financial and operational difficulties.
Over the last three years, the Alberta-based oil and natural gas manufacturing company implemented an aggressive debt reducing strategy selling most of its assets including the Saskatchewan light oil reserve. By March 2017, the total debt had decreased to $384million from $3billion. As a result, the company’s size reduced, and its production capacity went down to 30,000 barrels of oils per day from 135,000 barrels of oil per day.
With the name change and the new stock symbol OBE, the company now focuses on three primary areas, value creation, growth and innovation and accountability and transparency. Obsidian’s purpose is to protect enterprise value and embrace a disciplined approach in making technical and commercial decisions. Also, the company intends to involve all its shareholders, partners, customers and communities in its model for accountability purposes. The company appointed Ernst& Young as its auditor.
With vast and unique assets, a stable balance sheet and an excellent hedging strategy Obsidian energy hope to register strong performances regardless of the price environments. The company’s gas and oil fields situated along the Western Canadian Sedimentary Basin offer opportunities for growth in the company. Most of oil and gas produced by Obsidian Energy comes from the Alberta Viking, Pembina Cardium, and the Peace River Oil Sands. The Pembina Cardium covers 675,000 acres of land while the Alberta Viking reserve is on 190,000 acres of land. Obsidian’s energy proved reserves are equivalent to 79 million barrels of oils while its proved and probable reserves can produce 136 million barrels of oil.
Currently a mid-sized company, Obsidian Energy has a market capitalization of $ 503.21 million. The company suspended the issuance of dividends in 2015. Even after selling most of its assets, the Market is still optimistic about Obsidian Energy’s future. In 2016 the share price gained 28%.
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