Cardinal Energy Ltd. · TSX:CJ
Cardinal Energy — Investor Presentation (October 2016)
31 slides from Cardinal Energy's investor presentation, October 2016
Slide 1: Built to Last
BUILT TO LAST October 2016
Slide 2: Built to Last
Built to Last Low Debt Low Decline Strong Capital Efficiencies 2
Slide 3: Operating the Business
Operating the Business Amount of capital required to keep Committed Capital production flat year over year Cash flow from Target 30 – 35% simple Dividend Payments Operations payout ratio Balance increased Free Cash Flow decline from drilling with low decline acquisition opportunities 3
Slide 4: Cardinal Energy Profile
Cardinal Energy Profile Shares Outstanding(1) TSX: CJ Basic 73,506,303 Fully Diluted 77,106,876 Annual Dividend ($/share) $0.42 Q2 2016 average production (boe/d) 14,621 Q4 2016 forecast average production (boe/d) 15,100 % Oil and NGLs (2016 Forecast) 88% Reserves (2)(3) Mboe NPV10 MM Total Proved 4
Slide 5: Convertible Debentures
Convertible Debentures TSX: CJ.DB Issue Size: $50,000,0001 Face Value: $100 Issued: October 6, 2015 Term: 5 Years Conversion Price: $10.50 Coupon Rate: 5.5% 1. Can be Redeemed in Whole or in Part after Year 3. 5
Slide 6: Dividend Commitment
Dividend Commitment Dividend $0.163 $0.163 $0.178 $0.21 $0.21 $0.21 $0.21 $0.21 $0.105 $0.105 $0.105 $0.105 Rate Oil Price $98.68 $102.99 $97.17 $73.15 $48.63 $57.94 $46.43 $42.18 $33.45 $45.59 ‐ ‐ (WTI $US) 6
Slide 7: Cardinal Asset Base
Cardinal Asset Base Solid Base of Oil Production from 3 Core Areas WAINWRIGHT Appr. 5,450 boe/d production BANTRY Appr. 5,550 boe/d production SLAVE LAKE Appr. 3,600 boe/d production All areas have extensive development drilling, consolidation and growth potential 7
Slide 8: 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 Multiyear drilling inventory in excess of 40 unbooked locations By pass uphole oil drilling targets 5,450 boe/d 8
Slide 9: Lowering the Decline
Lowering the Decline Wainwright decline reduction through property management Limited spending to hold production Flat Wainwright was purchased with less than 10% decline 9
Slide 10: Net Production
10 (mboepd) Net Production 6 5 4 3 2 1 0 Jun-16 May-16 Apr-16 Mar-16 Feb-16 Jan-16 Dec-15 Wainwright Production Nov-15 Oct-15 Sep-15 Wainwright Area Aug-15 Jul-15 Jun-15 May-15 Apr-15 Mar-15 Feb-15 Jan-15 Dec-14 Nov-14 Oct-14 Sep-14 Aug-14 Jul-14 Oil Cut Jun-14 May-14 Apr-14 Mar-14 10% 9% 8% 7% 6% 5
Slide 11: Bantry
Bantry The majority of base production is currently under waterflood with less than a 12% decline 97% operated, average 94% working interest oil production Control key infrastructure resulting in ½ cycle drilling program Excellent Glauc drilling results to date 5,550 boe/d with over 130 unbo
Slide 12: Net Production
12 (mboepd) Net Production 10 9 8 7 6 5 4 3 2 1 0 Jun-16 May-16 Apr-16 Mar-16 Feb-16 Jan-16 Dec-15 Nov-15 Oct-15 Sep-15 Aug-15 Jul-15 Jun-15 May-15 Apr-15 Bantry Area Mar-15 Bantry Production Feb-15 Jan-15 Dec-14 Nov-14 Oct-14 Sep-14 Aug-14 Jul-14 Jun-14 May-14 Apr-14 Mar-14 Oil Cut Feb-14 Jan-14 De
Slide 13: Slave Lake
Slave Lake Comprises of the Mitsue Gilwood unit and approximately 1,200 Boe/d of non operated 3,600 boe/d (75% working interest) production Net production from the Slave Lake area is approximately 3,600 boe/d Light sweet 41˚ API oil Existing infrastructure and land sets up true half cycle ec
Slide 14: Mitsue Gilwood Units
Mitsue Gilwood Units Discovery in 1964 Developed with vertical drilling from 1964-1988 Pool underwent miscible flood then converted to water flood. Voidage replacement maintained at 1:1 2016/2017 Development Plan 1. Reduce operating costs 2. Establish horizontal drilling play in areas of low
Slide 15: Net Production
Mitsue Unit Production Mitsue Area Operated Production 10% 3 Oil Cut 9% 8% 7% Net Production (mboepd) 6% Oil Cut 5% 2 4% 3% 2% 1% 0% 1 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 15
Slide 16: Reserves by Region
Reserves by Region Reserves, mboe NPV10, M$ PDP TP TPP PDP TP TPP South (Bantry) 8,043 9,411 13,320 148,582 161,058 209,989 North (Mitsue) 13,221 13,604 18,402 201,855 207,193 245,736 Central (Wainwright) 18,108 18,827 24,957 338,832 343,833 413,913 Jenner 2,098 2,148 2,846 36,178 36,865 44,447 41,4
Slide 17: Reserve Growth Per Share
Reserve Growth Per Share 3,300 boed (PV10/share fd) 4,825 boed 4,825 boed(1) 1,525 1,525boed boed(1) 1,085/boed(1) 1,525 boed(1) 1,525 boed(1) 1. Net present value before tax discounted at 10%. See Advisory. 17
Slide 18: Reserve Comparison
Reserve Comparison 3,300 boed 4,825 boed 4,825 boed(1) 1,525 1,525boed boed(1) Proved Developed 1,085/boed(1) Producing Proved Undeveloped Probable 1,525 boed(1) 1,525 boed(1) 1. Source: Scotiabank 18
Slide 19: Hedging
Hedging Hedging 1. Natural gas - 3,000 gj/d collared at $2.00 X $2.93 for 2016 and 3,000 gj/d swapped at $2.12 for 2016, 4,496 gj/d swapped at $2.37 for 2017 and 2,329 gj/d swapped at $2.59 for 2018. 2. 6,000 bbl/d swapped for remainder of 2016 fixing WCS differential at CAD $18.38 and 4,414 bbl/d f
Slide 20: Realized Hedging
Realized Hedging a. ENERGY LTD. Realized Hedging Gains / (Losses) $16,000,000 $14,000,000 Cumulative net gain of over $12,000,000 + $60 million. $10,000,000 $8,000,000 $6,000,000 $4,000,000 $2,000,000 i T T T ofl. 7: ot, Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 -$2,000,000 -$4,000,000
Slide 21: 2016 Guidance
2016 Guidance Operational 2016e(2) 2015 2014 Average Oil Price $ 44 WTI $ 49 WTI $93 WTI Average production (boe/d) 14,600 11,838 7,815 Development capital ($MM)(1) $ 35 $ 37 $ 38 Wells Drilled 9 8 7 Financial Cash flow from operations ($MM) $60 $95 $95 - per share (basic) $0.83 $1.61 $2.18 Total di
Slide 22: Sensitivity – Free Cash Flow
Sensitivity – Free Cash Flow 2016 2017 (WTI) Budget $45 $50 $55 $60 Base Capital Program (MM) $35 $30 $30 $30 $30 Dividend (MM) $28 $30 $30 $30 $30 Free Cash Flow (MM) $0 $2 $23 $47 $71 *Assumes Q4 2016 average production of 15,100 boe/d and a flat WCS diff of $19 CDN. 22
Slide 23: Sensitivity – Q4 2016 Annualized
Sensitivity – Q4 2016 Annualized 23
Slide 24: Sensitivity – Q4 2016 Annualized
Sensitivity – Q4 2016 Annualized 24
Slide 25: Operating Costs
Operating Costs oe ENERGY LTD. OPERATING COSTS ($/BOE) e Bantry Acquisition (2) Wainwright Acquisition #1 (3) Wainwright Acquisition #2 wn BA int m uw $32.00 (4) Mitsue Acquisition $30.00 oO a ~~ N yw $28.00 t Ss w a $26.00 o cs 2 @ 3 g g g 3 g $24.00 ° i a De i nN uu a F : 2 a w ny ~ * - $22.00 re
Slide 26: 2016 Q2 Results
2016 Q2 Results Q2 Q2 2016 2015 % change Operational Average production (boe/d) 14,621 11,294 29% Percentage of liquids 88% 92% -4% Development capital ($MM)(1) $12.1 $11.1 9% Financial Cash flow from operations ($MM) $16.9 $29.9 -43% per share (basic) $0.25 $0.52 -52% Total dividend ($MM) $7.2 $12.
Slide 27: Corporate Information
Corporate Information Corporate Headquarters Cardinal Energy Ltd. 600, 400 – 3rd Avenue S.W. Calgary, AB T2P 4H2 Bankers ATB Financial CIBC World Markets Inc. RBC Dominion Securities Inc. Scotia Capital Inc. National Bank of Canada Auditors KPMG LLP Legal Burnet Duckworth & Palmer LLP Reserves Sprou
Slide 28: Analyst Coverage
Analyst Coverage Firm Analyst Phone Email BMO Nesbitt Burns Ray Kwan 403-515-1500 Ray.kwan@bmo.com CIBC Adam Gill 403-216-3405 adam.gill@cibc.com Canaccord Genuity Corp. Sam Roach 403-691-7809 sroach@canaccordgenuity.com Clarus Securities Inc. Robert Pare 403-767-0823 rpare@clarussecurities.com Dund
Slide 29: Advisory
Advisory Forward-looking Statements This presentation contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to the Cardinal's plans and other aspects of Cardinal's anticipated future
Slide 30: Advisory
Advisory This presentation contains future-oriented financial information and financial outlook information (collectively, "FOFI") about our prospective results of operations, cash flows, payout ratio and components thereof, all of which are subject to the same assumptions, risk factors, limitations
Slide 31: Advisory
Advisory Advisory Regarding Oil and Gas Information The crude oil, natural gas and natural gas liquid reserves and related future net revenue of Cardinal presented herein were evaluated by Sproule Associates Limited ("Sproule") and GLJ Petroleum Consultants (“GLJ“), Cardinal's independent reserves e
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