Canadian First Nation rejects Obsidian Energy drilling expansion plans

Canada’s Woodland Cree First Nation has rejected oil and gas producer Obsidian Energy’s proposal to expand drilling operations on its traditional territory, the Indigenous community said in a statement on Monday.

WHY IT’S IMPORTANT

The formal notice that Woodland Cree’s chief and council have rejected Obsidian’s drilling plans mark a further breakdown in relations, after the First Nation initially raised concerns about the company’s activities on their territory in northern Alberta in February.

The community urged Obsidian to address their concerns about a series of earthquakes in their territory in late 2022 and early 2023, that regulators said Obsidian were responsible for.

CONTEXT

Calgary-based Obsidian produces around 6,500 barrels of oil equivalent per day (boepd), or 20% of its total production, from assets in the Peace River region, some of which are within Woodland Cree territory.

MARKET REACTION

Obsidian shares were last down 0.4% at C$10.90 on the Toronto Stock Exchange.

Analysts at brokerage Stifel said that while the rejection would not have a meaningful impact on Obsidian’s short-term outlook, because the company already had well licenses in hand, it was not ideal for longer-term plans in the region.

THE REACTION

Obsidian did not immediately respond to a request for comment.

(Reporting by Nia Williams in British Columbia; Editing by Stephen Coates)