Obsidian Energy (OBE) AI Stock Analysis

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Obsidian Energy

(TSX:OBE)

Rating:50Neutral

Price Target:―

Obsidian Energy's overall stock score is weighed down by its financial challenges, particularly in terms of profitability and cash flow management, despite positive revenue growth and a strong balance sheet. Technical analysis further supports a cautious outlook with bearish indicators, while valuation metrics are unattractive due to negative earnings. The absence of earnings call insights and corporate events leaves these aspects out of consideration, focusing attention on the existing financial and market data.

Positive Factors

Portfolio Refinement

Obsidian's strategic portfolio refinement has positioned it for future recognition with top-quartile assets, low debt, and robust growth potential.

Production Outlook

The company announced its guidance projecting production in the range of 27.1-28.3 mboe/d, indicating an optimistic outlook for future production levels.

Negative Factors

Commodity Prices

A balance is prudent with weaker commodity prices, suggesting a cautious approach with lower spending in the near term.

Shareholder Returns

With a much improved balance sheet and recent strength in crude oil prices, Obsidian is expected to prioritize outsized heavy oil production growth over enhanced shareholder returns in the medium term.

Obsidian Energy (OBE) vs. iShares MSCI Canada ETF (EWC)

Market Cap

$561.65M

Dividend YieldN/A

Average Volume (3M)254.33K

Price to Earnings (P/E)5.6

Beta (1Y)1.42

Revenue Growth1.49%

EPS Growth-313.99%

CountryCA

Employees203

SectorEnergy

Sector Strength56

IndustryOil & Gas Exploration & Production

Share Statistics

EPS (TTM)0.21

Shares Outstanding67,102,200

10 Day Avg. Volume233,587

30 Day Avg. Volume254,334

Financial Highlights & Ratios

PEG Ratio0.01

Price to Book (P/B)0.45

Price to Sales (P/S)0.76

P/FCF Ratio-9.84

Enterprise Value/Market Cap1.39

Enterprise Value/Revenue1.02

Enterprise Value/Gross Profit-24.49

Enterprise Value/Ebitda2.01

Forecast

1Y Price Target

$9.50

Price Target Upside13.45% Upside

Rating ConsensusModerate Buy

Number of Analyst Covering2

Obsidian Energy Business Overview & Revenue Model

Company DescriptionObsidian Energy Ltd. is a Calgary-based independent oil and gas production company focused on the exploration, development, and production of oil and natural gas in Western Canada. The company operates in the energy sector and primarily engages in extracting and selling crude oil, natural gas, and natural gas liquids. Obsidian Energy is committed to sustainable and efficient operations while maximizing shareholder value through strategic asset management and operational excellence.

How the Company Makes MoneyObsidian Energy generates revenue primarily through the sale of crude oil, natural gas, and natural gas liquids extracted from its owned and operated assets in the Western Canadian Sedimentary Basin. The company's revenue model is centered around exploration and production activities, where it identifies and develops oil and gas reserves and subsequently sells the produced hydrocarbons at market prices. Key revenue streams include the sale of these commodities directly to refineries, marketing companies, and other purchasers under various pricing arrangements. The company's earnings are influenced by factors such as global oil and gas prices, production volumes, and operational efficiencies. Obsidian Energy may also engage in strategic partnerships or joint ventures to enhance its resource development capabilities and market reach, although specific partnerships are not detailed here. The company's focus on cost management and operational optimization further contributes to its financial performance.

Obsidian Energy Earnings Call Summary

Earnings Call Date:Jul 30, 2025

(Q1-2025)

% Change Since: -2.33%|

Next Earnings Date:Oct 30, 2025

Earnings Call Sentiment Neutral

The earnings call reflects a strategic shift following the sale of the Pembina assets, focusing on strengthening the balance sheet and shareholder returns through buybacks. While production growth and exploration successes were positive, increased operating costs and negative free cash flow present challenges.

Q1-2025 Updates

Positive Updates

Pembina Asset Sale

The company closed the sale of its Pembina assets for $320 million, including $211 million in cash, which was used to reduce debt. This transaction strengthened the balance sheet and focused the company’s efforts on key banner assets.

Production Growth

Obsidian reported a 12% increase in production to 38,400 BOEs per day from Q1 last year, driven by heavy oil production growth from the Peace River program.

Share Repurchase Program

The company repurchased 3.5 million shares for $24.5 million through May 6, demonstrating a commitment to returning capital to shareholders.

Peace River Exploration Success

Significant land acquisitions and exploration results in the Peace River region, with promising initial production rates from Clearwater and Bluesky formations.

Negative Updates

Increased Operating Costs

Operating costs increased to $15.72 per BOE from $13.91 last year due to higher water handling costs and land survey costs related to the Pembina disposition.

Negative Free Cash Flow

The company reported a negative free cash flow of $35 million for Q1, largely due to heavy capital expenditures.

Underperforming Wells

Some wells in the Peace River region underperformed due to higher viscosity oil than expected, resulting in higher gas and water rates on certain wells.

Company Guidance

During the call, Obsidian Energy provided guidance for the second quarter of 2025, with an estimated production midpoint of approximately 29,200 barrels of oil equivalent (BOEs) per day, following the sale of their Pembina assets. The production mix is expected to be around 72% oil and liquids. The company has approximately 71 million shares outstanding, translating to a market capitalization of about $385 million. They forecast net debt at the end of the second quarter to be approximately $255 million, with a net debt to funds from operations (FFO) ratio of roughly 1.1x. Obsidian Energy's strategy focuses on delivering superior shareholder returns through production growth, share buybacks, and debt reduction, with a current emphasis on maintaining a prudent leverage position and ample liquidity. The company also highlighted their strategic advantages, including a high-quality asset base, significant potential for future growth, and a strong balance sheet. The call noted that capital expenditures for Q2 are projected to be between $37 million and $42 million, with an expectation of generating positive free cash flow of $16 million.

Obsidian Energy Financial Statement Overview

Summary

Obsidian Energy's financial statements present a mixed picture. Although revenue grew by 28.24% from 2023 to 2024 and the balance sheet shows a strong equity position with low leverage, profitability is a concern with a negative net profit margin and negative free cash flow. The stable operating cash flow is a positive, but the negative net income and challenges in cash flow management weigh heavily on the financial performance score.

Income Statement

Neutral

Obsidian Energy's income statement shows mixed performance. Gross profit margin improved in 2024 to 7.43% from 62.65% in 2023, but net income declined significantly resulting in a negative net profit margin of -24.17% in 2024. Revenue growth is positive with a 28.24% increase from 2023 to 2024. However, the company experienced a decline in EBIT and net income, impacting profitability.

Balance Sheet

Positive

The balance sheet indicates a stable equity position with a debt-to-equity ratio of 0.24 in 2024, which is relatively low, suggesting prudent leverage. However, stockholders' equity decreased from 2023 to 2024. The equity ratio remains strong at 66.47%, signaling a robust capital structure, despite fluctuations in total assets.

Cash Flow

Neutral

Cash flow analysis reveals challenges in free cash flow, which turned negative in 2024 due to increased capital expenditures. Operating cash flow remained stable but the free cash flow to net income ratio is unfavorable due to the negative net income. The operating cash flow to net income ratio is not meaningful due to negative net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	767.30M	837.70M	653.30M	920.00M	497.50M	286.50M
Gross Profit	-31.90M	62.30M	409.40M	697.40M	497.40M	900.00K
EBITDA	388.60M	34.20M	401.20M	794.30M	577.10M	-600.30M
Net Income	-220.90M	-202.60M	108.00M	810.10M	414.00M	-771.70M
Balance Sheet
Total Assets	1.86B	2.11B	2.25B	2.20B	1.43B	964.10M
Cash, Cash Equivalents and Short-Term Investments	1.60M	0.00	500.00K	800.00K	7.30M	8.10M
Total Debt	227.30M	342.50M	228.00M	231.30M	399.70M	462.20M
Total Liabilities	469.60M	708.80M	606.60M	624.60M	665.70M	641.00M
Stockholders Equity	1.39B	1.41B	1.64B	1.58B	763.50M	323.10M
Cash Flow
Free Cash Flow	40.50M	-64.60M	59.60M	137.40M	57.70M	22.20M
Operating Cash Flow	377.20M	361.90M	352.70M	456.80M	198.70M	79.40M
Investing Cash Flow	-146.00M	-430.50M	-293.60M	-290.80M	-156.60M	-66.20M
Financing Cash Flow	-229.90M	67.60M	-59.40M	-172.50M	-42.90M	-8.10M

Obsidian Energy Technical Analysis

Technical Analysis Sentiment

Positive

Last Price8.37

Price Trends

50DMA

7.89

Positive

100DMA

7.27

Positive

200DMA

7.58

Positive

Market Momentum

MACD

0.04

Negative

RSI

61.61

Neutral

STOCH

78.41

Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For TSE:OBE, the sentiment is Positive. The current price of 8.37 is above the 20-day moving average (MA) of 8.07, above the 50-day MA of 7.89, and above the 200-day MA of 7.58, indicating a bullish trend. The MACD of 0.04 indicates Negative momentum. The RSI at 61.61 is Neutral, neither overbought nor oversold. The STOCH value of 78.41 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for TSE:OBE.

Obsidian Energy Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
Sector *	65 Neutral	$15.29B	7.24	2.92%	5.33%	4.27%	-62.52%
OBE	50 Neutral	$561.65M	5.64	-14.03%	―	1.49%	-313.99%
ZPTAF	―	$510.40M	13.00	7.20%	7.23%	―	―
FECCF	―	$306.71M	28.91	-28.80%	4.10%	―	―
TNZ	69 Neutral	C$606.67M	3.54	91.45%	―	65.41%	573.12%
LGN	67 Neutral	C$456.56M	18.99	9.82%	―	42.95%	4522.22%
CEI	48 Neutral	C$431.64M	―	-6.69%	―	41.39%	-61.36%

* Energy Sector Average

Performance Comparison

TSE:OBE

Obsidian Energy

8.37

-1.31

-13.53%

ZPTAF

Surge Energy

5.15

0.51

10.99%

FECCF

Frontera Energy

4.38

-1.42

-24.48%

TSE:TNZ

Tenaz Energy Corp

22.07

13.47

156.63%

TSE:CEI

Coelacanth Energy, Inc.

0.81

-0.02

-2.41%

TSE:LGN

Logan Energy Corp

0.79

-0.10

-11.24%

Glossary

BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Apr 22, 2025