Obsidian Energy, formerly Penn West Petroleum, reduced its capital budget this week by $20 million to $160 million in response to the lower commodity price environment.
At the same time, the company is maintaining its original 2017 production guidance of 30,500 to 31,500 boe/d.
Obsidian is relying on continued high production volumes from last winter's drilling program and a strong outlook for its second half development program to carry it through to the projected production volumes.
“We remain confident in our ability to demonstrate self-funded double-digit percent growth from the fourth quarter of 2016 to the fourth quarter of 2017,” Obsidian said in a statement.
The budget shaves $15 million from the company’s exploration and development program, to $145 million from $160 million, and $5 million from its decommissioning expenditures, to $15 million from $20 million.
The revised capital spending will now see $80 million go to Obsidian’s Cardium waterflood program, $20 million to optimizing Viking production, $12 million for new ventures and $5 million for cold flow production.
This May, Penn West Petroleum rebranded to Obsidian Energy as the last step of its transformation to a stronger, leaner and more capable company, according to CEO David French.
The rebrand was the outcome of a study that identified a negative perception of the Penn West’s reputation in capital markets, following years of challenges, that included having to restate financial reports for 2012, 2013 and the first quarter of 2014 after improper expense classifications.
Penn West also dramatically reduced its debt from nearly $3 billion in 2013 to $384 million at the end of the first quarter 2017 through a series of asset sales.
Today, Obsidian Energy holds a focused portfolio with industry positions in the Cardium, Peace River, and Alberta Viking areas.