EX-99.3

EX-99.3 4 obe-ex99_3.htm EX-99.3 EX-99.3

Exhibit 99.3

Obsidian Energy Ltd.

Consolidated Balance Sheets


		As at
(CAD millions, unaudited)	Note	June 30, 2022			December 31, 2021
Assets
Current
Cash		$	9.2		$	7.3
Accounts receivable			111.2			68.9
Risk management	7		0.6			1.8
Prepaid expenses and other			15.0			9.1
			136.0			87.1
Non-current
Property, plant and equipment	3		1,405.0			1,342.1
			1,405.0			1,342.1
Total assets		$	1,541.0		$	1,429.2

Liabilities and Shareholders’ Equity
Current
Accounts payable and accrued liabilities		$	143.8		$	107.8
Current portion of long-term debt	4		334.6			391.0
Current portion of lease liabilities	5		4.2			4.1
Current portion of provisions	6		20.1			23.4
Risk management	7		6.6			4.2
			509.3			530.5
Non-current
Lease liabilities	5		3.5			4.6
Provisions	6		116.5			123.8
Other non-current liabilities			6.9			6.8
			636.2			665.7
Shareholders’ equity
Shareholders’ capital	9		2,221.6			2,213.8
Other reserves			99.0			103.2
Deficit			(1,415.8	)		(1,553.5	)
			904.8			763.5
Total liabilities and shareholders’ equity		$	1,541.0		$	1,429.2

Subsequent events (Note 4 and 7)

Commitments and contingencies (Note 11)

See accompanying notes to the unaudited interim consolidated financial statements.


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1

Obsidian Energy Ltd.

Consolidated Statements of Income


	Three months ended June 30							Six months ended June 30
(CAD millions, except per share amounts, unaudited)	Note	2022			2021			2022			2021

Production revenues	8	$	276.5		$	111.0		$	480.2		$	203.2
Processing fees			2.0			1.7			3.9			3.3
Royalties			(44.7	)		(10.9	)		(74.7	)		(16.6	)
Sales of commodities purchased from third parties			3.7			1.9			6.8			3.9
			237.5			103.7			416.2			193.8

Other income			1.6			1.5			3.1			2.5
Government decommissioning assistance	12		(2.3	)		1.1			11.1			5.9
Risk management loss	7		(6.3	)		(5.3	)		(34.4	)		(9.8	)
			230.5			101.0			396.0			192.4

Expenses
Operating			43.9			33.9			84.2			64.8
Transportation			9.5			4.4			16.8			8.1
Commodities purchased from third parties			2.9			1.7			5.7			3.5
General and administrative			4.8			3.8			8.9			7.3
Restructuring			-			0.1			2.5			(1.9	)
Share-based compensation	10		0.8			9.7			24.9			12.4
Depletion, depreciation and impairment	3		42.1			(285.5	)		93.5			(260.0	)
Gain on provisions	6		-			(0.3	)		-			(0.3	)
Foreign exchange loss (gain)	4		1.5			(0.9	)		0.8			(1.6	)
Financing	4		10.5			10.8			20.3			22.7
Transaction costs			-			-			0.1			0.1
Other			0.6			0.8			0.6			(8.4	)
			116.6			(221.5	)		258.3			(153.3	)
Income before taxes			113.9			322.5			137.7			345.7

Deferred tax expense			-			-			-			-

Net and comprehensive income		$	113.9		$	322.5		$	137.7		$	345.7

Net income per share
Basic		$	1.39		$	4.33		$	1.69		$	4.67
Diluted		$	1.35		$	4.23		$	1.64		$	4.57
Weighted average shares outstanding (millions)
Basic	9		82.1			74.5			81.6			74.0
Diluted	9		84.6			76.3			84.1			75.6

See accompanying notes to the unaudited interim consolidated financial statements.


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 2

Obsidian Energy Ltd.

Consolidated Statements of Cash Flows


	Three months ended June 30							Six months ended June 30
(CAD millions, unaudited)	Note	2022			2021			2022			2021

Operating activities
Net income		$	113.9		$	322.5		$	137.7		$	345.7
Government decommissioning assistance			2.3			(1.1	)		(11.1	)		(5.9	)
Depletion, depreciation and impairment	3		42.1			(285.5	)		93.5			(260.0	)
Provisions	6		-			(0.3	)		-			(0.3	)
Financing	4		3.4			3.5			6.9			9.0
Share-based compensation	10		1.0			0.8			2.4			1.1
Unrealized risk management loss (gain)	7		(7.1	)		4.1			3.6			3.5
Foreign exchange loss (gain)	4		1.5			(0.9	)		0.8			(1.6	)
Decommissioning expenditures	6		(3.8	)		(0.5	)		(12.3	)		(3.8	)
Onerous office lease settlements	6		(2.3	)		(2.4	)		(4.6	)		(4.7	)
Financing fees paid			-			(0.3	)		-			(4.4	)
Change in non-cash working capital			(26.0	)		2.3			(8.0	)		(8.0	)
			125.0			42.2			208.9			70.6
Investing activities
Capital expenditures	3		(40.3	)		(21.5	)		(143.7	)		(51.0	)
Property acquisitions	3		(0.3	)		-			(0.3	)		-
Change in non-cash working capital			(41.1	)		(3.4	)		(4.3	)		3.4
			(81.7	)		(24.9	)		(148.3	)		(47.6	)
Financing activities
Decrease in long-term debt	4		(29.7	)		(16.0	)		(39.4	)		(25.0	)
Repayments of senior notes/PROP limited recourse loan	4		(5.9	)		-			(18.5	)		(1.4	)
Lease liabilities settlements	5		(1.0	)		(1.1	)		(2.0	)		(2.3	)
Exercised compensation plans			0.2			(0.1	)		1.2			(0.1	)
			(36.4	)		(17.2	)		(58.7	)		(28.8	)

Change in cash and cash equivalents			6.9			0.1			1.9			(5.8	)
Cash and cash equivalents, beginning of period			2.3			2.2			7.3			8.1
Cash and cash equivalents, end of period		$	9.2		$	2.3		$	9.2		$	2.3

See accompanying notes to the unaudited interim consolidated financial statements.


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 3

Obsidian Energy Ltd.

Statements of Changes in Shareholders’ Equity


(CAD millions, unaudited)	Note		Shareholders’ Capital		Other Reserves			Deficit			Total
Balance at January 1, 2022			$	2,213.8	$	103.2		$	(1,553.5	)	$	763.5
Net and comprehensive income				-		-			137.7			137.7
Share-based compensation		10		-		2.4			-			2.4
Issued on exercise of equity compensation plans		10		7.8		(6.6	)		-			1.2
Balance at June 30, 2022			$	2,221.6	$	99.0		$	(1,415.8	)	$	904.8


(CAD millions, unaudited)	Note		Shareholders’ Capital		Other Reserves			Deficit			Total
Balance at January 1, 2021			$	2,187.0	$	103.6		$	(1,967.5	)	$	323.1
Net and comprehensive income				-		-			345.7			345.7
Share-based compensation		10		-		1.0			-			1.0
Issued on exercise of equity compensation plans		10		2.5		(2.5	)		-			-
Balance at June 30, 2021			$	2,189.5	$	102.1		$	(1,621.8	)	$	669.8

See accompanying notes to the unaudited interim consolidated financial statements.


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 4

Notes to the Unaudited Interim Consolidated Financial Statements

(All tabular amounts are in CAD millions except numbers of common shares, per share amounts, percentages and various figures in Note 7)

1. Structure of Obsidian Energy

Obsidian Energy Ltd. (“Obsidian Energy”, the “Company”, “we”, “us” or “our”) is an exploration and production company and is governed by the laws of the Province of Alberta, Canada. The Company operates in one segment, to explore for, develop and hold interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin directly and through investments in securities of subsidiaries holding such interests. Obsidian Energy’s portfolio of assets is managed at an enterprise level, rather than by separate operating segments or business units. The Company assesses our financial performance at the enterprise level and resource allocation decisions are made on a project basis across our portfolio of assets, without regard to the geographic location of projects. Obsidian Energy owns the petroleum and natural gas assets or 100 percent of the equity, directly or indirectly, of the entities that carry on the remainder of the oil and natural gas business of Obsidian Energy which includes 100 percent of the Peace River Oil Partnership (“PROP”) effective November 24, 2021.

2. Basis of presentation and statement of compliance

a) Basis of Presentation

The unaudited condensed interim consolidated financial statements (“interim consolidated financial statements”) include the accounts of Obsidian Energy and our wholly owned subsidiaries.

Certain comparative figures have been reclassified to correspond with current period presentation.

b) Statement of Compliance

These interim consolidated financial statements are prepared in compliance with IAS 34 “Interim Financial Reporting” and accordingly do not contain all of the disclosures included in Obsidian Energy’s annual audited consolidated financial statements. These financial statements should be read in conjunction with Obsidian Energy’s audited annual consolidated financial statements as at and for the year ended December 31, 2021.

These interim consolidated financial statements were prepared using the same accounting policies as in the annual consolidated financial statements as at and for the year ended December 31, 2021.

All tabular amounts are in millions of Canadian dollars, except numbers of common shares, per share amounts, percentages and other figures as noted.

These interim consolidated financial statements were approved for issuance by the Board of Directors on July 27, 2022.


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 5

3. Property, plant and equipment (“PP&E”)

Oil and Gas assets/ Facilities, Corporate assets


Cost	Six months ended June 30, 2022		Year ended December 31, 2021
Balance, beginning of period	$	10,528.7	$	10,838.3
Capital expenditures	143.7			140.9
Business acquisition		-		32.9
Acquisitions	0.3			0.1
Net decommissioning changes	11.6			62.3
Derecognition on acquisition		-		(545.8	)
Balance, end of period	$	10,684.3	$	10,528.7


Accumulated depletion and depreciation	Six months ended June 30, 2022		Year ended December 31, 2021
Balance, beginning of period	$	9,194.6	$	9,942.6
Depletion and depreciation		81.0		116.3
Impairments	10.7			19.5
Impairment reversals		-		(338.0	)
Derecognition on acquisition		-		(545.8	)
Balance, end of period	$	9,286.3	$	9,194.6


			As at
Net book value	June 30, 2022		December 31, 2021
Total	$	1,398.0	$	1,334.1

Right-of-use assets


Cost	Six months ended June 30, 2022		Year ended December 31, 2021
Balance, beginning of period	$	24.8	$	22.7
Additions		0.8		2.1
Balance, end of period	$	25.6	$	24.8


Accumulated amortization	Six months ended June 30, 2022		Year ended December 31, 2021
Balance, beginning of period	$	16.8	$	13.2
Amortization		1.8		3.6
Balance, end of period	$	18.6	$	16.8


			As at
Net book value	June 30, 2022		December 31, 2021
Total	$	7.0	$	8.0


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 6

Total PP&E

Total PP&E including Oil and Gas assets, Facilities, Corporate assets and Right-of-use assets is as follows:


			As at
PP&E	June 30, 2022		December 31, 2021
Oil and Gas assets, Facilities, Corporate assets	$	1,398.0	$	1,334.1
Right-of-use assets		7.0		8.0
Total	$	1,405.0	$	1,342.1

At June 30, 2022, the Company completed an assessment to determine if indicators of impairment or an impairment reversal were present. No indicators were noted for our Cardium, Peace River and Viking cash generating units (“CGUs").

During the first half of 2022, we recorded a $10.7 million impairment in our Legacy CGU due to accelerated decommissioning spending in the area. The Legacy CGU has no recoverable amount, as such changes in our decommissioning liability are expensed each period.

4. Long-term debt


	As at
	June 30, 2022			December 31, 2021
Syndicated credit facility	$	282.1		$	321.5

PROP Limited recourse loan
10.50%, maturing December 31, 2022		5.9			16.0

Senior secured notes – 2008 Notes
9.37%, US$3.1 million, maturing November 30, 2022		4.0			4.7
Senior secured notes – 2010 Q1 Notes
8.82%, US$7.6 million, maturing November 30, 2022		9.8			11.3
Senior secured notes – 2010 Q4 Notes
7.85%, US$10.3 million, maturing November 30, 2022		13.3			15.4
7.95%, US$4.5 million, maturing November 30, 2022		5.8			6.8
8.20%, US$1.7 million, maturing November 30, 2022		2.1			2.5
Senior secured notes – 2011 Q4 Notes
7.76%, US$9.5 million, maturing November 30, 2022		12.3			14.2
Total credit facility and senior secured notes		335.3			392.4
Deferred interest		0.6			1.3
Deferred financing costs		(1.3	)		(2.7	)
Total long-term debt	$	334.6		$	391.0

Current portion	$	334.6		$	391.0
Non-current portion	$	-		$	-

At June 30, 2022 and December 31, 2021, the term-out date of the syndicated credit facility was within one year of the balance sheet date, which resulted in the outstanding amount being presented as a current liability.


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 7

Additional information on Obsidian Energy’s senior secured notes was as follows:


				As at
	June 30, 2022			December 31, 2021
Weighted average remaining life (years)		0.4			0.9
Weighted average interest rate		8.4	%		8.2	%

At June 30, 2022, the Company had a reserve-based syndicated credit facility with an aggregate amount available of $358.1 million which consisted of a $260.0 million revolving syndicated credit facility and a $98.1 million non-revolving term loan. Subsequent to June 30, 2022, the Company agreed to reduce the non-revolving term loan by $17.4 million to $80.7 million and repay US$2.0 million of the senior secured notes resulting in US$34.7 million outstanding.

At June 30, 2022, letters of credit totaling $5.0 million were outstanding (December 31, 2021 – $5.0 million) that reduce the amount otherwise available to be drawn on the syndicated credit facility.

Financing expense consists of the following:


	Three months ended June 30						Six months ended June 30
(millions)	2022			2021			2022			2021
Interest on bank debt and senior secured notes	$	6.4		$	7.0		$	11.9		$	12.7
PROP Limited recourse loan		0.5			-			1.0			-
Advisor fees		0.2			0.3			0.5			1.0
Accretion on decommissioning liability		2.5			1.4			5.0			2.9
Accretion on office lease provision		0.4			0.5			0.8			1.0
Accretion on other non-current liability		0.1			0.1			0.2			0.1
Accretion on lease liabilities		0.1			0.1			0.2			0.3
Deferred financing costs		0.7			1.7			1.4			2.7
Debt modification		(0.4	)		(0.3	)		(0.7	)		2.0
Financing	$	10.5		$	10.8		$	20.3		$	22.7


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 8

Subsequent to June 30, 2022, the Company completed a refinancing and issued five-year senior unsecured notes for an aggregate principal amount of $127.6 million (the “New Notes) as well as entered into new syndicated credit facilities with borrowing capacity of $205.0 million (the “New Credit Facilities“). The Company used the net proceeds from the New Notes, together with initial draws on the New Credit Facilities, to repay all of our existing senior secured notes due November 30, 2022, repay the outstanding balances under our existing credit facilities due November 30, 2022, and repay the PROP limited recourse loan due on December 31, 2022.

The New Credit Facilities were entered into with a group of lenders providing the Company with a $175.0 million revolving credit facility and a $30.0 million non-revolving term loan. The revolving credit facility is subject to a semi-annual borrowing base redetermination typically in May and November of each year and currently has a revolving period to July 27, 2023 and a term-out period of July 27, 2024. The non-revolving term loan has a maturity date of December 31, 2022.

The New Notes have an interest rate of 11.95 percent and mature on July 27, 2027 and were issued at a price of $980.00 per $1,000.00 principal amount resulting in aggregate gross proceeds of $125.0 million. The New Notes will be direct senior unsecured obligations of Obsidian Energy ranking equal with all other present and future senior unsecured indebtedness of the Company.

5. Lease liabilities

Total lease liabilities included in the Consolidated Balance Sheets are as follows:


	Six months ended June 30, 2022			Year ended December 31, 2021
Balance, beginning of period	$	8.7		$	10.4
Additions		0.8			2.1
Accretion charges		0.2			0.6
Lease payments		(2.0	)		(4.4	)
Balance, end of period	$	7.7		$	8.7

Current portion	$	4.2		$	4.1
Non-current portion	$	3.5		$	4.6

6. Provisions


	As at
	June 30, 2022		December 31, 2021
Decommissioning liability	$	114.8	$	121.6
Office lease provision		21.8		25.6
Total	$	136.6	$	147.2

Current portion	$	20.1	$	23.4
Non-current portion	$	116.5	$	123.8

Decommissioning liability

At June 30, 2022, the decommissioning liability was determined by applying an inflation factor of 2.0 percent (December 31, 2021 - 2.0 percent) and the inflated amount was discounted using a credit-adjusted rate of 9.0 percent (December 31, 2021 – 9.0 percent) over the expected useful life of the underlying assets, currently extending over 50 years into the future. At June 30, 2022, the total decommissioning liability on an undiscounted, uninflated basis was $583.4 million (December 31, 2021 - $594.6 million).


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 9

Changes to the decommissioning liability were as follows:


	Six months ended June 30, 2022			Year ended December 31, 2021
Balance, beginning of period	$	121.6		$	70.5
Net liabilities added (1)		0.7			0.1
Acquisition		-			2.1
Increase due to changes in estimates		10.9			62.2
Liabilities settled		(12.3	)		(8.1	)
Government decommissioning assistance		(11.1	)		(11.0	)
Accretion charges		5.0			5.8
Balance, end of period	$	114.8		$	121.6

Current portion	$	11.2		$	14.5
Non-current portion	$	103.6		$	107.1

(1)

Includes additions from drilling activity, facility capital spending and disposals related to net property dispositions.

Office lease provision

The office lease provision represents the net present value of non-lease components on future office lease payments. The office lease provision was determined by applying an asset specific credit-adjusted discount rate of 6.5 percent (December 31, 2021 – 6.5 percent) over the remaining life of the lease contracts, extending into 2025.

Changes to the office lease provision were as follows:


	Six months ended June 30, 2022			Year ended December 31, 2021
Balance, beginning of period	$	25.6		$	33.5
Increase (decrease) due to changes in estimates		-			(0.7	)
Settlements		(4.6	)		(9.1	)
Accretion charges		0.8			1.9
Balance, end of period	$	21.8		$	25.6

Current portion	$	8.9		$	8.9
Non-current portion	$	12.9		$	16.7

7. Risk management

Financial instruments consist of cash, accounts receivable, fair values of derivative financial instruments, accounts payable and accrued liabilities and long-term debt. At June 30, 2022, except for the senior secured notes described in Note 4 with a carrying value of $47.3 million (December 31, 2021 – $54.9 million) and a fair value of $46.9 million (December 31, 2021 - $54.4 million), the fair values of these financial instruments approximate their carrying amounts due to the short-term maturity of the instruments.

The fair values of all outstanding financial commodity related contracts are reflected on the Consolidated Balance Sheets with the changes during the period recorded in income as unrealized gains or losses.

At June 30, 2022 and December 31, 2021, the only asset or liability measured at fair value on a recurring basis was the risk management asset and liability, which was valued based on “Level 2 inputs” being quoted prices in markets that are not active or based on prices that are observable for the asset or liability.


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 10

The following table reconciles the changes in the fair value of financial instruments outstanding:


Risk management asset (liability)	Six months ended June 30, 2022			Year ended December 31, 2021
Balance, beginning of period	$	(2.4	)	$	0.2
Unrealized loss on financial instruments:
Commodity collars and swaps		(3.6	)		(2.6	)
Total fair value, end of period	$	(6.0	)	$	(2.4	)

Current asset portion	$	0.6		$	1.8
Current liability portion	$	(6.6	)	$	(4.2	)

Obsidian Energy had the following financial instruments outstanding as at June 30, 2022. Fair values are determined using external counterparty information, which is compared to observable market data. The Company limits our credit risk by executing counterparty risk procedures which include transacting only with institutions within our syndicated credit facility or companies with high credit ratings and by obtaining financial security in certain circumstances.


	Notional volume	Remaining term	Pricing	Fair value (millions)
Oil
WTI Swaps	3,750 bbl/d	July 2022	$140.46/bbl	$	0.6
WTI Swaps (1)	593 bbl/d	Q3 2022	US$63.26/bbl		(2.8	)
WTI Swaps (1)	606 bbl/d	Q4 2022	US$62.30/bbl		(2.3	)

AECO Swaps
AECO Swaps	26,065 mcf/d	July - October 2022	$4.74/mcf		(1.5	)

Total				$	(6.0	)

(1)

PROP Energy 45 Limited Partnership ("PROP 45"), our wholly owned subsidiary that purchased 45 percent of the PROP units from a third party on November 24, 2021, entered into the financial hedges in conjunction with the limited recourse acquisition financing.

Subsequent to June 30, 2022, in conjunction with our refinancing, we closed out the existing hedges under PROP 45 for a risk management loss of US$3.4 million.

Subsequent to June 30, 2022 the Company entered into the following additional oil financial hedges:


Type	Volume (bbls/d)		Remaining Term	Bought Put Price (C$/bbl)		Sold Call Price (C$/bbl)		Swap Price (C$/bbl)
WTI Swap		2,955	July 2022		-		-		134.35
WTI Swap		5,000	August 2022		-		-		125.07
WTI Swap		6,500	September 2022		-		-		120.77
WTI Collar		5,000	August 2022		118.00		135.39		-
WTI Collar		2,000	September 2022		115.00		127.50		-


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 11

The components of risk management on the Consolidated Statements of Income are as follows:


	Three months ended June 30						Six months ended June 30
	2022			2021			2022			2021
Realized
Settlement of commodity contracts	$	(13.4	)	$	(1.2	)	$	(30.8	)	$	(6.3	)
Total realized risk management loss	$	(13.4	)	$	(1.2	)	$	(30.8	)	$	(6.3	)

Unrealized
Commodity contracts	$	7.1		$	(4.1	)	$	(3.6	)	$	(3.5	)
Total unrealized risk management gain (loss)		7.1			(4.1	)		(3.6	)		(3.5	)
Risk management loss	$	(6.3	)	$	(5.3	)	$	(34.4	)	$	(9.8	)

Market risks

Obsidian Energy is exposed to normal market risks inherent in the oil and natural gas business, including, but not limited to, commodity price risk, foreign currency rate risk, credit risk, interest rate risk and liquidity risk. The Company seeks to mitigate these risks through various business processes and management controls and from time to time by using financial instruments.

There have been no material changes to these risks from those discussed in the Company’s annual audited consolidated financial statements.

8. Revenue and Other Income

The Company’s significant revenue streams consist of the following:


	Three months ended June 30				Six months ended June 30
	2022		2021		2022		2021
Oil	$	215.1	$	87.5	$	376.9	$	158.1
NGLs		18.2		7.7		33.1		14.8
Natural gas		43.2		15.8		70.2		30.3
Production revenues		276.5		111.0		480.2		203.2
Processing fees		2.0		1.7		3.9		3.3
Oil and natural gas sales		278.5		112.7		484.1		206.5
Other income		1.6		1.5		3.1		2.5
Oil and natural gas sales and other income	$	280.1	$	114.2	$	487.2	$	209.0


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 12

9. Shareholders’ equity

i) Issued


Shareholders’ capital	Common Shares		Amount
Balance, December 31, 2020		73,516,225	$	2,187.0
Issued pursuant to equity compensation plans (1)		1,356,610		2.6
Equity issue		5,880,681		25.9
Share issue costs	-			(1.7	)
Balance, December 31, 2021		80,753,516	$	2,213.8
Issued pursuant to equity compensation plans (1)		1,397,983		7.8
Balance, June 30, 2022		82,151,499	$	2,221.6

(1)

Upon vesting or exercise of equity awards, the net benefit is recorded as a reduction of other reserves and an increase to shareholders’ capital.

ii) Earnings per share - Basic and Diluted

The weighted average number of shares used to calculate per share amounts was as follows:


	Three months ended June 30				Six months ended June 30
Average shares outstanding (millions)	2022		2021		2022		2021
Basic		82.1		74.5		81.6		74.0
Dilutive impact of stock options/ Restricted Share Units ("RSUs")		2.5		1.8		2.5		1.6
Diluted		84.6		76.3		84.1		75.6

10. Share-based compensation

Restricted and Performance Share Unit plan ("RPSU plan")

Restricted Share Unit grants under the RPSU plan

Obsidian Energy awards RSU grants under the RPSU plan whereby employees receive consideration that fluctuates based on the Company’s share price on the Toronto Stock Exchange ("TSX"). Consideration can be in the form of cash or shares purchased on the open market or issued from treasury.


RSUs (number of shares equivalent)	Six months ended June 30, 2022			Year ended December 31, 2021
Outstanding, beginning of period		1,167,351			2,355,408
Granted		488,565			190,500
Vested		(784,514	)		(1,344,672	)
Forfeited		(32,374	)		(33,885	)
Outstanding, end of period		839,028			1,167,351

The fair value and weighted average assumptions of the RSUs granted during the periods were as follows:


	Six months ended June 30
	2022			2021
Average fair value of units granted (per unit)	$	10.56		$	1.99
Expected life of units (years)		2.9			1.0
Expected forfeiture rate		0.5	%		0.0	%


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 13

Performance Share Unit (“PSU”) grants under the RPSU plan

The RPSU plan allows Obsidian Energy to grant PSUs to employees of the Company. Members of the Board of Directors are not eligible for grants of PSUs under the RPSU plan. The PSU obligation is classified as a liability due to the cash settlement feature and could be settled in cash, shares purchased on the open market or shares issued from treasury.


PSUs (number of shares equivalent)	Six months ended June 30, 2022			Year ended December 31, 2021
Outstanding, beginning of period		1,138,465			453,845
Granted		124,610			684,620
Vested		(181,018	)	-
Forfeited		(133,017	)	-
Outstanding, end of period		949,040			1,138,465


	As at
PSU liability	June 30, 2022		December 31, 2021
Current	$	4.8	$	0.2
Non-current		5.1		4.2
Total	$	9.9	$	4.4

Stock Option Plan

Obsidian Energy has a Stock Option Plan that allows the Company to issue options to acquire common shares (“Options”) to officers, employees, directors and other service providers.


	Six months ended June 30, 2022					Year ended December 31, 2021
Options	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Outstanding, beginning of period		3,021,672		$	1.56		961,954		$	0.94
Granted		156,400			10.64		2,116,120			1.99
Exercised		(612,689	)		1.55		(11,938	)		0.56
Forfeited		-			-		(44,464	)		8.74
Outstanding, end of period		2,565,383		$	2.12		3,021,672		$	1.56
Exercisable, end of period		892,558		$	1.55		748,438		$	1.29

The fair value and weighted average assumptions of the Options granted during the six-month periods were as follows:


	Six months ended June 30
	2022			2021
Average fair value of Options granted (per Option)	$	6.56		$	1.11
Expected volatility		87.0	%		86.9	%
Expected life of Options (years)		3.9			3.4
Expected forfeiture rate		0.3	%		0.5	%


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 14

Non-Treasury Incentive Award Plan (“NTIP”)

In 2021, Obsidian Energy implemented the NTIP that allows the Company to issue restricted awards whereby employees receive consideration that fluctuates based on the Company’s share price on the TSX. The Company has the option to provide the consideration in the form of cash or shares purchased on the open market.


NTIP Restricted Awards	Six months ended June 30, 2022			Year ended December 31, 2021
Outstanding, beginning of period		1,093,800			-
Granted		3,400			1,120,660
Vested		(353,503	)		-
Forfeited		(28,309	)		(26,860	)
Outstanding, end of period		715,388			1,093,800


	As at
NTIP liability	June 30, 2022		December 31, 2021
Current	$	2.1	$	1.4
Non-current		1.5		1.1
Total	$	3.6	$	2.5

Deferred Share Unit (“DSU”) plan

The DSU plan allows the Company to grant DSUs in lieu of cash fees to non-employee directors providing a right to receive, upon retirement from the Board, a cash payment based on the volume-weighted-average trading price of the common shares on the TSX.


Deferred Share Units	Six months ended June 30, 2022			Year ended December 31, 2021
Outstanding, beginning of period		2,018,499			2,087,580
Granted		27,483			239,754
Exercised		(249,763	)		(308,835	)
Outstanding, end of period		1,796,219			2,018,499


	As at
DSU Liability	June 30, 2022		December 31, 2021
Current	$	18.0	$	10.7
Non-current		-	-
Total	$	18.0	$	10.7

During Q2 2022, $3.6 million of DSUs were redeemed; currently, no outstanding DSUs are redeemable.


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 15

Share-based compensation

Share-based compensation consisted of the following:


	Three months ended June 30					Six months ended June 30
	2022			2021		2022		2021
DSUs	$	(1.2	)	$	5.7	$	10.9	$	7.9
PSUs		0.6			2.6		6.6		2.8
NTIP		0.4			0.6		5.0		0.6
Cash settled share-based incentive plans	$	(0.2	)	$	8.9	$	22.5	$	11.3

RSUs	$	0.8		$	0.4	$	1.6	$	0.7
Options		0.2			0.4		0.8		0.4
Equity settled share-based incentive plans		1.0			0.8		2.4		1.1
Share-based compensation	$	0.8		$	9.7	$	24.9	$	12.4

The share price used in the fair value calculation of the DSU, NTIP and PSU obligations at June 30, 2022 was $9.94 per share (2021 – $4.24).

11. Commitments and contingencies

The Company is involved in various litigation and claims in the normal course of business and records provisions for claims as required.

12. Government grants

The Company received a grant allocation under the Alberta Site Rehabilitation Program ("ASRP") beginning in 2020. These awards have allowed the Company to expand our abandonment activities for wells, pipelines, facilities, and related site reclamation and thus reduce our decommissioning liability. During Q2 2022, the Company was notified that certain grants/allocations that we had previously received under the ASRP program had been revoked by the Government of Alberta due to a broad reduction in program support that impacted many industry participants. As a result, the Company reversed $2.3 million through income during the period. For the first six months of 2022, the Company utilized $11.1 million of net grants (2021 – $5.9 million).


OBSIDIAN ENERGY SECOND QUARTER 2022	INTERIM CONSOLIDATED FINANCIAL STATEMENTS 16