Cardinal Energy Ltd. · TSX:CJ
Cardinal Energy — Investor Presentation (April 2014)
23 slides from Cardinal Energy's investor presentation, April 2014
Slide 1: Building a Strong Foundation
BUILDING A STRONG FOUNDATION April 2014
Slide 2: Advisory: Forward-looking Statements
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 3: Advisory: Non-GAAP Measures
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
Slide 4: 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: 37,675,910(1) (as at March 31/14) Diluted: 38,952,292(2) (as at March 31/1
Slide 5: Building a Sustainable Business
Building a Sustainable Business Build a Solid Base • 97 % operated production, 90 % working interest • Decline rate less than 15% Growth • Target 5–10% production growth per year • Glauc horizontal drilling • Accretive low decline acquisitions Protect the Business • All season access areas, ec
Slide 6: Operating the Business
Operating the Business Base 2014 Budget (1) Amount of capital required to keep Committed Capital $ 16.6 MM production flat year over year Cash flow from Target 30 – 35% simple Dividend Payments $ 24.4 MM Operations payout ratio Balance increased Free Cash Flow $ 33.0 MM decline from drilling w
Slide 7: 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 7 7
Slide 8: Cardinal Assets
Cardinal Assets Solid Base of Oil Production in 3 Core Areas • Chauvin • Wainwright • Bantry 8 8
Slide 9: Chauvin
Chauvin All season access area in Eastern Alberta Current production of about 900 bbl/d 100% oil production, low decline rate of approximately 15% per year Operated, average working interest 98% 100% of Reserves are proved plus probable producing Provides a solid base of cash flow from o
Slide 10: Wainwright
Wainwright All season access area in Eastern Alberta Approximately 100 boepd of 99% oil production Low decline of 8% per year Operated, 73% working interest Horizontal drilling upside Opportunities to further consolidate the area 100% of Reserves are proved plus probable producing 10 1
Slide 11: Bantry
Bantry Over 240 net sections of land 97% operated, average 94% working interest Extensive gathering systems and processing facilities Potential recompletions, facility consolidations, water flood optimization, new flood schemes and well optimization 11 11
Slide 12: Glauc Drilling
Glauc Drilling Estimated 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 40 primary locations, 40 secondary locations 1. Bantry type well as evaluated in the Sproule Report “Evaluation of the P&NG Reserves of
Slide 13: Glauc Drilling
Glauc Drilling (1) See advisory. 13 13
Slide 14: Cardinal Dec. 2013 Reserves
Cardinal Dec. 2013 Reserves Reserve increase of 111% (P&P), per fully diluted share PDP 12,500 mboe TP 13,748 mboe P&P 21,163 mboe (86% oil) Discounted net present value (NPVBT 10%) increase of 62% per fully diluted share FDC remains conservative at $38.3 million (less than 0.6 X cash fl
Slide 15: 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 Minimal debt $125 million credit facility 15 15
Slide 16: Hedging Strategy
Hedging Strategy To provide certainty in cash flow from operations and dividends Cardinal has set a rolling 3 year corporate hedging policy and will opportunistically hedge 60% in 2014, 40% in 2015 and 30% in 2016. Cardinal currently has the following crude oil hedges: 16 16
Slide 17: Sustainable Sensitivities
Sustainable Sensitivities Cardinal’s financial prudence is reflected in its robust total payout ratio 2014 Total Payout Ratio Sensitivities (1) WTI (US$/bbl) $75 $80 $85 $90 $95 $100 $105 72% 67% 63% 63% 55% 53% 50% 1. Maintain flat production profile; (Capital Expenditures + Dividends) / Cash Flo
Slide 18: Q1 Activity
Q1 Activity Drilled and completed two horizontal wells and spud a third horizontal well in Bantry. Completed tuck in acquisition in Bantry. Evaluating staffing, operations and assets in the SE Alberta Acquisition. Target larger acquisition opportunities to develop a new “core” area. Begin
Slide 19: Corporate at a Glance
Corporate at a Glance Dividend: $0.65/share (33% payout ratio) Decline: Less than 15% Netback: $37.00 per boe G & A (target): $2.75 to $3.00 per boe Net Debt: Currently less than 0.1X net debt to cash flow from operations 19 19
Slide 20: Strong Guidance
Strong Guidance M. Scott Ratushny – Director and Chairman Mr. Ratushny has over 15 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 also been involved as director of two public oil and
Slide 21: An Experienced Team
An Experienced Team M. Scott Ratushny – Chairman and Chief Executive Officer Mr. Ratushny has over 15 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 also been involved as director of
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: 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 23 23