Obsidian Energy, once known as Penn West Petroleum began its transition into a profitable oil and gas producer as of 2013 with the sale of many assets. With these and other sales, it reduced its debt load from $3 billion down to $384 million as of March 2017. Now Obsidian Energy is far smaller, but it is streamlining has led to more focused production.
Three years before, Obsidian Energy produced as much as 135,000 barrels of oil equivalent per day (BOEPD). After oil prices dropped in 2014, Obsidian was forced to restructure. It now produces somewhere around 28,000 to 31,000 BOEPD. Its workforce consisted of 1,415 employees and now has shrunk to a mere 407. Selling off its assets, one of its core properties, Slave Point, its resources have been streamlined to leave intact only its most productive oil fields and only the absolutely necessary elements needed for its effective function.
Obsidian’s oil and gas fields are in Alberta, Canada. Alberta is the home of the Western Canadian Sedimentary Basin. It is one of the world’s largest petroleum reserves. Obsidian joins other Canadian producers in making Canada the world’s third largest natural gas producer and second largest exporter. Still, Canada’s reserves only represent one percent of the world’s natural gas supply. Canada’s conventional oil reserves, both light and heavy oil reserves are declining. Light oil is declining by a rate of three to four percent each year. Read This Article for more information.
Despite these drops in reserves, Canada still has the largest reserve of oil sands or bituminous sands. It overwhelms both Russia and Venezuela, the other locations of oil sands. Canada is the location of 70% of the world’s supply of oil sands. There is some controversy about burning the product from oil sands, but Canada insists that emissions from oil sands only exceed conventional oil emissions by 12%. Obsidian produces from its Peace River property those controversial oil sands.
Obsidian is one of the top sixty stocks on the Toronto Stock Exchange. Obsidian’s CEO announced that the company had three principles it would use for action:
1) Disciplined decision making to advance and protect innovation and progress.
2) Be accountable to stakeholders, partners and the community at large.
3) Maintain the right assets, use a sensible hedging strategy, and keep a healthy balance sheet in preparation for lower price environments.