Cardinal Energy Ltd. · TSX:CJ
Cardinal Energy — Investor Presentation (November 2014)
27 slides from Cardinal Energy's investor presentation, November 2014
Slide 1: Built to Last
e CARDINAL BUILT TO LAST November, 2014.
Slide 2: Cardinal Energy Ltd.
Cardinal Energy Ltd. Cardinal Energy Ltd. (“Cardinal” or the “Company”) is an oil focused Canadian company built to provide investors with Growth and a Sustainable dividend. Trading Symbol: TSX: CJ Shares Outstanding: 56,654,104(1) (as at September 30, 2014) Diluted: 58,768,972(1) (as at Sep
Slide 3: A Sustainable Platform
A Sustainable Platform Built a Solid Base • Base production decline rate less than 10% • 97% operated production, 90% working interest, 90% oil production Growth • Long term target <10+% ORGANIC production growth per year (2014 – 15-20% organic growth) • Multi year horizontal drilling inventory
Slide 4: Decline Rates
Decline Rates 1. Source cite: Scotiabank GBM (Global Banking and Markets) 4
Slide 5: Conservative Balance Sheet
Conservative Balance Sheet Corporate goal to always maintain a ratio of less than 1.0 x net debt to cash flow from operations Provides flexibility to acquire additional assets on an accretive basis Will use balance sheet as required $220 million credit facility borrowing base 5 5
Slide 6: Managing Our Production
Managing Our Production Growth Profile Balance between Growth and Decline Free Cash Flow Spending Allocation 30% 100% Drilling 20% Production growth 10% Target 100% Acquisitions 0% 10% 15% 20% 25% Production Decline Rate 6 6
Slide 7: Operating the Business
Operating the Business Pro-forma (annualized) (1) Amount of capital required to keep CAPEX $ 45.0 MM production flat year over year Cash flow from Dividend $ 48.4 MM Target 30 – 35% Operations Payments simple payout ratio Free Cash Balance increased $ 66.1 MM Flow decline from drilling with lo
Slide 8: Q3 Performance
Q3 Performance 2014 THIRD QUARTER PERFORMANCE Three months ended, FINANCIAL SEPT 30, 2014 JUNE 30, 2014 % CHANGE (thousands except per share amounts) Petroleum and natural gas revenue $54,045 $48,194 12% Cash flow from operations $25,858 $23,522 10% ‐ Basic per share $0.60 $0.62 (4%) ‐ Diluted per s
Slide 9: Netback
Netback Op costs projected to increase in Q4 due to acquisitions (1) See Advisory located at the end of the presentation. 9 9
Slide 10: Quarterly Production Growth
Quarterly Production Growth Quarterly Production Growth 12,000 188 200 172 176 171 180 10,000 146 160 Production / MM shares ‐ basic 140 8,000 120 boe/d 6,000 100 10,821 80 4,000 7,587 60 6,235 6,501 40 2,000 2,155 20 ‐ ‐ Q4 2013 Q1 2014 Q2 2014 Q3 2014 10,821 Q4 2014 Total (boe/d) Production / MM s
Slide 11: Cardinal Assets
Cardinal Assets Solid Base of Oil Production from 2 Core Areas Wainwright Approximately 5,400 BOE/d production forecast for Q4 Bantry Approximately 5,400 BOE/d production forecast for Q4 Both areas have extensive development drilling and growth potential 11 11
Slide 12: Wainwright
Wainwright Dominant land position with over 55 sections of land Oil production under waterflood with less than 10% decline 98% operated, average 95% working interest Control key infrastructure Solid low decline base production with uphole drilling targets Other growth opportunities 12 12
Slide 13: Wainwright Drilling
Wainwright Drilling Average well cost $1.0 mm (estimated) IP (365) < $40,000/flowing boe Reserves 55 mboe(1) F&D $18.00/boe(1) Multiyear drilling inventory of 30 primary locations Hz Well Type Curve (1) Waseca Type curve internally determined in accordance with NI 51-101 by a qualified Eng
Slide 14: Bantry
Bantry Dominant land position with over 246 sections of land 97% operated, average 94% working interest oil production Base production out-performing reserves estimates The majority of base production is currently under waterflood Control key infrastructure Solid low decline base product
Slide 15: Bantry Drilling
Bantry Drilling Average well cost $2.1mm IP (365) < $20,000/flowing boe Reserves 180 mboe F&D $11.66/boe Recycle ratio 3.5X Multiyear drilling inventory, 80 locations 1. Bantry type well as evaluated in the Sproule Report “Evaluation of the P&NG Reserves of Cardinal Energy Ltd. December
Slide 16: Bantry Drilling
Bantry Drilling Statistics based on the average of 4 producing wells ($2.1 mm per well) IP 30 less than $4,500/flowing boe IP 90 less than $6,000 per flowing boe IP 120 less than $7,000 per flowing boe Decline for 3 months in the type curve is 34% average well decline is less than 20%. Out
Slide 17: Cardinal Dec. 2013 Reserves with Wainwright Acquisitions
Cardinal Dec. 2013 Reserves with Wainwright Acquisitions Proforma Reserves with Acquisition 1,2 P&P 43.3 mmboe (92% oil) - $798.5 ($MM) NPVBT10 91% of Reserves are Proved plus Probable Producing Accretive Acquisitions Reserves increase per fully diluted share since Dec 31, 2013 PDP reserves/
Slide 18: Simple Payout Ratio
Simple Payout Ratio (1) See Advisory located at the end of the presentation. 18 18
Slide 19: Sustainable Sensitivities
Sustainable Sensitivities Cardinal’s financial prudence is reflected in its robust total payout ratio Total Payout Ratio Sensitivities (1) WTI (US$/bbl) $65 $70 $75 $80 $85 $90 $95 65% 62% 59% 57% 55% 53% 51% 1. Maintain flat production profile; (Capital Expenditures + Dividends) / Cash Flow from
Slide 20: Activity Since IPO
Activity Since IPO December 17, 2013 Completed initial public offering (“IPO”) at $10.50 per share December 17, 2013 South East Acquisition closes, adding 4,500 BOEPD December 23, 2013 Over‐allotment on IPO financing exercised, resulting in a total of $247.5 million being raised on the IPO. January
Slide 21: Hedging Strategy
Hedging Strategy To provide certainty in cash flow from operations and dividends Cardinal has set a rolling 3 year corporate hedging policy and will opportunistically hedge up to 60% in 2014, 40% in 2015 and 30% in 2016. Cardinal currently has the following crude oil hedges: BBL/D 5,000 4,381 4,
Slide 22: Track Record – Value Creation
Track Record – Value Creation Proven performance across commodities and throughout the cycle • Positive return on all equity issued in all companies Midway Energy Ltd. 2009-2012 AB - Cardium - Beaverhill Lake $118 Million - $550 Million Pilot Energy Ltd. 2004 - 2008 (Equity) (Sale Price) Sask. – B
Slide 23: Strong Guidance
Strong Guidance M. Scott Ratushny – Director and Chairman Mr. Ratushny has over 17 years of diverse oil and gas experience and has been involved in the creation, financing and growth of 9 successful private and public oil and gas companies. He is currently involved as director of two public oil and
Slide 24: An Experienced Team
An Experienced Team M. Scott Ratushny – Chief Executive Officer Mr. Ratushny has over 17 years of diverse oil and gas experience and has been involved in the creation, financing and growth of 9 successful private and public oil and gas companies. He has had a track record of creating value for Share
Slide 25: Corporate Information
Corporate Information Corporate Headquarters: 1400, 440 – 2nd Avenue S.W. Calgary, AB T2P 5E9 Auditors: KPMG LLP Legal: Burnet Duckworth & Palmer LLP Reserves: Sproule Associates Limited Contacts: Scott Ratushny Email: scottr@cardinalenergy.ca Tel: (403) 216-2706 Doug Smith Email: dougs@cardinalener
Slide 26: Advisory
Advisory Forward-looking Statements Certain information in this document contains forward-looking statements. These statements relate to future events or the Company's future performance. All information and statements contained herein that are not clearly historical in nature constitute forward loo
Slide 27: Advisory
Advisory Non-GAAP Measures Throughout this presentation the Company uses the terms “cash flow from operations”, “netback”, “net debt”, “free cash flow”, “simple payout ratio” and “total payout ratio”. These terms do not have a standardized prescribed meaning under GAAP and these measurements may not
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