Calgary-based Obsidian Energy has agreed to acquire Belly River light oil assets in Alberta’s Wilson Creek area for approximately $96 million net — a transaction that would position it as the largest producer in the Belly River play.
The purchase and sale agreement with Highwood Asset Management covers roughly 2,500 barrels of oil equivalent per day of production and 35 net sections of land in the Willesden Green area. Closing is expected on or about June 30, 2026.
Deal Terms and Immediate Financial Impact
The unadjusted purchase price is $105 million in cash. After closing adjustments of approximately $9 million, the net cost to Obsidian Energy comes to roughly $96 million, funded through existing cash and credit facilities.
The deal includes a contingent value payment of up to $7 million, paid in quarterly installments of up to $1.75 million from Q3 2026 through Q2 2027, depending on WTI price thresholds. Those thresholds decline each quarter — starting at US$85.00/bbl in Q3 2026 and falling to US$72.50/bbl by Q2 2027. Obsidian Energy says the transaction is immediately accretive to funds flow from operations, with net debt to FFO projected at approximately 1.1x at year-end 2026.
Why Obsidian Energy Pursued the Acquisition
Geography drove much of the strategic logic. The acquired lands sit directly adjacent to Obsidian Energy’s existing Willesden Green position, giving the company contiguous acreage and greater operational scale within a single core area.
CEO Stephen Loukas pointed to one specific advantage: historical development of the acquired assets was constrained by natural gas egress limitations — a problem he believes Obsidian is best placed to solve using its existing field infrastructure, which the company intends to expand. The numbers reinforce that rationale. After closing, Obsidian’s total Willesden Green land holdings will rise to approximately 290 net sections, and corporate liquids weighting increases from 49% to 55%. Loukas described the Belly River as a long-term growth platform underpinned by deep drilling inventory capable of generating attractive returns.
Production and Reserve Profile of the Acquired Assets
The acquired assets currently produce approximately 2,500 boe/d, with a 76% oil weighting based on May 2026 field estimates. That high oil cut sits at the center of the deal’s appeal for a company focused on light oil development.
Reserve metrics are equally compelling. The assets carry 2P reserves of 13.6 MMboe, a Reserve Life Index of approximately 15 years, and proved developed producing reserves of 3.4 MMboe. Obsidian has identified 36 booked 2P development locations on the acquired lands, pushing the company’s total Belly River drilling inventory past 100 net locations. For 2027, the acquired assets are estimated to generate an operating netback of approximately $42.25/boe at WTI US$72.50/bbl.
Planned Development and Production Growth Targets
Obsidian Energy plans to begin developing the acquired lands in 2027 with a six-well program, expected to grow production from roughly 2,500 boe/d to approximately 3,000 boe/d. At WTI US$72.50/bbl, the company projects the acquired assets will generate approximately $45 million in net operating income that year, along with roughly $15 million in free cash flow — figures that remain subject to commodity price assumptions.
Loukas set a more ambitious long-range target. He said Obsidian believes the combined Willesden Green asset can grow toward approximately 20,000 boe/d in a supportive oil price environment, delivering meaningful free cash flow to shareholders over time.
Company Context and Next Steps
Obsidian Energy is an intermediate Alberta oil and gas producer with assets spanning the Peace River, Willesden Green, and Viking areas, all within the Western Canada Sedimentary Basin. The company trades on both the Toronto Stock Exchange and NYSE American under the ticker OBE.
Once the transaction closes, pro forma corporate production is expected to reach approximately 31,400 boe/d — based on the midpoint of the company’s 2026 guidance and reflecting the addition of acquired Belly River volumes. BMO Capital Markets is serving as financial advisor on the deal, with Burnet, Duckworth & Palmer LLP acting as legal counsel. Updated 2026 guidance incorporating the acquired assets will be issued after closing on or about June 30, 2026.
Carlos is an engineer with strong expertise in technical and industrial topics. He previously worked at international companies such as Siemens and speaks Spanish, German, English, and Italian.
