Obsidian Energy Ltd is an energy company that specializes in petroleum products, oil, and gas. The term “obsidian” tells of its willingness to grow and transform with the changes in the fast-paced industry. With its high-quality assets and an entrepreneurial spirit, OBE promises investors a value for their money. However, it enters the market not as a new company but as a reformed Penn West Petroleum Limited.
Reason for Reforms
Formerly as Penn west Petroleum Limited, Obsidian Energy was one of the largest mid-size enterprises in the petroleum sector. It produced over 135,000 barrels per day, employed more than 1400 people, and had nearly 180 million shareholders. For the past four years, however, accounting scandals and high debt levels almost led to the company’s closure.
Surviving a crisis
In 2014, the firm’s debt was $3 billion. Through assets sales, Obsidian Energy reduced the debt by nearly 90% to only $384, million. In 2016, the firm settled the accounting scandals that had led to costly investors lawsuits. As a permanent solution to its woes, the shareholders decided on an entire overhaul in the organization’s leadership and operations. Get More Info Here.
From the beginning of 2017, Obsidian has undergone several target-specific changes. The production level was cut down to 30,000 barrels per day. As a result, the number of employees was reduced to only 300. Even more, it narrowed its focus from 30 production areas to just four.
Shareholders take a stand
For a complete transformation, the management of Penn West Petroleum put together a 6-point resolutions proposal. The six resolutions were geared towards avoiding the previous crisis and most importantly, redesigning the company’s course of action. On the 26th of June 2017, the shareholders took their stand on the proposed changes. Over 92% voted in favor of each resolution.
Change of Name
Changing the company’s name from Penn West to Obsidian Energy was the fifth resolution on the proposal. Just as Obsidian, the firm was taking a dynamic entrepreneurial approach in its organization and operations. Other decisions included the appointment of Ernst & Young as the firm’s financial editor and election of 8 new directors.