Cardinal Energy Ltd. · TSX:CJ

Cardinal Energy — Investor Presentation (January 2023)

29 slides from Cardinal Energy's investor presentation, January 2023

  1. Slide 1: Winter 2023

    TSX: CJ LOW DEBT LOW DECLINE LOW EMISSIONS Winter 2023

  2. Slide 2: Cardinal Snapshot

    Cardinal Snapshot As at September 30, 2022 (unless stated) • Lowest decline among • Monthly dividend Shares Outstanding 158 MM conventional oil producers • NCIB Market Capitalization (January, 2023) ~$1.2 billion • >500 identified locations Monthly Dividend $0.06 per share Net Debt $62 MM Sustainabl

  3. Slide 3: Our Business

    Our Business Cash Flow  Amount of capital required to maintain our assets and keep production flat Maintenance Capital  Amount of capital required to fulfill our commitment to operating our business in a responsible manner ARO/ESG  Capital available to our shareholders  Increase the value of the

  4. Slide 4: Net Negative Carbon Emissions

    Net Negative Carbon Emissions 2022 Cardinal Energy Corporate Emissions 50 100  Differentiated from our Peers Monthly Emissions (t CO2e) / Sequestration (t CO2) Thousands Cumulative Emissions (t CO2e) against 'Net Zero‘ Thousands  Negative Corporate Net Scope 1 CO2e Emissions 25 50  Midale, Sask C

  5. Slide 5: Corporate Production

    Corporate Production 25000  Current production exceeding budget 20000  Majority of production under established secondary or tertiary recovery schemes 15000 boe per day  Base decline less than 10% 10000  Large OOIP properties continue to outperform  Successful optimization initiatives across as

  6. Slide 6: Q3 Results

    Q3 Results Q3 2022 Adjusted Funds Flow $80 MM Capital Expenditures $24 MM  Capital Expenditures on Budget ARO Expenditures $7 MM  Shareholder Returns Maximized Dividends declared $24 MM NCIB purchases (3.4 mm shares) $24 MM  Q3 Production 4% Above Budget Production 21,715 boe/d  Strong Realized

  7. Slide 7: 2023 Budget – Enhance Free Cash Flow

    2023 Budget – Enhance Free Cash Flow Budget  Continue to reduce debt $80 WTI 2023 Budget $3.50/mcf AECO  Maintain production volumes ~22,000 boe/d Production (boe/d) ~22,000  Continue base optimization Adjusted Funds Flow $270 MM  Execute focused drilling program (17.6 net wells) Dividend $115 M

  8. Slide 8: Assumptions and Sensitivities

    Assumptions and Sensitivities Pricing Assumptions 2023 Budget Annualized Sensitivities WTI $ US/bbl 80.00 Adjusted Funds Flow WCS Differential $ US/bbl (18.00) ($ mm) MSW Differential $ US/bbl (3.50) Δ US$1 WTI 7.2 Fx rate US/CAD 0.78 Δ US$1 WCS Differential 4.6 AECO $CAD/mcf 3.50 Δ US$1 MSW Differe

  9. Slide 9: 2022 vs 2023 – Increasing Focus on Shareholder Returns

    2022 vs 2023 – Increasing Focus on Shareholder Returns Allocation of Adjusted Funds Flow 2022 Forecast (Avg $95 WTI) 2023 Budget ($80 WTI) Reduce Debt, Initiate Shareholder Returns Increasing Shareholder Returns 100% Priorities for Incremental Adjusted Funds Flow Shareholder 1. Eliminate bank debt R

  10. Slide 10: 2023 Plan - $97 MM Capital / $23 MM ARO

    2023 Plan - $97 MM Capital / $23 MM ARO Development $43 MM Drill, Complete, Equip and Tie In (17.6 net wells)  Focused drilling program Optimization $23 MM  Clearwater - Nipisi 4 well pad and Heart River assessment Well Optimization – workovers, pump jacks and ESPs Waterflood Optimization  Follow

  11. Slide 11: Power Volatility – Managing/Reducing Opex

    Power Volatility – Managing/Reducing Opex  Challenge :  Relatively large corporate power consumer ~28 MW (2022) • Associated with secondary recovery delivering low corporate decline rate • 2022 experienced extreme monthly variability in average Alberta power price $75-312/MWh (2022 annual average

  12. Slide 12: 2022 Drilling Program

    2022 Drilling Program Facility Ownership and Pipeline connected to Sales in all Areas  Clearwater – Nipisi, Gift Northern Alberta  Four (6 leg horizontals) oil wells at Nipisi  One 75% working interest well at Gift  Dunvegan – Grande Prairie Northern Alberta  Two horizontal oil wells on stream

  13. Slide 13: Clearwater – Nipisi, Gift, Heart River Northern Alberta

    Clearwater – Nipisi, Gift, Heart River Northern Alberta  First 4 well pad on production  Land positions on two additional Clearwater prospects established along Nipisi – Peavine trend:  Production well above forecast  Over 12,000 acres of Clearwater acreage  Achieved payout after 90 days  Offs

  14. Slide 14: Central – Wainwright Rex

    Central – Wainwright Rex  Legacy, low decline Sparky production ~1140 bbls/d  New underlying Rex level 8 leg horizontal on stream Aug 4  Current production ~100 boe/d (86% oil)  True half cycle development – infrastructure in place  Increases value of legacy Sparky production New Rex Formation

  15. Slide 15: Central – Wainwright Rex

    Central – Wainwright Rex  Play characteristics  Rex formation (Clearwater equivalent)  ~700m TVD  2-5m thick zone  Up to 27% porosity  OOIP (internal estimate) 3-5 mmbo/sec  ~20o API oil  Internal type curve IP365 105 boepd, EUR 135 mboe  Up to 50 potential locations  Long term water flood

  16. Slide 16: Ellerslie/Glauc – Tide Lake, Southern Alberta

    Ellerslie/Glauc – Tide Lake, Southern Alberta  Initial wells drilled in 2018 – 11 wells drilled to date, combination of hz multilaterals and hz multi frac wells targeting two zones (~1000m TVD)  2022 – 10 wells total (8 Ellerslie, 2 Glauc channel) drilled  Q4 - 5 wells drilled (4 Ellerslie, 1 Gla

  17. Slide 17: Midale, Sask – Long Term Development

    Midale, Sask – Long Term Development Midale & Weyburn Background Weyburn Midale  ~29o API oil, discovered early 1950’s Operator Whitecap Cardinal Cardinal Working Interest >0.1% 77.1%  Same zone similar reservoir properties Unit Area (ha) ~22,000 ~12,000 Estimated Drilling Density (acres/well) 20

  18. Slide 18: Midale – CCS EOR Simplified

    Midale – CCS EOR Simplified Process Impact 5,000 4,000 bbls/d (Gross) 3,000 2,000 1,000 0 2017-01 2018-01 2019-01 2020-01 2021-01 2022-01 2023-01 Source EPA  CO2 is injected into the reservoir, combines with residual oil and then a portion is produced along with the recovered oil.  Very low produc

  19. Slide 19: Midale, Sask – Multi-layer Targets

    Midale, Sask – Multi-layer Targets Surface  Excellent surface access ~1400m Reservoir 1-3 m  Historical injection (water and CO2) targeted in lower Vuggy  Current targeted layer development and optimization Midale Reservoir 1-3 m  Matching injection to production formation  Adding injectors and

  20. Slide 20: Midale, Sask – WAG Injector Program

    Midale, Sask – WAG Injector Program Midale Flood Development 350 300  Drilled two WAG injectors to be used for water and CO2 injection in 2021 and 2022 Incremental Oil Production (bbl/d gross) 250 200  Stronger than forecast incremental response from offset legacy production wells 150  Long life,

  21. Slide 21: Midale, Sask – New Production Wells

    Midale, Sask – New Production Wells 2022 Producer drilling results - 2 wells 400 Oil production (bbl/d gross) 300 200 100 0 2021 Injector Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23 Mar-24 Jun-24 Sep-24 Dec-24 2022 Budget Producers 2022 Producers Actual  Two new production wells drilled in 202

  22. Slide 22: Sustainability: Drilling Inventory Breakdown

    Sustainability: Drilling Inventory Breakdown Cardinal Identified Locations 2023 WTI price to District Primary Targets Tier 1 Tier 2 Drilling achieve 2 year Current Focus Program payout Tide Lake hz multilateral and hz multifrac Ellerslie, select South Ellerslie, Glauc, Arcs 30 30 4 $30-60/bbl Ellers

  23. Slide 23: Focusing on a Sustainable Future – ESG Focus

    Focusing on a Sustainable Future – ESG Focus Environment Social Governance  Indigenous Engagement &  Corporate Governance  CO2 injection exceeds Support  Diversity Scope 1 emissions  Sponsorships  Executive Compensation  Accelerating ARO activity  Standing with Ukraine tied to performance 

  24. Slide 24: ARO Focus

    ARO Focus 2020 2021 2022 2023  A demonstrated financial (million $'s) est. Budget Total commitment CJ ARO Spend 6 8 22 25 61 & Ongoing Remediation  Cardinal continues to exceed all regulatory mandated spend Government Funded Programs 14 9 5 - 28 requirements Non-Core Disposition - 3 15 - 18  Succ

  25. Slide 25: Asset Retirement Management

    Asset Retirement Management Cardinal is committed to responsible asset retirement as part of the full cycle of development. We are committed to reducing our environmental footprint. 2019 - 2022  In 2022, 26 operated wells were drilled and only 11 new surface leases were required. All others were dr

  26. Slide 26: Appendix - 2021 Year End Reserves

    Appendix - 2021 Year End Reserves NPVBT10 FD&A PNP PROB Year End 2021 MMBOE (1) (2)(3) Recycle Ratio 5% (4) & (MM) ($/boe) PUD 8% Proved Producing 74.4 $1,050 $5.66 5.2 Probable Proved Producing Producing 19% Total Proved 83.3 $1,110 $6.49 4.6 68% 87% of Reserves are Producing Total Proved plus RLI

  27. Slide 27: Advisory

    Advisory Note Regarding Forward Looking Statements These forward-looking statements are subject to numerous risks and uncertainties, certain of which are This presentation contains forward-looking statements and forward-looking information (collectively beyond Cardinal's control. Such risks and unce

  28. Slide 28: Advisory

    Advisory Production & Product Type Information Original Oil in Place ("OOIP") means Discovered Petroleum Initially in Place ("DPIIP"). DPIIP is References to petroleum, crude oil and natural gas liquids ("NGLs"), natural gas and average daily that quantity of petroleum that is estimated, as of a giv

  29. Slide 29: Advisory

    Advisory may not be comparable to similar financial measures disclosed by other issuers. The non-GAAP and other information and for what purposes management uses these measures and a quantitative reconciliation financial measures should not be considered to be more meaningful than GAAP measures whic

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