CALGARY, Alberta, March 05, 2019 (GLOBE NEWSWIRE) — Cardinal Energy Ltd. (“Cardinal” or the “Company“) (TSX:CJ) is pleased to present its 2018 year end reserves which reinforce our successful 2018 drilling program and the low decline nature of our asset base.
RESERVE HIGHLIGHTS (1)
- Proved Developed Producing (“PDP”) reserve additions of 10.7 mmboe replaced 2018 production by 1.4x, predominantly through organic growth and Total Proved plus Probable (“TPP”) reserve additions of 12.7 mmboe replaced 2018 production 1.7x.
- PDP Finding Development and Acquisition Costs (“FD&A”) including the change in future development costs (“FDC”) was $4.12/boe with a recycle ratio of 5x, primarily through a combination of positive technical revisions at Bantry, Midale and Wainwright due to performance exceeding the prior year projections and positive 2018 drilling results.
- Achieved a TPP FD&A of $7.99/boe including the change in FDC with a recycle ratio of 2.6x on TPP reserves.
- Increased our PDP Reserve Life Index (“RLI”) to 10 years and our TPP RLI to 14.8 years.
- PDP Net Present Value (before tax) discounted at 10% (“NPV10”) increased 9% to $8.73 per share and TPP net asset value increased 8% to $11.81 per share.
- PDP NPV10 increased 15% over 2017.
- 86% of Cardinal’s reserves are producing (proved plus probable producing) which reflects the low risk predictable nature of our asset base.
- 73% of the TPP reserve additions are producing.
- Top Quartile reserve results in our peer group in 2018 for: % PDP of TPP reserves; TPP Recycle Ratio; FD&A; FDC/2019 adjusted funds flow; PDP RLI.
1. See Oil and Gas Metrics
In an era of production curtailments and volatile oil pricing, Cardinal’s low decline separates our business model from other conventional oil producers as it requires minimal drilling capital to sustain production.
The ability to generate organic reserve growth is evident as our positive technical revisions contribute to our year over year reserve growth demonstrating both our staff’s technical aptitude in managing these assets and the quality of the assets themselves. In 2018, Cardinal acquired additional working interest reserves (net of dispositions) which accounted for 13% of the PDP and TPP reserve additions. Cardinal specifically targeted the acquisition of each of the assets it owns for their predictable low decline profile.
2018 RESERVES INFORMATION
Cardinal’s year-end 2018 reserves were evaluated by independent reserves evaluator GLJ Petroleum Consultants (“GLJ”) as at December 31, 2018. This evaluation of all of the Company’s oil and gas properties was done in accordance with the definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook (“COGE Handbook”) and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities (“NI 51-101”). Additional reserve information as required under NI 51-101 will be included in Cardinal’s Annual Information Form which will be filed on SEDAR on or before March 29, 2019. Reserves included are Company share reserves which are the Company’s total working interest reserves before deduction of any royalties and include any royalty interests payable to the Company. The numbers in the tables below may not add due to rounding.
|At December 31||2018
|Proved developed producing||74,085||71,023||4||%|
|Proved developed non-producing||2,583||3,264||-21||%|
|Total proved and probable||109,852||104,714||5||%|
|PDP RLI, (yrs) (1)(2)||10.0||9.3||7||%|
|Proved RLI, (yrs) (1)(2)||11.2||10.3||9||%|
|Proved and probable RLI, (yrs) (1)(2)||14.8||13.8||7||%|
|Proved plus probable producing RLI, (yrs) (1)(2)||12.7||12.2||4||%|
|Proved and Probable producing reserves % of Total||86||%||89||%|
|1. RLI based on Q4 2018 production of 20,365 boed.|
|2. RLI based on Q4 2017 production of 20,770 boed.|
|At December 31, 2018||2018
|Proved developed producing||1,014.7||885.7||15||%|
|Proved developed non-producing||22.2||30.7||-28||%|
|Total Proved and Probable||1,372.4||1,214.6||13||%|
|NPV per share (NPV10 per share/basic) (3)||2018
|Proved developed producing||$||8.73||$||7.99||9||%|
|Proved plus probable||$||11.81||$||10.96||8||%|
|1. Based on Consultant’s Average December 31, 2018 price forecast and GLJ reserves evaluation effective December 31, 2018.|
|2. Based on Consultant’s Average December 31, 2017 price forecast and GLJ reserves evaluation effective December 31, 2017.|
|3. Basic shares as at December 31, 2017 of 110, 838,321 and 2018 of 116,197,095.|
|Company Share Reserves Reconciliation|
|December 31, 2017||71,023||78,781||104,714|
|Extensions, Improved Recovery & Infills||4,969||7,362||8,409|
|Technical Revisions (1)||4,333||3,809||2,613|
|December 31, 2018||74,085||83,702||109,852|
|2018 Production Replacement||1.4x||1.6x||1.7x|
|1. Includes any revisions for economic factors.|
|2. In accordance with the requirements of NI 51-101, the reserve estimates for acquisitions are the reserves as of December 31, 2018 plus production from the date of acquisition (net of dispositions).|
Reserve Performance Ratios
The following tables highlight the Finding and Development Costs (“F&D), and FD&A of our Company share reserves and the associated recycle ratios.
TPP FD&A was supported by incremental undeveloped reserve bookings offsetting the Company’s successful 2018 drilling programs.
Finding and development Costs (1)(2)
|F&D, $/boe||Recycle Ratio|
Finding, Development and Acquisition Costs (1)(2)
|FD&A, $/boe||Recycle Ratio|
|1. Includes changes in future development costs and includes consideration of any royalty interest dispositions.|
|2. Recycle ratio is calculated using Cardinal’s average 2018 operating netback of $20.65 per BOE (unaudited) divided by the finding and development or finding, development and acquisition costs per boe. Excludes consideration of hedging in the netback.|
Future Development Costs
FDC reflects the best estimate of the capital cost required to produce the reserves. The FDC associated with the TPP reserves at yearend 2018 is $219 million undiscounted ($143 million discounted at 10%) of which 40%, or $88 million undiscounted ($39 million discounted at 10%) is attributed to the CO2 purchases for our southeast Saskatchewan enhanced oil recovery project.
|millions $||Total Proved||Total Proved plus
|Total FDC, Undiscounted||171.7||218.7|
|Total FDC, Discounted at 10%||115.0||143.6|
Our ratio of undiscounted TPP FDC to 2019 budgeted adjusted funds flow is 2.3x with 60 net future locations included in the 2018 reserve report. Excluding CO2 purchases for enhanced oil recovery, our 2019 budgeted adjusted funds flow multiple to undiscounted TPP FDC is 1.4x.
In 2018, Cardinal focused on the improvement and advancement of its core assets through both the drilling of new wells and the continuing optimization of enhanced recovery operations within our existing production base. Cardinal invested $21.4 million in drilling, completing, equipping and tying in 17 (10.6 net) wells on its Alberta and Saskatchewan asset base. In addition, the Company drilled 15 stratigraphic test wells which served to further delineate our Ellerslie and Glauc channel locations in the Bantry area of Alberta.
In southern Alberta, we proved up the economic and operational viability of our horizontal multi-leg, open hole Ellerslie concept with three successful new drills. In aggregate, these three wells are currently producing over 800 boe/d and have been producing for an average of five months. Cardinal believes that the success of these initial Ellerslie wells proves up a large inventory of locations for future development.
Also in southern Alberta, Cardinal continued with its successful development of Glauc channels via horizontal drilling with three successful wells. In aggregate, these three wells are currently producing more than 550 boe/d after seven months of production. Furthermore, with our modernized wellbore and completion design, Cardinal realized an all-in cost reduction for these three wells of more than 13%, when compared to our costs for previous Glauc channel wells drilled in this area.
Major oil producing assets under enhanced recovery continued to be optimized, with injection volumes being directed toward areas expected to respond most significantly. At Midale, our initiative to increase injected CO2 volumes, and to direct those volumes to the most appropriate locations within the reservoir have resulted in a distinct shallowing of the production decline. Throughout the Company, the effects of these efforts is best illustrated by positive revisions to our proved developed producing reserves.