6-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

OF THE SECURITIES EXCHANGE ACT OF 1934

For the month of May 2023

Commission File Number 1-32895

___________________

Obsidian Energy Ltd.

(Translation of registrant's name into English)

Suite 200, 207 – 9th Avenue SW
Calgary, Alberta T2P 1K3

Canada

(Address of principal executive offices)

___________________

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.)

Form 20-F  Form 40-F ☑

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1) 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7) 

                         .

DOCUMENTS INCLUDED AS PART OF THIS FORM 6-K

See the Exhibit Index hereto.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on May 4, 2023.

OBSIDIAN ENERGY LTD.
By:	/s/ Stephen Loukas
Name:	Stephen Loukas
Title:	President and Chief Executive Officer

2

EXHIBIT INDEX

Exhibit	Description
99.1	News Release, dated May 4, 2023
99.2	Management’s Discussion and Analysis for the three months ended March 31, 2023
99.3 99.4 99.5	Financial Statements for the three months ended March 31, 2023 Quarterly Certification of the Chief Executive Officer under Canadian law Quarterly Certification of the Chief Financial Officer under Canadian law

EX-99

Exhibit 99.1

 

Obsidian Energy Announces Strong First Quarter 2023 Results

•Strong performance and production increases from all development areas resulted in 33,153 boe/d average production for the quarter

•Funds flow from operations was $94.3 million in the quarter (20 percent increase from the first quarter of 2022)

•Peace River development and exploration program extends Walrus Bluesky play and further delineates acreage for both Bluesky and Clearwater formations

•Settled $9.8 million of equity award plans in cash as opposed to issuing more shares , given the significant discount of our share price to our intrinsic value

CALGARY, May 4, 2023 - OBSIDIAN ENERGY LTD. (TSX / NYSE American – OBE) (“ObsidianEnergy”, the “Company”, “we”, “us” or “our”) is pleased to report strong operating and financial results for the first quarter of 2023.

	Three months ended March 31
	2023				2022
FINANCIAL1
(millions, except per share amounts)
Cash flow from operating activities			72.6				83.9
Basic per share ($/share)2			0.89				1.03
Diluted per share ($/share)2			0.87				1.00
Funds flow from operations3			94.3				78.6
Basic per share ($/share)4			1.15				0.97
Diluted per share ($/share)4			1.12				0.94
Net income			30.5				23.8
Basic per share ($/share)			0.37				0.29
Diluted per share ($/share)			0.36				0.28
Capital expenditures			107.1				103.4
Decommissioning expenditures			8.7				8.5
Long-term debt			259.3				368.4
Net debt3			351.4				448.8
OPERATIONS
Daily Production
Light oil (bbl/d)			12,809				11,114
Heavy oil (bbl/d)			6,241				5,789
NGL (bbl/d)			2,678				2,432
Natural gas (mmcf/d)		69				60
Total production5 (boe/d)			33,153				29,407
Average sales price 2,6
Light oil ($/bbl)		101.51				117.91
Heavy oil ($/bbl)		44.98				84.77
NGL ($/bbl)		59.37				68.09
Natural gas ($/mcf)			4.06			4.96
Netback ($/boe)
Sales price			60.89				77.07
Risk management gain (loss)			0.88				(6.58	)
Net sales price			61.77				70.49
Royalties			(8.40	)			(11.35	)
Net operating costs4			(14.57	)			(13.93	)
Transportation			(3.25	)			(2.76	)
Netback4 ($/boe)			35.55				42.45

(1)We adhere to generally accepted accounting principles ("GAAP"); however, we also employ certain non-GAAP measures to analyze financial performance, financial position, and cash flow, including funds flow from operations ("FFO"), net debt, netback and net operating costs. Additionally, other financial measures are also used to analyze performance. These non-GAAP and other financial measures do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income and cash flow from operating activities, as indicators of our performance.

(2)Supplementary financial measure. See "Non-GAAP and Other Financial Measures".

(3)Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(4)Non-GAAP financial ratio. See "Non-GAAP and Other Financial Measures".

(5)Please refer to the "Oil and Gas Information Advisory" section below for information regarding the term "boe".

(6)Before realized risk management gains/(losses).

Detailed information can be found in Obsidian Energy's unaudited interim consolidated financial statements and management's discussion and analysis ("MD&A") as at and for the three-month period ended March 31, 2023 on our website at www.obsidianenergy.com, which will also be filed on SEDAR and EDGAR in due course.

The majority of our first half 2023 development program was completed across our Peace River, Willesden Green, Pembina and Viking assets in the first quarter, with the remaining activity to be finished in May. First quarter 2023 production increased to 33,153 boe/d – a 13 percent increase over the 29,407 boe/d in the first quarter of 2022 which contributed to increased FFO and net income from the first quarter of 2022.

2023 First Quarter Financial Highlights

•Strong Funds Flow – FFO increased to $94.3 million ($1.15 per basic share) for the first quarter of 2023 compared to $78.6 million ($0.97 per basic share) for the same period in 2022. Increased production combined with realized hedging gains primarily drove the increase over 2022.

•Capital Development Growth – The Company’s first half development program was active with the majority of spending incurring in the first quarter, which resulted in 29 (28.8 net) operated wells drilled (including four oilsands exploration wells). Total first quarter capital expenditures were $107.1 million (2022 – $103.4 million) and decommissioning expenditures were $8.7 million (2022 – $8.5 million).

•Stable G&A Costs – General and administrative (“G&A”) costs were $1.60 per boe in the first quarter of 2023 compared to $1.57 per boe in the first quarter of 2022 due to the Company’s focus on managing our cost structure.

•Managed Net Operating Costs – Net operating costs were higher at $14.57 per boe in the first quarter of 2023 compared to $13.93 per boe in the first quarter of 2022. The increase in net operating costs is mainly due to higher power costs and usage with an increased production base and general inflationary pressures experienced across the industry.

•Higher Net Income – Higher production and solid netbacks contributed to $30.5 million ($0.37 per basic share) of net income for the first quarter of 2023 compared to $23.8 million in the same period in 2022 ($0.29 per basic share). The increase was partially offset by lower commodity prices and a non-cash deferred income tax expense related to the deferred income tax asset recognized in 2022 in conjunction with our significant tax pool position.

•Continued Liquidity and Debt Focus – The amount available under our syndicated credit facility increased to $200.0 million from $175.0 million, with an extension of the revolving period to May 31, 2024, and the term-out date to May 31, 2025, through the early completion of our semi-annual borrowing base redetermination. With capital expenditures from our first half drilling program heavily weighted to the first quarter of 2023, net debt increased to $351.4 million at March 31, 2023, compared to $316.8 million at December 31, 2022, but decreased from $448.8 million at March 31, 2022.

•Approval of Normal Course Issuer Bid to Facilitate Share Buyback – The Board of Directors authorized a normal course issuer bid (“NCIB”) to provide a return of capital to shareholders, which was approved by the Toronto Stock Exchange (“TSX”) and allows the Company to buy back up to 10 percent of our “public float”, as defined by the TSX, up to February 27, 2024. Purchases under the NCIB will be subject to maintaining $65 million of liquidity and complying with the terms of our current credit facilities. The Company is currently in active discussions with several parties to further enhance our liquidity position to afford more flexibility on a return of capital strategy.

•Settlement of Equity-Linked Award Plans in Cash to Avoid Dilution – As we believe the intrinsic value of our shares far exceeds our current trading price, we elected to pay out performance share units and restricted share units that vested in the first quarter in cash ($9.8 million) rather than our usual practice of issuing shares at the current market price.

2023 First Quarter Operational Highlights

•Achieved Robust Development Well Results – Our active first quarter 2023 capital development continued the momentum from our 2022 program, resulting in drilling results with strong initial production (“IP”) rates. With five rigs deployed across the Peace River, Willesden Green, Pembina and Viking areas, 25 (24.8 net) development and exploration/appraisal wells were rig released in the first quarter and 21 (20.6 net) wells are now on production; additionally, we drilled four (4.0 net) oilsands exploration (“OSE”) wells in Peace River.

•Established New Walrus Development Area in Peace River – Results of our two (2.0 net) Bluesky 2023 exploration/appraisal wells initially produced an average of over 500 boe per day on a combined basis and further delineated our Peace River acreage while opening a new development area at the Walrus field.

•Peace River Potential – Initial results from the drilling and analysis of the well cores gathered from our four (4.0 net) OSE wells in the first quarter provided encouraging results. Placed strategically across our land base, they help to further delineate our extensive land position in Peace River by providing detailed subsurface data for both Bluesky and Clearwater formations.

•Expanded Western Side of Viking Play – Following up on the success of the 2022 step-out well on the western side of the play, we drilled and completed 11 (11.0 net) wells in our first half 2023 program by the end of April.

The initial three (3.0 net) wells were brought on production in the first quarter with the first two (2.0 net) wells showing a strong average 30-day IP rate of 212 boe/d (87 percent light oil).

2023 development program

We are pleased with the results of both our development and exploration/appraisal programs, providing solid production increases across our Peace River, Willesden Green, Pembina, and Viking areas. We further developed our Viking area following the successful step-out well in 2022, established a new development area at Walrus in Peace River, and further delineated our extensive land position in Peace River for both the Bluesky and Clearwater formations. During the first quarter, 25 (24.8 net) operated producing wells and four (4.0 net) operated OSE wells were rig released. We currently have 21 (20.6 net) wells on production of which 11 (10.7 net) wells were spud in 2022 and tied into permanent facilities in 2023. The table below provides our well drilling and on production breakdown by area. .

	Q1
Operated Wells	Wells Rig Released1	Wells On Production
Development:
Willesden Green (Cardium)	5 (5.0)	6 (6.0)
Pembina (Cardium / Devonian)	2 (1.8)	4 (3.6)
Peace River (Bluesky)	4 (4.0)	5 (5.0)
Viking	11 (11.0)	3 (3.0)
Total Development	22 (21.8)	18 (17.6)
Exploration/Appraisal:
Peace River (Bluesky)	2 (2.0)	2 (2.0)
Peace River (Clearwater)	1 (1.0)	1 (1.0)
OSE (Peace River)	4 (4.0)	N/A
Total Exploration/Appraisal	7 (7.0)	3 (3.0)
TOTAL	29 (28.8)	21 (20.6)

(1)Rig released well totals do not include 11 wells (10.7 net) rig released in 2022 and put on production in 2023, or the eight (2.4 net) non-operated development wells participated in during the first quarter, one of which was a water injection well.

(2)37 (35.2 net) wells rig released in 2023 are expected to be brought on production by the end of 2023 with nine in early 2024. In total, 45 (43.0 net) wells will be brought on production in 2023.

In addition, Obsidian Energy participated in eight non-operated development wells (2.4 net) during the quarter, one of which was a water injection well.

Peace River

Our focus at Peace River is on realizing the potential across our acreage from both a development and exploration/appraisal basis. As a result of our team’s work, our first quarter program provided strong production additions while opening the Walrus field for substantial future development and increases to future locations and reserves. We further delineated our extensive land position for both Bluesky and Clearwater formations through the drilling and analysis of our four OSE wells. In 2023, we will continue with our strategy to both develop and appraise future development opportunities in Peace River, and will outline a multi-year development and appraisal plan for the Bluesky and Clearwater formations in the third quarter of this year.

Bluesky Development

The first half 2023 Bluesky development program provided solid results with five (5.0 net) wells on production in the first quarter.

•06-04 Pad - Two (2.0 net) wells spud in 2022 were placed on production in February with an average 30-day IP rate of 133 boe/d (100 percent heavy oil) per well.

•02-05 Pad - Two (2.0 net) wells on the three-well pad were completed and are producing to permanent facilities with an average 30-day IP rate of 265 boe/d (100 percent oil) per well. In addition, one (1.0 net) well that was previously producing into temporary facilities at a 30-day IP rate of 134 boe/d (100 percent oil) is now tied into permanent facilities.

•14-05 Pad - One (1.0 net) well is on production and cleaning up after remedial completion work.

Recognizing the strong results from the three wells drilled at the Harmon Valley South (“HVS”) 6-31 Pad in early 2022, the Company added a second well to the offsetting 4-32 Pad in our first half Bluesky program. Both wells on the 4-32 Pad are on production and in the process of cleaning up.

Bluesky Exploration/Appraisal

Located to the east of our successful HVS development field, the potential of our Walrus acreage was largely unexplored until the first quarter of 2023. The results of our two (2.0 net) 2023 exploration/appraisal wells at the Walrus 16-20 Pad (in the north) and the Walrus 13-19 Pad (in the south) exceeded production expectations, providing key data on the Bluesky formation and effectively delineating the field for future large-scale development. Peak production rates achieved to date were 211 bbl/d (100 percent oil) for the 16-20 Pad well (1.0 net) and 303 bbl/d (100 percent oil) for the 13-19 Pad well (1.0 net). Due to restricted access in the area, typical for this time of year, the 16-20 Pad has been temporarily shut-in until access permits later in 2023.

OSE Activity

In the first quarter of 2023, we returned to organic exploration/appraisal work with the completion of our four vertical OSE wells. Placed strategically across our Peace River acreage, the wells further analyze and assess the development potential of our large land base in multiple formations. The information gathered from the cores are encouraging. Along with the results from the Dawson 12-33 Pad well (1.0 net), this data is being used to optimize future well design and placement as we define our second half 2023 program.

Willesden Green

Our Cardium play in Willesden Green continued to yield solid drilling results and production additions during the first quarter, providing a strong foundation for the Company. All five (5.0 net) wells drilled in the 2023 first half program were rig released in the quarter and placed on production prior to the end of April.

•08-09 Crimson Pad – Two (2.0 net) wells showed an average 30-day IP rate of 574 boe/d (73 percent oil) per well.

•12-26 Crimson Pad – One (1.0 net) well rig released in early January exhibited solid results with a 30-day IP rate of 276 boe/d (62 percent oil).

•08-36 Crimson Pad – Two (2.0 net) wells drilled in the first quarter were just placed on production and are cleaning up.

Pembina

We completed our 2023 first half program in Pembina during the quarter, adding production from four (3.6 net) Cardium wells.

•06-33 PCU#9 – Rig released in December 2022, the two (1.8 net) wells from this pad were placed on production in January 2023 with average 30-day IP rates of 293 boe/d (87percent light oil) per well.

•Lodgepole 03-14 Pad – Two (1.8 net) wells were placed on production with average 30-day IP rates of 183 boe/d (82 percent light oil) per well.

Additionally, Obsidian Energy also participated in the development of the non-operated Pembina Cardium Unit 11 (“PCU#11”), which continues to progress. Seven (3.1 net) wells were drilled since mid-2022, including 2 (0.9 net) injection wells. The three (1.3 net) wells drilled in the second half of 2022 have average 90-day IP rates of 420 boe/d (93 percent liquids) per well. Our partner’s full-year program includes 12 (5.4 net) Cardium wells in PCU#11.

Viking

Our 2023 first half program at Viking focuses on extending the play by further developing the potential of the western side of our acreage following the successful 2022 step-out well, recognized as the top 2022 Viking well in the basin on a cumulative and daily average production basis[1]. During the first quarter, 11 (11.0 net) wells were rig released with the first two wells on production showing 30-day IP rates averaging 212 boe/d (87 percent light oil). The majority of the remaining wells were brought on production in early May.

1 National Bank of Canada Financial Markets, ‘Oil, Gas & Consumable Fuels, North American Drilling Productivity Report’, March 21, 2023.

DECOMMISSIONING UPDATE

During the first quarter of 2023, $8.7 million was spent on decommissioning expenses to progress our environmental remediation efforts with a focus on abandoning and reclaiming inactive fields in Northern and Eastern Alberta. Obsidian Energy also completed work in February 2023 related to the Alberta Government’s Alberta Site Rehabilitation Program that ended in 2022. Total support received from the province over the three-year period was $30.2 million (on a gross basis), helping us successfully abandon a combined total of 796 net wells and 1,121 net kilometres of pipeline when combined with our decommissioning expenditures from 2020 to 2022.

RECONFIRMATION OF 2023 GUIDANCE

With our solid first quarter operational and development results, we are reiterating our guidance issued on January 30, 2023. Our first half program provided further information for our Peace River and Viking areas, and we expect to optimize our second half 2023 development plans in the coming months. We expect to generate strong free cash flow in 2023 that will be used to repay debt as well as return capital to shareholders. At the same time, we will remain flexible to commodity prices and will adjust our plans accordingly to maintain the financial strength of the Company. Our full year 2023 guidance is presented below.

		2023E Guidance
Production1	boe/d	32,000 – 33,500
% Oil and NGLs	%	67%
Capital expenditures2	$ millions	260 – 270
Decommissioning expenditures	$ millions	26 – 28
Net operating costs	$/boe	13.50 – 14.40
General & administrative	$/boe	1.60 – 1.70
Based on midpoint of above guidance
WTI Range	US$/bbl	80.00
AECO	CAD$/GJ	3.00
FFO3	$ millions	~395
Free Cash Flow (prior to NCIB)	$ millions	~105
Net debt (prior to NCIB)4	$ millions	~215
Net debt to FFO4	times	0.5

(1)Approximate mid-point of guidance range: 12,700 bbl/d light oil, 6,900 bbl/d heavy oil, 2,500 bbl/d NGLs and 63.9 mmcf/d natural gas. Average production volumes include a minimal amount of forecasted production associated with exploratory capital expenditures.

(2)Capital expenditures include approximately $25 million for exploration/appraisal well activity with minimal impact on forecasted production volumes.

(3)Pricing assumptions outlined are forecasted for the full year of 2023 and include risk management (hedging) adjustments as of May 3, 2023. Guidance FFO and free cash flow (“FCF”) includes approximately $6 million of estimated charges for full year 2023 related to the deferred share units, performance share units and non-treasury incentive plan cash compensation amounts which are based on a share price of $9.00 per share.

(4)Net debt figures estimated as at December 31, 2023, prior to the impact of any share purchased under the NCIB.

Guidance Sensitivity Table
Variable	Range	Change in 2023 FFO ($ millions)
WTI (US$/bbl)	+/- $1.00/bbl	8.6
MSW light oil differential (US$/bbl)	+/- $1.00/bbl	5.5
WCS heavy oil differential (US$/bbl)	+/- $1.00/bbl	3.1
Change in AECO ($/GJ)	+/- $0.25/GJ	3.2

HEDGING UPDATE

The Company has primarily focused our hedging program on AECO positions across 2023 and into early 2024 given our concerns on natural gas storage levels. As at May 3, 2023, the following oil and natural gas contracts are in place on a weighted average basis:

Oil Contracts

Type	Remaining Term		Volume (bbl/d)	Swap Price (C$/bbl)
WCS Differential	July 2023 - December 2023	1,000 bbl/d			($21.72)
WTI Swap	April 2023	1,900 bbl/d			$111.33

AECO Natural Gas Contracts

Type	Term	Volume (mcf/d)		Percentage Hedged1	Swap Price (C$/mcf)
AECO Swap	April 2023 – October 2023		49,203	77%	3.50
AECO Swap	November 2023 – March 2024		26,588	42%	3.46

(1)Percentage calculated based on annual expected pre-royalty natural gas production of 63.9 mmcf/d (midpoint of 2023E guidance).

UPDATED CORPORATE PRESENTATION

For further information on these and other matters, Obsidian Energy will post an updated corporate presentation later today on our website, www.obsidianenergy.com.

ADDITIONAL READER ADVISORIES

OIL AND GAS INFORMATION ADVISORY

Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of crude oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.

TEST RESULTS AND INITIAL PRODUCTION RATES

Test results and initial production rates disclosed herein, particularly those short in duration, may not necessarily be indicative of long-term performance or of ultimate recovery. Readers are cautioned that short-term rates should not be relied upon as indicators of future performance of these wells and therefore should not be relied upon for investment or other purposes. A pressure transient analysis or well-test interpretation has not been carried out and thus certain of the test results provided herein should be considered preliminary until such analysis or interpretation has been completed.

NON-GAAP AND OTHER FINANCIAL MEASURES

Throughout this news release and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position, and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income (loss) and cash flow from operating activities as indicators of our performance. The Company's unaudited consolidated financial statements and notes and MD&A as at and for the three months ended March 31, 2023 are available on the Company's website at www.obsidianenergy.comand under our SEDAR profile at www.sedar.com and EDGAR profile at www.sec.gov. The disclosure under the section "Non-GAAP and Other Financial Measures" in the MD&A is incorporated by reference into this news release.

Non-GAAP Financial Measures

The following measures are non-GAAP financial measures: FFO; net debt; net operating costs; netback; and FCF. These non-GAAP financial measures are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See the disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A for the three months ended March 31, 2023, for an explanation of the composition of these measures, how these measures provide useful information to an investor, and the additional purposes, if any, for which management uses these measures.

For a reconciliation of FFO to cash flow from operating activities, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of net debt to long-term debt, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of net operating costs to operating costs, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of netback to sales price, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

For a reconciliation of FCF to cash flow from operating activities, being our nearest measure prescribed by IFRS, see “Non-GAAP Measures Reconciliations” below.

Non-GAAP Ratios

The following measures are non-GAAP ratios: FFO (basic per share ($/share) and diluted per share ($/share)), which use FFO as a component; net operating costs ($/boe), which uses net operating costs as a component; netback ($/boe), which uses netback as a component; and net debt to FFO, which uses net debt and FFO as components. These non-GAAP ratios are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other issuers. See the disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A for the three months ended March 31, 2023, for an explanation of the composition of these non-GAAP ratios, how these non-GAAP ratios provide useful information to an investor, and the additional purposes, if any, for which management uses these non-GAAP ratios.

Supplementary Financial Measures

The following measures are supplementary financial measures: average sales price; cash flow from operating activities (basic per share and diluted per share); and G&A costs ($/boe). See the disclosure under the section "Non-GAAP and Other Financial Measures" in our MD&A for the three months ended March 31, 2023, for an explanation of the composition of these measures.

Non-GAAP Measures Reconciliations

Cash Flow from Operating Activities, FFO and FCF

	Three months ended March 31
(millions, except per share amounts)	2023			2022
Cash flow from operating activities	$	72.6		$	83.9
Change in non-cash working capital		6.6			(18.0	)
Decommissioning expenditures		8.7			8.5
Onerous office lease settlements		2.3			2.3
Settlement of restricted share units		4.6			-
Deferred financing costs		(0.5	)		(0.7	)
Restructuring charges (1)		-			2.5
Transaction costs		-			0.1
FFO		94.3			78.6
Capital expenditures		(107.1	)		(103.4	)
Decommissioning expenditures		(8.7	)		(8.5	)
Free Cash Flow	$	(21.5	)	$	(33.3	)

(1)Excludes the non-cash portion of restructuring and other expenses.

Netback to Sales Price

	Three months ended March 31
(millions)	2023			2022
Sales price	$	181.7		$	204.0
Risk management gain (loss)		2.6			(17.4	)
Net sales price		184.3			186.6
Royalties		(25.1	)		(30.0	)
Net operating costs		(43.5	)		(36.9	)
Transportation		(9.7	)		(7.3	)
Netback	$	106.0		$	112.4

Net Operating Costs to Operating Costs

	Three months ended March 31
(millions)		2023			2022
Operating costs		$	49.0		$	40.3
Less processing fees			(3.6	)		(1.9	)
Less road use recoveries			(1.9	)		(1.5	)
Net operating costs		$	43.5		$	36.9

Net Debt to Long-Term Debt

	As at March 31
(millions)		2023			2022
Long-term debt
Syndicated credit facility		$	139.0		$	311.8
Senior unsecured notes			127.6			-
Senior secured notes			-			47.1
PROP Limited recourse loan			-			10.5
Deferred interest			-			1.0
Unamortized discount of senior unsecured notes			(2.2	)		-
Deferred financing costs			(5.1	)		(2.0	)
Total			259.3			368.4
Working capital deficiency
Cash			(0.1	)		(5.6	)
Accounts receivable			(84.3	)		(96.6	)
Prepaid expenses and other			(12.3	)		(10.0	)
Bank overdraft			-			3.3
Accounts payable and accrued liabilities			188.8			189.3
Total			92.1			80.4
Net debt		$	351.4		$	448.8

ABBREVIATIONS

Oil		Natural Gas
API	American Petroleum Institute	mcf	thousand cubic feet
bbl	barrel or barrels	mcf/d	Thousand cubic feet per day
bbl/d	barrels per day	mmcf	million cubic feet
boe	barrel of oil equivalent	mmcf/d	Million cubic feet per day
boe/d	barrels of oil equivalent per day	bcf	billion cubic feet
mmbbls	million barrels	NGL	natural gas liquids
mmboe	million barrels of oil equivalent	GJ	gigajoule
WTI	West Texas Intermediate	AECO	Alberta benchmark price for natural gas
WCS	Western Canadian Select

FUTURE-ORIENTED FINANCIAL INFORMATION

This release contains future-oriented financial information (“FOFI”) and financial outlook information relating to the Company's prospective results of operations, operating costs, expenditures, production, FFO, FCF, net operating costs, and net debt, which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth below under "Forward-Looking Statements". The Company's actual results, performance or achievement could differ materially from those expressed in, or implied by, such FOFI, or if any of them do so, what benefits the Company will derive therefrom. The Company has included this FOFI to provide readers with a more complete perspective on the Company's business as of the date hereof and such information may not be appropriate for other purposes.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this document constitute forward-looking statements or information (collectively “forward-looking statements”) within the meaning of the "safe harbour" provisions of applicable securities legislation. Forward-looking statements are typically identified by words such as “anticipate”, “continue”, “estimate”, “expect”, “forecast”, “budget”, “may”, “will”, “project”, “could”, “plan”, “intend”, “should”, “believe”, “outlook”, “objective”, “aim”, “potential”, “target” and similar words suggesting future events or future performance. In addition, statements relating to “reserves” or “resources” are deemed to be forward-looking statements as they involve the implied assessment, based on certain estimates and assumptions, that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future. In particular, this document contains forward-looking statements pertaining to, without limitation, the following: that we will file the unaudited interim consolidated financial statements and MD&A on our website, SEDAR and EDGAR in due course; our expectations for development program completion and future development; our expectations in connection with our NCIB program; on expectations for on production dates; our beliefs in connection with the intrinsic value of our shares; our expectations for development in the Peace River area and when we plan to outline our multi-year development and appraisal plan for the area; that we expect to optimize our second half 2023 development plans, generate strong free cash flow in 2023 and how we plan to use the associated cash; our reconfirmed guidance for production, capital and decommissioning expenditures, net operating costs, general & administrative costs, FFO, free cash flow (prior to NCIB), net debt (prior to NCIB) and net debt to FFO; our guidance sensitivities; our hedges; and our expectations for an updated corporate presentation.

With respect to forward-looking statements and FOFI contained in this document, the Company has made assumptions regarding, among other things: that the Company does not dispose of or acquire material producing properties or royalties or other interests therein other than stated herein (provided that, except where otherwise stated, the forward-looking statements and FOFI contained herein do not assume the completion of any transaction); the impact of regional and/or global health related events, including that the COVID-19 pandemic will not have any adverse impact on energy demand and commodity prices in the future; that the Company's operations and production will not be disrupted by circumstances attributable to the COVID-19 pandemic and the responses of governments and the public to any resurgence of the pandemic; global energy policies going forward, including the continued ability of members of OPEC, Russia and other nations to agree on and adhere to production quotas from time to time; our ability to qualify for (or continue to qualify for) new or existing government programs created as a result of the COVID-19 pandemic or otherwise, and obtain financial assistance therefrom, and the impact of those programs on our financial condition; Obsidian Energy's views with respect to its financial condition and prospects, the stability of general economic and market conditions, currency exchange rates and interest rates, the availability of cash or other financing sources to fund for repurchases of common shares under the NCIB and our ability to comply with applicable terms and conditions under the Company’s debt agreements, the existence of alternative uses for Obsidian Energy's cash resources and compliance with applicable laws and regulations (including Canadian and U.S. securities laws and Canadian corporate law) pertaining to the NCIB; our ability to execute our plans as described herein and in our other disclosure documents and the impact that the successful execution of such plans will have on our Company and our stakeholders; future capital expenditure and decommissioning expenditure levels; future operating costs and G&A costs; future crude oil, natural gas liquids and natural gas prices and differentials between light,

medium and heavy oil prices and Canadian, WTI and world oil and natural gas prices; future hedging activities; future crude oil, natural gas liquids and natural gas production levels, including that we will not be required to shut-in production due to low commodity prices or the further deterioration of commodity prices; future exchange rates and interest rates; future debt levels; our ability to execute our capital programs as planned without significant adverse impacts from various factors beyond our control, including extreme weather events, wild fires, infrastructure access and delays in obtaining regulatory approvals and third party consents; our ability to obtain equipment in a timely manner to carry out development activities and the costs thereof; our ability to market our oil and natural gas successfully to current and new customers; our ability to obtain financing on acceptable terms, including our ability (if necessary) to continue to extend the revolving period and term out period of our credit facility, our ability to maintain the existing borrowing base under our credit facility, our ability (if necessary) to replace our syndicated bank facility and our ability (if necessary) to finance the repayment of our senior unsecured notes; and our ability to add production and reserves through our development and exploitation activities.

Although the Company believes that the expectations reflected in the forward-looking statements and FOFI contained in this document, and the assumptions on which such forward-looking statements and FOFI are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements and FOFI included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements and FOFI involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the forward-looking statements and FOFI contained herein will not be correct, which may cause our actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements and FOFI. These risks and uncertainties include, among other things: our inability to repurchase common shares under the NCIB in the amounts permitted or at all due to a lack of financial resources, the inability to comply with our debt agreements, legal restrictions on share repurchases, competing demands for our financial resources, or other factors; the anticipated benefits of repurchasing our shares under the NCIB do not materialize; Obsidian Energy's future capital requirements; general economic and market conditions; demand for Obsidian Energy's products; and unforeseen legal or regulatory developments and other risk factors detailed from time to time in Obsidian Energy reports filed with the Canadian securities regulatory authorities and the United States Securities and Exchange Commission; the possibility that we change our 2023 budget in response to internal and external factors, including those described herein; the possibility that the Company will not be able to continue to successfully execute our business plans and strategies in part or in full, and the possibility that some or all of the benefits that the Company anticipates will accrue to our Company and our stakeholders as a result of the successful execution of such plans and strategies do not materialize; the possibility that the Company is unable to complete one or more of the potential transactions being pursued, on favorable terms or at all; the possibility that the Company ceases to qualify for, or does not qualify for, one or more existing or new government assistance programs implemented in connection regional and/or global health related events or otherwise, that the impact of such programs falls below our expectations, that the benefits under one or more of such programs is decreased, or that one or more of such programs is discontinued; the impact on energy demand and commodity prices of regional and/or global health related events, and the responses of governments and the public to any pandemic, including the risk that the amount of energy demand destruction and/or the length of the decreased demand exceeds our expectations; the risk that there is another significant decrease in the valuation of oil and natural gas companies and their securities and the decrease in confidence in the oil and natural gas industry generally whether caused by a resurgence of the COVID-19 pandemic, the worldwide transition towards less reliance on fossil fuels and/or other factors; the risk that the financial capacity of the Company's contractual counterparties is adversely affected and potentially their ability to perform their contractual obligations; the possibility that the revolving period and/or term out period of our credit facility and the maturity date of our senior unsecured notes is not further extended (if necessary), that the borrowing base under our credit facility is reduced, that the Company is unable to renew or refinance our credit facilities on acceptable terms or at all and/or finance the repayment of our senior unsecured notes when they mature on acceptable terms or at all and/or obtain new debt and/or equity financing to replace one or all of our credit facilities and senior unsecured notes; the possibility that we breach one or more of the financial covenants pursuant to our agreements with our lenders and the holders of our senior unsecured notes; the possibility that we are forced to shut-in production, whether due to commodity prices failing to rise or other factors; the risk that OPEC and other nations fail to agree on and/or adhere to production quotas from time to time that are sufficient to balance supply and demand fundamentals for crude oil; general economic and political conditions in Canada, the U.S. and globally, and in particular, the effect that those conditions have on commodity prices and our access to capital; industry conditions, including fluctuations in the price of crude oil, natural gas liquids and natural gas, price differentials for crude oil and natural gas produced in Canada as compared to other markets, and transportation restrictions, including pipeline and railway capacity constraints; fluctuations in foreign exchange or interest rates; unanticipated operating events or environmental events that can reduce production or cause production to be shut-in or delayed (including extreme cold during winter months, wild fires and flooding); the possibility that fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to hydrocarbons and technological advances in fuel economy and renewable energy generation systems could permanently reduce the demand for oil and natural gas and/or permanently impair the Company's ability to obtain financing on acceptable terms or at all, and the possibility that some or all of these risks are heightened as a result of the response of governments and consumers to the ongoing COVID-19 pandemic. Additional information on these and other factors that could affect Obsidian Energy, or its operations or financial results, are

included in the Company's Annual Information Form (See "Risk Factors" and "Forward-Looking Statements" therein) which may be accessed through the SEDAR website (www.sedar.com), EDGAR website (www.sec.gov) or Obsidian Energy's website. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

Unless otherwise specified, the forward-looking statements and FOFI contained in this document speak only as of the date of this document. Except as expressly required by applicable securities laws, we do not undertake any obligation to publicly update or revise any forward-looking statements. The forward-looking statements and FOFI contained in this document are expressly qualified by this cautionary statement.

Obsidian Energy shares are listed on both the Toronto Stock Exchange in Canada and the NYSE American in the United States under the symbol "OBE".

All figures are in Canadian dollars unless otherwise stated.

contact

OBSIDIAN ENERGY

Suite 200, 207 - 9th Avenue SW, Calgary, Alberta T2P 1K3

Phone: 403-777-2500

Toll Free: 1-866-693-2707

Website:www.obsidianenergy.com;

Investor Relations:

Toll Free: 1-888-770-2633

E-mail: investor.relations@obsidianenergy.com

EX-99

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2023

This management’s discussion and analysis of financial condition and results of operations (“MD&A”) of Obsidian Energy Ltd. (“Obsidian Energy”, the “Company”, “we”, “us”, “our”) should be read in conjunction with the Company's unaudited interim condensed consolidated financial statements for the three months ended March 31, 2023 and the Company’s audited consolidated financial statements and MD&A for the year ended December 31, 2022. The date of this MD&A is May 3, 2023. All dollar amounts contained in this MD&A are expressed in millions of Canadian dollars unless noted otherwise.

Throughout this MD&A and in other materials disclosed by the Company, we adhere to generally accepted accounting principles ("GAAP"), however the Company also employs certain non-GAAP measures to analyze financial performance, financial position, and cash flow, including funds flow from operations, netback, sales, gross revenues, net operating costs, net debt and free cash flow. Additionally, other financial measures are also used to analyze performance. These non-GAAP and other financial measures do not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income and cash flow from operating activities, as indicators of our performance.

This MD&A also contains oil and natural gas information and forward-looking statements. Please see the Company's disclosure under the headings "Non-GAAP and Other Financial Measures", "Oil and Natural Gas Information", and "Forward-Looking Statements" included at the end of this MD&A.

Quarterly Financial Summary

(millions, except per share and production amounts) (unaudited)

	Mar. 31		Dec. 31		Sep. 30		Jun. 30		Mar. 31		Dec. 31		Sep. 30		Jun. 30
Three months ended	2023		2022		2022		2022		2022		2021		2021		2021
Production revenues	$	180.9	$	206.5	$	210.6	$	276.5	$	203.7	$	149.8	$	124.5	$	111.0
Cash flow from operating activities		72.6		126.5		121.4		125.0		83.9		62.6		65.5		42.2
Basic per share (1)		0.89		1.54		1.48		1.52		1.03		0.81		0.88		0.57
Diluted per share (1)		0.87		1.50		1.44		1.48		1.00		0.78		0.85		0.55
Funds flow from operations (2)		94.3		110.5		104.6		157.0		78.6		80.0		59.3		42.3
Basic per share (3)		1.15		1.34		1.27		1.91		0.97		1.04		0.79		0.57
Diluted per share (3)		1.12		1.31		1.24		1.86		0.94		1.00		0.77		0.55
Net income		30.5		631.7		40.7		113.9		23.8		21.7		46.6		322.5
Basic per share		0.37		7.69		0.50		1.39		0.29		0.28		0.62		4.33
Diluted per share	$	0.36	$	7.47	$	0.48	$	1.35	$	0.28	$	0.27	$	0.60	$	4.23
Production
Light oil (bbl/d)		12,809		12,105		11,062		12,261		11,114		11,155		10,314		10,836
Heavy oil (bbl/d)		6,241		5,983		5,854		6,174		5,789		3,237		2,688		2,660
NGLs (bbl/d)		2,678		2,520		2,379		2,406		2,432		2,310		2,213		2,162
Natural gas (mmcf/d)		69		67		64		64		60		58		54		54
Total (boe/d)(4)		33,153		31,742		29,985		31,575		29,407		26,352		24,164		24,651

(1)Supplementary financial measure. See "Non-GAAP and Other Financial Measures".

(2)Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(3)Non-GAAP financial ratio. See "Non-GAAP and Other Financial Measures".

(4)Disclosure of production on a per boe basis in this MD&A consists of the constituent product types and their respective quantities. See also "Supplemental Production Disclosure" and "Oil and Natural Gas Information".

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 1

Cash flow from Operating Activities, Funds Flow from Operations and Free Cash Flow

	Three months ended March 31
(millions, except per share amounts)	2023			2022
Cash flow from operating activities	$	72.6		$	83.9
Change in non-cash working capital		6.6			(18.0	)
Decommissioning expenditures		8.7			8.5
Onerous office lease settlements		2.3			2.3
Settlement of restricted share units		4.6			-
Deferred financing costs		(0.5	)		(0.7	)
Restructuring charges (1)		-			2.5
Transaction costs		-			0.1
Funds flow from operations (2)		94.3			78.6
Capital expenditures		(107.1	)		(103.4	)
Decommissioning expenditures		(8.7	)		(8.5	)
Free Cash Flow (2)	$	(21.5	)	$	(33.3	)
Per share – funds flow from operations (3)
Basic per share	$	1.15		$	0.97
Diluted per share	$	1.12		$	0.94

(1)Excludes the non-cash portion of restructuring and other expenses.

(2)Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(3)Non-GAAP financial ratio. See "Non-GAAP and Other Financial Measures".

Cash flow from operating activities decreased in Q1 2023 from Q1 2022 primarily due to lower commodity prices in addition to the Company settling our restricted share payments in cash rather than equity. Funds flow from operations increased in Q1 2023 from Q1 2022 mainly due to realized hedging gains in Q1 2023 compared to realized hedging losses in Q1 2022. Production volumes increased in 2023, however, were offset by the lower commodity price environment.

Business Strategy

Our strategy is focused on maintaining moderate production growth, operational excellence, improving our debt leverage and delivering top quartile total shareholder returns, including through a return of capital initiative to shareholders. We believe our plan to focus development activity primarily on our Cardium, Peace River and Viking assets will generate value for all stakeholders. Our industry leading Cardium position with a deep inventory of high return wells offers a predictable, liquids weighted, production profile that is capable of generating growth and sustainable free cash flow. Over the past two years our development success in Peace River, combined with our substantial land position in the area, results in an asset base with compelling Bluesky development and significant Clearwater potential for future heavy oil production growth and cash flow generation, offering further value for stakeholders. Additionally, we have been active in our Viking area which provides the Company further light oil opportunities with highly economic returns.

We plan to continue to decrease debt levels as we focus on meeting our absolute debt targets. With a stable debt structure that currently provides appropriate operational liquidity and a longer-term maturity profile, the Company anticipates being well positioned to continue developing our strong portfolio of assets while being able to act on new opportunities to our shareholders’ benefit.

Pursuant to our return of capital initiative to our shareholders, in the first quarter of 2023 we received approval from the Toronto Stock Exchange for a normal course issuer bid ("NCIB"). Purchases under the NCIB will be subject to maintaining $65 million of liquidity and complying with the terms of our current credit facilities. In the near term, we plan to further enhance our liquidity by accessing our debt capacity.

In Q1 2023, the Company continued to progress on our environmental remediation efforts, with a focus on abandoning and reclaiming inactive fields in Northern Alberta. Currently, we anticipate spending between $26 - $28 million on our decommissioning expenditures in 2023.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 2

Business Environment

The following table outlines quarterly averages for benchmark prices and Obsidian Energy’s realized prices for the previous eight quarters.

	Q1 2023			Q4 2022			Q3 2022			Q2 2022			Q1 2022			Q4 2021			Q3 2021			Q2 2021
Benchmark prices
WTI oil ($US/bbl)	$	76.13		$	82.65		$	91.55		$	108.41		$	94.29		$	77.19		$	70.56		$	66.07
Edm mixed sweet par price (CAD$/bbl)		99.06			110.03			116.88			137.76			115.64			93.36			83.77			77.30
Western Canada Select (CAD$/bbl)		69.44			77.38			93.62			122.06			100.99			78.82			71.80			67.01
NYMEX Henry Hub ($US/mmbtu)		3.42			6.26			8.20			7.17			4.95			5.83			4.01			2.83
AECO 5A Index (CAD$/mcf)		3.22			5.11			4.16			7.24			4.74			4.66			3.60			3.09
Foreign exchange rate ($US/CAD$)		1.35			1.35			1.31			1.28			1.27			1.26			1.26			1.23
Benchmark differentials
WTI - Edm Light Sweet ($US/bbl)		(2.86	)		(1.61	)		(2.05	)		(0.50	)		(2.96	)		(3.10	)		(4.08	)		(3.11	)
WTI - WCS Heavy ($US/bbl)		(24.77	)		(25.66	)		(19.86	)		(12.80	)		(14.53	)		(14.64	)		(13.58	)		(11.49	)
Average sales price (1)(2)
Light oil (CAD$/bbl)		101.51			110.45			118.66			139.88			117.91			92.55			84.27			76.97
Heavy oil (CAD$/bbl)		44.98			62.19			81.78			106.18			84.77			51.76			60.87			48.58
NGLs (CAD$/bbl)		59.37			64.33			69.12			82.93			68.09			59.46			52.79			42.79
Total liquids (CAD$/bbl)		80.08			90.80			101.36			123.32			101.72			80.07			75.55			66.95
Natural gas (CAD$/mcf)	$	4.06		$	5.66		$	5.31		$	7.38		$	4.96		$	5.05		$	3.89		$	3.21

(1)Excludes the impact of realized hedging gains or losses.

(2)Supplementary financial measures. See "Non-GAAP and Other Financial Measures".

Oil

WTI prices averaged US$76.13 per bbl during Q1 2023. WTI prices settled at US$78.16 per bbl in January before decreasing throughout the balance of the quarter, settling at US$73.37 per bbl in March. The decrease in pricing was mainly due to a potential recession as it relates to oil demand and resilient Russian oil supply despite sanctions being put in place.

In Q1 2023, WCS differentials widened, settling at a US$24.77 per bbl differential to WTI. Although the Keystone pipeline re-started, weaker pricing was experienced as inventories increased while the pipeline was down and unplanned refinery outages impacted demand. Alternatively, the MSW differential remained narrow, settling at US$2.86 per bbl differential to WTI.

The Company currently has the following oil hedging contracts in place on a weighted average basis:

Type	Volume (bbls/d)		Remaining Term	Swap Price (C$/bbl)
WCS Differential		1,000	July 2023 - December 2023		(21.72	)
WTI Swap		1,900	April 2023		111.33

Natural Gas

NYMEX Henry Hub gas prices peaked in January at US$3.78 per mmbtu. Strong supply, a mild winter across most of the United States, and above normal storage levels resulted in prices declining to a low of US$1.93 mmbtu in March. The average NYMEX price for Q1 2023 settled at US$3.42 per mmbtu.

In Alberta, AECO 5A followed a similar pattern, reaching a high of $4.32 per mcf in January. Strong supply and a mild winter reduced prices through the quarter, reaching a low of $2.65 per mcf in late February. AECO 5A prices for the quarter averaged $3.22 per mcf.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 3

The Company currently has the following natural gas hedging contracts in place on a weighted average basis:

Type	Volume (mcf/d)		Remaining Term	Swap Price (C$/mcf)
AECO Swap		49,203	April 2023 - October 2023		3.50
AECO Swap		26,588	November 2023 - March 2024		3.46

RESULTS OF OPERATIONS

Average Sales Prices (1)

	Three months ended March 31
	2023		2022			% change
Light oil (per bbl)	$	101.51	$	117.91			(14	)
Heavy oil (per bbl)		44.98		84.77			(47	)
NGL (per bbl)		59.37		68.09			(13	)
Total liquids (per bbl)		80.08		101.72			(21	)
Realized risk management loss (per bbl)		-		(10.07	)		(100	)
Total liquids price, net (per bbl)		80.08		91.65			(13	)
Natural gas (per mcf)		4.06		4.96			(18	)
Realized risk management gain (per mcf)		0.43		0.02			2,050
Natural gas net (per mcf)		4.49		4.98			(10	)
Weighted average (per boe)		60.89		77.07			(21	)
Realized risk management gain (loss) (per boe)		0.88		(6.58	)	(n/a)
Weighted average net (per boe)	$	61.77	$	70.49			(12	)

(1)Supplementary financial measures. See "Non-GAAP and Other Financial Measures".

Production

	Three months ended March 31
Daily production	2023		2022		% change
Light oil (bbl/d)		12,809		11,114		15
Heavy oil (bbl/d)		6,241		5,789		8
NGL (bbl/d)		2,678		2,432		10
Natural gas (mmcf/d)		69		60		15
Total production (boe/d)		33,153		29,407		13

In Q1 2023, production levels increased compared to Q1 2022 due to the Company’s continued development program. During the Q1 2023, the Company had an active development program across our Cardium, Peace River and Viking areas with 21 wells (20.6 net) brought on production.

Average production within the Company’s key development areas and within the Company’s Legacy asset area were as follows:

	Three months ended March 31
Daily production (boe/d) (1)	2023		2022		% change
Cardium		24,496		21,878		12
Peace River		6,885		6,469		6
Viking		1,267		690		84
Legacy		505		370		36
Total		33,153		29,407		13

(1)Refer to “Supplemental Production Disclosure” for details by product type.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 4

Netbacks

	Three months ended March 31
(per boe)	2023			2022
Netback:
Sales price (1)	$	60.89		$	77.07
Risk management gain (loss) (2)		0.88			(6.58	)
Royalties		(8.40	)		(11.35	)
Transportation		(3.25	)		(2.76	)
Net operating costs (3)		(14.57	)		(13.93	)
Netback (3)	$	35.55		$	42.45
	(boe/d)			(boe/d)
Production		33,153			29,407

(1)Includes the impact of commodities purchased and sold to/from third parties of $0.8 million (2022 – $0.3 million).

(2)Realized risk management gains and losses on commodity contracts, including the PROP Energy 45 Limited Partnership ("PROP 45") hedges in Q1 2022.

(3)Non-GAAP financial ratios. See "Non-GAAP and Other Financial Measures".

The Company's netback decreased in Q1 2023 from the comparable period primarily due to lower commodity prices. This was partially offset by decreased royalties due to lower commodity prices and a realized risk management gain on our commodity contracts.

	Three months ended March 31
(millions)	2023			2022
Netback:
Sales (1) (2)	$	181.7		$	204.0
Risk management gain (loss) (3)		2.6			(17.4	)
Royalties		(25.1	)		(30.0	)
Transportation		(9.7	)		(7.3	)
Net operating costs (2)		(43.5	)		(36.9	)
Netback (2)	$	106.0		$	112.4

(1)Includes the impact of commodities purchased and sold to/from third parties of $0.8 million (2022 – $0.3 million).

(2)Non-GAAP financial measures. See "Non-GAAP and Other Financial Measures".

(3)Realized risk management gains and losses on commodity contracts.

Production Revenues

A reconciliation from production revenues to gross revenues is as follows:

	Three months ended March 31
(millions)	2023			2022
Production revenues	$	180.9		$	203.7
Sales of commodities purchased from third parties		5.4			3.1
Less: Commodities purchased from third parties		(4.6	)		(2.8	)
Sales (1)		181.7			204.0
Realized risk management gain (loss) (2)		2.6			(17.4	)
Gross revenues (1)	$	184.3		$	186.6

(1)Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(2)Relates to realized risk management gains and losses on commodity contracts.

The Company's production revenues and gross revenues were lower in Q1 2023 compared to Q1 2022, due to lower commodity prices. This was partially offset by higher production volumes from our active development program and realized risk management gains compared to realized risk management losses in Q1 2022.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 5

Change in Gross Revenues (1)

(millions)
Gross revenues – January 1 – March 31, 2022	$	186.6
Increase in liquids production		22.5
Decrease in liquids prices		(42.9	)
Increase in natural gas production		3.6
Decrease in natural gas prices		(5.5	)
Decrease in realized oil risk management loss		17.5
Increase in realized natural gas risk management gain		2.5
Gross revenues – January 1 – March 31, 2023 (2)	$	184.3

(1)Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

(2)Excludes processing fees and other income.

Royalties

	Three months ended March 31
	2023			2022
Royalties (millions)	$	25.1		$	30.0
Average royalty rate (1)		14	%		15	%

(1)Excludes effects of risk management activities and other income.

For Q1 2023, both absolute royalties and the average royalty rate decreased from 2022 largely due to lower commodity prices.

Expenses

	Three months ended March 31
(millions)	2023		2022
Net operating (1)	$	43.5	$	36.9
Transportation		9.7		7.3
Financing		11.7		9.8
Share-based compensation	$	2.2	$	24.1

(1)Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

Operating

A reconciliation of operating costs to net operating costs is as follows:

	Three months ended March 31
(millions)	2023			2022
Operating costs	$	49.0		$	40.3
Less processing fees		(3.6	)		(1.9	)
Less road use recoveries		(1.9	)		(1.5	)
Net operating costs (1)	$	43.5		$	36.9

(1)Non-GAAP financial measure. See “Non-GAAP and Other Financial Measures”.

Operating costs have increased compared to Q1 2022 due to higher power costs, increased power usage with a higher production base and general inflationary pressures experienced across the industry.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 6

Transportation

The Company continues to utilize multiple sales points in the Peace River area to increase realized prices. New wells drilled in the Peace River area over the past year resulted in higher production and thus higher transportation costs in Q1 2023 compared to Q1 2022.

Financing

Financing expense consists of the following:

	Three months ended March 31
(millions)	2023		2022
Interest	$	6.3	$	6.3
Accretion on decommissioning liability		4.4		2.5
Accretion on office lease provision		0.3		0.4
Accretion on other non-current liability		-		0.1
Accretion on discount of senior unsecured notes		0.1		-
Accretion on lease liabilities		0.1		0.1
Deferred financing costs		0.5		0.7
Debt modification		-		(0.3	)
Financing	$	11.7	$	9.8

Obsidian Energy’s debt structure includes short-term borrowings under our syndicated credit facility and term financing through our senior unsecured notes. Interest charges were comparable in Q1 2023 and Q1 2022 as higher interest rates under the Company’s current debt agreements in Q1 2023 were offset by lower balances under our syndicated credit facility.

The Company has a reserve-based syndicated credit facility which is subject to a semi-annual borrowing base redetermination. The aggregate amount available under the syndicated credit facility is $200.0 million which was increased in March 2023, previously $175.0 million, as part of our semi-annual borrowing base redetermination (typically completed in May and November of each year). At that time, the revolving period and maturity dates under the syndicated credit facility were extended to May 31, 2024 and May 31, 2025, respectively.

The Company has senior unsecured notes outstanding totaling $127.6 million which mature on July 27, 2027. They were initially issued at a price of $980.00 per $1,000.00 principal amount resulting in aggregate gross proceeds of $125.0 million and at an interest rate of 11.95 percent. The senior unsecured notes are direct senior unsecured obligations of Obsidian Energy ranking equal with all other present and future senior unsecured indebtedness of the Company. As part of the terms of the senior unsecured notes, the Company is required to provide a repurchase offer in certain circumstances to an aggregate amount of $63.8 million (the "Repurchase Offer"), based on free cash flow for the six months ended June 30 (typically offered in August) and based on free cash flow for the six months ended December 31 (typically offered in March). Minimum available liquidity thresholds and projected leverage ratios under the Company's syndicated credit facilities are also required to be met in order to proceed with a Repurchase Offer.

At March 31, 2023, letters of credit totaling $5.1 million were outstanding (December 31, 2022 – $5.1 million) that reduce the amount otherwise available to be drawn on our syndicated credit facility.

Share-Based Compensation

Share-based compensation expense relates to the Company's Stock Option Plan (the “Option Plan”), restricted shares units (“RSUs") granted under the Restricted and Performance Share Unit Plan (“RPSU plan”), restricted awards granted under the Non-Treasury Incentive Award Plan (“NTIP”), Deferred Share Unit Plan (“DSU plan”) and performance share units (“PSUs”) granted under the RPSU plan.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 7

Share-based compensation expense consisted of the following:

	Three months ended March 31
(millions)	2023			2022
DSUs	$	(0.7	)	$	12.1
PSUs		0.4			6.0
NTIP		0.4			4.6
Cash settled share-based incentive plans	$	0.1		$	22.7
RSUs	$	1.8		$	0.8
Options		0.3			0.6
Equity settled share-based incentive plans		2.1			1.4
Share-based compensation	$	2.2		$	24.1

The change in share price at the balance sheet date results in a mark-to-market valuation which is used to calculate the PSU, DSU and NTIP future obligations. On March 31, 2023, the Company's share price closed at $8.63 per share (2022 - $11.08 per share), which resulted in a lower expense.

General and Administrative Expenses ("G&A")

	Three months ended March 31
(millions, except per boe amounts)	2023		2022
Gross	$	9.4	$	7.6
Per boe (1)		3.14		2.88
Net		4.8		4.1
Per boe (1)	$	1.60	$	1.57

(1)Supplementary financial measure. See “Non-GAAP and Other Financial Measures”.

The Company increased staffing levels in 2022 to align with our higher activity level and expanded capital program which has contributed to higher absolute G&A costs in Q1 2023 compared to Q1 2022. Additionally, in Q1 2023, general inflationary pressures have continued to impact G&A. Higher production levels in Q1 2023 partially offset the increase in G&A on a per boe basis.

Restructuring and other expenses

	Three months ended March 31
(millions)	2023		2022
Restructuring	$	-	$	2.5

Restructuring expenses in 2022 included severance charges as well as the acceleration of certain expenses under the RPSU plan due to staff changes.

Depletion, Depreciation and Impairment

	Three months ended March 31
(millions)	2023		2022
Depletion and depreciation (“D&D”)	$	51.6	$	40.1
PP&E Impairment	$	0.1	$	11.3

The Company’s D&D expense increased from Q1 2022, primarily due to higher production and non-cash impairment reversal charges recorded in 2022 in our Cardium cash generating unit (“CGU”), which increased the depletable base. These impairment reversals were recorded mainly due to the improved commodity price environment and our expanded capital program which increased reserve volumes.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 8

In the first quarter of 2023, we recorded a $0.1 million impairment in our Legacy CGU due to decommissioning spending in the area. The Legacy CGU has no recoverable amount, as such changes in our decommissioning liability are expensed each period.

Taxes

	Three months ended March 31
(millions)	2023		2022
Deferred income tax expense	$	9.7	$	-

In 2022, the Company recorded a $246.4 million deferred income tax asset as we determined that it was probable that the asset would be utilized. In Q1 2023, the Company generated income and utilized $9.7 million of the deferred income tax asset which led to the deferred income tax expense.

Net Income

	Three months ended March 31
(millions, except per share amounts)	2023		2022
Net income	$	30.5	$	23.8
Basic per share		0.37		0.29
Diluted per share	$	0.36	$	0.28

In Q1 2023, net income was the result of the Company's higher production and strong netback. This was partially offset by lower commodity prices compared to Q1 2022, and increased depletion and depreciation expenses. The Company also recorded a non-cash deferred income tax expense due to the recognition of a deferred income tax asset in 2022 in conjunction with our significant tax pool position.

In Q1 2022, net income was associated with the Company’s higher revenue which was supported by higher oil prices. This was partially offset by increased depletion and depreciation expenses and higher share-based compensation charges as a result of the Company's significant share price appreciation during the quarter.

Capital Expenditures

	Three months ended March 31
(millions)	2023		2022
Drilling and completions	$	76.7	$	67.8
Well equipping and facilities		28.1		21.8
Land and geological/geophysical		1.9		13.7
Corporate		0.4		0.1
Capital expenditures	$	107.1	$	103.4

In Q1 2023, we completed an active development program with five rigs utilized across our Cardium, Peace River and Viking plays. During Q1 2023, we brought on 21 (20.6 net) wells which included 10 (9.6 net) wells in the Cardium, 8 (8.0 net) wells in Peace River, and 3 (3.0 net) wells in the Viking.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 9

Drilling

	Three months ended March 31
	2023				2022
(number of wells)	Gross		Net		Gross		Net
Oil		32		27		22		19
Injectors, stratigraphic and service		5		4		-		-
Total		37		31		22		19

The Company drilled 29 (28.8 net) operated wells during Q1 2023. In addition, the Company had a minor non-operated working interest on 8 (2.4 net) wells that were drilled by various partners during the period.

Environmental and Climate Change

The oil and natural gas industry has a number of environmental risks and hazards and is subject to regulation by all levels of government. Environmental legislation includes, but is not limited to, operational controls, site rehabilitation requirements and restrictions on emissions of various substances produced in association with oil and natural gas operations. Compliance with such legislation is expected to require additional expenditures and a failure to comply may result in fines and penalties which could, in the aggregate and under certain assumptions, become material.

Obsidian Energy is dedicated to our environmental, social, governance ("ESG") initiatives to manage the environmental impact from our operations through our environmental programs which include resource conservation, water management and site abandonment/ reclamation/ remediation. Operations are continuously monitored to minimize our environmental impact and allocate sufficient capital to reclamation and other activities to mitigate the impact on the areas in which the Company operates. Obsidian Energy voluntarily entered into the Government of Alberta’s Area Based Closure program (the "ABC program") which allowed the Company to accelerate abandonment activities, specifically on inactive properties, in a more cost-effective manner through 2020 and 2021. Beginning in 2022, the Company follows the new Alberta Energy Regulator ("AER") guidance under Directive 088 where a minimum amount of spending is required to abandon inactive sites. In August 2022, our minimum spending targets for 2023 were increased by the Alberta Government.

The Company received Alberta Site Rehabilitation Program ("ASRP") grants and allocations of over $30.2 million on a gross basis to the end of 2022 when the ASRP ended, a portion of which was received in allocation eligibility as an ABC program participant. Total grant support was determined once all project costs were finalized in 2023. These awards allowed the Company to expand our abandonment activities for wells, pipelines, facilities, and related site reclamation and thus reduced our decommissioning liability.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 10

Liquidity and Capital Resources

Net Debt

Net debt is the total of long-term debt and working capital deficiency as follows:

	As at
(millions)	March 31, 2023			December 31, 2022
Long-term debt
Syndicated credit facility	$	139.0		$	105.0
Senior unsecured notes		127.6			127.6
Unamortized discount of senior unsecured notes		(2.2	)		(2.3	)
Deferred financing costs		(5.1	)		(5.0	)
Total		259.3			225.3
Working capital deficiency
Cash		(0.1	)		(0.8	)
Accounts receivable		(84.3	)		(82.6	)
Prepaid expenses and other		(12.3	)		(10.7	)
Accounts payable and accrued liabilities		188.8			185.6
Total		92.1			91.5
Net debt (1)	$	351.4		$	316.8

(1)Non-GAAP financial measure. See "Non-GAAP and Other Financial Measures".

Net debt increased compared to December 31, 2022, as a result of higher drawings under our syndicated credit facility and increased working capital deficiency due to our active development program in Q1 2023.

Liquidity

The Company has a reserve-based syndicated credit facility with a borrowing limit of $200.0 million and senior unsecured notes totaling $127.6 million due in 2027. For further details on the Company’s debt instruments please refer to the “Financing” section of this MD&A.

The Company actively manages our debt portfolio and considers opportunities to reduce or diversify our debt capital structure. Management contemplates both operating and financial risks and takes action as appropriate to limit the Company’s exposure to certain risks. Management maintains close relationships with the Company’s lenders and agents to monitor credit market developments. These actions and plans aim to increase the likelihood of maintaining the Company’s financial flexibility and appropriate capital program, supporting the Company’s ongoing operations and ability to execute longer-term business strategies.

Financial Instruments

Obsidian Energy had the following financial instruments outstanding as at March 31, 2023. 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.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 11

	Notional Volume	Remaining Term	Swap Price	Fair value (millions)
Oil
WCS Differential	1,000 bbl/d	July 2023 - December 2023	($21.72)/bbl	$	(0.1	)
AECO
AECO Swap	47,393 mcf/d	April 2023 - October 2023	$3.55/mcf		11.6
AECO Swap	16,588 mcf/d	November 2023 - March 2024	$3.57/mcf		(0.3	)
Total				$	11.2

Refer to the Business Environment section above for a full list of hedges currently outstanding including contracts that were entered into subsequent to March 31, 2023.

Based on commodity prices and contracts in place at March 31, 2023, a $1.00 change in the price per barrel of liquids would change pre-tax unrealized risk management by $0.2 million and a $0.10 change in the price per mcf of natural gas would change pre-tax unrealized risk management by $1.3 million.

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

	Three months ended March 31
(millions)	2023			2022
Realized
Settlement of oil contracts loss	$	-		$	(17.5	)
Settlement of natural gas contracts gain		2.6			0.1
Total realized risk management gain (loss)	$	2.6		$	(17.4	)
Unrealized
Oil contracts loss	$	(0.1	)	$	(5.1	)
Natural gas contracts gain (loss)		5.1			(5.6	)
Total unrealized risk management gain (loss)		5.0			(10.7	)
Risk management gain (loss)	$	7.6		$	(28.1	)

Sensitivity Analysis

Estimated sensitivities to selected key assumptions on funds flow from operations for the 12 months subsequent to the date of this MD&A, including risk management contracts entered into to date, are based on forecasted results.

				Impact on funds flow from operations (1)
Change of:	Change			$ millions		$/share
Price per barrel of liquids	WTI US$1.00				9.5		0.12
Liquids production	1,000 bbl/day				32.1		0.39
Price per mcf of natural gas	AECO $0.10				0.8		0.01
Natural gas production	1 mmcf/day				0.9		0.01
Effective interest rate		1	%		0.9		0.01
Exchange rate ($US per $CAD)	$	0.01			5.5		0.07

(1) Non-GAAP financial measure or non-GAAP financial ratio. See “Non-GAAP and Other Financial Measures”.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 12

Contractual Obligations and Commitments

Obsidian Energy is committed to certain payments over the next five calendar years and thereafter as follows:

	2023		2024		2025		2026		2027		Thereafter		Total
Long-term debt (1)	$	-	$	-	$	139.0	$	-	$	127.6	$	-	$	266.6
Transportation		4.6		3.9		2.2		1.8		1.4		2.6		16.5
Interest obligations		16.1		26.5		19.9		15.2		15.2		-		92.9
Office lease		7.5		10.0		0.8		-		-		-		18.3
Lease liability		2.6		1.0		0.3		0.1		0.1		4.9		9.0
Decommissioning liability (2)		17.7		23.6		21.9		20.3		18.9		75.6		178.0
Total	$	48.5	$	65.0	$	184.1	$	37.4	$	163.2	$	83.1	$	581.3

(1)The 2025 figure includes our syndicated credit facility which has a term-out date of May 2025. The 2027 figure includes our senior unsecured notes due in July 2027. Refer to the Financing section above for further details. Historically, the Company has successfully renewed our syndicated credit facility.

(2)These amounts represent the inflated, discounted future reclamation and abandonment costs that are expected to be incurred over the life of the Company’s properties.

At March 31, 2023, the Company had an aggregate of $127.6 million in senior unsecured notes maturing in July 2027. Also, the revolving period of our syndicated credit facility is May 31, 2024, with a term out period to May 31, 2025. In the future, if the Company is unsuccessful in renewing or replacing the syndicated credit facility or obtaining alternate funding for some or all of the maturing amounts of the senior unsecured notes, it is possible that we could be required to seek other sources of financing, including other forms of debt or equity arrangements if available. Please see the Financing section of this MD&A for further details regarding our outstanding debt instruments.

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

Equity Instruments

Common shares issued:
As at March 31, 2023	82,442,210
Issuance under Stock option plan	72,190
As at May 3, 2023	82,514,400
Options outstanding:
As at March 31, 2023	2,463,452
Exercised	(72,190	)
As at May 3, 2023	2,391,262
RSUs outstanding:
As at March 31, 2023	1,274,474
Granted	4,070
Vested	(4,457	)
Forfeited	(9,903	)
As at May 3, 2023	1,264,184

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 13

Supplemental Production Disclosure

Outlined below is production by product type for each area and in total for the three months ended March 31, 2023 and 2022.

	Three months ended March 31
Daily production (boe/d)	2023		2022
Cardium
Light oil (bbl/d)		11,992		10,914
Heavy oil (bbl/d)		22		48
NGLs (bbl/d)		2,600		2,364
Natural gas (mmcf/d)		59		51
Total production (boe/d)		24,496		21,878
Peace River
Light oil (bbl/d)		-		-
Heavy oil (bbl/d)		6,077		5,594
NGLs (bbl/d)		10		4
Natural gas (mmcf/d)		5		5
Total production (boe/d)		6,885		6,469
Viking
Light oil (bbl/d)		668		143
Heavy oil (bbl/d)		99		104
NGLs (bbl/d)		38		22
Natural gas (mmcf/d)		3		3
Total production (boe/d)		1,267		690
Legacy
Light oil (bbl/d)		149		57
Heavy oil (bbl/d)		43		43
NGLs (bbl/d)		30		42
Natural gas (mmcf/d)		2		1
Total production (boe/d)		505		370
Total
Light oil (bbl/d)		12,809		11,114
Heavy oil (bbl/d)		6,241		5,789
NGLs (bbl/d)		2,678		2,432
Natural gas (mmcf/d)		69		60
Total production (boe/d)		33,153		29,407

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 14

Reconciliation of Cash flow from Operating Activities to Funds flow from Operations

	Mar. 31			Dec. 31			Sep. 30			Jun. 30			Mar. 31			Dec. 31			Sep. 30			Jun. 30
Three months ended	2023			2022			2022			2022			2022			2021			2021			2021
Cash flow from operating activities	$	72.6		$	126.5		$	121.4		$	125.0		$	83.9		$	62.6		$	65.5		$	42.2
Change in non-cash working capital		6.6			(20.9	)		(21.9	)		26.0			(18.0	)		6.2			(9.1	)		(2.3	)
Decommissioning expenditures		8.7			3.0			3.5			3.8			8.5			2.7			1.6			0.5
Onerous office lease settlements		2.3			2.3			2.3			2.3			2.3			2.1			2.3			2.4
Settlement of restricted share units		4.6			-			-			-			-			-			-			-
Deferred financing costs		(0.5	)		(0.4	)		(0.7	)		(0.7	)		(0.7	)		(1.1	)		(1.7	)		(1.7	)
Financing fees paid		-			-			-			-			-			0.3			-			0.3
Restructuring charges (1)		-			-			-			-			2.5			-			0.1			0.1
Transaction costs		-			-			-			-			0.1			3.4			-			-
Other expenses (1)		-			-			-			0.6			-			0.1			0.6			0.8
Commodities purchased from third parties		-			-			-			-			-			3.7			-			-
Funds flow from operations	$	94.3		$	110.5		$	104.6		$	157.0		$	78.6		$	80.0		$	59.3		$	42.3

(1)Excludes the non-cash portion of restructuring and other expenses.

Changes in Internal Control Over Financial Reporting (“ICFR”)

Obsidian Energy’s senior management has evaluated whether there were any changes in the Company's ICFR that occurred during the period beginning on January 1, 2023 and ending on March 31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company's ICFR. No changes to the Company’s ICFR were made during the quarter.

Off-Balance-Sheet Financing

Obsidian Energy has off-balance-sheet financing arrangements consisting of operating leases. The operating lease payments are summarized in the Contractual Obligations and Commitments section.

Non-GAAP and Other Financial Measures

Throughout this MD&A and in other materials disclosed by the Company, we employ certain measures to analyze financial performance, financial position, and cash flow. These non-GAAP and other financial measures do not have any standardized meaning prescribed by IFRS and therefore may not be comparable to similar measures provided by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than GAAP measures which are determined in accordance with IFRS, such as net income and cash flow from operating activities, as indicators of our performance.

Non-GAAP Financial Measures

“Free cash flow” is funds flow from operations less both capital and decommissioning expenditures and the Company believes it is a useful measure to determine and indicate the funding available to Obsidian Energy for investing and financing activities, including the repayment of debt, reallocation to existing business units, deployment into new ventures and return of capital to shareholders. See “Cash flow from Operating Activities, Funds Flow from Operations and Free Cash Flow” above for a reconciliation of free cash flow to cash flow from operating activities, being our nearest measure prescribed by IFRS.

“Funds flow from operations” is cash flow from operating activities before changes in non-cash working capital, decommissioning expenditures, onerous office lease settlements, the effects of financing related transactions from foreign exchange contracts and debt repayments, restructuring charges, transaction costs, certain other expenses, settlement of RSUs and certain commodities purchased from third parties, and is representative of cash related to continuing operations. Funds flow from operations is used to assess the Company’s ability to fund our planned capital programs. See “Cash flow from Operating Activities, Funds Flow from Operations and Free Cash Flow” and "Reconciliation of Cash flow from operating activities to Funds flow from operations" above for reconciliations of funds flow from operations to cash flow from operating activities, being our nearest measure prescribed by IFRS.

“Gross revenues” are production revenues including realized risk management gains and losses on commodity contracts and adjusted for commodities purchased from third parties and sales of commodities purchased from third

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 15

parties and is used to assess the cash realizations on commodity sales. See “Results of Operations – Production Revenues” above for a reconciliation of gross revenues to production revenues, being our nearest measure prescribed by IFRS.

"Sales” are production revenues plus sales of commodities purchased from third parties less commodities purchased from third parties and is used to assess the cash realizations on commodity sales before realized risk management gains and losses. See “Results of Operations – Production Revenues” above for a reconciliation of gross revenues to production revenues, being our nearest measure prescribed by IFRS.

“Net debt” is the total of long-term debt and working capital deficiency and is used by the Company to assess our liquidity. See “Liquidity and Capital Resources – Net Debt” above for a reconciliation of net debt to long-term debt, being our nearest measure prescribed by IFRS.

“Net operating costs” are calculated by deducting processing income and road use recoveries from operating costs and is used to assess the Company’s cost position. Processing fees are primarily generated by processing third party volumes at the Company’s facilities. In situations where the Company has excess capacity at a facility, it may agree with third parties to process their volumes to reduce the cost of operating/owning the facility. Road use recoveries are a cost recovery for the Company as we operate and maintain roads that are also used by third parties. See “Results of Operations – Expenses – Operating” above for a reconciliation of net operating costs to operating costs, being our nearest measure prescribed by IFRS.

“Netback” is revenue less royalties, net operating costs, transportation expenses and realized risk management gains and losses, and is used in capital allocation decisions and to economically rank projects. See "Results of Operations – Netbacks" above for a reconciliation of netbacks to sales.

Non-GAAP Financial Ratios

“Funds flow from operations – basic per share” is comprised of funds flow from operations divided by basic weighted average common shares outstanding. Funds flow from operations is a non-GAAP financial measure. See “Cash flow from Operating Activities, Funds Flow from Operations and Free Cash Flow” and “Reconciliation of Cash flow from operating activities to Funds flow from operations” above.

“Funds flow from operations – diluted per share” is comprised of funds flow from operations divided by diluted weighted average common shares outstanding. Funds flow from operations is a non-GAAP financial measure. See “Cash flow from Operating Activities, Funds Flow from Operations and Free Cash Flow” and “Reconciliation of Cash flow from operating activities to Funds flow from operations” above.

“Net operating costs per bbl”, “Net operating costs per mcf” and “Net operating costs per boe” are net operating costs divided by weighted average daily production on a per bbl, per mcf or per boe basis, as applicable. Net operating costs is a non-GAAP financial measure. See “Results of Operations – Expenses – Operating" above.

“Netback per bbl”, “Netback per mcf” and “Netback per boe” are netbacks divided by weighted average daily production on a per bbl, per mcf or per boe basis, as applicable. Management believes that netback per boe is a key industry performance measure of operational efficiency and provides investors with information that is also commonly presented by other oil and natural gas producers. Netback is a non-GAAP financial measure. See “Results of Operations – Netbacks” above.

Supplementary Financial Measures

Average sales prices for light oil, heavy oil, NGLs, total liquids and natural gas are supplementary financial measures calculated by dividing each of these components of production revenues by their respective production volumes for the periods.

“Cash flow from operating activities – basic per share” is comprised of cash flow from operating activities, as determined in accordance with IFRS, divided by basic weighted average common shares outstanding.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 16

“Cash flow from operating activities – diluted per share" is comprised of cash flow from operating activities, as determined in accordance with IFRS, divided by diluted weighted average common shares outstanding.

"G&A gross – per boe" is comprised of general and administrative expenses on a gross basis, as determined in accordance with IFRS, divided by boe for the period.

"G&A net – per boe" is comprised of general and administrative expenses on a net basis, as determined in accordance with IFRS, divided by boe for the period.

Oil and Natural Gas Information

Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.

Abbreviations

Oil		Natural Gas
bbl	barrel or barrels	mcf	thousand cubic feet
bbl/d	barrels per day	mcf/d	thousand cubic feet per day
boe	barrel of oil equivalent	mmcf	million cubic feet
boe/d	barrels of oil equivalent per day	mmcf/d	million cubic feet per day
MSW	Mixed Sweet Blend	mmbtu	Million British thermal unit
WTI	West Texas Intermediate	AECO	Alberta benchmark price for natural gas
WCS	Western Canadian Select	NGL	natural gas liquids
		LNG	liquefied natural gas
		NYMEX	New York Mercantile Exchange price for natural gas

References to Q1, Q2, Q3 and Q4 are to the three-month periods ended March 31, June 30, September 30 and December 31, respectively.

Forward-Looking Statements

Certain statements contained in this document constitute forward-looking statements or information (collectively "forward-looking statements") within the meaning of the "safe harbour" provisions of applicable securities legislation. In particular, this document contains forward-looking statements pertaining to, without limitation, the following: our strategy of maintaining moderate production growth, operational excellence, improving our debt leverage and delivering top quartile total shareholder return; our belief that our plan to focus development activity on our Cardium, Viking and Peace River assets will generate value for all stakeholders; that our Cardium position with a deep inventory of high return wells offers a predictable, liquids weighted, production profile capable of generating growth and sustainable free cash flow; that there is compelling Bluesky development and significant Clearwater potential for future heavy oil production growth and cash flow generation, offering further value for stakeholders; the opportunities that our Viking location provides the Company; our expectations for debt levels and targets; our expectations in connection with the NCIB; our plan to further enhance our liquidity by accessing our debt capacity; our expectations for decommissioning expenditures in 2023; the terms and conditions under our syndicated credit facility and senior unsecured notes; our expectations in connection with compliance with environmental legislation; that we are dedicated to managing our ESG initiatives to manage the environmental impact from our operations through the environmental programs which include resource conservation, water management and site abandonment / reclamation / remediation; how we plan to manage our debt portfolio; our hedges; all information disclosed under "Sensitivity Analysis; our future payment obligations as disclosed under "Contractual Obligations and Commitments"; that management contemplates both operating and financial risks and takes action as appropriate to limit the Company’s exposure to certain risks and that management maintains close relationships with the Company's lenders and agents to monitor credit market developments, and these actions and plans aim to increase the likelihood of maintaining the Company's financial flexibility and capital program, supporting the

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 17

Company's ongoing operations and ability to execute longer-term business strategies; and the sensitivity analysis and contractual obligations and commitments moving forward.

With respect to forward-looking statements contained in this document, the Company has made assumptions regarding, among other things: that the Company does not dispose of or acquire material producing properties or royalties or other interests therein; the impact of regional and/or global health related events, including that the COVID-19 pandemic will not have any adverse impact on energy demand and commodity prices in the future; that the Company's operations and production will not be disrupted by circumstances attributable to the COVID-19 pandemic and the responses of governments and the public to any resurgence of the pandemic; on energy demand and commodity prices; that the Company's operations and production will not be disrupted by circumstances attributable to the COVID-19 pandemic and the responses of governments and the public to the pandemic; global energy policies going forward, including the continued ability and willingness of members of OPEC and other nations to agree on and adhere to production quotas from time to time; our ability to qualify for (or continue to qualify for) new or existing government programs created as a result of the COVID-19 pandemic or otherwise, and obtain financial assistance therefrom, and the impact of those programs on our financial condition; our ability to execute our plans as described herein and in our other disclosure documents and the impact that the successful execution of such plans will have on our Company and our stakeholders; future capital expenditure and decommissioning expenditure levels; future operating costs and G&A costs and the impact of inflation thereon; future oil, natural gas liquids and natural gas prices and differentials between light, medium and heavy oil prices and Canadian, WTI and world oil and natural gas prices; future hedging activities; future oil, natural gas liquids and natural gas production levels; future exchange rates, interest rates and inflation rates; future debt levels; our ability to execute our capital programs as planned without significant adverse impacts from various factors beyond our control, including extreme weather events such as wild fires and flooding, infrastructure access and delays in obtaining regulatory approvals and third party consents; our ability to obtain equipment in a timely manner to carry out development activities and the costs thereof; our ability to market our oil and natural gas successfully to current and new customers; our ability to obtain financing on acceptable terms, including our ability (if necessary) to extend the revolving period and term out period of our credit facility, our ability to maintain the existing borrowing base under our credit facility, our ability (if necessary) to replace our syndicated bank facility and our ability (if necessary) to finance the repayment of our senior unsecured notes on maturity; and our ability to add production and reserves through our development and exploitation activities.

Although the Company believes that the expectations reflected in the forward-looking statements contained in this document, and the assumptions on which such forward-looking statements are made, are reasonable, there can be no assurance that such expectations will prove to be correct. Readers are cautioned not to place undue reliance on forward-looking statements included in this document, as there can be no assurance that the plans, intentions or expectations upon which the forward-looking statements are based will occur. By their nature, forward-looking statements involve numerous assumptions, known and unknown risks and uncertainties that contribute to the possibility that the forward-looking statements contained herein will not be correct, which may cause our actual performance and financial results in future periods to differ materially from any estimates or projections of future performance or results expressed or implied by such forward-looking statements. These risks and uncertainties include, among other things: the possibility that we change our budgets (including our capital expenditure budgets) in response to internal and external factors, including those described herein; the possibility that the Company will not be able to continue to successfully execute our business plans and strategies in part or in full, and the possibility that some or all of the benefits that the Company anticipates will accrue to our Company and our stakeholders as a result of the successful execution of such plans and strategies do not materialize; the possibility that the Company ceases to qualify for, or does not qualify for, one or more existing or new government assistance programs, that the impact of such programs falls below our expectations, that the benefits under one or more of such programs is decreased, or that one or more of such programs is discontinued; the impact on energy demand and commodity prices of regional and/or global health related events, including any resurgence of the COVID-19 pandemic, and the responses of governments and the public thereto, including the risk that the amount of energy demand destruction and/or the length of the decreased demand exceeds our expectations; the risk that there is another significant decrease in the valuation of oil and natural gas companies and their securities and in confidence in the oil and natural gas industry generally, whether caused by a resurgence of the COVID-19 pandemic, the worldwide transition towards less reliance on fossil fuels and/or other factors; the risk that the financial capacity of the Company's contractual counterparties is adversely affected and potentially their ability to perform their contractual obligations; the possibility that the revolving period and/or term out period of our credit facility and the maturity date of our senior unsecured notes is not extended (if necessary), that the borrowing base under our credit facility is

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 18

reduced, that the Company is unable to renew or refinance our credit facilities on acceptable terms or at all and/or finance the repayment of our senior unsecured notes when they mature on acceptable terms or at all and/or obtain new debt and/or equity financing to replace our credit facilities and/or senior unsecured notes or to fund other activities; the possibility that we are forced to shut-in production, whether due to commodity prices decreasing, extreme weather events or other factors; the risk that OPEC and other nations fail to agree on and/or adhere to production quotas from time to time that are sufficient to balance supply and demand fundamentals for oil; general economic and political conditions in Canada, the U.S. and globally, and in particular, the effect that those conditions have on commodity prices and our access to capital; industry conditions, including fluctuations in the price of oil, natural gas liquids and natural gas, price differentials for oil and natural gas produced in Canada as compared to other markets, and transportation restrictions, including pipeline and railway capacity constraints; fluctuations in foreign exchange, including the impact of the Canadian/U.S. dollar exchange rate on our revenues and expenses; fluctuations in interest rates, including the effects of increased interest rates on our borrowing costs and on economic activity, and including the risk that higher interest rates cause or contribute to the onset of a recession; the risk that our costs increase significantly due to ongoing high levels of inflation, supply chain disruptions and/or other factors, adversely affecting our profitability; unanticipated operating events or environmental events that can reduce production or cause production to be shut-in or delayed (including extreme cold during winter months, wild fires and flooding); the risk that wars and other armed conflicts adversely affect world economies and the demand for oil and natural gas, including the ongoing war between Russian and Ukraine; the possibility that fuel conservation measures, alternative fuel requirements, increasing consumer demand for alternatives to hydrocarbons, government mandates requiring the sale of electric vehicles, and technological advances in fuel economy and renewable energy generation systems could permanently reduce the demand for oil and natural gas and/or permanently impair the Company's ability to obtain financing and/or insurance on acceptable terms or at all, and the possibility that some or all of these risks are heightened as a result of the response of governments, financial institutions and consumers to the COVID-19 pandemic and/or public opinion and/or special interest groups; and the other factors described under "Risk Factors" in our Annual Information Form and described in our public filings, available in Canada at www.sedar.com and in the United States at www.sec.gov. Readers are cautioned that this list of risk factors should not be construed as exhaustive.

The forward-looking statements contained in this document speak only as of the date of this document. Except as expressly required by applicable securities laws, the Company does not undertake any obligation to publicly update any forward-looking statements. The forward-looking statements contained in this document are expressly qualified by this cautionary statement.

Additional Information

Additional information relating to Obsidian Energy, including Obsidian Energy’s Annual Information Form, is available on the Company’s website at www.obsidianenergy.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.

OBSIDIAN ENERGY FIRST QUARTER 2023 MANAGEMENT’S DISCUSSION AND ANALYSIS 19

EX-99

Exhibit 99.3

Obsidian Energy Ltd.

Consolidated Balance Sheets

		As at
(CAD millions, unaudited)	Note	March 31, 2023			December 31, 2022
Assets
Current
Cash		$	0.1		$	0.8
Accounts receivable			84.3			82.6
Risk management	7		11.6			6.2
Prepaid expenses and other			12.3			10.7
			108.3			100.3
Non-current
Property, plant and equipment	3		1,913.1			1,857.6
Deferred income tax	11		236.7			246.4
			2,149.8			2,104.0
Total assets		$	2,258.1		$	2,204.3
Liabilities and Shareholders’ Equity
Current
Accounts payable and accrued liabilities		$	188.8		$	185.6
Current portion of lease liabilities	5		2.6			3.2
Current portion of provisions	6		32.4			34.1
Risk management	7		0.4			-
			224.2			222.9
Non-current
Long-term debt	4		259.3			225.3
Lease liabilities	5		2.9			2.8
Provisions	6		161.1			165.7
Other non-current liabilities			2.9			7.9
			650.4			624.6
Shareholders’ equity
Shareholders’ capital	9		2,221.9			2,221.9
Other reserves			98.7			101.2
Deficit			(712.9	)		(743.4	)
			1,607.7			1,579.7
Total liabilities and shareholders’ equity		$	2,258.1		$	2,204.3

Subsequent event (Note 7)

Commitments and contingencies (Note 12)

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY FIRST QUARTER 2023 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 1

Obsidian Energy Ltd.

Consolidated Statements of Income

		Three months ended March 31
(CAD millions, except per share amounts, unaudited)	Note	2023			2022
Production revenues	8	$	180.9		$	203.7
Processing fees	8		3.6			1.9
Royalties			(25.1	)		(30.0	)
Sales of commodities purchased from third parties			5.4			3.1
			164.8			178.7
Other income	8		1.9			1.5
Government decommissioning assistance	13		(0.4	)		13.4
Risk management gain (loss)	7		7.6			(28.1	)
			173.9			165.5
Expenses
Operating			49.0			40.3
Transportation			9.7			7.3
Commodities purchased from third parties			4.6			2.8
General and administrative			4.8			4.1
Share-based compensation	10		2.2			24.1
Depletion, depreciation and impairment	3		51.7			51.4
Foreign exchange gain			-			(0.7	)
Financing	4		11.7			9.8
Restructuring			-			2.5
Transaction costs			-			0.1
			133.7			141.7
Income before taxes			40.2			23.8
Deferred income tax expense	11		9.7			-
Net and comprehensive income		$	30.5		$	23.8
Net income per share
Basic		$	0.37		$	0.29
Diluted		$	0.36		$	0.28
Weighted average shares outstanding (millions)
Basic	9		82.0			81.2
Diluted	9		83.9			83.6

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY FIRST QUARTER 2023 INTERIM CONSOLIDATED FINANCIAL STATEMENTS 2

Obsidian Energy Ltd.

Consolidated Statements of Cash Flows

		Three months ended March 31
(CAD millions, unaudited)	Note	2023			2022
Operating activities
Net income		$	30.5		$	23.8
Government decommissioning assistance	13		0.4			(13.4	)
Depletion, depreciation and impairment	3		51.7			51.4
Financing	4		5.4			3.5
Share-based compensation	10		2.1			1.4
Unrealized risk management loss (gain)	7		(5.0	)		10.7
Foreign exchange gain			-			(0.7	)
Deferred income tax expense	11		9.7			-
Decommissioning expenditures	6		(8.7	)		(8.5	)
Onerous office lease settlements	6		(2.3	)		(2.3	)
Settlement of RSUs			(4.6	)		-
Change in non-cash working capital			(6.6	)		18.0
			72.6			83.9
Investing activities
Capital expenditures	3		(107.1	)		(103.4	)
Change in non-cash working capital			1.5			36.8
			(105.6	)		(66.6	)
Financing activities
Increase (decrease) in long-term debt	4		34.0			(9.7	)
Repayment of senior secured notes/PROP limited recourse loan			-			(12.6	)
Financing fees paid			(0.6	)		-
Lease liabilities settlements	5		(1.1	)		(1.0	)
Exercised compensation plans			-			1.0
			32.3			(22.3	)
Change in cash and cash equivalents			(0.7	)		(5.0	)
Cash and cash equivalents, beginning of period			0.8			7.3
Cash and cash equivalents, end of period		$	0.1		$	2.3

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY FIRST QUARTER 2023 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, 2023		$	2,221.9	$	101.2		$	(743.4	)	$	1,579.7
Net and comprehensive income			-		-			30.5			30.5
Share-based compensation	10		-		2.1			-			2.1
Issued on exercise of equity compensation plans	9		-		(4.6	)		-			(4.6	)
Balance at March 31, 2023		$	2,221.9	$	98.7		$	(712.9	)	$	1,607.7

(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			-		-			23.8			23.8
Share-based compensation	10		-		1.4			-			1.4
Issued on exercise of equity compensation plans	9		7.4		(6.4	)		-			1.0
Balance at March 31, 2022		$	2,221.2	$	98.2		$	(1,529.7	)	$	789.7

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY FIRST QUARTER 2023 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's registered office is located at Suite 200, 207 - 9th Avenue S.W. Calgary, Alberta, Canada T2P 1K3. 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.

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. Results from acquired properties are included in Obsidian Energy’s reported results subsequent to the closing date and results from properties sold are included until the closing date.

All intercompany balances, transactions, income and expenses are eliminated on consolidation.

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, 2022. Additionally, 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, 2022.

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 May 3, 2023.

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 5

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

Oil and Gas assets/ Facilities, Corporate assets

Cost	Three months ended March 31, 2023			Year ended December 31, 2022
Balance, beginning of period	$	10,931.7		$	10,528.7
Capital expenditures		107.1			314.8
Property acquisitions		-			4.6
Net decommissioning changes		(0.4	)		83.6
Balance, end of period	$	11,038.4		$	10,931.7

Accumulated depletion and depreciation	Three months ended March 31, 2023		Year ended December 31, 2022
Balance, beginning of period	$	9,079.4	$	9,194.6
Depletion and depreciation		50.7		170.4
Impairment		0.1		36.4
Impairment reversal		-		(322.0	)
Balance, end of period	$	9,130.2	$	9,079.4

			As at
Net book value	March 31, 2023		December 31, 2022
Total	$	1,908.2	$	1,852.3

Right-of-use assets

The following table includes a break-down of the categories for right-of-use assets.

Cost	Three months ended March 31, 2023		Year ended December 31, 2022
Balance, beginning of period	$	25.8	$	24.8
Additions		0.5		1.0
Balance, end of period	$	26.3	$	25.8

Accumulated amortization	Three months ended March 31, 2023		Year ended December 31, 2022
Balance, beginning of period	$	20.5	$	16.8
Amortization		0.9		3.7
Balance, end of period	$	21.4	$	20.5

			As at
Net book value	March 31, 2023		December 31, 2022
Total	$	4.9	$	5.3

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	March 31, 2023		December 31, 2022
Oil and Gas assets, Facilities, Corporate assets	$	1,908.2	$	1,852.3
Right-of-use assets		4.9		5.3
Total	$	1,913.1	$	1,857.6

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 6

At March 31, 2023, 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 quarter of 2023, we recorded a $0.1 million impairment in our Legacy CGU due to 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
	March 31, 2023			December 31, 2022
Syndicated credit facility	$	139.0		$	105.0
Senior unsecured notes
11.95% $127.6 million, maturing July 27, 2027		127.6			127.6
Total		266.6			232.6
Unamortized discount of senior unsecured notes		(2.2	)		(2.3	)
Deferred financing costs		(5.1	)		(5.0	)
Total long-term debt	$	259.3		$	225.3
Current portion	$	-		$	-
Non-current portion	$	259.3		$	225.3

The Company has a reserve-based syndicated credit facility which is subject to a semi-annual borrowing base redetermination. The aggregate amount available under the syndicated credit facility is $200.0 million which was increased in March 2023, previously $175.0 million, as part of our semi-annual borrowing base redetermination (typically completed in May and November of each year). At that time, the revolving period and maturity dates under the syndicated credit facility were extended to May 31, 2024 and May 31, 2025, respectively.

The Company has senior unsecured notes outstanding totaling $127.6 million which mature on July 27, 2027. They were initially issued at a price of $980.00 per $1,000.00 principal amount resulting in aggregate gross proceeds of $125.0 million and at an interest rate of 11.95 percent. The senior unsecured notes are direct senior unsecured obligations of Obsidian Energy ranking equal with all other present and future senior unsecured indebtedness of the Company. As part of the terms of the senior unsecured notes, the Company is required to provide a repurchase offer in certain circumstances to an aggregate amount of $63.8 million (the "Repurchase Offer"), based on free cash flow for the six months ended June 30 (typically offered in August) and based on free cash flow for the six months ended December 31 (typically offered in March). Minimum available liquidity thresholds and projected leverage ratios under the Company's syndicated credit facilities are also required to be met in order to proceed with a Repurchase Offer.

At March 31, 2023, letters of credit totaling $5.1 million were outstanding (December 31, 2022 – $5.1 million) that reduce the amount otherwise available to be drawn on our syndicated credit facility.

Financing expense consists of the following:

	Three months ended March 31
	2023		2022
Interest	$	6.3	$	6.3
Accretion on decommissioning liability		4.4		2.5
Accretion on office lease provision		0.3		0.4
Accretion on other non-current liability		-		0.1
Accretion on discount of senior unsecured notes		0.1		-
Accretion on lease liabilities		0.1		0.1
Deferred financing costs		0.5		0.7
Debt modification		-		(0.3	)
Financing	$	11.7	$	9.8

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 7

5. Lease liabilities

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

	Three months ended March 31, 2023			Year ended December 31, 2022
Balance, beginning of period	$	6.0		$	8.7
Additions		0.5			1.0
Accretion charges		0.1			0.6
Lease payments		(1.1	)		(4.3	)
Balance, end of period	$	5.5		$	6.0
Current portion	$	2.6		$	3.2
Non-current portion	$	2.9		$	2.8

6. Provisions

	As at
	March 31, 2023		December 31, 2022
Decommissioning liability	$	178.0	$	182.3
Office lease provision		15.5		17.5
Total	$	193.5	$	199.8
Current portion	$	32.4	$	34.1
Non-current portion	$	161.1	$	165.7

Decommissioning liability

At March 31, 2023, the decommissioning liability was determined by applying an inflation factor of 2.0 percent (December 31, 2022 - 2.0 percent) and the inflated amount was discounted using a credit-adjusted rate of 10.0 percent (December 31, 2022 – 10.0 percent) over the expected useful life of the underlying assets, currently extending over 50 years into the future. At March 31, 2023, the total decommissioning liability on an undiscounted, uninflated basis was $581.9 million (December 31, 2022 - $582.7 million).

Changes to the decommissioning liability were as follows:

	Three months ended March 31, 2023			Year ended December 31, 2022
Balance, beginning of period	$	182.3		$	121.6
Net liabilities added (1)		0.1			0.3
Increase (decrease) due to changes in estimates		(0.5	)		83.3
Liabilities settled		(8.7	)		(18.8	)
Government decommissioning assistance		0.4			(15.7	)
Accretion charges		4.4			11.6
Balance, end of period	$	178.0		$	182.3
Current portion	$	23.6		$	25.4
Non-current portion	$	154.4		$	156.9

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

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 8

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, 2022– 6.5 percent) over the remaining life of the lease contracts, extending into 2025.

Changes to the office lease provision were as follows:

	Three months ended March 31, 2023			Year ended December 31, 2022
Balance, beginning of period	$	17.5		$	25.6
Decrease due to changes in estimates		-			(0.3	)
Settlements		(2.3	)		(9.2	)
Accretion charges		0.3			1.4
Balance, end of period	$	15.5		$	17.5
Current portion	$	8.8		$	8.7
Non-current portion	$	6.7		$	8.8

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 March 31, 2023, the fair values of these financial instruments approximate their carrying amounts.

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 March 31, 2023 and December 31, 2022, 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.

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

Risk management asset (liability)	Three months ended March 31, 2023			Year ended December 31, 2022
Balance, beginning of period	$	6.2		$	(2.4	)
Unrealized gain (loss) on financial instruments:
Oil		(0.1	)		4.0
Natural gas		5.1			4.6
Total fair value, end of period	$	11.2		$	6.2
Current asset portion	$	11.6		$	6.2
Current liability portion	$	(0.4	)	$	-

Obsidian Energy had the following financial instruments outstanding as at March 31, 2023. 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.

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 9

	Notional Volume	Remaining Term	Swap Price	Fair value (millions)
Oil
WCS Differential	1,000 bbl/d	July 2023 - December 2023	($21.72)/bbl	$	(0.1	)
AECO
AECO Swap	47,393 mcf/d	April 2023 - October 2023	$3.55/mcf		11.6
AECO Swap	16,588 mcf/d	November 2023 - March 2024	$3.57/mcf		(0.3	)
Total				$	11.2

Subsequent to March 31, 2023, the Company entered into the following additional financial hedges:

	Notional Volume	Remaining Term	Swap Price
Oil
WTI Swap	1,900 bbl/d	April 2023	$111.33/bbl
AECO
AECO Swap	2,536 mcf/d	June 2023 - October 2023	$2.00/mcf
AECO Swap	10,000 mcf/d	November 2023 - March 2024	$3.29/mcf

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

	Three months ended March 31
	2023			2022
Realized
Settlement of oil contracts loss	$	-		$	(17.5	)
Settlement of natural gas contracts gain		2.6			0.1
Total realized risk management gain (loss)	$	2.6		$	(17.4	)
Unrealized
Oil contracts loss	$	(0.1	)	$	(5.1	)
Natural gas contracts gain (loss)		5.1			(5.6	)
Total unrealized risk management gain (loss)		5.0			(10.7	)
Risk management gain (loss)	$	7.6		$	(28.1	)

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, liquidity risk and climate change 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 as at and for the year ended December 31, 2022.

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 10

8. Revenue and Other Income

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

	Three months ended March 31
	2023		2022
Oil	$	141.5	$	161.8
NGLs		14.3		27.0
Natural gas		25.1		14.9
Production revenues		180.9		203.7
Processing fees		3.6		1.9
Oil and natural gas sales		184.5		205.6
Other income		1.9		1.5
Oil and natural gas sales and other income	$	186.4	$	207.1

9. Shareholders’ equity

i) Issued

Shareholders’ capital	Common Shares		Amount
Balance, December 31, 2021		80,753,516	$	2,213.8
Issued pursuant to equity compensation plans (1)		1,688,694		8.1
Balance, December 31, 2022 and March 31, 2023		82,442,210	$	2,221.9

(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.

Pursuant to our return of capital initiative to our shareholders, in the first quarter of 2023 we received approval from the Toronto Stock Exchange for a normal course issuer bid ("NCIB"). Purchases under the NCIB will be subject to maintaining $65 million of liquidity and complying with the terms of our current credit facilities. The Company did not repurchase any common shares during the first quarter of 2023.

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 March 31
Average shares outstanding (millions)	2023		2022
Basic		82.0		81.2
Dilutive impact (1)		1.9		2.4
Diluted		83.9		83.6

(1)Includes impact of stock options and restricted share units.

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 11

10. Share-based compensation

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

Restricted Share Unit ("RSU") 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)	Three months ended March 31, 2023			Year ended December 31, 2022
Outstanding, beginning of period		874,130			1,167,351
Granted		923,620			537,225
Vested (1)		(521,596	)		(784,514	)
Forfeited		(1,680	)		(45,932	)
Outstanding, end of period		1,274,474			874,130

(1)Vested RSUs in 2023 were settled in cash and in 2022 were settled in shares.

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

	Three months ended March 31
	2023			2022
Average fair value of RSUs granted (per RSU)	$	9.79		$	10.55
Expected life of RSUs (years)		2.6			3.0
Expected forfeiture rate		0.1	%		0.5	%

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

The RPSU plan allows Obsidian Energy to grant PSUs to employees of the Company. 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)	Three months ended March 31, 2023			Year ended December 31, 2022
Outstanding, beginning of period		949,040			1,138,465
Granted		152,760			124,610
Vested		(291,710	)		(181,018	)
Forfeited		-			(133,017	)
Outstanding, end of period		810,090			949,040

	As at
PSU liability	March 31, 2023		December 31, 2022
Current	$	5.5	$	5.2
Non-current		1.0		6.1
Total	$	6.5	$	11.3

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 12

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.

	Three months ended March 31, 2023				Year ended December 31, 2022
Options	Number of Options		Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Outstanding, beginning of period		2,274,672	$	2.30		3,021,672		$	1.56
Granted		188,780		9.81		156,400			10.64
Exercised		-		-		(903,400	)		1.27
Forfeited		-		-		-			-
Outstanding, end of period		2,463,452	$	2.88		2,274,672		$	2.30
Exercisable, end of period		788,600	$	2.13		749,498		$	1.69

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

	Three months ended March 31
	2023			2022
Average fair value of Options granted (per Option)	$	6.34		$	6.56
Expected volatility		82.4	%		87.0	%
Expected life of Options (years)		3.9			3.9
Expected forfeiture rate		0.2	%		0.3	%

Non-Treasury Incentive Award Plan (“NTIP”)

The NTIP 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	Three months ended March 31, 2023			Year ended December 31, 2022
Outstanding, beginning of period		689,228			1,093,800
Granted		-			3,400
Vested		(1,134	)		(363,871	)
Forfeited		-			(44,101	)
Outstanding, end of period		688,094			689,228

	As at
NTIP liability	March 31, 2023		December 31, 2022
Current	$	2.9	$	2.6
Non-current		1.9		1.8
Total	$	4.8	$	4.4

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 13

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	Three months ended March 31, 2023		Year ended December 31, 2022
Outstanding, beginning of period		1,811,245		2,018,499
Granted		29,740		42,509
Exercised		-		(249,763	)
Outstanding, end of period		1,840,985		1,811,245

	As at
DSU Liability	March 31, 2023		December 31, 2022
Current	$	15.9	$	16.6
Non-current		-		-
Total	$	15.9	$	16.6

At March 31, 2023, the Company had no outstanding DSUs that were redeemable.

Share-based compensation

Share-based compensation consisted of the following:

	Three months ended March 31
	2023			2022
DSUs	$	(0.7	)	$	12.1
PSUs		0.4			6.0
NTIP		0.4			4.6
Cash settled share-based incentive plans	$	0.1		$	22.7
RSUs	$	1.8		$	0.8
Options		0.3			0.6
Equity settled share-based incentive plans		2.1			1.4
Share-based compensation	$	2.2		$	24.1

The share price used in the fair value calculation of the DSU, NTIP and PSU obligations at March 31, 2023 was $8.63 per share (2022 – $11.08).

11. Deferred income tax asset

	Three months ended March 31, 2023			Year ended December 31, 2022
Balance, beginning of period	$	246.4		$	-
Deferred income tax expense		(9.7	)		-
Recognition of deferred income tax asset		-			246.4
Balance, end of period	$	236.7		$	246.4

The Company recorded a deferred tax asset in 2022, as we expect to have sufficient taxable profits in future years in order to fully utilize the remaining deferred tax asset balance. The deferred tax asset is reduced by net income for the period on an after-tax basis.

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 14

12. 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.

13. Government grants

The Company received grant allocations under the Alberta Site Rehabilitation Program (“ASRP”) beginning in 2020. The ASRP ended on December 31, 2022, however, costs were able to be submitted into 2023. These awards allowed the Company to expand our abandonment activities for wells, pipelines, facilities, and related site reclamation and thus reduce our decommissioning liability. The Company's grants were adjusted by $0.4 million during the first quarter of 2023 (2022 – $13.4 million of grant utilization).

OBSIDIAN ENERGY FIRST QUARTER 2023   NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS 15

EX-99

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Stephen Loukas, President and Chief Executive Officer of Obsidian Energy Ltd., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together the “interim filings”) of Obsidian Energy Ltd.(the “issuer”) for the interim period ended March 31, 2023.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 N/A.

5.3 N/A.

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2023and ended on March 31, 2023that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 4, 2023

(signed) “Stephen Loukas”

_______________________

Stephen Loukas

President & Chief Executive Officer

EX-99

Exhibit 99.5

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Peter Scott, Senior Vice President and Chief Financial Officer of Obsidian Energy Ltd., certify the following:

1. Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Obsidian Energy Ltd.(the “issuer”) for the interim period ended March 31, 2023.

2. No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.

3. Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.

4. Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer.

5. Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings

(a) designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that

(i) material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and

(ii) information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and

(b) designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP.

5.1 Control framework: The control framework the issuer’s other certifying officer(s) and I used to design the issuer’s ICFR is the framework set forth in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

5.2 N/A.

5.3 N/A.

6. Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on January 1, 2023and ended on March 31, 2023that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 4, 2023

(signed) “Peter Scott”

_______________________

Peter Scott

Senior Vice President and Chief Financial Officer