Obsidian Energy (OBE-T) Nov 10, '17 Third Quarter Results and 2018 Budget web.tmxmoney.com
Obsidian Energy Friday after releasing its third quarter financials. Investors had been awaiting the results of what president and chief executive officer Dave French previously touted as the company's "most active development program in three years," and the results did not disappoint them. In a research note this morning, Scotia Capital analyst Patrick Bryden highlighted "very strong" initial production rates in the Alberta Viking, and he added that in the Cardium, "base decline rates have stalled impressively to 5 per cent, down from 20 per cent in 2016." Also, at a new area for the company, the Deep basin, three wells are producing a total of 2,000 barrels of oil equivalent a day, which is "substantially above management's expectations," said Mr. Bryden. All in all, Obsidian produced 30,166 barrels a day in the third quarter. Mr. Bryden raised his price target to $2 from $1.75, while maintaining his rating of "sector perform."
Obsidian did not change its full-year production guidance of 30,500 to 31,500 barrels a day or its capital expenditure budget of $160-million. It revealed that for 2018, it expects to produce 31,000 to 32,000 barrels a day, on a capex budget of $135-million. Despite the lower 2018 budget, the 2018 production guidance represents a 5-per-cent increase over this year's guidance when adjusted for asset sales. The company has spent more than a year selling non-core assets and reducing its long-term debt to $364-million as of Sept. 30, 2017, from $1.85-billion as of March 31, 2016. Continuing its sales effort, Obsidian has arranged the sale of its royalty assets in eastern Alberta for $40-million. The assets contribute 181 barrels a day to the company's production. In a conference call on Friday, Mr. French mentioned that there are no plans for other royalty sales at the moment, though he added that "obviously, we'll look at opportunities as they come about." More generally, Mr. French has been demonstrating his optimism through share acquisitions: In the third quarter, he bought his first 126,700 shares, at prices ranging from $1.07 to $1.23. Considering today's close of $1.54, he is up on his investment. |
