CALGARY, ALBERTA–(Marketwired – Nov. 7, 2016) – Cardinal Energy Ltd. (“Cardinal” or the “Company“) (TSX:CJ) is pleased to announce its operating and financial results for the three and nine months ended September 30, 2016. The Company’s unaudited financial statements and management’s discussion and analysis for the quarter ended September 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
- Cardinal achieved record average production of 14,957 boe/day, (87% oil and NGLs), an increase of 33% or 5% per weighted average share compared to the third quarter of 2015;
- Production for the nine months ended September 30, 2016 increased 31% to 14,610 boe/d from 11,179 boe/d in 2015;
- Operating expenses per boe for the third quarter decreased to $19.96/boe from $20.23/boe in the second quarter of 2016;
- General and administrative expenses per boe decreased to $1.82/boe from $2.09/boe in the second quarter of 2016;
- Cardinal invested $12.7 million in exploration and development capital expenditures and drilled 3 Glauconitic horizontal wells in Bantry in the third quarter of 2016; and
- Cash flow from operations increased 7% to $18.2 million from the second quarter of 2016 and netback was $15.81/boe including realized hedging gains of $1.74/boe.
|FINANCIAL AND OPERATING HIGHLIGHTS|
|(000’s except shares, per share and per boe amounts)||Three months ended September 30||Nine months ended September 30|
|2016||2015||% Change||2016||2015||% Change|
|Petroleum and natural gas revenue||53,673||42,949||25||137,221||134,800||2|
|Cash flow from operations||18,177||24,810||(27||)||42,857||76,691||(44||)|
|basic and diluted per share||$||0.25||$||0.43||(42||)||$||0.62||$||1.33||(53||)|
|basic and diluted per share||$||(0.06||)||$||(1.83||)||(97||)||$||(0.80||)||$||(1.69||)||(52||)|
|Net debt (1)||85,148||71,397||19||85,148||71,397||19|
|Net debt to cash flow from operations||1.2||0.7||71||1.2||0.7||71|
|Development capital expenditures||12,697||11,707||8||26,851||25,516||5|
|Weighted average shares outstanding|
|basic and fully diluted||73,501||57,760||27||68,878||57,469||20|
|Average daily production|
|Crude oil and NGL (bbl/d)||13,027||10,321||26||12,833||10,326||24|
|Natural gas (mcf/d)||11,578||5,390||115||10,660||5,120||108|
|Petroleum and natural gas revenue||$||39.01||$||41.61||(6||)||$||34.28||$||44.17||(22||)|
|Realized gain on derivatives||1.74||11.53||(85||)||4.07||11.83||(66||)|
|Netback after risk management||$||15.81||$||27.09||(42||)||$||13.52||$||28.48||(53||)|
|(1) See non-GAAP measures|
Message to Shareholders
The third quarter of 2016 marked the 7th consecutive quarter of Cardinal maintaining a sustainable growth capital program in response to lower commodity prices. We will continue this type of maintenance capital spending in the fourth quarter of 2016 and expect to achieve average production for Q4 of approximately 15,000 boe/d. Our less than 15% production decline rate enables Cardinal to weather periods of low commodity pricing with minimum capital spending.
We continue to pursue initiatives to reduce our cost structure. Both operating costs and G&A per boe continue to be reduced quarter over quarter and we believe this trend will continue into 2017.
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 has increased its abandonment and reclamation budget from $1.2 million to $3.2 million for 2016.
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 1.68. 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. We are progressing through our capital program for physical well abandonments and currently have an LMR of 1.94.
Subsequent to quarter end, we completed our semi-annual borrowing base review and in spite of the continued depressed commodity price environment our borrowing base has continued to be held constant at $250 million. Cardinal is in a strong financial position and at quarter end had net bank debt of $35.1 million and Q3/16 net debt to cash flow from operations of 1.2 X (including $50 million principal amount of convertible debentures).
Cardinal expects to release its 2017 guidance in early December when it hopes to have more clarity on oil pricing for next year. We have approximately 46% of our current oil production hedged at an average price of $62.88 CDN WTI per barrel for 2017. This hedging level would allow us to maintain our dividend at the current rate and to go through another year with a maintenance type of capital spending budget showing low single digit growth.
We expect that if there is transparency to an oil price above $50 WTI (USD) that we will be able to present guidance showing double digit growth for 2017.
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.