Obsidian Energy (OBE-T) the play got as low as $1.03 earlier this week, something president and CEO David French took as a buying opportunity. He bought 50,000 shares on Tuesday at $1.07. These are his first 50,000 shares (not counting restricted stock awards or the approximately 4,300 shares held in a retirement account), even though Mr. French has been with Obsidian exactly 10 months now, taking over as president and CEO on Oct. 24, 2016. That was mere weeks after he sold his previous company, the Albania-focused Bankers Petroleum, to a Chinese outfit for $2.20 a share. Now his focus is Obsidian's core assets in Alberta. These produced over 25,000 barrels of oil equivalent a day in the second quarter of 2017, according to the quarterly financials that Obsidian released earlier this month. Obsidian also announced at the time that it is reducing its 2017 budget to $160-million from $180-million but leaving its production guidance intact. Even with the budget cut, Mr. French declared that Obsidian was about to embark on "our most active development program in three years."
Mr. French provided more details during a boosterish BNN interview on Aug. 9. He dismissed the $20-million budget cut as "not a significant change in the trajectory of the capital," explaining that Obsidian's spending is evenly split between "longer-durated development" (such as waterfloods in the Cardium) and "faster-return, high-volume projects" (such as drilling in the Peace River area and the Alberta Viking). The budget cut (which will largely affect the Cardium) merely reflects Obsidian's decision to "adjust our blend" so it can defer some 2017 spending while having only a "very, very small" effect on 2017 production, said Mr. French. Whether it might affect 2018 production was not said, and the interviewer did not ask. Instead, the interviewer turned the discussion to the coming development program, repeating the "most active in three years" description and declaring, "It sounds like you're ready to make the turn!" Mr. French could not agree more. He pointed out that Obsidian has reduced its long-term debt to less than $400-million as of June 30, 2017, from over $1.5-billion as of June 30, 2016, and is now ready to turn its attention to "organic growth."
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