Cardinal Energy Ltd. · TSX:CJ
Cardinal Energy — Investor Presentation (January 2014)
25 slides from Cardinal Energy's investor presentation, January 2014
Slide 1: Building a Strong Foundation
BUILDING A STRONG FOUNDATION January 2014
Slide 2: Advisory: Oil and Gas Advisories
Advisory Oil and Gas Advisories 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"), Cardinal's independent reserves evaluator, in accordance with the requirements of National
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: 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 5: 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 sustainable yield. Trading Symbol: TSX: CJ Shares Outstanding: Basic: 35,290,311 Diluted: 36,828,679* Insider Ownership: 11.2% Market Capita
Slide 6: Building a Sustainable Business
Building a Sustainable Business Build a Solid Base • Operated, high working interest • Current decline rate less than 15% Growth • Target 5–10% production growth per year • Strong capital efficiency in Glauc drilling play • Focus on per share growth in production and dividends Protect the Busi
Slide 7: Re-Investment
Re-Investment Drilling to sustain/grow • Low risk development drilling • Low capital exposure per well • Deploy horizontal drilling, multi stage frac completions to locations identified by management • Top quartile capital efficiencies Opportunistic Acquisitions to build/grow • Oil focused • Foc
Slide 8: Operating the Business
Operating the Business Base 2014 Budget 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 $22.0 MM Operations payout ratio Balance increased Free Cash Flow $25.8 MM decline from drilling with low
Slide 9: 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 9 9
Slide 10: Cardinal Assets
Cardinal Assets Solid Base of Oil Production in 3 Core Areas • Chauvin • Wainwright • Bantry 10 10
Slide 11: Chauvin
Chauvin All season access area in Eastern Alberta Current production of about 900 boepd 100% oil production, low decline rate of approximately 15% per year Operated, average working interest 98% 89% proved producing reserves Provides a solid base of cash flow from operations Note: Reserv
Slide 12: 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 87% proved producing reserves Horizontal drilling upside Opportunities to further consolidate the area Note: Reserves based on Wa
Slide 13: Bantry
Bantry 4,800 boepd (90% liquids) Southern Alberta all season access area Solid base of low decline oil production – less than 15% per year Identified unbooked upside Minimal FDC in reserve value Half cycle economics for drilling 13 13
Slide 14: Bantry
Bantry Over 200 net sections of land 90% operated, average 90% working interest Extensive gathering systems and processing facilities Potential recompletions, facility consolidations, water flood optimization, new flood schemes and well optimization 14 14
Slide 15: New Tight Oil Play – Drilling Inventory
New Tight Oil Play – Drilling Inventory Estimated well cost $2.1mm Multiyear drilling inventory 40 primary locations, 40 secondary locations Commenced drilling1st horizontal well and licensed second well planned for Q1/14 Bantry Type Curve (Boe) The type curve is based on analogous information
Slide 16: Cardinal Dec. 2013 Reserves
Cardinal Dec. 2013 Reserves Probable Reserves Probable 27% Reserves 22% PDNP & PUD PDNP & 2% PUD 2% PDP PDP 76% 71% Cardinal Reserves: 17,753,000 boe Cardinal Reserves: $343,000,000 71% of Reserves are Proved Developed Producing No reserves booked to new tight oil play 90% of properties operat
Slide 17: Conservative Balance Sheet
Conservative Balance Sheet Corporate goal to always maintain a ratio of less than 0.75 x net debt to cash flow from operations Provides flexibility to acquire additional assets on an accretive basis Will use balance sheet for special circumstances Current net debt ~ $4 MM 17 17
Slide 18: Hedging Strategy
Hedging Strategy To provide certainty in cash flow from operations and dividends Cardinal has set the following 3 year corporate hedging policy: • 2014 – Opportunistically Hedge up to 60% of production • 2015 – Opportunistically Hedge up to 40% of production • 2016 – Opportunistically Hedge up to
Slide 19: Sustainable Sensitivities
Sustainable Sensitivities Cardinal’s financial prudence is reflected in its robust total payout ratio 2014 Total Payout Ratio Sensitivities (1) WTI (US$/bbl) $75 $80 $85 $90 $95 $100 $105 93% 82% 73% 66% 60% 56% 52% 1. Maintain flat production profile; (Capital Expenditures + Dividends) / Corporat
Slide 20: Q1 Activity
Q1 Activity Licensed and are currently drilling two horizontal wells in Bantry. Working to execute on “tuck in” acquisitions in Bantry, Wainwright and Chauvin. Evaluating staffing, operations and assets in the SE Alberta Acquisition. Target larger acquisition opportunities to develop a new “
Slide 21: Pro Forma Acquisition and IPO
Pro Forma Acquisition and IPO Dividend: $0.65/share Production: 5,800 boepd (90% oil) Decline: Less than 15% Netback: $34.00 per boe G & A (target): $2.25 to $2.75 per boe Cash Flow From $31.00 per boe Operations: Net Debt: Less than 0.1X debt to cashflow Credit Facility: $125,000,000 21 21
Slide 22: 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 23: 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 24: 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 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 Mark Leggett Email: markl@cardinalen
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