CALGARY, ALBERTA–(Marketwired – Aug. 2, 2016) – Cardinal Energy Ltd. (“Cardinal” or the “Company“) (TSX:CJ) is pleased to announce its operating and financial results for the three and six months ended June 30, 2016. The Company’s unaudited financial statements and management’s discussion and analysis for the quarter ended June 30, 2016, have been filed on the System for Electronic Document Analysis and Retrieval (“SEDAR”) at www.sedar.com and on Cardinal’s website at www.cardinalenergy.ca.
Financial and Operating Highlights
- Petroleum and natural gas revenue increased by 50% from Q1 2016 to $50.1 million in the second quarter;
- Production for the second quarter was 14,621 Boe/d, an increase of 3% over Q1 2016 and an increase of 29% over Q2 2015;
- Cash flow from operations for the quarter increased 118% to $16.9 million compared to Q1 of 2016;
- Operating expenses per boe decreased a further 6% from Q1 2016 to $20.23 per boe;
- Cardinal drilled four successful Glauc horizontal wells in Bantry in Q2. The production rates for these wells are ahead of Company’s expectations with rates of: 725 boe/d IP60, 416 boe/d IP60, 409 boe/d IP60 and 208 boe/d IP30;
- Cardinal closed a bought deal financing for gross proceeds of $66.9 million; and
- Cardinal’s credit facility was renewed at $150 million and $25 million was drawn at the end of Q2 2016.
| FINANCIAL AND OPERATING HIGHLIGHTS | |||||||||||
| (000’s except shares, per share and per boe amounts) | Three months ended June 30 | Six months ended June 30 | |||||||||
| 2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||
| Financial | |||||||||||
| Petroleum and natural gas revenue | 50,124 | 53,442 | (6) | 83,548 | 91,851 | (9) | |||||
| Cash flow from operations | 16,922 | 29,937 | (43) | 24,680 | 51,881 | (52) | |||||
| basic per share | $ | 0.25 | $ | 0.52 | (52) | $ | 0.37 | $ | 0.91 | (59) | |
| fully diluted per share | $ | 0.25 | $ | 0.51 | (51) | $ | 0.37 | $ | 0.89 | (58) | |
| Earnings (loss) | (35,317) | 21,685 | (263) | (50,961) | 8,838 | n/m | |||||
| basic per share | $ | (0.52) | $ | 0.38 | (239) | $ | (0.77) | $ | 0.15 | n/m | |
| fully diluted per share | $ | (0.52) | $ | 0.37 | (242) | $ | (0.77) | $ | 0.15 | n/m | |
| Dividends declared | 7,202 | 12,075 | (40) | 14,119 | 24,097 | (41) | |||||
| per share | $ | 0.105 | $ | 0.21 | (50) | $ | 0.21 | $ | 0.42 | (50) | |
| Net debt (1) | 81,908 | 62,432 | 31 | 81,908 | 62,432 | 31 | |||||
| Net debt to cash flow from operations | 1.2 | 0.5 | 140 | 1.2 | 0.5 | 140 | |||||
| Development capital expenditures | 12,077 | 11,076 | 9 | 14,154 | 13,809 | 2 | |||||
| Weighted average shares outstanding | |||||||||||
| basic | 67,356 | 57,438 | 17 | 66,541 | 57,320 | 16 | |||||
| fully diluted | 67,356 | 58,814 | 15 | 66,541 | 58,575 | 14 | |||||
| Operating | |||||||||||
| Average daily production | |||||||||||
| Crude oil and NGL (bbl/d) | 12,870 | 10,430 | 23 | 12,734 | 10,329 | 23 | |||||
| Natural gas (mcf/d) | 10,506 | 5,179 | 103 | 10,196 | 4,983 | 105 | |||||
| Total (boe/d) | 14,621 | 11,294 | 29 | 14,433 | 11,159 | 29 | |||||
| Netback | |||||||||||
| Petroleum and natural gas revenue | $ | 37.67 | $ | 52.00 | (28) | $ | 31.81 | $ | 45.48 | (30) | |
| Royalties | 4.26 | 6.48 | (34) | 3.92 | 5.69 | (31) | |||||
| Operating expenses | 20.23 | 21.99 | (8) | 20.86 | 22.58 | (8) | |||||
| Netback | 13.18 | 23.53 | (44) | 7.03 | 17.21 | (59) | |||||
| Realized gain on derivatives | 2.29 | 8.98 | (74) | 5.29 | 11.98 | (56) | |||||
| Netback after risk management | $ | 15.47 | $ | 32.51 | (52) | $ | 12.32 | $ | 29.19 | (58) | |
| (1) See non-GAAP measures | |||||||||||
Guidance Update
Cardinal has increased its base capital expenditure budget by $10 million for the last half of 2016. Capital expenditures for the last half will consist of 4 wells in Bantry, 1 well in Slave Lake, well optimizations and facility expenditures to further reduce operating expenses. The revised expenditures are expected to result in average production of 15,100 boe/d in Q4 of 2016, an increase from our previous guidance of 14,600 boe/d.
LMR Update
With the recent changes to the Alberta Energy Regulator’s licensing framework and limits under the Liability Management Ratio (“LMR”) for license transfers, Cardinal has focused on understanding and responding to the new regulatory framework.
Cardinal will also increase its abandonment and reclamation budget from $1.2 million to $3.2 million as part of the increased budget.
When the changes were announced on June 20, 2016, Cardinal’s LMR of assets versus abandonment liabilities as determined by the formula set out in the program, was 1.69. The Company reacted immediately to the program changes and began an internal program to bring our LMR to 2.0, the level that is the new suggested temporary threshold for license transfers. We were able to increase the LMR to 1.75 in July without spending any money and expect to be able to increase our LMR to 1.90 with the increase in our abandonment budget and other initiatives this year.
Cardinal will continue to work towards increasing our LMR to exceed 2.0 in 2017. The Company does not expect that our current LMR will be an impediment to future acquisition opportunities.
Appointment of New Officer
Cardinal is pleased to announce the appointment of Connie Shevkenek as VP of Engineering as of September 1, 2016. Ms. Shevkenek has been with Cardinal since February of 2014. Ms. Shevkenek has in excess of 25 years of experience in numerous aspects of the oil and gas industry focusing on reserve and acquisition evaluations for various companies and independent evaluators.
About Cardinal Energy Ltd.
Cardinal is a junior Canadian oil focused company built to provide investors with a stable platform for dividend income and growth. Cardinal’s operations are focused in all season access areas in Alberta.