Obsidian Energy Announces Strategic Actions to Unlock Shareholder Value

— Launches Sale Process for Alberta Viking Assets; Ongoing Discussions with CIC Regarding Disposition of PROP; Plans to Use Any Sale Proceeds to Fund Cardium Growth, Reduce Debt and Buy Back Shares —

CALGARY, April 2, 2018 /CNW/ – OBSIDIAN ENERGY LTD. (TSX – OBE, NYSE – OBE.BC) (“Obsidian Energy“, the “Company“, “we“, “us” or “our“) has retained RBC Capital Markets to explore a potential sale of the Company’s Alberta Viking assets and is engaged in ongoing discussions with China Investment Corporation (“CIC“) regarding a disposition of the Company’s share of jointly owned Peace River assets. Obsidian Energy intends to use the proceeds of any such asset sales to accelerate growth in the Company’s prime Cardium assets, pay down debt and return capital to shareholders through the implementation of a Normal Course Issuer Bid.

The Company is also announcing a deferral of the proposed share consolidation and changes to Obsidian Energy’s Director compensation to further align director pay with shareholders.

“Today’s announcement is the natural next step in our ongoing strategy to unlock shareholder value and establish Obsidian Energy as a growth company focused on optimizing our industry-leading position in the Cardium,” said David French, President and CEO of Obsidian Energy. “In addition to exploring the sale of our Alberta Viking and Peace River assets, we are actively reviewing industry consolidation opportunities with significant synergies and a focus on creating a company with best-in-class operating performance, financial discipline and industry-leading growth prospects.”

Over the past three years, Obsidian Energy has divested approximately $2.3 billion of assets, significantly improved the Company’s financial and operating performance and eliminated a number of the legacy challenges that have constrained the Company’s relative performance.

“Obsidian Energy’s Board and management are working with a sense of purpose – and opportunity – to create value for all shareholders,” said Jay Thornton, Board Chair. “This process started in Q3 last year and accelerated in October when the Board selected RBC Capital Markets as our lead financial advisor to work alongside management to action any and all value creating transactions. We believe in the Company’s future and are excited about its potential.”

With production of approximately 2,500 boe/d, the Alberta Viking asset offers a mix of light-oil and gas with high-netback shorter cycle wells, an industry-leading land position and extensive owned infrastructure over the entire Esther area. The Peace River Oil Partnership (“PROP“) is a joint venture between Obsidian Energy and CIC, with net production to Obsidian Energy of approximately 5,000 boe/d and a large position in a crude oil resource highly amenable to conventional cold-flow production. PROP has de-risked its large resource base and has many years of inventory with attractive economics.

The Company expects to conclude a sale of the Alberta Viking assets by the end of the second quarter of 2018. Discussions with CIC are expected to continue into the fall before a formal process is started.

Planned Use of Proceeds
The Board will determine the right balance of accelerated Cardium growth, debt repayment and share buybacks based on changes in the Company’s borrowing base as a result of any production being sold, and Obsidian Energy’s share price at the time of any such sale. The Company intends to apply for a Notice of Intention to Make a Normal Course Issuer Bid (the “Bid“) with the Toronto Stock Exchange (the “TSX“) upon closing of the potential transaction. The Bid will be subject to the approval of the TSX and the Company’s lenders. Obsidian Energy intends to repurchase shares on both the TSX and New York Stock Exchange (the “NYSE“) and/or alternative Canadian trading systems.

Proposed Share Consolidation to Cure NYSE Listing Requirements to Be Deferred, or Otherwise Cancelled
Obsidian Energy previously announced its intention to propose a consolidation of the Company’s outstanding common shares at the upcoming Annual and Special Meeting, subject to Board discretion. The Board and management have listened to investor feedback encouraging the Board not to proceed with the share consolidation at this time. Moreover, the Board and management strongly believe that the continued execution of the Company’s strategy will bring Obsidian Energy into compliance with the NYSE’s listing requirements within the applicable time frame. The Board will, however, continue to seek the discretion to consolidate the common shares, on the same ratio as previously stated, but only in the event that the Company is not in compliance with the minimum share price listing standard on the latest date necessary to potentially avoid the delisting from the NYSE.

Obsidian Energy Directors Elect to Receive All Fees in Equity versus Cash
As an expression of confidence in the Company’s future and to even more firmly align the interests of Directors with the interests of Obsidian Energy shareholders, each member of the Board of Directors has elected to take all of his or her fees in the form of equity (e.g. Deferred Share Units) going forward.

Obsidian Energy shares are listed on the Toronto Stock Exchange under the symbol “OBE” and the New York Stock Exchange under the symbol “OBE.BC”.

OBSIDIAN ENERGY: Suite 200, 207 – 9th Avenue SW, Calgary, Alberta T2P 1K3, Phone: 403-777-2500, Fax: 403-777-2699, Toll Free: 1-866-693-2707, Website: www.obsidianenergy.com; Investor Relations: Toll Free: 1-888-770-2633, E-mail: investor_relations@obsidianenergy.com