TSX: CJ March 2020 Investor Presentation
1. Reduce operating costs/increase netbacks 2. Reduce net debt to 1X 3. ARO impact spend Our Strategy 2 | Cardinal Energy Ltd. | TSX: CJ Increase Free Cash Flow
Go Forward 3. $ 20.94 boe/d to a budgeted $20.00 boe/d in 2020 2. Reduce our Asset Retirement Reduced our gross undiscounted ARO liability by $42 million Increase our netbacks 3 | Cardinal Energy Ltd. | TSX: CJ Reduced operating costs, began blending operations, optimized our delivery points 3. Reduce our reliance on third parties and variable costs Reduced our power bill thru self reducing our operating cost from As a result of 2019 initiatives Lower our operating costs Firm up our ability to Increase Sustainability Reduce Risk Goal 2019 Result Goal 2019 Result 1. replace production by earning land thru farm ins Increased our drilling inventory 1. Pay down our debt Reduced net debt by $22 million 2. generation by $2.3 million/year Obligations ( " ARO " ) exposure
Exhibit 11: 2019E Conventional Decline Rates ARX CR ERF CPG OBE AAV VET BNP POU TOG SGY BIR BNE PONY PSX WCP HSE FRU PGF CVE CNQ CJ IMO Corporate Decline Rate (%) Average: 28% PEY BXE Decline Rates 25 4 | Cardinal Energy Ltd. | TSX: CJ Note: CNQ, CVE, HSE, and IMO include Canadian production only and exclude oil sands production. VET’s decline rate is based on Canadian production only. Refer to Exhibit 1.33 for detailed data on VET’s corporate decline rate. FRU’s decline rate represents production from free title and gross overriding royalty (GORR) production, excluding joint ventures, production volume royalty agreements, and working interest volumes. Refer to exhibit 1.17 for FRU corporate decline data inclusive of all corporate volumes. Source: Company reports: geoSCOUT: Drillinginfo: Scotiabank GBM estimates Source: Scotiabank, Statsbook, May 2019 0 5 10 15 20 30 ECA 35 40 45 50 VII ATH NVA KEL BTE PMT DEE TOU Cardinal ± 10%
all of our operating metrics and concentrating on those which add real value to our shareholders. It meant being disciplined and judiciously allocating capital to our asset base. In the current market environment where external debt and equity capital, if available, is prohibitively priced, our source of capital is the cash flow generated by our assets. We strive to be disciplined as stewards of this cash flow and re-deploy it in ways which maximize our current and future profitability. building more productive capacity should be de-emphasized over strengthening our balance sheet and increasing our margins on existing production. As such, some of the allocations of our $63 million of budget expenditures were allocated 35% to drilling wells which targeted reserve additions, 5% to stratigraphic test wells which delineated geological concepts de-risking future development inventory, 6% for ongoing CO2 purchases to enhance recovery at Midale and 30% to improving our facilities and power generation. medium to long term. For example in 2019, our power expenditures and other margin initiatives resulted in a decrease in operating costs while our balance sheet strengthening resulted in both a decline in overall debt and an increase in debt adjusted reserves per share. More importantly, these expenditures on debt reduction and operating cost savings will continue to be felt in enhanced cash flow into the future. 2019 Reserves Summary 5 | Cardinal Energy Ltd. | TSX: CJ Our capital allocation philosophy at Cardinal is to enhance our ability to sustainably increase shareholder returns. This meant taking a hard look at In 2019, lack of transportation egress, Government imposed production constraints and the low decline nature of our assets convinced us that The results of these expenditures were not only apparent in our operating results for 2019 but will continue to add to shareholder value over the
Reserves per Share Growth 12% 9% 8% Total Proved and Probable 0.52 0.51 0.46 0.46 11% 0.31 Notes: (1) Debt adjusted shares are based on the closing share price at December 31, 2019 of $2.60/share and December 31, 2018 of $2.22/share and unaudited net debt of $247.6 million at December 31, 2019 and net debt of $269.7 million at December 31, 2018 (2) Diluted shares include consideration of outstanding Restricted Awards (3) 0.31 0.33 2019 Reserves Basic 6 | Cardinal Energy Ltd. | TSX: CJ Debt Adjusted Reserves per Share (1)(2)(3) Year End 2019 Year End 2018 % Change Reserves/Share (boe/debt adjusted share) Diluted 0.34 Basic Diluted % Change Basic % Change Diluted Proved Producing 2019 reserves based on GLJ Petroleum Consultants reserves evaluation report effective December 31, 2019 ("GLJ Report")
NPV10 per Share Growth 6% 6% 6% Total Proved and Probable $6.15 $6.02 $5.78 $5.69 6% $4.27 Notes: (1) Debt adjusted shares are based on the closing share price at December 31, 2019 of $2.60/share and December 31, 2018 of $2.22/share and unaudited net debt of $247.6 million at December 31, 2019 and net debt of $269.7 million at December 31, 2018 (2) Diluted shares include consideration of outstanding Restricted Awards (3) $4.21 $4.44 2019 Reserves Basic 7 | Cardinal Energy Ltd. | TSX: CJ Debt Adjusted NPV10 per Share (1)(2)(3) Year End 2019 Year End 2018 % Change NPV10/Share ($/debt adjusted share) Diluted $4.54 Basic Diluted % Change Basic % Change Diluted Proved Producing 2019 net present value discounted at 10% before tax ("NPV10") based on the GLJ report
Horizontal multifrac, multilateral and vertical inventory Light and medium oil Horizontal multifrac and multilateral inventory multilateral inventory Dunvegan bars Horizontal multifrac and Clearwater shoreface Swan Hills platform Light and medium oil Central (117/9) Gilwood sandstones South (88/39) Arcs Light and medium oil Ellerslie valley fill Horizontal multifrac and multilateral Rex marine sand Viking shoreface Glauc channels Light oil Light and medium oil existing producing assets Cardinal (>500 identified locations/105 booked) inventory infill vertical and horizontal Horizontal multifrac and CO 2 Midale (201/26) North (105/31) Waseca channels commodity prices 8 | Cardinal Energy Ltd. | TSX: CJ Drilling Inventory Ensures sustainability of production, optionality for long-term growth inventory • Multi-year inventory • Conventional play types • Extensions and infills of • • Inventory balanced across: • • Asset base • • • Play types • • • Oil quality • • • Development maturity • • • Egress options • • Strong economics at current • • • • • • •
Cardinal Production Trend 9 | Cardinal Energy Ltd. | TSX: CJ Daily Field Net Production (BOEPD) Midale Turnaround (September) House Mountain Turnaround (October) Self-Curtail (late-Nov/Dec.) South AB Turnaround (Scots Lake) and Jenner Power Outages South AB New Drills on Production 2019 Recovery
(# potential locations) Production 22% 39% 19% 21% Capex ($60-65MM) 16% 29% 32% 24% (20.5-21.5 mboe/d) NOI 20% 55% 10% 15% Drilling (wells) 200 92 87 136 Drilling Inventory ($155-165MM) 25% Low Decline, Long Reserve Life South Oil Focused Balanced Portfolio Deep Development Drilling Inventory Defined ESG Focus Cardinal (Sustainable Asset ) 10 | Cardinal Energy Ltd. | TSX: CJ North 26% Central Midale 2020 Budget and Statistics 26% 16% 30% 28% FCF* ($40-45MM) 24% 25% • • • • •
Total Production Mar-18 Net Est Sales Total (BOE/day) Net Est Sales Gas (BOE/day) Net Produced Oil/NGL/Condensate (bbl/day) Nov-19 Sep-19 Jul-19 May-19 Mar-19 Jan-19 Nov-18 Sep-18 Jul-18 May-18 Jan-18 11 | Cardinal Energy Ltd. | TSX: CJ Nov-17 Sep-17 Jul-17 May-17 Mar-17 Jan-17 25,000 20,000 15,000 10,000 5,000 0 Daily Net Sales (BOEPD) Rate (BOEPD)
(# of potential locations) Capex Drilling Inventory 87 (wells) Drilling 10% (20.5-21.5 mboe/d) Production 32% ($40-45MM) FCF* 30% ($60-65MM) 19% Low decline, light oil focus ($155-165MM) NOI 26% 2020 Budget and Statistics 12 | Cardinal Energy Ltd. | TSX: CJ North (Sustainable Asset) Select development drilling optimization Water flood, Infrastructure Established long life water floods • • • •
Northern Alberta (Stable Light Oil) Jul-18 Net Est Sales Total (BOE/day) Net Est Sales Gas (BOE/day) Net Produced Oil/NGL/Condensate (bbl/day) Jan-20 Nov-19 Sep-19 Jul-19 May-19 Mar-19 Jan-19 Nov-18 Sep-18 May-18 13 | Cardinal Energy Ltd. | TSX: CJ Mar-18 Jan-18 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Daily Net Sales (BOEPD) Rate (BOEPD)
(# of potential locations) ($155-165MM) Drilling Inventory 136 (wells) Drilling 15% (20.5-21.5 mboe/d) Production 24% ($40-45MM) FCF* 28% ($60-65MM) Capex 21% NOI Low Decline, Long Reserve Life 25% Medium oil Established water floods Water flood optimization Select drilling inventory assessment Focus on reduction in inactive well count Central (Sustainable Asset ) 14 | Cardinal Energy Ltd. | TSX: CJ 2020 Budget and Statistics • • • • • •
Central Alberta (Waterflood Management and Optimization) Sep-18 Net Est Sales Total (BOE/day) Net Est Sales Gas (BOE/day) Net Produced Oil/NGL/Condensate (bbl/day) Jan-20 Nov-19 Sep-19 Jul-19 May-19 Mar-19 Jan-19 Nov-18 Jul-18 15 | Cardinal Energy Ltd. | TSX: CJ May-18 Mar-18 Jan-18 6,000 5,000 4,000 3,000 2,000 1,000 0 Daily Net Sales (BOEPD) Rate (BOEPD)
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