Price Forecast:

Bullish Case: Obsidian Energy exhibits revenue resilience amid a recovering oil market, signaling strong potential growth. Positive sentiment from operational synergies could drive significant upward price movements.

Bearish Case: Ongoing environmental disputes remain a critical risk for Obsidian Energy, potentially stalling production and impairing investor confidence, thus posing a downside risk for OBE's price.

Potential Outcomes:

1. Resolution of environmental disputes (40%);

2. Continued revenue growth from operational efficiencies (30%);

3. Escalating legal challenges impacting production (25%);

4. Short-term volatility influencing price swings (35%);

5. Sustained mean reversion in price action (65%).

Trading Oracle: Consider implementing a debit spread strategy by buying OBE $7.50 calls while selling $10 calls expiring January 2025. This takes advantage of high implied volatility and historical mean recovery, aiming for a favorable risk-reward outlook as market sentiment stabilizes in the coming months.

November 20, 2024