Cardinal Energy Ltd. · TSX:CJ
Cardinal Energy — Investor Presentation (December 2017)
26 slides from Cardinal Energy's investor presentation, December 2017
Slide 1: Moving Forward
Moving Forward December 2017
Slide 2: Cardinal Profile
Cardinal Profile Shares Outstanding TSX: CJ Basic(1) 110.2 MM Fully Diluted (excluding debentures) 113.2 MM Annual Dividend ($/share) $0.42 H2 2017 average production (boe/d) 21,000 Reserves (Mmboe)(2)(3) Total Proved and Developed Producing (“PDP”) 66.4 Total Proved (“1P”) 70.5 Total Proved Plus Pr
Slide 3: 2018 Budget
2018 Budget $132,000,000 Post Hedging Adjusted Funds Flow $125,000,000 Capital Program $55,500,000 Free Cash Flow $69,500,000 Dividend Debt Repayment Growth Share Buyback Price Assumptions: WTI (USD) $55.00 AECO $ 1.75 US/CDN FX $0.78 3
Slide 4: Sensitivities
Sensitivities Production Level 21,000 boe/d Annual Adjusted Funds Flow Change WTI +/- US $1.00 $4 million FX +/- USD/CAD $0.01 $2.7 million Aeco +/- $0.10 $0.3 million 4
Slide 5: Organic Growth
Organic Growth (1) ($ millions) Drilling & Optimization Facilities Total 2015 14 15 29 2016 21 20 41 2017 39 17 56 2018 38 17.5 55.5 (1) excludes land, geological and geophysical and corporate capital Low decline enables lower Capex Flat production profile achieved with 40-45% of adjusted funds
Slide 6: Risk Management Hedging
Risk Management Hedging 1. Natural gas - 8,500 gj/d at 2.42 for 2017, 7,333 gj/d at $2.37 for 2018 and 1,000 gj/d at $2.12 for Q1 2019. 2. WCS differential - 7,500 bbl/d for 2017 at $19.12 and 2,583 bbl/d for 2018 at $18.78. 6
Slide 7: Core Operating Areas
Core Operating Areas Solid Base of Oil Production H2 2017 Budgeted Production North 7200 boe/d (Slave Lake) (House Mountain) (Grand Prairie) Central (Wainwright) 5,500 boe/d South (Bantry) 5,300 boe/d SE Saskatchewan (Midale) 3,000 boe/d 21,000 boe/d 7
Slide 8: North
North North Operating Area Mitsue Gilwood Unit Slave Lake (Non-operated) Dunvegan House Mountain 8
Slide 9: House Mountain
House Mountain High working interest Operating working interests in 4 units plus non-unit production. Low decline light oil Upside: • Op cost reduction • Increased water flood performance • Frac existing horizontals • Horizontal drills from suspended vertical wells 9
Slide 10: Elmworth Dunvegan Pool
Elmworth Dunvegan Pool 102/04‐30‐71‐10W6 – Summer 2017 drill Currently in the midst of a 5-6 well horizontal Dunvegan drilling program 3 2 1 Enhanced Recovery in the form of waterflood to be 6 5 4 pursued next 16‐13‐71‐11W6 – Summer 2017 drill Potential Future Drill 10
Slide 11: Elmworth Summer 2017 New Drills vs Type Curve
Elmworth Summer 2017 New Drills vs Type Curve This profile used in 2018 budget forecast 11
Slide 12: Elmworth Dunvegan Type-well Economics
Elmworth Dunvegan Type-well Economics Applying the historic average production profile of horizontal wells in this pool, against a $1.8MM well cost generates the following BTax economic outputs ($55WTI USD, $1.75 AECO CAD): • 92% IRR • 1.1 year payout • $9.58 F&D • 2.8 recycle ratio lifetime 12
Slide 13: Midale
Midale Production, base 2,997 boe/d Opex/boe $16.70 Production, adds 416 boe/d NOI $38.6 MM Total Production 3,413 boe/d CapEx (excluding A&D) $10.5 MM Royalty rate 19.5% FCF $28.1 MM Lowest decline property, aided by enhanced recovery in the form of CO2 and water injection. Plan to increase CO2
Slide 14: Midale – Underperformance = Opportunity
Midale – Underperformance = Opportunity Underperformance to date Inefficient Injection • Hz Injection in “Vuggy” • Hz production in “Marly” • Poor vertical permeability Poor conformance • Hz’s drilled perpendicular to fracture trends • Verticals injectors overpressured Low well density • 34 ac
Slide 15: Inefficient & Insufficient Injection
Inefficient & Insufficient Injection 15
Slide 16: Central
Central Production, base 5,184 boe/d Opex/boe $23.35 Production, adds ‐ boe/d NOI $42.7 MM Total Production 5,184 boe/d CapEx $7.8 MM Royalty rate 11% FCF $34.9 MM Low decline free cash flow generating area No production additions from drilling therefore higher repair and maintenance (op. cost)
Slide 17: Central
Central Despite having no new wells drilled, the Central properties have declined by less than 4% annually since the beginning of 2014 17
Slide 18: Bantry Type Curve
e CARDINAL ENERGY LTD. Bantry Type Curve Glauc Type Curves —— 2014 Average (8) ———2015 Average (6) ——— 2016 Average (13) ——— 2017 Average (6) «= = Type Curve - Unrisked 400 350 300 250 150 Production Rate (Sales BOEPD) 100 50 le} 3 6 9 12 is 18 21 24 27 30 33 36 Months
Slide 19: Bantry Drilling
Bantry Drilling - 13 strats (4 Glauc, 5 Ellerslie, 4 both) - Potentially proving up 14 Glauc and 15 Ellerslie locations 19
Slide 20: 2017 ARO Spending & 2018 ARO Budget
2017 ARO Spending & 2018 ARO Budget 2017 Estimated ARO Spending 2018 ARO Budget Zonal abandonments $360,000 2018 Requirements incl IWCP (est) $2,750,000 Abandonments (cut & cap), operated $1,240,000 Other Abandonments/D13 / Non-Op * $1,000,000 Abandonments & D13, non-operated $908,700 Mitsue Asbesto
Slide 21: Corporate
Corporate Growth: Ave. annual prod 14% Exit production 3% Cash flow 52% CFPS (basic) 27% Total net debt held flat at $228 MM prior to dispositions 21
Slide 22: 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 23: Analyst Coverage
Analyst Coverage Firm Analyst Phone Email BMO Nesbitt Burns Ray Kwan 403-515-1500 Ray.kwan@bmo.com Clarus Securities Inc. Robert Pare 403-767-0823 rpare@clarussecurities.com FirstEnergy Capital Corp. Cody Kwong 403-262-0600 crkwong@firstenergy.com Haywood Securities Darrell Bishop 403-509-1938 dbish
Slide 24: 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 25: 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 26: Advisory
Advisory Advisory Regarding Oil and Gas Information The crude oil, natural gas and natural gas liquid reserves of Cardinal presented herein were evaluated by Sproule Associates Limited ("Sproule") and GLJ Petroleum Consultants (“GLJ“), Cardinal's independent reserves evaluators, in accordance with t
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