13D Filing: FrontFour Capital Group and Penn West Petroleum Ltd. (PWE)

UNITED STATES

SECURITIES AND EXCHANGE
COMMISSION

Washington, D.C. 20549

SCHEDULE 13D

(Rule 13d-101)

INFORMATION TO BE INCLUDED
IN STATEMENTS FILED PURSUANT

TO § 240.13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO

§ 240.13d-2(a)

(Amendment No.  )¹

Obsidian Energy Ltd.

(Name
of Issuer)

Common Shares

(Title of Class of Securities)

674482 10 4

(CUSIP Number)

David
A. lorber

FRONTFOUR CAPITAL GROUP LLC
35 Mason Street, 4^th Floor
Greenwich, Connecticut 06830
(203) 274-9050

STEVE WOLOSKY, ESQ.

OLSHAN FROME WOLOSKY LLP

1325 Avenue of the Americas

New York, New York 10019

(212) 451-2300

(Name, Address and Telephone Number of Person

Authorized to Receive Notices
and Communications)

November 8, 2017

(Date of Event Which Requires
Filing of This Statement)

If
the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule
13D, and is filing this schedule because of §§ 240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following
box ¨.

Note:  Schedules
filed in paper format shall include a signed original and five copies of the schedule, including all exhibits.  See
§ 240.13d-7 for other parties to whom copies are to be sent.

1
The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to
the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided
in a prior cover page.

The information required
on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities
Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject
to all other provisions of the Act (however, see the Notes).

The following constitutes
the Schedule 13D filed by the undersigned (the “Schedule 13D”).

This statement relates
to the common shares (the “Shares”) of Obsidian Energy Ltd., a company governed by the laws of the Province of Alberta,
Canada (the “Issuer”). The address of the principal executive offices of the Issuer is Suite 200, 207 – 9^th
Avenue SW, Calgary, Alberta T2P 1K3 Canada.

(a)       This
statement is filed by:

Each of the foregoing
is referred to as a “Reporting Person” and collectively as the “Reporting Persons.” Each of the Reporting
Persons is party to that certain Joint Filing Agreement, as further described in Item 6. Accordingly, the Reporting Persons are
hereby filing a joint Schedule 13D.

(b)       The
principal business address of each of FrontFour Capital, FrontFour Corp., the Canadian Fund and Messrs. Loukas, Lorber and George
is 35 Mason Street, 4^th Floor, Greenwich, Connecticut 06830. The principal business address of the Master Fund is c/o
Intertrust Cayman, 190 Elgin Avenue, George Town, Grand Cayman KY1-9007, Cayman Islands. The principal business address of each
of the Energy Fund and Energy Fund GP is 200 Bay Street, Suite 3800, Toronto, Ontario, M5J 2Z4 Canada. The directors, executive
officers and principals of each of FrontFour Capital, the Master Fund, the Canadian Fund, FrontFour Corp. and Energy Fund GP and
their principal occupations and business addresses are set forth on Schedule A attached hereto and are incorporated by
reference in this Item 2. To the best of the Reporting Persons’ knowledge, except as otherwise set forth herein, none of
the persons listed on Schedule A beneficially owns any securities of the Issuer or is a party to any contract, agreement
or understanding required to be disclosed herein.

(c)       The
principal business of each of the Master Fund, the Canadian Fund and the Energy Fund is investing in securities. The principal
business of FrontFour Capital is serving as the investment manager of the Master Fund and of accounts it separately manages (the
“Separately Managed Accounts”). The principal occupation of each of Messrs. Loukas, Lorber and George is serving as
a managing member and principal owner of FrontFour Capital. By virtue of these relationships, each of FrontFour Capital and Messrs.
Loukas, Lorber and George may be deemed to beneficially own the Shares directly beneficially owned by the Master Fund and the Separately
Managed Accounts.

The principal business
of FrontFour Corp. is serving as the investment manager of the Canadian Fund. Messrs. Loukas, Lorber and George are the principal
owners and the directors of FrontFour Corp. By virtue of these relationships, each of FrontFour Corp. and Messrs. Loukas, Lorber
and George may be deemed to beneficially own the Shares directly beneficially owned by the Canadian Fund.

The principal business
of Energy Fund GP is serving as the general partner of the Energy Fund. Messrs. Loukas, Lorber and George are the principal owners
and directors of Energy Fund GP. By virtue of these relationships, each of Energy Fund GP and Messrs. Loukas, Lorber and George
may be deemed to beneficially own the Shares directly owned by the Energy Fund.

(d)       No
Reporting Person, nor any person listed on Schedule A, has, during the last five years, been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors).

(e)       No
Reporting Person, nor any person listed on Schedule A, has, during the last five years, been party to a civil proceeding
of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment,
decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.

(f)       Messrs.
Loukas, Lorber and George are citizens of the United States of America. The citizenship of the persons listed on Schedule A
is set forth therein.

The Shares and call
options purchased by each of the Master Fund and the Canadian Fund, the Shares and call options held in the Separately Managed
Accounts and the Shares purchased by the Energy Fund, were purchased with working capital (which may, at any given time, include
margin loans made by brokerage firms in the ordinary course of business). The aggregate purchase price of the 18,769,421 Shares
owned directly by the Master Fund is approximately $21,366,137, including brokerage commissions. The aggregate purchase price
of the call options exercisable into 2,311,200 Shares owned directly by the Master Fund is approximately $471,688, including brokerage
commissions. The aggregate purchase price of the 454,000 Shares owned directly by the Canadian Fund is approximately CAD$1,019,386,
including brokerage commissions. The aggregate purchase price of the call options exercisable into 56,000 Shares owned directly
by the Canadian Fund is approximately $11,409, including brokerage commissions. The aggregate purchase price of the 5,628,225
Shares held in the Separately Managed Accounts is approximately $10,406,551, including brokerage commissions. The aggregate purchase
price of the call options exercisable into 482,800 Shares held in the Separately Managed Accounts is approximately $98,737, including
brokerage commissions. The aggregate purchase price of the 154,200 Shares owned directly by the Energy Fund is approximately CAD$249,762,
including brokerage commissions. The aggregate purchase price of the 210,000 Shares owned directly by Mr. Loukas is approximately
$254,890, including brokerage commissions. The aggregate purchase price of the 450,000 Shares owned directly by Mr. Lorber is
approximately $694,348, including brokerage commissions.

The Reporting Persons
purchased the securities of the Issuer reported herein based on their belief that such securities, when purchased, were undervalued
and represented an attractive investment opportunity.

The Reporting Persons
delivered a letter to the Board of Directors of the Issuer (the “Board”) on October 5, 2017, and subsequently entered
into discussions with members of the Board and management related to the Issuer’s strategy and Board composition. The Reporting
Persons may continue to enter into discussions with the Board and reserve all rights to take any and all action with respect to
their investment in the Issuer.

The Reporting Persons
believe that the Shares currently trade at a significant discount to intrinsic value and do not reflect the value inherent in the
Issuer’s unparalleled acreage position in the Cardium, significant upside in the Mannville, infrastructure advantaged position
in the Alberta Viking and valuable tax pool position. In order to unlock this value, the Reporting Persons intend to communicate
with the Issuer’s management and Board about a broad range of strategic and operational matters. The Reporting Persons also
intend to review their investment in the Issuer on a continuing basis and may from time to time in the future express their views
to and/or meet with management, the Board, other shareholders or third parties, and/or formulate plans or proposals regarding the
Issuer, its assets or its securities. The Reporting Persons may exchange information with any such persons pursuant to appropriate
confidentiality or similar agreements.

No Reporting Person
has any present plan or proposal which would relate to or result in any of the matters set forth in subparagraphs (a) – (j) of
Item 4 of Schedule 13D except as set forth herein or such as would occur upon or in connection with completion of, or following,
any of the actions discussed herein. The Reporting Persons may consider, explore and/or develop plans and/or make proposals with
respect to, or with respect to potential changes in, the operations, management, the articles and bylaws, Board composition, ownership,
capital or corporate structure, capital allocation, dividend policy, strategy and plans of the Issuer, potential strategic transactions
involving the Issuer or certain of the Issuer’s businesses or assets, or may change their intention with respect to any and
all matters referred to in Item 4.

Depending upon overall
market conditions, other investment opportunities available to the Reporting Persons, and the availability of securities of the
Issuer at prices that would make the purchase or sale of such securities desirable, the Reporting Persons may endeavor (i) to increase
or decrease their respective positions in the Issuer through, among other things, the purchase or sale of securities of the Issuer
on the open market or in private transactions, including through a trading plan created under Rule 10b5-1(c) or otherwise, on such
terms and at such times as the Reporting Persons may deem advisable and/or (ii) to enter into transactions that increase or hedge
their economic exposure to the Shares without affecting their beneficial ownership of Shares.

(a)
The aggregate percentage of Shares reported owned by each person named herein is based upon 504,328,913 Shares outstanding
as of November 9, 2017, which is the total number of Shares outstanding as reported in the Issuer’s Form 6-K filed with the
Securities and Exchange Commission on November 13, 2017.

As of the close of
business on November 17, 2017, the Master Fund beneficially owned directly 21,080,621 Shares (including 2,311,200 Shares underlying
certain call options exercisable within 60 days of the date hereof), the Canadian Fund beneficially owned directly 510,000 Shares
(including 56,000 Shares underlying certain call options exercisable within 60 days of the date hereof), 6,111,025 Shares (including
482,800 Shares underlying certain call options exercisable within 60 days of the date hereof) were held in the Separately Managed
Accounts, the Energy Fund directly owned 154,200 Shares, Mr. Loukas directly owned 210,000 Shares and Mr. Lorber directly owned
450,000 Shares, constituting approximately 4.2%, less than 1%, approximately 1.2%, less than 1%, less than 1% and less than 1%,
respectively, of the Shares outstanding.

FrontFour Capital,
as the investment manager of the Master Fund and the Separately Managed Accounts, may be deemed to beneficially own the 27,191,646
Shares directly beneficially owned by the Master Fund and held in the Separately Managed Accounts, constituting approximately 5.4%
of the Shares outstanding.

FrontFour Corp., as
the investment manager of the Canadian Fund, may be deemed to beneficially own the 510,000 Shares directly beneficially owned by
the Canadian Fund, constituting less than 1% of the Shares outstanding.

Energy Fund GP, as
the general partner of the Energy Fund, may be deemed to beneficially own the 154,200 Shares directly owned by the Energy Fund,
constituting less than 1% of the Shares outstanding.

Mr. Loukas, as a managing
member and principal owner of FrontFour Capital, a principal owner of FrontFour Corp. and a principal owner and director of Energy
Fund GP, may be deemed to beneficially own the 27,855,846 Shares directly beneficially owned in the aggregate by the Master Fund,
the Canadian Fund and the Energy Fund and held in the Separately Managed Accounts, which, together with the 210,000 Shares he directly
owns, constitute approximately 5.6% of the Shares outstanding.

Mr. Lorber, as a managing
member and principal owner of FrontFour Capital, a principal owner of FrontFour Corp. and a principal owner and director of Energy
Fund GP, may be deemed to beneficially own the 27,855,846 Shares directly beneficially owned in the aggregate by the Master Fund,
the Canadian Fund and the Energy Fund and held in the Separately Managed Accounts, which, together with the 450,000 Shares he directly
owns, constitute approximately 5.6% of the Shares outstanding.

Mr. George, as a managing
member and principal owner of FrontFour Capital, a principal owner of FrontFour Corp. and a principal owner and director of Energy
Fund GP, may be deemed to beneficially own the 27,855,846 Shares directly beneficially owned in the aggregate by the Master Fund,
the Canadian Fund and the Energy Fund and held in the Separately Managed Accounts, which constitute approximately 5.5% of the Shares
outstanding.

Each of the Reporting
Persons, as a member of a “group” with the other Reporting Persons for purposes of Rule 13d-5(b)(1) of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”), may be deemed to beneficially own the securities of the Issuer
owned by the other Reporting Persons. The filing of this Schedule 13D shall not be deemed an admission that the Reporting Persons
are, for purposes of Section 13(d) of the Exchange Act, the beneficial owners of any securities of the Issuer he or it does not
directly own. Each of the Reporting Persons specifically disclaims beneficial ownership of the securities reported herein that
he or it does not directly own.

(b)
Each of the Master Fund, FrontFour Capital and Messrs. Loukas, Lorber and George have shared power to vote or direct the
vote of, and to dispose or direct the disposition of, the Shares owned directly by the Master Fund.

Each of FrontFour
Capital and Messrs. Loukas, Lorber and George have shared power to vote or direct the vote of, and to dispose or direct the disposition
of, the Shares held in the Separately Managed Accounts.

Each of the Canadian
Fund, FrontFour Corp. and Messrs. Loukas, Lorber and George have shared power to vote or direct the vote of, and to dispose or
direct the disposition of, the Shares owned directly by the Canadian Fund.

Each of the Energy
Fund, Energy Fund GP and Messrs. Loukas, Lorber and George have shared power to vote or direct the vote of, and to dispose or direct
the disposition of, the Shares owned directly by the Energy Fund.

Mr. Loukas has the
sole power to vote or direct the vote of, and to dispose or direct the disposition of, the Shares owned directly by him.

Mr. Lorber has the
sole power to vote or direct the vote of, and to dispose or direct the disposition of, the Shares owned directly by him.

(c)
The transactions in the securities of the Issuer effected by the Reporting Persons during the past 60 days are set forth
on Schedule B attached hereto. All of such transactions were effected in the open market except as otherwise set forth therein.

(d)
No person other than the Reporting Persons is known to have the right to receive, or the power to direct the receipt of
dividends from, or proceeds from the sale of, the Shares.

(e)
Not applicable.

On the date hereof,
the Reporting Persons entered into a Joint Filing Agreement in which the Reporting Persons agreed to the joint filing on behalf
of each of them of statements on Schedule 13D with respect to securities of the Issuer. A copy of this agreement is attached hereto
as Exhibit 99.1 and is incorporated herein by reference.

The Master Fund has
(a) purchased call options (i) referencing an aggregate of 811,600 Shares, which have an exercise price of $1.10 per Share and
expire on May 18, 2018, (ii) referencing an aggregate of 811,300 Shares, which have an exercise price of $1.15 per Share and expire
on May 18, 2018, and (iii) referencing an aggregate of 688,300 Shares, which have an exercise price of $1.20 per Share and expire
on May 18, 2018, and (b) sold short put options (i) referencing an aggregate of 1,622,900 Shares, which have an exercise price
of $0.85 per Share and expire on May 18, 2018, and (ii) referencing an aggregate of 688,300 Shares, which have an exercise price
of $1.05 per Share and expire on May 18, 2018.

The Canadian Fund
has (a) purchased call options (i) referencing an aggregate of 19,500 Shares, which have an exercise price of $1.10 per Share
and expire on May 18, 2018, (ii) referencing an aggregate of 19,800 Shares, which have an exercise price of $1.15 per Share and
expire on May 18, 2018, and (iii) referencing an aggregate of 16,700 Shares, which have an exercise price of $1.20 per Share and
expire on May 18, 2018, and (b) sold short put options (i) referencing an aggregate of 39,300 Shares, which have an exercise price
of $0.85 per Share and expire on May 18, 2018, and (ii) referencing an aggregate of 16,700 Shares, which have an exercise price
of $1.05 per Share and expire on May 18, 2018.

The Separately Managed
Accounts have (a) purchased call options (i) referencing an aggregate of 168,900 Shares, which have an exercise price of $1.10
per Share and expire on May 18, 2018, (ii) referencing an aggregate of 168,900 Shares, which have an exercise price of $1.15 per
Share and expire on May 18, 2018, and (iii) referencing an aggregate of 145,000 Shares, which have an exercise price of $1.20
per Share and expire on May 18, 2018, and (b) sold short put options (i) referencing an aggregate of 337,800 Shares, which have
an exercise price of $0.85 per Share and expire on May 18, 2018, and (ii) referencing an aggregate of 145,000 Shares, which have
an exercise price of $1.05 per Share and expire on May 18, 2018.

Except as described
above in this Item 6, none of the Reporting Persons has any contracts, arrangements, understandings or relationships with respect
to the securities of the Issuer.

SIGNATURES

After reasonable inquiry
and to the best of his knowledge and belief, each of the undersigned certifies that the information set forth in this statement
is true, complete and correct.

SCHEDULE A

Directors, Executive Officers and
Principals of Certain Reporting Persons

FrontFour Capital Group LLC

FrontFour Master Fund, Ltd.

FrontFour Opportunity Fund

FrontFour Capital Corp.

FrontFour Energy GP Inc.

¹ Mr. Ellott directly owns 2,650 Shares, constituting less than 1% of the Shares outstanding. The aggregate purchase price of such Shares is approximately CAD$24,910, excluding brokerage commissions.

SCHEDULE B

Transactions in the Securities
of the Issuer During the Past Sixty Days

FRONTFOUR MASTER FUND, LTD.

FRONTFOUR OPPORTUNITY FUND^***

FRONTFOUR CAPITAL GROUP LLC

(Through Separately Managed Accounts)

FRONTFOUR ENERGY FUND^***

STEPHEN LOUKAS

DAVID A. LORBER

* Represents a short sale.

** Represents a purchase to cover short position.

*** ll prices for transactions in Common Shares are in
Canadian Dollars and all prices for transactions in options are in U.S. Dollars.