- Obsidian Energy (TSX:OBE) lowered 2026 production guidance to 28,500-29,500 boe/d following weather-related delays and temporary third-party downtime at its Belly River assets
- Production at the affected Belly River assets has been restored to approximately 2,400 boe/d, while two rigs remain active in both Peace River and Willesden Green
- The company is expanding waterflood and infrastructure projects in Peace River and expects 15%+ year-over-year production growth in 2027
- Obsidian Energy stock (TSX:OBE) opened trading at C$18.77
Obsidian Energy (TSX:OBE) has revised its 2026 production guidance to 28,500 to 29,500 barrels of oil equivalent per day (boe/d) as weather-related development delays and temporary third-party facility downtime at its recently acquired Belly River assets impacted output. Despite the revised forecast, the company said operations remain on track, with active drilling programs in both its heavy oil and light oil core areas and expectations for more than 15% year-over-year production growth in 2027.
The updated guidance reflects slower-than-anticipated production additions due to adverse weather conditions that delayed field activity and a third-party compressor outage affecting recently acquired Belly River production. Obsidian noted that the Belly River issue has since been resolved, restoring production to approximately 2,400 boe/d.
This article is a journalistic opinion piece that has been written based on independent research. It is intended to inform investors and should not be taken as a recommendation or financial advice.
Development activity accelerates across core assets
Obsidian’s second-half development program continues to advance with two drilling rigs operating in Peace River and two rigs active in Willesden Green, underscoring the company’s focus on building momentum heading into 2027.
A key component of the growth strategy is the acceleration of development in the Peace River region. The company plans to add a waterflood injector at the 6-20 Walrus pad and has begun construction of an all-season road at North Walrus, infrastructure investments designed to improve reservoir performance and unlock future drilling opportunities.
Peace River heavy oil program remains on track
The Peace River development program, which has been active since July, continues to progress at the Dawson and Harmon Valley South (HVS) areas. Obsidian’s 2026 capital spending plan for Peace River remains approximately C$110 million, supporting expected average annual production of roughly 12,250 boe/d.
At Dawson, the company recently completed drilling operations on the seven-well integrated waterflood Clearwater pad at 08-24, consisting of three producing wells and four injectors. The first three producing wells have already been brought online and are generating encouraging early results. Combined production from the pad has reached approximately 700 boe/d, entirely oil production.
Meanwhile, drilling continues at the HVS 16-18 Bluesky pad, where two of three wells have entered production and are currently being cleaned up.
The company is also expanding its Clearwater waterflood infrastructure. New water pipelines are being installed to connect recently drilled pads to existing facilities, while construction has started on a new water handling facility at Dawson 13-23. These projects are designed to support long-term reservoir pressure maintenance and improve recovery rates.
Infrastructure investments support growth
Obsidian has completed construction of an all-season access road at Nampa, a significant milestone in its longer-term Clearwater development strategy. The project enabled the reactivation of the Nampa 07-34 Clearwater pad, restoring approximately 131 boe/d of oil production.
At North Walrus, roughly seven kilometres of all-season road infrastructure are under construction. Once completed, the roads are expected to facilitate the return of approximately 100 boe/d of currently shut-in production while opening access to additional drilling and exploration prospects.
In Walrus, the company is advancing plans for a new integrated waterflood development within the Bluesky formation. The project will incorporate a waterflood pattern at the 6-20 pad, leveraging techniques that have delivered positive results in more mature Peace River fields. Drilling at the location is expected to begin in late 2026.
Light oil operations continue to expand
In the Willesden Green area, development activity remains robust with two rigs expected to remain active through year-end. Obsidian has allocated approximately C$200 million in light oil capital expenditures during 2026, supporting anticipated average production of approximately 16,750 boe/d.
At Crimson, both wells on the 01-05 Belly River pad have been drilled, completed and brought online at the end of August, contributing additional production from the company’s growing Belly River position.
The second light oil drilling rig has also begun work at Open Creek, where a five-well drilling program is targeting both the Belly River and Cardium formations. By developing multiple zones from a single pad, Obsidian aims to improve capital efficiency while expanding future production capacity.
Positioning for stronger 2027 growth
While the revised 2026 outlook reflects temporary operational setbacks, management emphasized that the underlying growth strategy remains intact. The company expects production weighting toward liquids to improve in 2027 as additional Belly River and heavy oil volumes come online.
With development activity accelerating across both Peace River and Willesden Green, expanding waterflood infrastructure, and production disruptions largely resolved, Obsidian appears focused on transitioning current capital investments into stronger production growth next year.
For investors, the updated guidance may moderate near-term expectations, but the company’s continued infrastructure expansion, active four-rig drilling program and forecast for 15% or greater production growth in 2027 suggest management remains confident in the long-term growth trajectory of its asset base.
Leadership insights
“Our second-half development program is advancing, with two rigs active in each of Peace River and Willesden Green, complemented by continued progress on our Peace River waterflood initiatives as we build momentum toward the execution of our 2027 growth plans,” Stephen Loukas, Obsidian Energy’s president and CEO said in a news release. “Following the integration of the recently acquired Belly River assets, production was impacted during July and into August by a third-party compressor issue that resulted in significant downtime. The Belly River assets are now back to their current expected production capability of ~2,400 boe/d. Combined with delays to portions of our development program resulting from wet weather during the summer, these factors have impacted our full-year production outlook.”
About Obsidian Energy
Obsidian Energy Ltd. is an intermediate-sized oil and gas producer with a portfolio of assets, primarily in the Peace River, Willesden Green and Viking areas in Alberta.
Obsidian Energy stock (TSX:OBE) opened trading at C$18.77 and has risen 120 per cent since the year began.
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