SCHEDULE: Kernaghan Group Re-Establishes >5% Stake in Obsidian Energy

The Kernaghan group has increased its beneficial ownership in Obsidian Energy Ltd. to 5.22% through a series of open market and private transactions, re-establishing a greater than 5% stake.

Summary

• Kernwood Limited and related individuals (the "Reporting Persons") have filed an Amendment No. 4 to their Schedule 13D, updating their beneficial ownership in Obsidian Energy Ltd.
• The Reporting Persons collectively hold 3,533,866 Common Shares, representing 5.22% of the outstanding shares as of June 30, 2025.
• Kernwood Limited acquired 3,438,300 Common Shares through open market transactions from March 23, 2023, to the filing date.
• Edward H. Kernaghan acquired an additional 55,145 Common Shares through open market transactions, bringing his direct ownership to 85,352 shares.
• The group's beneficial ownership dropped below 5% as of December 31, 2021, due to an increase in Obsidian Energy's outstanding shares.
• They re-established beneficial ownership above 5% as of August 15, 2025, following further share acquisitions.
• Principia Research Inc., Edward J. Kernaghan, and Alice Kernaghan are no longer part of the Section 13(d) group.
• Edward J. Kernaghan divested all ownership interest in Kernwood on May 15, 2019.
• Recent purchases by Kernwood include 50,000 shares at $7.843 on August 18, 2025, and 108,500 shares at $7.769 on August 19, 2025.
• Kernwood also acquired 10,214 Common Shares from Principia Research Inc. on September 9, 2025, in a privately negotiated transaction at market price.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive as a significant shareholder group has increased its stake and re-established a >5% ownership, indicating continued investment interest and potential future engagement, including seeking board representation. While there were some sales by individual family members, the overall group's position has strengthened.

Positives

• The Kernaghan group has increased its beneficial ownership in Obsidian Energy, demonstrating continued investment interest.
• The group re-established a greater than 5% stake, indicating a significant and active position.
• The stated purpose of the transactions is for investment, with potential plans to enhance value, including seeking board representation.

Negatives

• The group's beneficial ownership temporarily fell below 5% as of December 31, 2021, due to share dilution from an increase in outstanding shares.
• Alice Kernaghan sold 100,000 Common Shares on March 24, 2022.
• Elizabeth Kernaghan sold 90,000 Common Shares on March 25, 2022.

Risks

• The filing does not explicitly mention company-specific risks for Obsidian Energy Ltd. It focuses on the reporting persons' investment activities.

Future Outlook

The Reporting Persons review their investments in Obsidian Energy on a continuing basis and may acquire or dispose of additional securities. They may also consider, formulate, and implement plans to enhance the value of their investment, including potentially seeking board representation.

Management Comments

• The Common Shares reported in this Amendment No. 4 were acquired by the Reporting Persons from time to time in open market transactions with a view towards investment.
• The Reporting Persons may from time to time and at any time, in their sole discretion, acquire or cause to be acquired, additional equity or debt securities or other instruments of the Issuer, its subsidiaries or affiliates, or dispose or cause to be disposed, such equity or debt securities or instruments.
• The Reporting Persons may seek to have one of their members appointed to the board of directors of the Issuer.

Industry Context

This filing reflects a significant shareholder group increasing its stake in an energy company, which could signal confidence in the sector or the specific company's prospects. Such movements by substantial investors are often watched for potential strategic shifts or increased shareholder engagement in the energy industry.

Comparison to Industry Standards

• The filing does not provide specific financial or operational results for Obsidian Energy Ltd. that would allow for a direct comparison to global industry benchmarks or specific comparable companies/projects. It primarily details changes in beneficial ownership and investment intent.

Management Changes

Corporate Governance

Legal Proceedings

• None of the Reporting Persons or Listed Persons have been convicted in a criminal proceeding (excluding traffic violations) or been a party to a civil proceeding resulting in a judgment, decree, or final order related to federal or state securities laws during the last five years.

Related Party Transactions

• Kernwood Limited acquired 10,214 Common Shares from Principia Research Inc. on September 9, 2025, in a privately negotiated transaction at market price. Principia Research Inc. was previously part of the Section 13(d) group.

Stakeholder Impact

• Shareholders: The increased stake by a significant investor group could be seen as a vote of confidence, potentially influencing market perception and share price. The possibility of seeking board representation suggests potential for increased shareholder activism or strategic input.
• Management/Board: The stated intent to potentially seek board representation could lead to increased scrutiny or strategic discussions with current management and the board.

Next Steps

• Reporting Persons may acquire or dispose of additional equity or debt securities of Obsidian Energy.
• Reporting Persons may consider, formulate, and implement plans to enhance the value of their investment.
• Reporting Persons may seek to have one of their members appointed to the board of directors of Obsidian Energy.

Key Dates

Recommendation

The filing indicates a significant shareholder group has increased its stake in Obsidian Energy, re-establishing a greater than 5% beneficial ownership. This demonstrates continued investment interest and potential for future engagement, including seeking board representation, which could be a positive catalyst. However, the filing does not provide new financial performance data or specific strategic plans that would warrant a 'buy' recommendation. The previous temporary dip below 5% ownership due to share dilution and some individual sales by family members suggest a nuanced view. Therefore, a 'hold' recommendation is appropriate, advising investors to maintain their current position while monitoring for further developments regarding the group's strategic intentions and Obsidian Energy's performance.

Keywords

Obsidian Energy, OBSIDIAN ENERGY LTD., Common Shares, Schedule 13D/A, Beneficial Ownership, Kernwood Limited, Edward H. Kernaghan, Elizabeth Kernaghan, Share Acquisition, Investment, SEC Filing, Energy Sector, Shareholder Activism