Obsidian Energy Announces Partial Redemption of $30 Million Senior Unsecured Notes.

Obsidian Energy announced a partial redemption of its $110.8 million aggregate principal amount of senior unsecured notes due July 27, 2027. The company will redeem $30 million of the outstanding notes on August 29, 2025, at a redemption price of $1,029.88 per $1,000 principal amount, plus accrued interest. The redemption is expected to reduce the company's go-forward interest expense.

Obsidian Energy (NYSE American: OBE) has announced plans to redeem $30 million of its outstanding 11.95% Senior Unsecured Notes due July 27, 2027. The redemption represents approximately 27% of the current $110.8 million outstanding Notes. The redemption will occur on August 29, 2025, at a price of $1,029.88 per $1,000 principal amount (102.988% of principal), plus accrued and unpaid interest. Following the redemption, $80.8 million of Notes will remain outstanding, with future semi-annual free cash flow offer requirements capped at $17.0 million [1].

The partial redemption of the high-interest Notes demonstrates strategic financial management. By redeeming $30 million of the Notes, Obsidian Energy is reducing its future interest obligations and enhancing its financial health. The company is paying a 2.988% premium above par value to achieve this, indicating management's confidence that the long-term interest savings outweigh the short-term premium costs [1].

The decision to redeem the Notes also signals strong liquidity and operational cash flow generation. The company is lowering its semi-annual free cash flow offer requirement from $23.3 million to $17.0 million under the trust indenture, creating greater financial flexibility [1].

For an energy company, reduced debt burden provides critical flexibility to weather commodity price volatility while maintaining operational capabilities. This partial redemption represents a disciplined capital allocation approach that balances debt reduction with maintaining sufficient liquidity for operations [1].

Obsidian Energy's President and CEO, Stephen Loukas, commented, "The Company's strong balance sheet and liquidity position is enabling us to pay down a portion of our outstanding Notes thereby reducing our go forward interest expense" [1].

The redemption is expected to improve Obsidian Energy's debt-to-equity ratio and potentially lower its weighted average cost of capital. This, in turn, could lead to better borrowing terms and increased financial flexibility [1].

Formal notice of redemption is being delivered to the registered holders of the Notes through Computershare Trust Company of Canada, the trustee under the Indenture, in accordance with the Indenture [1].

References:
[1] https://www.stocktitan.net/news/OBE/obsidian-energy-announces-notice-of-partial-redemption-for-30-hpm3clzzrafn.html