SUSTAI NABLE DI VI DEND & GROW TH May 2018 Cardinal Profile - PDF document

SUSTAI NABLE DI VI DEND & GROW TH May 2018

Cardinal Profile Shares Outstanding TSX: CJ Basic (1) 110.8 MM Fully Diluted (excluding debentures) 114.0 MM 2018 Annual Dividend ($/share) $0.42 2018 Average Production Guidance (boe/d) 21,000-21,500 Light oil & NGL’s ( bbls/ d) 9 ,7 7 5 ( 4 6 % ) WCS medium quality oil (bbls/d) 8,700 (41%) Natural gas (boe/d) 2,775 (13%) Annual Decline Rate +/- 10% Reserves ( Mm boe) ( 2 ) ( 3 ) Proved and Developed Producing (“PDP”) 71.0 Total Proved (“1P”) 78.8 Total Proved Plus Probable (“2P”) 104.7 RLI 2P (years) 13.7 Net Bank Debt ( 1 ) ± $ 2 1 2 MM Bank line $325 MM Tax Pools $ 1 .5 B (1) Estimated as at March 31, 2018 (2) As at December 31, 2017 (Company interest reserves) 2 (3) See Advisory

2017 in Review Mandate: Increase light oil exposure  Increase netbacks  Reduce operating Costs  Maintain dividend  3

Grande Prairie Acquisition (March 2017) Grande Prairie Acquisition MM$ Acquisition Consideration 31 2017 Capital Expenditures 12 Total Capital 43 2017 Cash Flow from Assets 6 Net Capital Outlay 2017 37 Grande Prairie Acquisition – YE 2 0 1 7 PV1 0 , MM$ PDP TP TPP YE 2 0 1 7 Closing 6 3 8 4 1 0 0 Reserves , Mmboe 6 8 9 PV10 excludes consideration of abandonment liability 4

Midale/House Mountain Acquisition (July 2017) MM$ Acquisition Consideration 296 2017 Capital Expenditures 3 Total Capital 299 Midale/House Mountain Historical Production 6,000 2017 Cash Flow from Assets 31 5,000 Net Capital Outlay 2017 268 SE Sask ( Midale) 4,000 boe/d 3,000 Midale/ House Mtn Acq YE 2 0 1 7 PV1 0 , MM$ 2,000 PDP TP TPP House Mountain YE 2 0 1 7 Closing 3 4 6 3 6 2 4 5 2 1,000 Reserves , Mmboe 22 23 30 0 08-Jul-17 08-Aug-17 08-Sep-17 08-Oct-17 08-Nov-17 08-Dec-17 08-Jan-18 PV10 excludes consideration of abandonment liability 5

2017 Results House Mountain Grande Prairie and Midale % I ncrease Acquisition Acquisition over Q4 2 0 1 6 At Q2 2 0 1 7 At Q3 2 0 1 7 Q1 2 0 1 8 Q4 2 0 1 6 Light oil (bbl/d) 2,677 3,040 8,112 8,987 2 3 6 % WCS Priced oil (bbl/d) 9,596 10,074 9,531 8,845 -8 % NGL (bbl/d) 313 703 712 660 1 1 1 % Nat Gas (mcf/d) 12,178 20,021 18,650 16,505 3 6 % Production (boe/d) 14,616 17,154 21,463 21,243 4 5 % 6

2017 in Review Dec 31/16 Jan/2018 Mandate: Increase light oil exposure 22% 50%  Increase netbacks $14.86 $20.20  Reduce operating Costs  $23.24 $20.93 ✔ Maintain dividend  7

2018 Outlook  Sustainable Business Model  Growth and Income funded thru cash flow, at less than 100% payout ratio  Focus Areas: Reduce Net Bank Debt to 1x cash flow  Maintaining best in class 10% decline  Improve netback  Begin long lead time operating cost reduction projects  Maintain dividend  8

Cardinal Production By Area 9

Mitsue / House Mountain Mitsue House Mtn Focus: Capital projects to improve netbacks and decrease op costs  Build out drilling inventory  1 0

Grande Prairie 7 well Hz program (2017-2018)  Average well performance above expectation  Additional drilling 2018 2H + 2019  EOR (water flood) currently anticipated (2019)  Q4 2017/Q1 2018 New Drills Dunvegan Bar sand - ~1350m TVD  High quality light oil (~75% liquids)  1 1

Central Operating Area 8 % yoy reserves grow th w ith w ater flood optim ization Low predictable decline of ~ 5 % / year >300 million barrels OOIP  Majority of production is under secondary recovery  Drill inventory developing  1 2

South - Bantry Strat Program Initial success (2014-2016) focused in  areas supported by abundant vertical well control 10 location strat program drilled (Jan-  Feb 2018) to increase confidence in next round of horizontal drills 2 0 1 8 Focus Operating cost optimization  2H drilling program  Primary area of initial drilling Inventory expansion  Water flood optimization  1 3

Midale – Long term potential Directly offsets the Weyburn Unit  Recovery Factors Analogous reservoir to Weyburn, 50%  46% world class miscible flood 45% reservoir 40% Long term potential 33% 35% Underdeveloped relative to  30% Weyburn with minimal 24% 25% development since 2009 20% 20% 2 0 1 8 – 2 0 1 9 Focus 15% Increase and optimize CO2 10%  injection 5% 0% Initiate infill drilling program  Weyburn Midale (producer and injector) Produced to date Current EUR Increase unit production   1 % increase in recovery factor ~ replaces Cardinal’s current annual production 1 4

Balance of 2018 Q1 2 0 1 8 Q2 2 0 1 8 Q3 2 0 1 8 Q4 2 0 1 8 Total Production 21,200 20,500 21,250 21,500+ Bank Debt $213 M $200 M Payout 98% Less than 100% Less than 100% Less than 100% Dividend $0.035/month $0.035/month $0.035/month $0.035/month 1 5

Cardinal 3 Year Strategic Plan  Decrease bank debt to historical levels of <0.5x cash flow  Reduce operating costs to $18 – 19/bbl  Increase light oil weighting  Deliver modest growth of 2–5%/per year  Dividend growth 1 6

Corporate Information Corporate Headquarters Cardinal Energy Ltd. 600, 400 – 3 rd Avenue S.W. Calgary, AB T2P 4H2 ATB Financial Bankers CIBC World Markets Inc. RBC Dominion Securities Inc. Scotia Capital Inc. National Bank of Canada KPMG LLP Auditors Burnet Duckworth & Palmer LLP Legal Sproule Associates Limited Reserves GLJ Petroleum Consultants Contacts Scott Ratushny E scottr@cardinalenergy.ca T 403.216.2706 Laurence Broos E laurenceb@cardinalenergy.ca T 403.727.2021 1 7

Capital Spending Low decline results in low sustaining  Capex Flat production profile achieved with  40-45% of adjusted funds flow 1 8

ARO Expenditures ARO Expenditures > Regulatory Obligations Additional abandonments and  reclamation are done annually to stay ahead of requirements. Reactivations and recompletions  continue to be part of our area optimization plans. 20% of Cardinal’s ARO liability is  associated with facilities, which are forecast for abandonment at the end of field life. Given the nature of Cardinal’s long life assets, this is a long ways out…. 1 9

Risk Management Hedging 1. Natural gas – 7,333 gj/d at $2.37 for 2018 and 1,000 gj/d at $2.12 for Q1 2019. 2. WCS differential - 4,167 bbl/d for H1 2018 at ~$19 and 1,500 bbl/d for H2 2018 at ~$20.12. 3. Includes Collars for: Q2 2018 – 4,000 bbl/d $65 X $75 Q3/4 2018 – 3,500 bbl/d $68 x $79 H1 2019 – 1,500 bbl/d $70 x $83 2 0

Reserve Comparison Proved Developed Producing Proved Undeveloped Probable 4,825 boed CJ’s FDC is 1.3 x 2018 forecast adjusted funds flow Proved and Probable 1,525 boed 1,525 boed (1) Producing Reserves are 8 9 % of Total Reserves 1,085/boed (1) 1,525 boed (1) Peer’s FDC is 4 x 2018 forecast adjusted funds flow (1) Source: Scotiabank (2) RLI based on annualized WI production of 20,770 boepd 2 1 (3) See Advisory

FD&A costs 2017 F&D / FD&A Costs (1) Incl ∆ FDC ( $/BOE) 3,300 boed F&D 12.67 Transition to Lighter FD&A 10.76 Bbls 4,825 boed 4,825 boed (1) FD&A Operating Recycle Ratio 2.1 x 13.7 year 2P RLI  54% year over year reserve growth  1,525 boed 1,525 boed (1) Replaced 6.3 x 2017 production  1,085/boed (1) 1,525 boed(1) 1,525 boed (1) (1) See Advisory 2 2

Increasing Higher API Reserve Mix 2 P Reserves - Product Split 1 20 00 0 1 00 00 0 13% 2P Reserves, m boe 8 00 00 54% 11% 6 00 00 9% 40% 38% 4 00 00 33 % 49 % 2 00 00 52 % 0 ye20 15 ye20 16 ye20 17 W CS Pricing Light & NGL Gas 2 3