Penn West Exploration Ltd. Re-brands to Obsidian Energy Ltd. to Restore Its Lost Glory

Obsidian Energy Ltd. is an intermediate-sized Canadian company that specializes in the production of oil and natural gas. This company was until 26 June 2017, labeled as Penn West Exploration Ltd. and it is located in Calgary, Alberta. For sometimes, it was ranked among the sixty largest companies at the Toronto Stock Exchange, and as such it falls into the category of S&P/TSX 60. Obsidian Energy remained a Canadian royalty trust (CANROY) between 2005 and 2011 reaching peak market capitalization at the beginning of 2008 with nearly US $9.5 billion.

 

After changing its name, Obsidian Energy has put plans in place to pursue modest growth in the next three years by tightly tying its budget to the oil and gas prices. The process of changing the name of this company was subjected to a vote where 92 percent of the shareholders voted in favor of the name Obsidian Energy. According to Dave French, the Company CEO, the name Obsidian was chosen for this company because obsidian, a naturally existing volcanic glass, can possibly be sharpened and honed.

 

The company was hit by financial hitches in 2014 when the price of crude oil hit a record low. Consequently, the company was severely restructured and the majority of its assets sold to reduce the debt. The oil and gas fields of Obsidian Energy are found in Alberta, and more specifically within the Western Canadian Sedimentary Basin, a region known to be among the largest petroleum reserves in the world. The fields are located in three key areas including Alberta Viking, Peace River oil sands, and Pembina Cardium.

 

In 2017, the total production Obsidian Energy Ltd is estimated to be averaging at 31,000 bbl per day. In early 2008, it paid dividends that yielded an annual rate of 15-16%. Additionally, the company paid out monthly, which is not common with the equities the New York Stock Exchange-listed equities. Because Trust’s assets are always considered to be depletable resource, the dividend payments are taxed as a return of capital and not return on investment. This gives an additional tax advantage to the U.S., and it is the same for all the other royalty trusts.

 

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