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 2021

Commission File Number 1-32895

Obsidian Energy Ltd.

(Translation of registrant’s name into English)

Suite 200, 207 – 9^th 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 7, 2021.

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

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EXHIBIT INDEX

Exhibit	Description
99.1	News Release, dated May 7, 2021
99.2	Management’s Discussion and Analysis for the three months ended March 31, 2021
99.3	Financial Statements for the three months ended March 31, 2021
99.4	Quarterly Certification of the Chief Executive Officer under Canadian law
99.5	Quarterly Certification of the Chief Financial Officer under Canadian law

EX-99.1

Exhibit 99.1

Obsidian Energy Announces First Quarter 2021 Results and Successful First Half Development Program

•    Successful completion of nine well, first half 2021 drilling program in Cardium

•    Robust initial well results with first five wells on-stream; completion activity commenced on remaining four wells

•    Free cash flow generation results in lower net debt

CALGARY, May 7, 2021 - OBSIDIAN ENERGY LTD. (TSX – OBE, OTCQX – OBELF) (“Obsidian Energy”, the “Company”, “we”, “us” or “our”) is pleased to report strong operating and financial results for the first quarter 2021.

	Three Months Ended March 31
	2021			2020
FINANCIAL
(millions, except per share amounts)
Cash flow from operations		28.1			31.4
Basic per share ($/share)		0.38			0.43
Diluted per share ($/share)		0.37			0.43
Funds flow from operations1		36.3			36.3
Basic per share ($/share)1		0.49			0.50
Diluted per share ($/share)1		0.48			0.50
Net income (loss)		23.2			(747.6	)
Basic per share ($/share)		0.32			(10.24	)
Diluted per share ($/share)		0.31			(10.24	)
Capital expenditures		29.5			40.6
Decommissioning expenditures		3.3			8.0
Net debt1		455.0			517.0
OPERATIONS
Daily Production
Light oil (bbls/d)		10,014			12,512
Heavy oil (bbls/d)		2,788			3,644
NGL (bbls/d)		2,056			2,239
Natural gas (mmcf/d)		50			52
Total production2 (boe/d)		23,225			27,092
Average sales price3
Light oil ($/bbl)		67.34			50.59
Heavy oil ($/bbl)		40.48			20.07
NGL ($/bbl)		38.20			22.52
Natural gas ($/mcf)		3.21			2.20
Netback1 ($/boe)
Sales price		44.21			32.17
Risk management gain (loss)		(2.44	)		4.47
Net sales price		41.77			36.64
Royalties		(2.68	)		(2.23	)
Net operating expenses1		(13.52	)		(12.04	)
Transportation		(1.79	)		(2.68	)
Netback1 ($/boe)		23.78			19.69

(1) The terms funds flow from operations (“FFO”) and their applicable per share amounts, “net debt”, “netback” and “net operating expenses” are non-GAAP measures. Please refer to the “Non-GAAP Measures” advisory section below for further details.

(2) Please refer to the “Oil and Gas Information Advisory” section below for information regarding the term “boe”.

(3) Before 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 months ended March 31, 2021 on our website at www.obsidianenergy.com, which will be filed on SEDAR and EDGAR in due course.

KEY FIRST QUARTER 2021 RESULTS

Commodity prices continued to improve during the first quarter, generating the highest funds flow from operations over the last four quarters and free cash flow that allowed for the pay down of debt. Net debt is now $62.0 million lower at $455.0 million at March 31, 2021 compared to the same period in 2020. Following suspension of our capital program through the majority of 2020, the Company successfully executed our expanded 2021 first half development program with the drilling of nine Cardium wells (including one well rig released in December 2020). Three of the wells were on production in March and two in April; initial production rates have been at internal expectations while costs came in below our budget. Completion operations have begun on the remaining four wells. We remain committed to restoring COVID-19 related production declines experienced in 2020 through our active development program and continuing to further reduce debt levels through free cash flow generation.

2021 First Quarter Financial Highlights

• Strong Funds Flow – FFO was $36.3 million ($0.49 per share) for the first quarter of 2021, in line with the first quarter of 2020. Higher oil prices in 2021 offset realized hedging gains and higher production volumes in 2020.

• Capital Discipline – Capital expenditures in the first quarter of 2021 totaled $29.5 million (2020: $40.6 million). First quarter 2021 capital expenditures were predominately spent on drilling six wells with three wells completed and on stream (2020: 10 wells drilled; three wells completed and on stream). Decommissioning expenditures totaled $3.3 million compared to $8.0 million in the same period in 2020.

• Debt Reduction – Our continued focus on debt reduction resulted in a decrease in net debt of 12 percent to $455.0 million at March 31, 2021, compared to $517.0 million at March 31, 2020. This included $386.0 million drawn on our syndicated credit facility (down from $407.0 million at March 31, 2020), $58.2 million of senior notes and $10.8 million of a working capital deficiency.

• Continued Low G&A Costs – G&A costs remained relatively consistent at $1.69 per boe in the first quarter of 2021 compared to $1.63 per boe in 2020, despite lower production volumes in 2021. On an absolute basis, G&A costs were $0.5 million lower at $3.5 million in the first quarter of 2021 compared to the same period in 2020.

• Operating Cost Management – Net operating costs of $13.52 per boe were under budget during the first quarter of 2021 but higher than $12.04 per boe in the first quarter of 2020. Lower production volumes and increased power costs, in part due to cold weather in February, impacted per boe results during the first quarter of 2021. In addition, the reduction of discretionary repair and maintenance activities, beginning in March 2020, due to decreasing oil prices as a result of the COVID-19 pandemic contributed to lower operating costs in 2020.

• Net Income – Net income of $23.2 million ($0.32 per share) in the first quarter of 2021 benefitted from higher oil prices and the Company’s overall lower cost structure. This compared to a net loss of $747.6 million ($10.24 per share) in 2020, largely due to the recording of non-cash impairments from the significantly lower forecasted oil price environment at the time.

2021 First Quarter Operational Highlights

• Solid Asset Performance – During 2020, the Company postponed virtually all development activity from late March to early December in response to the COVID-19 pandemic and the low commodity price environment. As a result, production declines led to lower production levels throughout 2020 and into 2021, realizing 23,225 boe/d in average production in the first quarter of 2021 compared to 27,092

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boe/d in the first quarter of 2020. We expect to increase production throughout 2021 and into 2022 with an active development program focused on restoring production to pre-COVID-19 levels.

• Robust Development Well Results – Our first half drilling program delivered strong initial production (“IP”) with our three wells on the 4-35 pad achieving top quartile rates compared to our wells drilled in the area since 2017.

• Extended Reach Drilling at Lower Well Capital Costs – We continued to improve drilling and completion efficiency on capital, design and execution over the quarter. The first half development program drilling costs were approximately six percent less with an increase in average drilled horizontal length of eight percent and completed lateral length of 10 percent as compared to our first half 2020 program. Our 2021 drilling results include a new Company pacesetter for wells with intermediate casing and a new Company-best well lateral length.

• Continued Reduction in Decommissioning Liabilities – We successfully abandoned a combined total of 107 net wells and 155 net kilometres of pipeline during the first quarter of 2021 through participation in the Area Based Closure (“ABC”) program and the Alberta Site Rehabilitation Program (“ASRP”), where we have utilized $4.8 million of net grants. As a result of these efforts, our undiscounted, uninflated decommissioning liability was reduced $12 million in the first quarter.

Production Volumes by Product and Producing Region Three Months Ended March 31, 2021
Area	Production (boe/d)		Light Oil (bbls/d)		Heavy Oil (bbls/d)		NGLs (bbls/d)		Gas (mmcf/d)
Cardium		19,056		9,803		47		1,985		43.3
Viking		794		157		123		40		2.8
Peace River		3,012		—		2,567		3		2.6
Key Development Areas		22,862		9,960		2,737		2,028		48.8
Legacy Areas		363		53		51		28		1.4
Key Development & Legacy Areas		23,225		10,014		2,788		2,056		50.2

2021 DEVELOPMENT PROGRAM UPDATE

We are pleased with our nine-well first half 2021 program in our high economic return Willesden Green Cardium area. All nine wells have been rig-released with five of the new Willesden Green wells commissioned with well IP rates as outlined below. All activity to date has been completed on schedule or early compared to our plan, and our program has been delivered below our capital budget estimates.

We achieved new levels of drilling accomplishments in our first half program with a new Company pacesetter Cardium well with intermediate casing (11.1 days and 5,349 metres depth from spud to rig release), saving over $0.2 million and finishing 1.5 days quicker than estimated. We also set a new Company record length in the Cardium with a measured depth of 5,576 metres (3,503 metres horizontal length), which is the longest Cardium well drilled for the Company.

In addition, our successful optimization program continues with $3.9 million invested in the first quarter out of a total of $8 million allocated for 2021 to capture highly attractive capital efficiencies.

Production rates for the new 2021 wells on-stream were as follows:

Well	IP10	IP30
4-35: Three Well Pad
102/12-33-043-08W5	910 boe/d (87% oil)	748 boe/d (74% oil)
102/04-33-043-08W5	849 boe/d (80% oil)	662 boe/d (65% oil)
100/03-25-043-08W5	690 boe/d (91% oil)	714 boe/d (73% oil)
13-19: Two Well Pad

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102/02-32-043-08W5	57 boe/d (91% oil)*	158 boe/d (76% oil)*
102/16-29-043-08W5	460 boe/d (75% oil)	311 boe/d (66% oil)

* Early rates depressed by extended frac fluid recovery, recent production rate of 220 boe/d (76% oil).

Given the current favourable ground conditions, completions activity began in early May on the remaining four wells in the first half program, giving the Company a head start on our second half activity plan. In addition, construction of several pad sites in our second half program has been completed; drilling activity will commence in July dependent upon weather conditions.

We expect to drill 23 wells (19.3 net) in our two-rig continuous drilling program in the second half of 2021, predominantly in our Willesden Green and Pembina Cardium assets. Combined with the nine (9.0 net) wells drilled in our first half 2021 program, we expect to bring 25 wells (22.8 net) on production in 2021 with the remaining seven wells (6.8 net) expected on production early in the first quarter of 2022. The Company has significant capability to scale our development drilling in response to changes in commodity prices.

Our proactive management has led to a reduction of our decommissioning liabilities by over 30 percent since December 31, 2018, on an uninflated and undiscounted basis. We remain committed to further reducing this obligation. Decommissioning activity will continue throughout the remainder of 2021 both under the ASRP and ABC programs. With the support of nearly $30 million of ASRP grants, we anticipate 511 net wells and 409 net kilometres of pipelines will be abandoned prior to the end of 2022, which is equivalent to approximately a 90 percent decrease in our Legacy inactive well inventory at year-end 2020.

2021 OUTLOOK AND GUIDANCE; 2022 FORECAST

Our 2021 budget and 2022 forecast are designed to steadily restore average production to approximately 25,400 to 26,400 boe/d in 2022, while also paying down debt. With a strong start to our 2021 development program, we expect to generate higher fourth quarter and exit production rates than achieved in 2020, while still meaningfully reducing debt levels. This is expected to result in an annualized fourth quarter 2021 net debt to EBITDA ratio of 2:1 (assuming mid-point of operational guidance and WTI of US$60/bbl). With first quarter 2021 results at or ahead of our budget, we remain on track to meet our 2021 guidance.

		2021E (Guidance)			2022E (Forecast 4)
Production 1	boe/d		23,300 – 23,800			25,400 – 26,400
Net Operating Expense	$/boe		$12.70 – $13.10			n/a
General & Administrative	$/boe		$1.65 – $1.85			n/a
Capital Expenditures	$ millions		$125 – $130			$102 - $117
Decommissioning Expenditures 2	$ millions		$8			$13
Based on midpoint of above guidance
Funds Flow from Operations	$ millions		$160 – $195	3		$195 - $255
Funds Flow from Operations	per share		$2.18 – $2.65	3		n/a
Free Cash Flow	$ millions		$25 – $60	3		$60 – $130
Pricing assumptions
WTI Range	US$/bbl		$55.00 – $65.00			$55.00 - $65.00
AECO	C/mcf		$2.79			$2.79
Foreign Exchange	CAD/USD		$1.27			$1.27

(1) Mid-point of guidance range: 10,600 bbl/d light oil, 2,800 bbl/d heavy oil, 1,950 bbl/d NGLs and 49.2 mmcf/d natural gas

(2) Decommissioning expenditures do not include grants and allocations to be utilized by the Company under the Alberta Site Rehabilitation program.

(3) Includes actual WTI and natural gas prices for the first quarter of 2021. WTI = US$57.84/bbl; AECO natural gas prices = CAD$3.15/mcf. Risk management (hedging) adjustments incorporated into 2021 guidance as at May 6, 2021.

(4) Forecast 2022 free cash flow and production profiles based on ~$110MM capital program, $13MM decommissioning expenditures and includes a 34 well drilling program. Opex modelled at $12.75/boe and G&A modelled at $1.70/boe.

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CLOSURE OF STRATEGIC REVIEW PROCESS

The Company has formally closed our previously announced strategic alternatives process, considering the successful completion of our syndicated credit facility and senior notes maturity extension to November 2022 and our stronger operational and improved financial position. However, we continue to pursue consolidation and merger/acquisition/disposition opportunities as part of our normal course of business to create incremental value for our stakeholders.

HEDGING UPDATE

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

Term	Notional Volume		Pricing (CAD)
April 2021		5,525 bbl/d	$	77.90/bbl
May 2021		4,625 bbl/d	$	79.64/bbl
June 2021		1,000 bbl/d	$	79.78/bbl

Additionally, the Company has the following physical contracts in place:

	Notional Volume		Term		Pricing (CAD)
Physical Oil Contracts1
WTI		571 bbl/d		Apr – Jun 2021	$	59.04/bbl
Light Oil Differential2 3
		1,245 bbl/d		Apr – Jun 2021	$	5.51/bbl
		1,280 bbl/d		Jul – Sep 2021	$	5.82/bbl
Light Oil Differential – USD2
		1,556 bbl/d		Apr – Jun 2021	US$	4.00/bbl
		1,539 bbl/d		Jul – Sep 2021	US$	4.42/bbl
Heavy Oil Differential4
		564 bbl/d		Jul – Sep 2021	$	14.85/bbl

(1) WTI, differentials and foreign exchange hedged to lock-in positive net operating income on certain heavy oil properties.

(2) Differentials completed on a WTI - MSW basis.

(3) USD transactions completed on a US$ WTI - US$ MSW basis and converted to Canadian dollars using a fixed foreign exchange ratio of CAD/USD $1.281 in the second quarter of 2021 and $1.279 in the third quarter of 2021.

(4) Differentials completed on a WTI - WCS basis.

The Company has the following natural gas hedges in place on a weighted average basis:

Term	Notional Volume		Pricing (CAD)
April 2021		26,065 mcf/d	$	2.83/mcf
May 2021		21,326 mcf/d	$	2.68/mcf
June 2021		21,326 mcf/d	$	2.67/mcf
July 2021		21,326 mcf/d	$	2.57/mcf
August 2021		21,326 mcf/d	$	2.57/mcf
September 2021		21,326 mcf/d	$	2.57/mcf
October 2021		21,326 mcf/d	$	2.57/mcf

ANNUAL GENERAL MEETING

The Company is pleased to announce that its Annual General Meeting (“AGM”) will be scheduled for Wednesday, June 16, 2021 at 9:00 am (Mountain Time). It is our intention to hold our AGM in person at

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the offices of Obsidian Energy depending on the Alberta Health guidelines in place on public gatherings at that time. Further announcements and information regarding the AGM will be made in due course.

UPDATED CORPORATE PRESENTATION

For further information on these and other matters, Obsidian Energy will post an updated quarterly corporate presentation 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. Boe/d means barrels of oil equivalent per day.

NON-GAAP MEASURES

Certain financial measures including FFO, FFO per share-basic, FFO per share-diluted, free cash flow, netback, net operating costs, net debt and EBITDA, included in this release do not have a standardized meaning prescribed by IFRS and therefore are considered non-GAAP measures; accordingly, they may not be comparable to similar measures provided by other issuers. FFO is cash flow from operating activities before changes in non-cash working capital, decommissioning expenditures, office lease settlements, the effects of financing related transactions from foreign exchange contracts and debt repayments and certain other expenses and is representative of cash related to continuing operations. FFO is used to assess the Company’s ability to fund its planned capital programs. See “Calculation of Funds Flow from Operations” below for a reconciliation of FFO to cash flow from operating activities, being its nearest measure prescribed by IFRS. Free cash flow is funds flow from operations less capital and decommissioning expenditures. Netback is the per unit of production amount of revenue less royalties, net operating expenses, transportation expenses and realized risk management gains and losses, and is used in capital allocation decisions and to economically rank projects. Net operating costs are calculated by deducting processing income and road use recoveries 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 as a means 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. Net debt is the total of long-term debt and working capital deficiency and is used by the Company to assess its liquidity. EBITDA is cash flow from operations excluding the impact of changes in non-cash working capital, decommissioning expenditures and financing expenses.

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CALCULATION OF FUNDS FLOW FROM OPERATIONS

	Three months ended March 31
(millions, except per share amounts)	2021			2020
Cash flow from operating activities	$	28.1		$	31.4
Change in non-cash working capital		10.3			(5.1	)
Decommissioning expenditures		3.3			8.0
Onerous office lease settlements		2.3			(1.2	)
Deferred financing costs		(1.0	)		—
Financing fees paid		4.1			—
Realized foreign exchange loss – debt maturities		0.3			—
Restructuring charges1		(2.0	)		0.3
Transaction costs		0.1			—
Other expenses		(9.2	)		2.9
Funds flow from operations	$	36.3		$	36.3
Per share
Basic per share	$	0.49		$	0.50
Diluted per share	$	0.48		$	0.50

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

ABBREVIATIONS

Oil		Natural Gas
bbl	barrel or barrels	mmcf	million cubic feet
bbl/d	barrels per day	mmcf/d	million cubic feet per day
boe	barrel of oil equivalent	AECO	Alberta benchmark price for natural gas
boe/d	barrels of oil equivalent per day	NGL	natural gas liquids
MSW	Mixed Sweet Blend
WTI	West Texas Intermediate

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. Please note that initial production and/or peak rates are not necessarily indicative of long-term performance or ultimate recovery. 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 SEDAR and EDGAR in due course; that we expect to increase production throughout 2021 and into 2022 with an active development program focused on restoring production to pre-COVID 19 levels; our expected 2021 optimization program; our expected timing for development activity and ability to respond to changes in commodity prices; our expected timing for rig-release, and completion for certain wells; our expectation for the ASRP and ABC programs in 2021 and 2022 and our commitment to further reducing or decommissioning liability; how are 2021 budget and 2022

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are designed and expectations for production and debt reduction; our expectation for annualize fourth quarter 2021 net debt to EBITDA ratio; our full year guidance including production, net operating expenses, G&A expenses, capital and decommissioning expenditures, FFO and FFO/share and free cash flow; that we will continue to pursue consolidation and merger/acquisition/disposition opportunities as part of our normal course of business to create incremental value for our stakeholders; our hedges; the date, time and location of the AGM; and when we will post our updated corporate presentation.

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 other than stated herein (provided that, except where otherwise stated, the forward-looking statements contained herein (including our guidance set out under “Outlook”) do not assume the completion of any transaction); the impact of regional and/or global health related events, including the ongoing COVID-19 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 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 (including the CEWS and ASRP) 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; 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 additional production due to the continuation of low commodity prices or the further deterioration of commodity prices and our expectations regarding when commodity prices will improve such that any remaining shut-in properties can be returned to production; 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 to renew or replace our syndicated bank facility and our ability to finance the repayment of our senior 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 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 with the COVID-19 pandemic and other regional and/or global health related events or otherwise, that the impact of such programs falls below our expectations, that the benefits under

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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 the ongoing COVID-19 pandemic, and the responses of governments and the public to the 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 the 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 that has been caused by the COVID-19 pandemic persists or worsens; the risk that the COVID-19 pandemic adversely affects the financial capacity of the Company’s contractual counterparties 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 notes is not further extended (if necessary), that the borrowing base under our credit facility is reduced, that the Company is unable to renew our credit facilities on acceptable terms or at all and/or finance the repayment of our senior notes when they mature on acceptable terms or at all and/or obtain debt and/or equity financing to replace one or both of our credit facilities and senior 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 notes; the possibility that we are forced to shut-in additional production or continue existing production shut-ins longer than anticipated, whether due to commodity prices failing to rise or decreasing further or changes to existing government curtailment programs or the imposition of new programs; the risk that OPEC, Russia 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 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. The forward-looking statements 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 OTCQX Market in the United States under the symbol “OBE” and “OBELF” respectively.

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:

9

Toll Free: 1-888-770-2633

E-mail: investor.relations@obsidianenergy.com

10

EX-99.2

Exhibit 99.2

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2021

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, 2021 and the Company’s audited consolidated financial statements and MD&A for the year ended December 31, 2020. The date of this MD&A is May 6, 2021. All dollar amounts contained in this MD&A are expressed in millions of Canadian dollars unless noted otherwise.

Certain financial measures such as funds flow from operations, funds flow from operations per share-basic, funds flow from operations per share-diluted, free cash flow, netback, net operating costs, gross revenues and net debt included in this MD&A do not have a standardized meaning prescribed by International Financial Reporting Standards (“IFRS”) and therefore are considered non-GAAP measures; accordingly, they may not be comparable to similar measures provided by other issuers. 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 Measures”, “Oil and Gas Information”, and “Forward-Looking Statements” included at the end of this MD&A.

Within this MD&A the Company has updated the presentation of our financial figures to disclose dollar figures rounded to the nearest hundred thousand. This may result in immaterial differences in the comparative figures.

Quarterly Financial Summary

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

Three months ended	Mar. 31 2021		Dec. 31 2020		Sep. 30 2020			June 30 2020			Mar. 31 2020			Dec. 31 2019			Sep. 30 2019			June 30 2019
Production revenues	$	92.2	$	72.8	$	75.4		$	48.2		$	79.0		$	111.6		$	90.1		$	107.8
Cash flow from operations		28.1		11.1		34.8			2.1			31.4			49.5			32.0			(2.7	)
Basic per share		0.38		0.15		0.47			0.03			0.43			0.68			0.44			(0.04	)
Diluted per share		0.37		0.15		0.47			0.03			0.43			0.68			0.44			(0.04	)
Funds flow from operations (1)		36.3		26.4		30.4			24.7			36.3			54.2			28.4			41.5
Basic per share		0.49		0.36		0.41			0.34			0.50			0.74			0.39			0.57
Diluted per share		0.48		0.36		0.41			0.34			0.50			0.74			0.39			0.57
Net income (loss)		23.2		0.2		(3.2	)		(21.1	)		(747.6	)		(543.2	)		(28.9	)		(159.6	)
Basic per share		0.32		0.01		(0.04	)		(0.29	)		(10.24	)		(7.44	)		(0.40	)		(2.19	)
Diluted per share	$	0.31	$	0.01	$	(0.04	)	$	(0.29	)	$	(10.24	)	$	(7.44	)	$	(0.40	)	$	(2.19	)
Production
Light oil (bbls/d)		10,014		10,055		10,952			12,800			12,512			12,246			10,802			12,453
Heavy oil (bbls/d)		2,788		2,895		2,823			1,966			3,644			3,718			3,991			4,059
NGLs (bbls/d)		2,056		2,087		2,244			2,278			2,239			2,095			2,192			2,201
Natural gas (mmcf/d)		50		52		54			53			52			52			51			55
Total (boe/d)		23,225		23,644		25,031			25,872			27,092			26,639			25,505			27,835

(1) Please refer to our prior quarterly filings for reconciliations of cash flow from operations to funds flow from operations.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   1

Cash flow from Operations and Funds Flow from Operations

	Three months ended March 31
(millions, except per share amounts)	2021			2020
Cash flow from operating activities	$	28.1		$	31.4
Change in non-cash working capital		10.3			(5.1	)
Decommissioning expenditures		3.3			8.0
Onerous office lease settlements		2.3			(1.2	)
Deferred financing costs		(1.0	)		—
Financing fees paid		4.1			—
Realized foreign exchange loss – debt repayment		0.3			—
Restructuring charges (1)		(2.0	)		0.3
Transaction costs		0.1			—
Other expenses		(9.2	)		2.9
Funds flow from operations	$	36.3		$	36.3
Per share – funds flow from operations
Basic per share	$	0.49		$	0.50
Diluted per share	$	0.48		$	0.50

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

In Q1 2021, funds flow from operations was comparable to Q1 2020 and cash flow from operations was slightly lower compared to Q1 2020 due to realized hedging gains and higher production volumes in 2020 which was offset by higher oil prices in Q1 2021. Beginning in March 2020, the Company restricted capital spending in response to the COVID-19 pandemic and resultant volatile commodity price market which ultimately led to lower production volumes. The Company re-started development activities in late 2020 with the first wells brought on production in March 2021.

Business Strategy

We believe our plan to primarily focus on our industry leading Cardium position offers a predictable, liquids weighted, production profile that is capable of generating sustainable value for all stakeholders. The Company recommenced drilling in our Willesden Green play in the Cardium in late 2020 where we have a significant inventory of high netback drilling opportunities. This activity started our 2021 development program which we expect to total $125 - $130 million of capital expenditures. With a strong start to our 2021 development program, we expect to generate higher fourth quarter and exit 2021 production rates than achieved in 2020, while still meaningfully reducing debt levels. With a continued constructive pricing environment, our program further positions us for additional production growth that generates even greater free cash flow in 2022.

In the second half of 2021, we intend to utilize a two-rig continuous drilling program with plans to drill 23 wells (19.3 net), predominantly in our Willesden Green and Pembina Cardium assets. Combined with the nine net wells drilled in the first half of the year, we expect to bring 25 wells (22.8 net) on production in 2021, with the remaining seven wells (6.8 net) expected on production early in Q1 2022. In addition, our successful optimization program continues with $8 million allocated for 2021 to capture further highly attractive capital efficiencies. The Company has significant capability to scale our development drilling in response to changes in commodity prices.

In Q1 2021, we continued our participation in the Alberta Site Restoration Program (“ASRP”) and Area-Based Closure program (“ABC” program), focusing on inactive fields in Northern Alberta. Our decommissioning activity in 2021 and 2022 will benefit from nearly $30 million (gross) of ASRP grants, of which $7.0 million (net) have been utilized through Q1 2021.

OBSIDIAN ENERGY FIRST QUARTER 2021 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 2021			Q4 2020			Q3 2020			Q2 2020			Q1 2020			Q4 2019			Q3 2019			Q2 2019
Benchmark prices
WTI oil ($US/bbl)	$	57.84		$	42.66		$	40.93		$	27.85		$	46.17		$	56.96		$	56.45		$	59.81
Edm mixed sweet par price (CAD$/bbl)		66.61			50.29			49.83			29.55			51.62			67.99			68.40			73.81
Western Canada Select (CAD$/bbl)		57.45			43.46			42.41			22.42			34.11			54.29			58.39			65.72
NYMEX Henry Hub ($US/mmbtu)		3.56			2.53			2.00			1.72			1.95			2.50			2.32			2.47
AECO Index (CAD$/mcf)		3.15			2.77			2.24			1.99			2.22			2.48			0.92			1.08
Foreign exchange rate (CAD$/$US)		1.266			1.303			1.332			1.386			1.345			1.320			1.321			1.338
Benchmark differentials
WTI - Edm Light Sweet ($US/bbl)		(5.24	)		(4.07	)		(3.51	)		(6.14	)		(7.58	)		(5.37	)		(4.66	)		(4.63	)
WTI - WCS Heavy ($US/bbl)		(12.47	)		(9.31	)		(9.08	)		(11.47	)		(20.53	)		(15.83	)		(12.24	)		(10.68	)
Average sales price (1)
Light oil (CAD$/bbl)		67.34			50.76			50.84			29.20			50.59			70.57			68.14			72.20
Heavy oil (CAD$/bbl)		40.48			30.00			29.54			5.98			20.07			41.80			40.44			42.63
NGLs (CAD$/bbl)		38.20			24.61			22.11			11.65			22.52			31.42			15.75			14.95
Total liquids (CAD$/bbl)		58.27			43.14			43.06			24.18			41.13			60.10			54.87			59.05
Natural gas (CAD$/mcf)	$	3.21		$	2.81		$	2.40		$	2.14		$	2.20		$	2.55		$	1.05		$	1.18

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

Oil

In Q1 2021, WTI averaged US$57.84 per barrel. WTI oil prices started 2021 close to US$50.00 per barrel and increased throughout the quarter with March settling at US$62.26 per barrel. The increase during the quarter was mainly due to OPEC+ maintaining current production levels as well as Saudi Arabia agreeing to additional voluntary cuts. In addition, demand has slowly improved from its lows due to relaxing of some COVID-19 restrictions and oil prices have benefitted from positive sentiment as vaccine rollouts continue to expand, which lately have been partially offset by the continuing emergence of COVID-19 variants.

Oil differentials also improved throughout Q1 2021 with MSW averaging US$5.24 per barrel and WCS averaging US$12.47 per barrel. In March, due to production disruptions impacting supply in Western Canada, both light (MSW) and heavy differentials (WCS) tightened further and settled at $4.24 and $11.42 per barrel, respectively.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   3

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

Term	Notional volume		Pricing
April 2021		5,525 bbl/d	$	77.90/bbl
May 2021		4,625 bbl/d	$	79.64/bbl
June 2021		1,000 bbl/d	$	79.78/bbl

Additionally, the Company has the following physical contracts in place:

	Notional volume		Term		Pricing
Physical Oil Contracts (1)
WTI		571 bbl/d		Apr – Jun 2021	$	59.04/bbl
Light Oil Differential (2) (3)
		1,245 bbl/d		Apr – Jun 2021	$	5.51/bbl
		1,230 bbl/d		Jul – Sep 2021	$	5.82/bbl
Light Oil Differential – USD (2)
		1,556 bbl/d		Apr – Jun 2021	US$	4.00/bbl
		1,539 bbl/d		Jul – Sep 2021	US$	4.42/bbl
Heavy Oil Differential (4)
		564 bbl/d		Jul – Sep 2021	$	14.85/bbl

(1) WTI, differentials and foreign exchange hedged to lock-in positive net operating income on certain heavy oil properties.

(2) Differentials completed on a WTI - MSW basis.

(3) USD transactions completed on a US$ WTI - US$ MSW basis and converted to Canadian dollars using a fixed foreign exchange ratio of CAD/USD $1.281 in the second quarter of 2021 and CAD/USD $1.279 in the third quarter of 2021.

(4) Differentials completed on a WTI - WCS basis.

Natural Gas

NYMEX Henry Hub natural gas averaged US$3.56 per mmbtu for Q1 2021. NYMEX prices started Q1 2021 at US$2.60 per mmbtu, dropping to a low of US$2.45 per mmbtu in mid-January before increasing to a high of US$23.86 per mmbtu in February as winter storms in the U.S. impacted demand.

In Alberta, AECO 5A averaged $3.15 per mcf for Q1 2021. AECO natural gas prices started January at a low of $2.44 per mcf and gradually increased. In February, cold weather in Western Canada caused prices to increase into the $3.00 per mcf range before rising to $6.33 per mcf in mid-February as winter storms in the U.S. increased export demand from Canada.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   4

The Company has the following natural gas hedges in place on a weighted average basis:

Term	Notional volume		Pricing
April 2021		26,100 mcf/d	$	2.83/mcf
May 2021		21,300 mcf/d	$	2.68/mcf
June 2021		21,300 mcf/d	$	2.67/mcf
July - October 2021		21,300 mcf/d	$	2.57/mcf

Average Sales Prices

	Three months ended March 31
	2021			2020		% change
Light oil (per bbl)	$	67.34		$	50.59		33
Heavy oil (per bbl)		40.48			20.07		>100
NGLs (per bbl)		38.20			22.52		70
Total liquids (per bbl)		58.27			41.13		42
Risk management (loss) gain (per bbl)		(3.82	)		6.47		n/a
Total liquids price, net (per bbl)		54.45			47.60		14
Natural gas (per mcf)		3.21			2.20		46
Risk management (loss) gain (per mcf)		—			0.04		(100	)
Natural gas net (per mcf)		3.21			2.24		43
Weighted average (per boe)		44.21			32.17		37
Risk management (loss) gain (per boe)		(2.44	)		4.47		n/a
Weighted average net (per boe)	$	41.77		$	36.64		14

RESULTS OF OPERATIONS

Production

	Three months ended March 31
Daily production	2021		2020		% change
Light oil (bbls/d)		10,014		12,512		(20	)
Heavy oil (bbls/d)		2,788		3,644		(23	)
NGLs (bbls/d)		2,056		2,239		(8	)
Natural gas (mmcf/d)		50		52		(4	)
Total production (boe/d)		23,225		27,092		(14	)

During 2020, the Company postponed virtually all development activity from late March to early December, in response to the COVID-19 pandemic and the low commodity price environment, which led to lower production levels throughout the year and in Q1 2021 due to base declines.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   5

Our decision to defer development spending for the majority of 2020 reduced production levels across all areas in the second half of 2020 and Q1 2021. Heavy oil production volumes in Peace River were also impacted by our decision to temporarily shut-in certain heavy oil production, with 250 boe per day continuing to be offline in Q1 2021. The Company is currently re-starting this shut-in production and expects to have it all back on-line by mid-2021.

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

	Three months ended March 31
Daily production (boe/d) (1)	2021		2020		% change
Cardium		19,056		21,739		(12	)
Peace River		3,012		4,040		(25	)
Alberta Viking		794		830		(4	)
Legacy		363		483		(25	)
Total		23,225		27,092		(14	)

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

Netbacks

	Three months ended March 31
							2021			2020
	Liquids			Natural Gas			Combined			Combined
	(bbl)			(mcf)			(boe)			(boe)
Operating netback:
Sales price (1)	$	58.27		$	3.21		$	44.21		$	32.17
Risk management gain (loss) (2)		(3.82	)		—			(2.44	)		4.47
Royalties		(3.69	)		(0.15	)		(2.68	)		(2.23	)
Transportation		(2.13	)		(0.20	)		(1.79	)		(2.68	)
Net operating costs		(18.00	)		(0.93	)		(13.52	)		(12.04	)
Netback	$	30.63		$	1.93		$	23.78		$	19.69
	(bbls/d)			(mmcf/d)			(boe/d)			(boe/d)
Production		14,858			50			23,225			27,092

(1) Includes the impact of commodities purchased and sold to/from third parties - $0.2 million (2020 – $0.3 million).

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

In 2021, netbacks were higher than the comparable period due to higher commodity prices as COVID-19 restrictions eased and vaccines started to be administered. This was partially offset by realized hedging losses and higher royalties due to higher oil prices, as well as higher operating costs due to increased activity levels.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   6

Production Revenues

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

	Three months ended March 31
(millions)	2021			2020
Production revenues	$	92.2		$	79.0
Realized risk management (loss) gain (1)		(5.1	)		11.0
Sales of commodities purchased		2.0			1.7
Less: Commodities purchased		(1.8	)		(1.4	)
Gross revenues	$	87.3		$	90.3

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

Production revenues were higher in 2021 due to increases in commodity prices, which was partially offset by lower production volumes. Gross revenues were lower in Q1 2021 mainly due to realized hedging losses during the period compared to gains in Q1 2020.

Change in Gross Revenues

(millions)
Gross revenues – January 1 – March 31, 2020	$	90.3
Decrease in liquids production		(13.5	)
Increase in liquids prices		22.6
Decrease in natural gas production		(0.5	)
Increase in natural gas prices		4.5
Decrease in realized oil risk management		(15.9	)
Decrease in realized natural gas risk management		(0.2	)
Gross revenues – January 1 – March 31, 2021 (1)	$	87.3

(1) Excludes processing fees and other income.

Royalties

	Three months ended March 31
	2021			2020
Royalties (millions)	$	5.7		$	5.4
Average royalty rate (1)		6	%		7	%
$/boe	$	2.68		$	2.23

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

For 2021, royalties increased from the comparable period largely due to higher oil prices.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   7

Expenses

	Three months ended March 31
(millions)	2021		2020
Net Operating	$	28.3	$	29.7
Transportation		3.7		6.6
Financing		9.9		11.2
Share-based compensation	$	2.7	$	0.7

	Three months ended March 31
(per boe)	2021		2020
Net Operating	$	13.52	$	12.04
Transportation		1.79		2.68
Financing		4.76		4.57
Share-based compensation	$	1.30	$	0.34

Operating

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

	Three months ended March 31
(millions)	2021			2020
Operating costs	$	30.9		$	32.8
Less processing fees		(1.6	)		(1.7	)
Less road use recoveries		(1.0	)		(1.4	)
Net Operating costs	$	28.3		$	29.7

In 2021, the Company continued to benefit from the cost saving initiatives that have been implemented over the past year resulting in a lower cost structure. During Q1 2021 the Canadian Emergency Wage Subsidy (“CEWS”) program reduced operating costs by $0.3 million.

Transportation

The Company continues to utilize multiple sales points in the Peace River area to increase realized prices. The increase in realized prices is partially offset by additional transportation costs. In 2020, the Company had certain take-or-pay contracts terminate which led to a reduction in transportation costs in 2021.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   8

Financing

Financing expense consists of the following:

	Three months ended March 31
(millions)	2021		2020
Interest on bank debt and senior notes	$	5.7	$	8.1
Advisor fees		0.7		2.2
Deferred financing costs		1.0		—
Unwinding of discount on lease liabilities		0.2		0.9
Loss on debt modification		2.3		—
Financing	$	9.9	$	11.2

Obsidian Energy’s debt structure includes short-term borrowings under our syndicated credit facility and term financing through our senior notes. Financing charges decreased from the comparable period mainly due to lower drawn balances under the Company’s syndicated credit facility. This was partially offset by a non-cash debt modification loss as a result of entering into an amending agreement on our senior notes, which extended term and increased interest rates, in March 2021.

The interest rates on the Company’s syndicated credit facility are subject to fluctuations in short-term money market rates as advances on the syndicated credit facility are generally made under short-term instruments. As at March 31, 2021, 87 percent (December 31, 2020 – 87 percent) of the Company’s outstanding debt instruments were exposed to changes in short-term interest rates.

The Company has a reserve-based syndicated credit facility which is subject to a semi-annual borrowing base redetermination typically in May and November of each year. During Q1 2021, the Company entered into an amending agreement with our banking syndicate whereby the aggregate amount drawn or available to be drawn under the syndicated credit facility is now set at $440 million. The $440 million of availability consists of a $225 million revolving syndicated credit facility and a $215 million non-revolving term loan.

Additionally, the following terms were included in the amending agreement:

• the revolving period under the syndicated credit facility has been extended to May 31, 2022, with the end date of the term period extended to November 30, 2022;

• the maturity date of the non-revolving term loan is also November 30, 2022;

• the next scheduled borrowing base redeterminations will occur on November 30, 2021 and May 31, 2022;

• a revolving period reconfirmation date will occur on January 17, 2022, whereby, on or prior to such date, the lenders may accelerate the end date of the revolving period to February 1, 2022. In this case, the end date of the term period would remain unchanged at November 30, 2022; and

• the Company’s revolving credit facility will have a one-time adjustment to reduce our undrawn availability to $35 million at December 31, 2021. Any borrowing availability at this time in excess of that amount will be used to reduce amounts outstanding on the non-revolving term loan and senior notes.

Additionally, during Q1 2021, the Company agreed with holders of our senior notes to extend the maturity dates of the notes due on November 30, 2021 to November 30, 2022 and to increase the interest rate on each series of our notes by approximately 2.1 percent.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   9

At March 31, 2021, the carrying value of the Company’s US dollar denominated senior notes was $58.2 million (December 31, 2020 – $60.3 million). In Q1 2021, the Company repaid senior notes in the amount of US$1.1 million (CAD $1.4 million) which resulted in a decrease in the carrying value. Additionally, a stronger Canadian dollar against the US dollar at the comparable balance sheet dates contributed to a lower carrying value. Summary information on the Company’s senior notes outstanding as at March 31, 2021 is as follows:

	Amount (millions)		Maturity date		Average interest rate			Weighted average remaining term (years)
2008 Notes	US$	4.0		November 30, 2022		8.52	%	1.7
2010 Q1 Notes	US$	9.5		November 30, 2022		7.97	%	1.7
2010 Q4 Notes	US$	20.8		November 30, 2022		7.06	%	1.7
2011 Notes	US$	12.0		November 30, 2022		6.91	%	1.7

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”), Deferred Share Unit Plan (“DSU plan”) and performance share units (“PSUs”) granted under the RPSU plan.

Share-based compensation expense consisted of the following:

	Three months ended March 31
(millions)	2021		2020
RSU grants	$	0.3	$	0.3
PSU grants		0.2		—
DSU plan		2.2		0.4
Share-based compensation	$	2.7	$	0.7

The share price used in the fair value calculation of the RPSU and DSU plan obligations at March 31, 2021 was $1.82 per share (2020 – $0.23). The share-based compensation for Options was insignificant in both periods.

General and Administrative Expenses (“G&A”)

	Three months ended March 31
(millions, except per boe amounts)	2021		2020
Gross	$	6.3	$	7.1
Per boe		3.01		2.88
Net		3.5		4.0
Per boe	$	1.69	$	1.63

The Company has continued to focus on G&A reductions, primarily related to head office and information technology costs, which resulted in lower absolute costs in 2021 compared to 2020. Additionally, the Company’s matching component under the employee retirement savings plan, which was temporarily suspended in May 2020, continued to be in effect through Q1 2021. Salaries, which were also temporarily reduced in May 2020 in response to the volatile commodity markets, were fully reinstated effective February 1, 2021.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   10

Restructuring and other expenses

	Three months ended March 31
(millions, except per boe amounts)	2021			2020
Restructuring	$	(2.0	)	$	0.3
Per boe		(0.95	)		0.12
Other		(9.2	)		2.9
Per boe	$	(4.41	)	$	1.16

Restructuring expenses in Q1 2021 include a settlement benefit of a prior cancelled office lease that resulted in a $2.0 million recovery of previously accrued costs.

In 2018, the Company fully utilized available insurance coverage relating to ongoing claims against former Penn West employees arising from the Company’s 2014 restatement of certain financial results when we were known as Penn West. A claim brought by the United States Securities and Exchange Commission (“SEC”) against Penn West was previously settled. The Company had been indemnifying two former employees pursuant to indemnity agreements in connection with the claims brought by the SEC arising out of the same restatement. In 2020, the SEC reached a settlement with the two former employees.

The Company continued to accrue for, but not pay, defense costs incurred on behalf of the two former employees and in Q1 2021 agreed to a settlement to pay $6.4 million of the defense costs equally over a 30-month period beginning in April 2021. As a result of the settlement, the Company recorded a recovery of previously accrued costs in Q1 2021 within Other in the Consolidated Statements of Income (Loss).

Depletion, Depreciation, Impairment and Accretion

	Three months ended March 31
(millions, except per boe amounts)	2021		2020
Depletion and depreciation (“D&D”)	$	24.5	$	44.0
D&D expense per boe		11.72		17.84
PP&E Impairment		1.0		762.9
PP&E Impairment per boe		0.49		309.38
Accretion		2.0		2.6
Accretion expense per boe	$	0.96	$	1.06

The Company’s D&D expense has decreased from the comparable period, primarily due to non-cash impairment charges recorded in Q1 2020. These impairment charges were recorded mainly due to lower forecast commodity prices and higher discount rates due to continued commodity price and market value volatility within the oil and natural gas industry.

During Q1 2020, the Company completed impairment tests across all of our CGU’s as a result of the low commodity price environment, primarily due to the impact of the COVID-19 pandemic and concerns regarding potential supply and demand implications. This led to the Company recording $762.9 million of non-cash impairments. Impairment losses related to PP&E may be reversed in future periods if commodity price forecasts materially improve.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   11

Taxes

As at March 31, 2021, the Company was in a net unrecognized deferred tax asset position of approximately $443.3 million (December 31, 2020 - $448.6 million). Since the Company has not recognized the benefit of deductible timing differences in excess of taxable timing differences, deferred tax expense (recovery) for the quarter is nil.

Foreign Exchange

Obsidian Energy records unrealized foreign exchange gains or losses to translate U.S. denominated senior notes and the related accrued interest to Canadian dollars using the exchange rates in effect on the balance sheet date. Realized foreign exchange gains or losses are recorded upon repayment of the senior notes.

The split between realized and unrealized foreign exchange gains or losses is as follows:

	Three months ended March 31
(millions)	2021			2020
Realized foreign exchange loss	$	0.3		$	—
Unrealized foreign exchange (gain)/loss		(1.0	)		5.5
Foreign exchange (gain)/loss	$	(0.7	)	$	5.5

In Q1 2021, the Company repaid senior notes in the amount of US$1.1 million which resulted in the realized foreign exchange loss.

Net Income/(Loss)

	Three months ended March 31
(millions, except per share amounts)	2021		2020
Net income/(loss)	$	23.2	$	(747.6	)
Basic per share		0.32		(10.24	)
Diluted per share	$	0.31	$	(10.24	)

In 2021, net income was associated with the Company’s strong netback which was supported by higher oil prices. Additionally, the Company recorded a recovery within Other in the Consolidated Statements of Income (Loss) as a result of a settlement on a previously accrued provision.

In 2020, the net loss was mainly due to non-cash, PP&E impairment charges as a result of lower forecasted commodity prices due to the impact of the COVID-19 pandemic and potential supply and demand implications.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   12

Capital Expenditures    

	Three months ended March 31
(millions)	2021		2020
Drilling and completions	$	21.1	$	30.1
Well equipping and facilities		7.4		10.2
Land and geological/geophysical		0.9		0.2
Corporate		0.1		0.1
Capital expenditures		29.5		40.6
Property dispositions, net		—		(0.1	)
Total capital expenditures	$	29.5	$	40.5

The Company began drilling our first half 2021 program in our Willesden Green play in the Cardium in December 2020 which continued throughout Q1 2021. The program expanded from seven to nine wells due to both improved oil prices and efficient operations. All wells were rig-released between December 2020 and April 2021, with three of the wells brought on production in March and two in April. Completion operations have begun on the remaining four wells, giving the Company a head start on our second half capital program.

Drilling

	Three months ended March 31
	2021					2020
(number of wells)	Gross		Net			Gross		Net
Oil		8		6			12		10
Injectors, stratigraphic and service		1		—			1		—
Total		9		6			13		10
Success rate (1)				100	%				100	%

(1) Success rate is calculated excluding stratigraphic and service wells.

The Company rig released six operated gross wells (six net) during the first quarter of 2021. In addition to this, the Company had a minor non-operated working interest on two oil wells and one injector well that were drilled by a partner 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 restoration requirements and restrictions on emissions of various substances produced in association with oil and natural gas operations. Compliance with such legislation could 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 managing the environmental impact from our operations through our environmental programs which include resource conservation, water management and site abandonment/reclamation/remediation. Obsidian Energy has voluntarily entered into the Government of Alberta’s ABC program which has allowed the Company to accelerate abandonment activities, specifically on inactive properties, in a more cost-effective manner. The Company is committed to remaining in the ABC program for at least 2021 and 2022. The Alberta Government announced the suspension of spending requirements for the ABC program for 2020 and the $9 million incurred by the Company in 2020 will be applied to our 2021 program target. Additionally, operations are continuously monitored to minimize both environmental and climate change impacts and allocate sufficient capital to reclamation and other activities to mitigate the impact on the areas in which the Company operates.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   13

The Company has received ASRP grants to date totaling $20 million on a gross basis and an additional $10 million in allocation eligibility as an ABC program participant. These awards will allow the Company to expand our abandonment activities for wells, pipelines, facilities, and related site reclamation and thus reduce our decommissioning liability. We began utilizing the ASRP grants in Q4 2020 which will continue in 2021 and 2022.

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, 2021			December 31, 2020
Long-term debt
Syndicated credit facility	$	386.0		$	395.0
Senior secured notes		58.2			60.3
Deferred interest		2.3			—
Deferred financing costs		(6.6	)		(3.5	)
Total		439.9			451.8
Working capital deficiency
Cash		(2.2	)		(8.1	)
Accounts receivable		(52.4	)		(40.8	)
Prepaid expenses and other		(10.2	)		(9.2	)
Accounts payable and accrued liabilities		79.9			74.1
Total		15.1			16.0
Net debt	$	455.0		$	467.8

Net debt decreased compared to December 31, 2020, as commodity price increases and the Company’s lower cost structure resulted in higher netbacks and lower drawings on the syndicated credit facility.

The Company’s credit facility was classified as a long-term liability at March 31, 2021 as the term-out date is November 30, 2022, which is beyond 12 months from the reporting date.

Liquidity

The Company has a reserve-based syndicated credit facility with a borrowing limit of $440.0 million with $386.0 million drawn at March 31, 2021. For further details on the Company’s debt instruments and our recent bank amendment, 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.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   14

On March 31, 2021, the Company was in compliance with all of our financial covenants which consisted of the following:

	Limit			March 31, 2021
Senior debt to capitalization		Less than 75	%		56	%
Total debt to capitalization		Less than 75	%		56	%

Financial Instruments

Obsidian Energy had the following financial instruments outstanding as at March 31, 2021. Fair values are determined using external counterparty information, which is compared to observable market data. The Company limits our credit risk by executing counterparty risk procedures which include transacting only with institutions within our syndicated credit facility or companies with high credit ratings, and by obtaining financial security in certain circumstances.

	Notional volume		Remaining term		Pricing		Fair value (millions)
Oil
WTI Swaps		4,750 bbl/d		April 2021	$	77.74/bbl	$	0.5
WTI Swaps		1,125 bbl/d		May 2021	$	81.50/bbl		0.3
AECO Swaps
AECO Swaps		26,100 mcf/d		April 2021	$	2.83/mcf		0.1
AECO Swaps		21,300 mcf/d		May 2021	$	2.68/mcf		0.1
AECO Swaps		21,300 mcf/d		June 2021	$	2.67/mcf		—
AECO Swaps		9,500 mcf/d		July - October 2021	$	2.38/mcf		(0.2	)
Total							$	0.8

Refer to the Business Environment section above for a full list of hedges currently outstanding including trades that were entered into subsequent to March 31, 2021.

Based on commodity prices and contracts in place at March 31, 2021, a $1.00 change in the price per barrel of liquids of WTI 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 $0.3 million.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   15

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

	Three months ended March 31
(millions)	2021			2020
Realized
Settlement of commodity contracts	$	(5.1	)	$	11.0
Total realized risk management gain (loss)	$	(5.1	)	$	11.0
Unrealized
Commodity contracts	$	0.6		$	12.3
Total unrealized risk management gain (loss)		0.6			12.3
Risk management gain (loss)	$	(4.5	)	$	23.3

Refer to the Business Environment section above for a full list of physical hedges currently outstanding including trades that were entered into subsequent to March 31, 2021.

Outlook

Obsidian Energy’s 2021 budget is based on a balanced plan to begin restoring production that was reduced during COVID-19 spending postponements combined with debt reduction from free cash flow. Execution of our plan will see production growth throughout 2021 leading us into 2022 with the expectation of further production growth and greater free cash flow. The Company’s capital spending in 2021 will predominately focus on further development within the Willesden Green and Pembina plays in the Cardium. A 32 well program is planned and builds on the 2020 program where Obsidian Energy experienced strong production results. The Company completed our first half, nine well, drilling program in Willesden Green by April 2021, with five of these wells now on production. Our current full year 2021 guidance is presented below and remains unchanged since it was initially disclosed on March 29, 2021:

Metric		2021 Guidance Range
Average Production (1)	boe per day		23,300 – 23,800
Capital Expenditures	$ millions		$125 – $130
Decommissioning Expenditures (2)	$ millions		$8
Net Operating expense	$/boe		$12.70 - $13.10
G&A	$/boe		$1.65 - $1.85
Based on midpoint of guidance
Funds flow from operations	$ millions		$160 – $195
Funds flow from operations	Per share		$2.18 – $2.65
Free cash flow	$ millions		$25 – $60
Pricing assumptions
WTI range	US$/bbl		$55.00 – $65.00
AECO	CAD$/mcf		$2.79
Foreign Exchange	CAD/USD		$1.27

(1) Mid-point of guidance range: 10,600 bbl/d light oil, 2,800 bbl/d heavy oil, 1,950 bbl/d NGLs and 49.2 mmcf/d natural gas.

(2) Decommissioning expenditures do not include grants and allocations to be utilized by the Company under the ASRP.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   16

This outlook section is included to provide shareholders with information about Obsidian Energy’s expectations as at May 6, 2021 for average production, capital expenditures, decommissioning expenditures, net operating expense, G&A expenses, funds flow from operations and free cash flow for 2021 and readers are cautioned that the information may not be appropriate for any other purpose. This information constitutes forward-looking information. Readers should note the assumptions, risks and discussion under “Forward-Looking Statements” and are cautioned that numerous factors could potentially impact the Company and our ability to meet our guidance, including fluctuations in commodity prices and foreign exchange rates, any decision we make to shut-in additional production or resume production from shut-in properties, the impact of the COVID-19 pandemic on supply and demand for commodities, particularly oil, our ability to qualify for and receive payments under government assistance programs, and acquisition and disposition activity.

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 as discussed in the Outlook above.

			Impact on funds flow
Change of:	Change		$ millions		$/share
Price per barrel of liquids		WTI US$1.00		5		0.07
Liquids production		1,000 bbls/day		19		0.25
Price per mcf of natural gas		AECO $0.10		1		0.02
Natural gas production		10 mmcf/day		7		0.09
Effective interest rate		1%		4		0.05
Exchange rate ($US per $CAD)		$0.01		3		0.04

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   17

Contractual Obligations and Commitments

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

	2021		2022		2023		2024		2025		Thereafter		Total
Long-term debt (1)	$	—	$	444.2	$	—	$	—	$	—	$	—	$	444.2
Transportation		4.6		5.9		4.9		2.5		2.1		5.6		25.6
Power infrastructure		5.2		4.2		0.7		—		—		—		10.1
Interest obligations		24.5		32.2		—		—		—		—		56.7
Office lease		7.5		10.0		10.0		10.0		0.8		—		38.3
Lease liability		3.1		4.0		2.5		0.2		0.1		5.0		14.9
Decommissioning liability (2)		4.0		12.4		3.5		3.3		3.1		38.7		65.0
Total	$	48.9	$	512.9	$	21.6	$	16.0	$	6.1	$	49.3	$	654.8

(1) The 2022 figure includes $386.0 million related to the syndicated credit facility and non-revolving term loan that is due for renewal in 2022 and $58.2 million of senior notes set to mature in 2022; refer to the Financing section above for further details. Historically, the Company has successfully renewed its 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.

The revolving period of our syndicated credit facility continues to May 31, 2022, with a term out period to November 30, 2022, provided that if the lenders do not reconfirm the revolving period on January 17, 2022 the revolving period will accelerate to February 1, 2022 and the end date of the term period will continue to be November 30, 2022. In addition, the Company has an aggregate of US$46.3 million in senior notes maturing November 30, 2022. 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 notes, it is possible that we could be required to seek to obtain other sources of financing, including other forms of debt or equity arrangements if available.

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, 2021	73,523,122
Issuances under RPSU plan	727,175
As at May 6, 2021	74,250,297
Options outstanding:
As at March 31, 2021 and May 6, 2021	920,747
RSUs
As at March 31, 2021	2,340,385
Vested	(727,175	)
As at May 6, 2021	1,613,210

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   18

Supplemental Production Disclosure

Outlined below is production by product type for each area for the three months ended March 31, 2021 and 2020.

	Three months ended March 31
Daily production (boe/d)	2021		2020
Cardium
Light oil (bbls/d)		9,803		12,197
Heavy oil (bbls/d)		47		40
NGLs (bbls/d)		1,985		2,168
Natural gas (mmcf/d)		43		44
Total production (boe/d)		19,056		21,739
Peace River
Light oil (bbls/d)		—		—
Heavy oil (bbls/d)		2,567		3,432
NGLs (bbls/d)		3		3
Natural gas (mmcf/d)		3		4
Total production (boe/d)		3,012		4,040
Viking
Light oil (bbls/d)		157		219
Heavy oil (bbls/d)		123		44
NGLs (bbls/d)		40		37
Natural gas (mmcf/d)		3		3
Total production (boe/d)		794		830
Legacy
Light oil (bbls/d)		53		96
Heavy oil (bbls/d)		51		128
NGLs (bbls/d)		28		31
Natural gas (mmcf/d)		1		1
Total production (boe/d)		363		483
Total
Light oil (bbls/d)		10,014		12,512
Heavy oil (bbls/d)		2,788		3,644
NGLs (bbls/d)		2,056		2,239
Natural gas (mmcf/d)		50		52
Total production (boe/d)		23,225		27,092

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   19

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, 2021 and ending on March 31, 2021 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 Measures

Certain financial measures including funds flow from operations, funds flow from operations per share-basic, funds flow from operations per share-diluted, free cash flow, netback, net operating costs, gross revenues and net debt, included in this MD&A do not have a standardized meaning prescribed by IFRS and therefore are considered non-GAAP measures; accordingly, they may not be comparable to similar measures provided by other issuers. 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 and certain other expenses 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 Operations and Funds Flow from Operations” above for a reconciliation of funds flow from operations to cash flow from operating activities, being our nearest measure prescribed by IFRS. Free cash flow is funds flow from operations less both capital and decommissioning expenditures. Netback is the per unit of production amount of revenue less royalties, net operating expenses, 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 our calculation of netbacks. 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 as a means 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 “Expenses – Operating” above for a reconciliation of operating costs to net operating costs. Gross revenues are production revenues including realized risk management gains and losses on commodity contracts and adjusted for commodities purchased and sales of commodities purchased and is used to assess the cash realizations on commodity sales. See “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 calculation of the Company’s net debt.

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   20

Oil and 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.

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 belief that our plan to focus on our industry leading Cardium position offers a predictable, liquids weighted, production profile that is capable of generating sustainable value for all stakeholders; our expected 2021 development program and capital expenditures; that we expect to generate higher fourth quarter and exit 2021 production rates than achieved in 2020, while still meaningfully reducing debt levels; that with a constructive pricing environment, our program further positions us for additional production growth that generates even greater free cash flow in 2022; our intended drilling program, locations, completion and on production dates, optimization program, decommissioning activity benefit in 2021 and 2022 based on the ASRP grants, and when shut-in production will be brought back on-line; the expected re-confirmation and term out dates, as applicable, in connection with our reserve-based syndicated credit facility, the lender option date to complete a borrowing base redetermination on the credit facility, the available revolving capacity at the end of year depending on the amount drawn under the credit facility, and the maturity dates and interest rates on the senior notes; that the compliance with certain environmental legislation could 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; that the Company continuously monitors operations to minimize environmental impact and allocate sufficient capital to reclamation and other activities to mitigate the impact on the areas in which the Company operates; that we are dedicated to managing the environmental impact from our operations through the environmental programs which include resource conservation, water management and site abandonment / reclamation / remediation; that we will remain in the ABC program for 2021 and 2022; how the ASRP will allow the Company to expand the abandonment activities, the timing thereof and staying actively engaged in these types of programs; that amounts spent in 2020 under the ABC program can be applied to our 2021 target; our hedging program; 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 Company’s ongoing operations and ability to execute longer-term business strategies; our financial outlook including our full year 2021 guidance including average production range, capital expenditures and decommissioning expenditures, net operating and G&A expense ranges, funds flow from operations and funds flow from operations per share ranges, and free cash flow ranges; and the sensitivity analysis and contractual obligations and commitments moving forward; and that the impairment losses related to PP&E can be reversed in future periods if commodity price forecasts materially improve.

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 other than as stated herein; that the Government of Alberta will not impose oil and bitumen production quotas under its curtailment rules again in the future; the impact of regional and/or global health related events, including the ongoing COVID-19 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, 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 (including the CEWS and ASRP) or otherwise, and obtain financial assistance therefrom, and the impact of those programs on our financial

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   21

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; 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, including that we will not be required to shut-in additional production due to a deterioration of commodity prices and our expectations regarding when commodity prices will improve such that any remaining shut-in properties can be returned to production; 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 to renew or replace our syndicated bank facility and our ability to finance the repayment of our senior 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 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 implemented in connection with the COVID-19 pandemic and other 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, including the ongoing COVID-19 pandemic, and the responses of governments and the public to the 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 the 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 that has been caused by, among other things, the COVID-19 pandemic and the worldwide transition towards less reliance on fossil fuels persists or worsens; the risk that the COVID-19 pandemic adversely affects the financial capacity of the Company’s contractual counterparties 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 notes is not further extended (if necessary), that the borrowing base under our credit facility is reduced, that the Company is unable to renew our credit facilities on acceptable terms or at all and/or finance the repayment of our senior notes when they mature on acceptable terms or at all and/or obtain new debt and/or equity financing to replace one or both of our credit facilities and senior 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 notes; the possibility that we are forced to shut-in additional production or continue existing production shut-ins longer than anticipated, whether due to commodity prices decreasing or the Alberta government reactivating its curtailment program; the risk that OPEC, Russia 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

OBSIDIAN ENERGY FIRST QUARTER 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   22

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 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 ongoing COVID-19 pandemic; 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 2021 MANAGEMENT’S DISCUSSION AND ANALYSIS   23

EX-99.3

Exhibit 99.3

Obsidian Energy Ltd.

Consolidated Balance Sheets

		As at
(CAD millions, unaudited)	Note	March 31, 2021			December 31, 2020
Assets
Current
Cash		$	2.2		$	8.1
Accounts receivable			52.4			40.8
Risk management	7		1.0			0.8
Prepaid expenses and other			10.2			9.2
			65.8			58.9
Non-current
Property, plant and equipment	3		911.7			905.2
			911.7			905.2
Total assets		$	977.5		$	964.1
Liabilities and Shareholders’ Equity
Current
Accounts payable and accrued liabilities		$	79.9		$	74.1
Current portion of long-term debt	4		—			451.8
Current portion of lease liabilities	5		4.1			4.8
Current portion of provisions	6		16.1			16.3
Risk management	7		0.2			0.6
			100.3			547.6
Non-current
Long-term debt	4		439.9			—
Lease liabilities	5		6.7			5.6
Provisions	6		80.6			87.7
Other non-current liabilities			3.4			0.1
			630.9			641.0
Shareholders’ equity
Shareholders’ capital	9		2,187.0			2,187.0
Other reserves	9		103.9			103.6
Deficit			(1,944.3	)		(1,967.5	)
			346.6			323.1
Total liabilities and shareholders’ equity		$	977.5		$	964.1

Commitments and contingencies (Note 11)

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY FIRST QUARTER 2021 INTERIM CONSOLIDATED FINANCIAL STATEMENTS   1

Obsidian Energy Ltd.

Consolidated Statements of Income (Loss)

	Three months ended         March  31
(CAD millions, except per share amounts, unaudited)	Note	2021			2020
Production revenues	8	$	92.2		$	79.0
Processing fees			1.6			1.7
Royalties			(5.7	)		(5.4	)
Sales of commodities purchased from third parties			2.0			1.7
			90.1			77.0
Other income			1.0			4.1
Government decommissioning assistance			4.8			—
Risk management gain (loss)	7		(4.5	)		23.3
			91.4			104.4
Expenses
Operating			30.9			32.8
Transportation			3.7			6.6
Commodities purchased from third parties			1.8			1.4
General and administrative			3.5			4.0
Restructuring			(2.0	)		0.3
Share-based compensation	10		2.7			0.7
Depletion, depreciation, impairment and accretion	3,6		27.5			809.5
Gain on provisions	6		—			(22.9	)
Foreign exchange loss (gain)	4		(0.7	)		5.5
Financing	4,5		9.9			11.2
Transaction costs			0.1			—
Other	11		(9.2	)		2.9
			68.2			852.0
Income (loss) before taxes			23.2			(747.6	)
Deferred tax expense			—			—
Net and comprehensive income (loss)		$	23.2		$	(747.6	)
Net income (loss) per share
Basic		$	0.32		$	(10.24	)
Diluted		$	0.31		$	(10.24	)
Weighted average shares outstanding (millions)
Basic	9		73.5			73.0
Diluted	9		76.0			73.0

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY FIRST QUARTER 2021 INTERIM CONSOLIDATED FINANCIAL STATEMENTS   2

Obsidian Energy Ltd.

Consolidated Statements of Cash Flows

	Three months ended March 31
(CAD millions, unaudited)	Note	2021			2020
Operating activities
Net income (loss)		$	23.2		$	(747.6	)
Government decommissioning assistance			(4.8	)		—
Other income			—			(0.3	)
Depletion, depreciation, impairment and accretion	3,6		27.5			809.5
Provisions	6		—			(22.9	)
Financing	4,5		2.5			0.9
Share-based compensation	10		0.3			0.3
Unrealized risk management gain	7		(0.6	)		(12.3	)
Unrealized foreign exchange (gain) loss	4		(1.0	)		5.5
Decommissioning expenditures	6		(3.3	)		(8.0	)
Onerous office lease settlements	6		(2.3	)		1.2
Deferred financing costs			1.0			—
Financing fees paid			(4.1	)		—
Change in non-cash working capital			(10.3	)		5.1
			28.1			31.4
Investing activities
Capital expenditures	3		(29.5	)		(40.6	)
Property dispositions (acquisitions), net	3		—			0.1
Change in non-cash working capital			6.8			(0.6	)
			(22.7	)		(41.1	)
Financing activities
Increase (decrease) in long-term debt	4		(9.0	)		8.0
Repayment of senior notes	4		(1.4	)		—
Realized foreign exchange loss on repayments	4		0.3			—
Lease receivable receipts			—			2.2
Lease liabilities settlements	5		(1.2	)		(1.7	)
			(11.3	)		8.5
Change in cash and cash equivalents			(5.9	)		(1.2	)
Cash and cash equivalents, beginning of period			8.1			3.0
Cash and cash equivalents, end of period		$	2.2		$	1.8

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY FIRST QUARTER 2021 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, 2021		$	2,187.0	$	103.6	$	(1,967.5	)	$	323.1
Net and comprehensive income			—		—		23.2			23.2
Share-based compensation	10		—		0.3		—			0.3
Balance at March 31, 2021		$	2,187.0	$	103.9	$	(1,944.3	)	$	346.6
(CAD millions, unaudited)	Note	Shareholders’ Capital		Other Reserves		Deficit			Total
Balance at January 1, 2020		$	2,186.7	$	101.8	$	(1,195.8	)	$	1,092.7
Net and comprehensive loss			—		—		(747.6	)		(747.6	)
Share-based compensation	10		—		0.3		—			0.3
Balance at March 31, 2020		$	2,186.7	$	102.1	$	(1,943.4	)	$	345.4

See accompanying notes to the unaudited interim consolidated financial statements.

OBSIDIAN ENERGY FIRST QUARTER 2021 INTERIM CONSOLIDATED FINANCIAL STATEMENTS   4

Notes to the Unaudited Interim Consolidated Financial Statements

(All tabular amounts are in CAD millions except numbers of common shares, per share amounts,

percentages and various figures in Note 7)

1. Structure of Obsidian Energy

Obsidian Energy Ltd. (“Obsidian Energy”, the “Company”, “we”, “us” or “our”) is an exploration and production company and is governed by the laws of the Province of Alberta, Canada. The Company operates in one segment, to explore for, develop and hold interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin directly and through investments in securities of subsidiaries holding such interests. Obsidian Energy’s portfolio of assets is managed at an enterprise level, rather than by separate operating segments or business units. The Company assesses our financial performance at the enterprise level and resource allocation decisions are made on a project basis across our portfolio of assets, without regard to the geographic location of projects. Obsidian Energy owns the petroleum and natural gas assets or 100 percent of the equity, directly or indirectly, of the entities that carry on the remainder of the oil and natural gas business of Obsidian Energy, except for an unincorporated joint arrangement (the “Peace River Oil Partnership”) in which Obsidian Energy’s wholly owned subsidiaries hold a 55 percent interest.

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, our wholly owned subsidiaries and our proportionate interest in partnerships. Results from acquired properties are included in the Company’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. Additionally, within these interim consolidated financial statements the Company has updated the presentation of our financial figures to disclose dollar figures rounded to the nearest hundred thousand. This may result in immaterial differences in the comparative figures.

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 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, 2020.

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 6, 2021.

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE 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, 2021		Year ended December 31, 2020
Balance, beginning of period	$	10,838.3	$	10,387.2
Capital expenditures		29.5		57.2
Dispositions		—		(0.1	)
Transfer from/(to) assets held for sale		—		423.0
Net decommissioning dispositions		1.1		(29.0	)
Balance, end of period	$	10,868.9	$	10,838.3

Accumulated depletion and depreciation	Three months ended March 31, 2021		Year ended December 31, 2020
Balance, beginning of period	$	9,942.6	$	8,708.3
Depletion and depreciation		23.7		122.1
Impairments		1.0		766.2
Transfers from/(to) asset held for sale		—		346.0
Balance, end of period	$	9,967.3	$	9,942.6

	As at
Net book value	March 31, 2021		December 31, 2020
Total	$	901.6	$	895.7

Right-of-use assets

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

Cost
	Office			Transportation			Vehicle		Surface		Total
Balance, January 1, 2020	$	12.6		$	16.7		$	4.1	$	2.1	$	35.5
Additions (Terminations)		(12.6	)		(1.8	)		1.6		—		(12.8	)
Balance, December 31, 2020	$	—		$	14.9		$	5.7	$	2.1	$	22.7
Additions (Terminations)		—			1.4			—		—		1.4
Balance, March 31, 2021	$	—		$	16.3		$	5.7	$	2.1	$	24.1

Accumulated amortization
	Office			Transportation		Vehicle		Surface		Total
Balance, January 1, 2020	$	2.4		$	6.0	$	1.3	$	0.1	$	9.8
Amortization		0.5			4.5		1.3		—		6.3
Termination		(2.9	)		—		—		—		(2.9	)
Balance, December 31, 2020	$	—		$	10.5	$	2.6	$	0.1	$	13.2
Amortization		—			0.5		0.3		—		0.8
Balance, March 31, 2021	$	—		$	11.0	$	2.9	$	0.1	$	14.0

	As at
	March 31, 2021		December 31, 2020
Total	$	10.1	$	9.5

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   6

Total PP&E

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

	As at
PP&E	March 31, 2021		December 31, 2020
Oil and Gas assets, Facilities, Corporate assets	$	901.6	$	895.7
Right-of-use assets		10.1		9.5
Total	$	911.7	$	905.2

At March 31, 2021, the Company completed an assessment to determine if indicators of impairment or an impairment reversal were present. No indicators were noted.

In 2020, the Company recorded $766.2 million of non-cash net impairments across multiple CGU’s, primarily as a result of the low commodity price environment due to the impact of the COVID-19 pandemic.

4. Long-term debt

	As at
	March 31, 2021			December 31, 2020
Syndicated credit facility	$	386.0		$	395.0
Senior secured notes – 2008 Notes 8.52%, US$4.0 million, maturing November 30, 2022		5.0			5.2
Senior secured notes – 2010 Q1 Notes 7.97%, US$9.5 million, maturing November 30, 2022		12.0			12.4
Senior secured notes – 2010 Q4 Notes 7.00%, US$13.0 million, maturing November 30, 2022		16.3			16.9
7.10%, US$5.7 million, maturing November 30, 2022		7.2			7.4
7.35%, US$2.1 million, maturing November 30, 2022		2.6			2.7
Senior secured notes – 2011 Q4 Notes 6.91%, US$12.0 million, maturing November 30, 2022		15.1			15.7
Total credit facility and senior secured notes		444.2			455.3
Deferred interest		2.3			—
Deferred financing costs		(6.6	)		(3.5	)
Total long-term debt	$	439.9		$	451.8
Current portion	$	—		$	451.8
Long-term portion	$	439.9		$	—

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   7

As a result of entering into amending agreements with our banking syndicate during the first quarter of 2021 and the extension of the term-out period to November 30, 2022, the Company’s syndicated credit facility was classified as non-current on March 31, 2021. Additionally, as part of the amending agreements, the Company made a US$1.1 million (CAD$1.4 million) repayment on our senior secured notes during the first quarter of 2021.

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

	As at
	March 31, 2021			December 31, 2020
Weighted average remaining life (years)		1.7			0.9
Weighted average interest rate		7.3	%		5.2	%

The Company has a reserve-based syndicated credit facility which is subject to a semi-annual borrowing base redetermination typically in May and November of each year. In the first quarter of 2021, the Company entered into an amending agreement with our banking syndicate whereby the aggregate amount drawn or available to be drawn under the syndicated credit facility is now set at $440 million. The $440 million of availability consists of a $225 million revolving syndicated credit facility and a $215 million non-revolving term loan.

Additionally, the following terms were included in the amending agreement:

• the revolving period under the syndicated credit facility has been extended to May 31, 2022, with the end date of the term period extended to November 30, 2022;

• the maturity date of the non-revolving term loan is also November 30, 2022;

• the next scheduled borrowing base redeterminations will occur on November 30, 2021 and May 31, 2022;

• a revolving period reconfirmation date will occur on January 17, 2022, whereby, on or prior to such date, the lenders may accelerate the end date of the revolving period to February 1, 2022. In this case, the end date of the term period would remain unchanged at November 30, 2022; and

• the Company’s revolving credit facility will have a one-time adjustment to reduce our undrawn availability to $35 million at December 31, 2021. Any borrowing availability at this time in excess of that amount will be used to reduce amounts outstanding on the non-revolving term loan and senior notes.

Additionally, in the first quarter of 2021, the Company agreed with holders of our senior notes to extend the maturity dates of the notes due on November 30, 2021 to November 30, 2022 and to increase the interest rate on each series of our notes by approximately 2.1 percent.

Drawings on the Company’s syndicated credit facility are subject to fluctuations in short-term money market rates as they are generally held as short-term borrowings. As at March 31, 2021, 87 percent (December 31, 2020 – 87 percent) of Obsidian Energy’s long-term debt instruments were exposed to changes in short-term interest rates.

At March 31, 2021, letters of credit totaling $5.3 million were outstanding (December 31, 2020 – $5.0 million) that reduce the amount otherwise available to be drawn on the syndicated credit facility.

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   8

Financing expense consists of the following:

	Three months ended March 31
	2021		2020
Interest on bank debt and senior notes	$	5.7	$	8.1
Advisor fees		0.7		2.2
Deferred financing costs		1.0		—
Unwinding discount on lease liabilities		0.2		0.9
Loss on debt modification		2.3		—
Financing	$	9.9	$	11.2

The senior note amending agreement entered into by the Company in March 2021, resulted in a debt modification under IFRS 9 (“Financial Instruments”) and the recognition of a non-cash loss of $2.3 million due to the extended term and increase in interest rates.

Obsidian Energy records unrealized foreign exchange gains or losses on our senior notes as amounts are translated into Canadian dollars at the rate of exchange in effect at the balance sheet date. Realized foreign exchange gains or losses are recorded upon actual repayment of senior notes. The split between realized and unrealized foreign exchange is as follows:

	Three months ended March 31
	2021			2020
Realized foreign exchange loss	$	0.3		$	—
Unrealized foreign exchange (gain)/loss		(1.0	)		5.5
Foreign exchange (gain)/loss	$	(0.7	)	$	5.5

The Company is subject to Senior debt and Total debt to Capitalization financial covenants with a maximum ratio of 75 percent, as more specifically defined in the applicable lending agreements. At March 31, 2021, the Company was in compliance with our financial covenants under such lending agreements.

5. Lease liabilities

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

	Three months ended March 31, 2021			Year ended December 31, 2020
Balance, beginning of period	$	10.4		$	113.8
Additions (terminations)		1.4			(98.6	)
Unwinding of discount on lease liabilities		0.2			1.5
Lease payments		(1.2	)		(6.3	)
Balance, end of period	$	10.8		$	10.4
Current portion	$	4.1		$	4.8
Long-term portion	$	6.7		$	5.6

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   9

The following table sets out a maturity analysis of lease payments, disclosing the undiscounted balance after March 31, 2021:

	2021		2022		2023		2024		2025		Thereafter		Total
Transportation	$	2.0	$	2.7	$	1.7	$	—	$	—	$	—	$	6.4
Vehicle		1.0		1.2		0.7		0.1		—		—		3.0
Surface		0.1		0.1		0.1		0.1		0.1		5.0		5.5
Total	$	3.1	$	4.0	$	2.5	$	0.2	$	0.1	$	5.0	$	14.9

Amounts recognized in Consolidated Statements of Income (Loss) and Consolidated Statements of Cash Flows

The Company recorded $nil income from sub-leases related to our right-of-use assets. Expenses related to short-term leases and leases of low-value assets were insignificant during the period.

6. Provisions

	As at
	March 31, 2021		December 31, 2020
Decommissioning liability	$	65.0	$	70.5
Office lease provision		31.7		33.5
Total	$	96.7	$	104.0
Current portion	$	16.1	$	16.3
Long-term portion	$	80.6	$	87.7

Decommissioning liability

At March 31, 2021, the decommissioning liability was determined by applying an inflation factor of 2.0 percent (December 31, 2020 - 2.0 percent) and the inflated amount was discounted using a credit-adjusted rate of 9.0 percent (December 31, 2020 – 9.0 percent) over the expected useful life of the underlying assets, currently extending over 50 years into the future. At March 31, 2021, the total decommissioning liability on an undiscounted, uninflated basis was $584.9 million (December 31, 2020 - $596.6 million).

Changes to the decommissioning liability were as follows:

	Three months ended March 31, 2021			Year ended December 31, 2020
Balance, beginning of period	$	70.5		$	100.1
Net liabilities added (disposed) (1)		0.5			(0.4	)
Increase (decrease) due to changes in estimates		0.6			(28.6	)
Liabilities settled		(3.3	)		(11.1	)
Government decommissioning assistance		(4.8	)		(2.2	)
Transfers from (to) liabilities for assets held for sale		—			7.0
Accretion charges		1.5			5.7
Balance, end of period	$	65.0		$	70.5
Current portion	$	7.1		$	7.3
Long-term portion	$	57.9		$	63.2

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

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   10

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, 2020 – 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, 2021			Year ended December 31, 2020
Balance, beginning of period	$	33.5		$	12.7
Net additions (dispositions)		—			27.0
Increase (decrease) due to changes in estimates		—			1.0
Cash settlements		(2.3	)		(9.7	)
Accretion charges		0.5			2.5
Balance, end of period	$	31.7		$	33.5
Current portion	$	9.0		$	9.0
Long-term portion	$	22.7		$	24.5

7. Risk management

Financial instruments consist of cash and cash equivalents, accounts receivable, fair values of derivative financial instruments, accounts payable and accrued liabilities and long-term debt. At March 31, 2021, except for the senior notes described in Note 4 with a carrying value of $58.2 million (December 31, 2020 – $60.3 million) and a fair value of $46.0 million (December 31, 2020 – $49.3 million), the fair values of these financial instruments approximate their carrying amounts due to the short-term maturity of the instruments.

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

At March 31, 2021 and December 31, 2020, 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, 2021		Year ended December 31, 2020
Balance, beginning of period	$	0.2	$	(0.6	)
Unrealized gain (loss) on financial instruments:
Commodity collars and swaps		0.6		0.8
Total fair value, end of period	$	0.8	$	0.2
Current portion	$	0.8	$	0.2
Long-term portion	$	—	$	—

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   11

Obsidian Energy had the following financial instruments outstanding as at March 31, 2021. Fair values are determined using external counterparty information, which is compared to observable market data. The Company limits our credit risk by executing counterparty risk procedures which include transacting only with institutions within our syndicated credit facility or companies with high credit ratings and by obtaining financial security in certain circumstances.

	Notional volume		Remaining term		Pricing		Fair value (millions)
Oil
WTI Swaps		4,750 bbl/d		April 2021	$	77.74/bbl	$	0.5
WTI Swaps		1,125 bbl/d		May 2021	$	81.50/bbl		0.3
AECO Swaps
AECO Swaps		26,100 mcf/d		April 2021	$	2.83/mcf		0.1
AECO Swaps		21,300 mcf/d		May 2021	$	2.68/mcf		0.1
AECO Swaps		21,300 mcf/d		June 2021	$	2.67/mcf		—
AECO Swaps		9,500 mcf/d		July - October 2021	$	2.38/mcf		(0.2	)
Total							$	0.8

Based on commodity prices and contracts in place at March 31, 2021, a $1.00 change in the price per barrel of WTI oil 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 $0.3 million.

Subsequent to March 31, 2021 the Company entered into the following additional financial hedges:

	Notional volume		Term		Pricing
Oil
WTI Swaps		775 bbl/d		April 2021	$	78.91/bbl
WTI Swaps		3,500 bbl/d		May 2021	$	79.04/bbl
WTI Swaps		1,000 bbl/d		June 2021	$	79.78/bbl
AECO Swaps
AECO Swaps		11,850 mcf/d		July 2021	$	2.72/mcf
AECO Swaps		11,850 mcf/d		August 2021	$	2.72/mcf
AECO Swaps		11,850 mcf/d		September 2021	$	2.72/mcf
AECO Swaps		11,850 mcf/d		October 2021	$	2.72/mcf

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   12

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

	Three months ended March 31
	2021			2020
Realized
Settlement of commodity contracts	$	(5.1	)	$	11.0
Total realized risk management gain (loss)	$	(5.1	)	$	11.0
Unrealized
Commodity contracts	$	0.6		$	12.3
Total unrealized risk management gain (loss)		0.6			12.3
Risk management gain (loss)	$	(4.5	)	$	23.3

Additionally, the Company had the following physical contracts outstanding at March 31, 2021.

	Notional volume		Term		Pricing
Physical Oil Contracts (1)
WTI		571 bbl/d		Apr – Jun 2021	$	59.04/bbl
Light Oil Differential (2) (3)
		1,245 bbl/d		Apr – Jun 2021	$	5.51/bbl
		1,230 bbl/d		Jul – Sep 2021	$	5.82/bbl
Light Oil Differential – USD (2)
		1,556 bbl/d		Apr – Jun 2021	US$	4.00/bbl
		1,539 bbl/d		Jul – Sep 2021	US$	4.42/bbl
Heavy Oil Differential (4)
		564 bbl/d		Jul – Sep 2021	$	14.85/bbl

(1) WTI, differentials and foreign exchange hedged to lock-in positive net operating income on certain heavy oil properties.

(2) Differentials completed on a WTI - MSW basis.

(3) USD transactions completed on a US$ WTI - US$ MSW basis and converted to Canadian dollars using a fixed foreign exchange ratio of CAD/USD $1.281 in the second quarter of 2021 and CAD/USD $1.279 in the third quarter of 2021.

(4) Differentials completed on a WTI - WCS basis.

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   13

Market risks

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

COVID-19 Pandemic Risk

In March 2020, the World Health Organization declared COVID-19 a global pandemic. Since that time, the oil and natural gas industry has experienced significant volatility with commodity prices, and in particular oil prices, as a result of a decline in economic activity and lower demand for commodities in both Canada and around the world. In 2021, oil prices have largely recovered from the lows that occurred in the second quarter of 2020 as restrictions eased and vaccines started to be administered. The timing for achieving full demand recovery remains uncertain as countries are at various stages of rolling-out vaccines while virus outbreaks continue to occur, mainly due to new variants, which has resulted in activity restrictions. This market volatility has not only impacted oil and natural gas sales but has increased the complexity of certain judgements and estimates when preparing our first quarter financial information, particularly within the measurement uncertainty of the inputs used in the Company’s assessment of the recoverability of asset carrying values, assessing counterparty credit risk as well as the credit risk-adjusted discount rate used within our decommissioning liability and office lease provision.

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

8. Revenue and Other Income

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

	Three months ended March 31
	2021		2020
Oil	$	70.6	$	63.9
NGLs		7.1		4.6
Natural gas		14.5		10.5
Production revenues		92.2		79.0
Processing fees		1.6		1.7
Oil and natural gas sales		93.8		80.7
Other income		1.0		4.1
Oil and natural gas sales and other income	$	94.8	$	84.8

Other income includes $1.0 million in road use recoveries (2020 - $1.4 million). In 2020, the remainder primarily relates to curtailment sales, whereby the Company sold unused production limit capacity under the Alberta Government Curtailment production limits.

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   14

9. Shareholders’ equity

i) Issued

Shareholders’ capital	Common Shares		Amount
Balance, December 31, 2019		73,011,488	$	2,186.7
Issued pursuant to equity compensation plans (1)		504,737		0.3
Balance, December 31, 2020		73,516,225	$	2,187.0
Issued pursuant to of equity compensation plans (1)		6,897		—
Balance, March 31, 2021		73,523,122	$	2,187.0

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

ii) Earnings per share - Basic and Diluted

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

	Three months ended March 31
Average shares outstanding (millions)		2021	2020
Basic		73.5	73.0
Dilutive impact of stock options and RSUs		2.5	—
Diluted (1)		76.0	73.0

(1) 2020 excludes the impact of 1.1 million weighted average shares related to options outstanding under the Stock Option Plan (“Option Plan”) and Restricted Share Units (“RSUs”) outstanding under the Restricted and Performance Share Unit plan (“RPSU plan”) that were considered anti-dilutive and/or not in the money.

10. Share-based compensation

Restricted and Performance Share Unit plan

Restricted Share Unit grants under the RPSU plan

Obsidian Energy awards RSU grants under the RPSU plan whereby employees receive consideration that fluctuates based on the Company’s share price on the 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, 2021			Year ended December 31, 2020
Outstanding, beginning of period		2,355,408			1,100,278
Granted		—			1,818,840
Vested		(6,897	)		(510,738	)
Forfeited		(8,126	)		(52,972	)
Outstanding, end of period		2,340,385			2,355,408

There were no RSUs granted during the first quarter of 2021 or 2020.

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   15

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

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

PSUs (number of shares equivalent)	Three months ended March 31, 2021		Year ended December 31, 2020
Outstanding, beginning of period		453,845		92,424
Granted		—		376,310
Vested		—		(10,716	)
Forfeited		—		(4,173	)
Outstanding, end of period		453,845		453,845

The liability associated with the PSU’s under the RPSU plan was $0.3 million at March 31, 2021 (December 31, 2020 - $0.1 million).

Stock Option Plan

Obsidian Energy has an Option Plan that allows the Company to issue options to acquire common shares to officers, employees, directors and other service providers.

	Three months ended March 31, 2021					Year ended December 31, 2020
Options	Number of Options			Weighted Average Exercise Price		Number of Options			Weighted Average Exercise Price
Outstanding, beginning of period		961,954		$	0.94		89,178		$	10.41
Granted		—			—		917,490			0.56
Forfeited		(41,207	)		8.40		(44,714	)		12.06
Outstanding, end of period		920,747		$	0.60		961,954		$	0.94
Exercisable, end of period		3,257		$	13.02		44,464		$	8.74

There were no options granted during the first quarter of 2021 or 2020.

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, a cash payment based on the volume-weighted-average trading price of the common shares on the TSX. At March 31, 2021, 2,192,790 DSUs (December 31, 2020 – 2,087,580) were outstanding and $4.1 million was recorded as a current liability (December 31, 2020 – $1.9 million).

Share-based compensation

Share-based compensation consisted of the following:

	Three months ended March 31
	2021		2020
RSU grants	$	0.3	$	0.3
PSU grants		0.2		—
DSU plan		2.2		0.4
Share-based compensation	$	2.7	$	0.7

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   16

The share price used in the fair value calculation of the DSU and RPSU plan obligations at March 31, 2021 was $1.82 per share (2020 – $0.23). The share-based compensation for options was insignificant in both periods.

Employee retirement savings plan

Obsidian Energy has an employee retirement savings plan (the “savings plan”) for the benefit of all employees. Under the savings plan, employees may elect to contribute up to 10 percent of their salary and Obsidian Energy matches these contributions at a rate of $1.00 for each $1.00 of employee contribution. Both the employee’s and Obsidian Energy’s contributions are used to acquire Obsidian Energy common shares or are placed in low-risk investments. Shares are purchased in the open market at prevailing market prices.

Effective May 1, 2020, due to the low commodity price environment, the Company temporarily suspended the employer match portion of the savings plan. This was partially re-instated on May 1, 2021 with Obsidian Energy matching contributions at a rate of $0.50 for each $1.00 of employee contribution up to 10 percent of an employee’s salary.

11. Commitments and contingencies

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

In 2018, the Company fully utilized available insurance coverage relating to ongoing claims against former Penn West employees arising from the Company’s 2014 restatement of certain financial results when we were known as Penn West. A claim brought by the United States Securities and Exchange Commission (“SEC”) against Penn West was previously settled. The Company had been indemnifying two former employees pursuant to indemnity agreements in connection with the claims brought by the SEC arising out of the same restatement. In 2020, the SEC reached a settlement with the two former employees.

The Company continued to accrue for, but not pay, defense costs incurred on behalf of the two former employees and recently agreed to a settlement to pay $6.4 million of the defense costs equally over a 30-month period beginning in April 2021. As a result of the settlement, the Company recorded a recovery of costs in the first quarter of 2021 previously accrued which was recorded within Other in the Consolidated Statements of Income (Loss).

12. Government grants

The Company has received payments as part of the Canadian Emergency Wage Subsidy (“CEWS”). The CEWS allows eligible companies to receive a subsidy of employee wages, subject to a maximum. For the first quarter of 2021, this resulted in a benefit to the Company of approximately $0.5 million (2020 – nil) which resulted in a $0.3 million reduction to operating costs, a $0.1 million reduction to general and administrative costs and a $0.1 million reduction to capital expenditures.

The Company received a grant allocation under the Alberta Site Rehabilitation Program in 2020. These awards will allow the Company to expand our abandonment activities for wells, pipelines, facilities, and related site reclamation and thus reduce our decommissioning liability. The Company utilized $4.8 million of net grants during the first quarter of 2021 (2020 – nil).

OBSIDIAN ENERGY FIRST QUARTER 2021 NOTES TO THE INTERIM CONSOLIDATED FINANCIAL STATEMENTS   17

EX-99.4

Exhibit 99.4

FORM 52-109F2

CERTIFICATION OF INTERIM FILINGS

FULL CERTIFICATE

I, Stephen Loukas, Interim 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, 2021.

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, 2021 and ended on March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 7, 2021

(signed) “Stephen Loukas”

Stephen Loukas

Interim President & Chief Executive Officer

EX-99.5

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, 2021.

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, 2021 and ended on March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR.

Date: May 7, 2021

(signed) “Peter Scott”

Peter Scott

Senior Vice President and Chief Financial Officer