In conjunction with its Q3 2023 results release, Cardinal Energy made a very interesting operations announcement. On November 6, Cardinal Energy released details on its establishment of a thermal oil operating unit in Saskatchewan. The company, which has historically operated predominantly in eastern Alberta with a growing presence in the Clearwater, announced plans to begin development of a Steam-Assisted Gravity Drainage (SAGD) project near Reford, Saskatchewan. The company’s November corporate presentation provided detailed information on its plans, but we wanted to leverage Petro Ninja and BOE Intel tools to provide our readers with an expanded view of this opportunity.
Map of Cardinal Energy’s Primary Assets (Source: Cardinal Energy November Presentation)
Cardinal acquired some of its thermal assets via its April 2023 acquisition of Broadview Resources Inc., as well as a number of land purchases that aren’t discussed in detail. As it stands, none of the acquired rights have been utilized in active drilling or production of any kind. In total, we’ve identified 16.8 net sections that were transferred as part of the Broadview transaction. As discussed later in this article, when you compare public mineral rights to the company’s own map in its presentation, it’s likely that many of the company’s mineral rights are still held by land brokers.
Cardinal Energy’s Reford Area Crown Mineral Rights and Licences (Mineral Rights in yellow, Transferred Licences in purple, Post-Transfer Licences in black)
Cardinal’s Reford position places it in close proximity to assets operated by CNRL, Cenovus, and Strathcona among others. The production from this region is virtually all oil, and Cardinal would not be the first producer to use SAGD in the area. Cenovus, for example, operates 12 producing SAGD assets in the Lloydminster area.
All Crown Mineral Rights Near Cardinal’s Reford Assets as of November 7 (Cardinal in purple, Long Run Exploration in brown, Strathcona in grey, CNRL in red, Cenovus in turquoise, Land Brokers in black)
When examining mineral rights ownership near Cardinal’s Reford assets, a large number of rights are held by land brokers. Examining the well licences in the area provides more information; a number of the licenses obtained by Cardinal since the Broadview acquisition have targeted land positions that are still officially held by brokers. Furthermore, we can see some broker-held rights freely shared by Cardinal in its November corporate presentation.
All Crown Mineral Rights Near Cardinal’s Reford Assets as of November 7 and All Non-Abandoned/Suspended Wells. (Mineral Rights: Cardinal in purple, Long Run Exploration in brown, Strathcona in grey, CNRL in red, Cenovus in turquoise, Land Brokers in black. Wells: Cardinal wells spud since acquisition in green, all other wells in orange)
(SOURCE: November 2023 Corporate Presentation)
With respect to Cardinal’s plans, the company appears to be taking a “conservative” approach to its thermal oil project that is highlighted by the development of a 6,000 bopd SAGD facility, with 3 potential sites identified. All told, this a major growth opportunity for Cardinal Energy in an increasingly active sector of the Canadian oil patch. Should Cardinal Energy’s production from this asset reach its 2026 target of 6,000 BBL/d, it would represent a 32.6% increase over the company’s present oil production. This, when combined with the company’s growing Clearwater presence, make Cardinal a company worth keeping an eye on.
Cardinal Energy Quarterly Corporate Production by Commodity, 2018 – 2023
To keep tabs on Cardinal and other Canadian producers, check out BOE Intel. Whether it’s transfers or drilling, our tools help you track developments both large and small.