Cardinal Energy Group, Inc. Announces 4th Quarter and Full Year Results

DUBLIN OH--(Marketwired - Apr 13, 2015) - Cardinal Energy Group, Inc. (OTCQB: CEGX), an independent oil and gas exploration and production company with its primary assets in Shakelford County, Texas, reported financial results for the Fourth Quarter ended December 31, 2014. Cardinal's fourth quarter operating revenues in 2014 totaled $768,263 compared to $3,919 for the comparable period in 2013. The current period amount reflects increased crude oil sales volumes from its north-central Texas oil and gas leases and contract development revenues for services provided to the Bradford JV partnership. Cardinal's Net Comprehensive Loss was $2,445,928 or $.07 per share for the year ended December 31, 2014 compared to $2,091,117 or $.06 per share in 2013. Total operating revenues in 2014 surged to $1,865,626 from $16,657 in 2013. EBITDA (earnings before interest, taxes, depreciation and amortization) for the year ended December 31, 2014 was a loss of $1,324,130 compared to a loss of $1,543,819 in 2013. EBITDA for the third and fourth quarters of 2014 was $194,138 compared to a loss of $829,041 for the comparable period of 2013. The improvement during the second half of 2014 reflects the increased sales volumes of crude oil from the Company's recently acquired and developed Texas oil and gas properties plus contract development revenues from services provided to Bradford JV.

The Company continues its expansion into providing contract development services along with the exploration and development of its own prospects. Cardinal has also adjusted its operations to capitalize on changing and uncertain oil prices. Cardinal's operating assets were adjusted through the sale of its Ohio and California oil and gas properties to a former officer of the Company. The sale of the assets reduced the common stock then outstanding by approximately 9%: Divesture of these assets consolidated Cardinal's operations solely in Texas.

Timothy Crawford, CEO of Cardinal comments, "We expect our oil production to increasingly contribute to the Company's operations. During the fourth quarter we brought 3 producing wells online on the Fortune lease and we were able to acquire 20% of the Bradford project. We anticipate both projects will become important producing properties as we begin enhanced oil recovery. We will have close to 20 new shallow wells producing by the end of the second quarter of 2015 in keeping with our focus on shallow well development in Central Texas. This focus on the development of shallow reservoirs and the close proximity of our operating leases to one another should help us to drive down our lifting costs in 2015."

The following provides a summary of the financial results as well as an operations update.

2014 Oil and Gas Sales Revenues jump 794% from 2013 Oil and Gas Sales Revenues

Revenues from the sales of crude oil and natural gas rose to $148,855 in 2014 compared to $16,657 for the year ended December 31, 2013. This dramatic increase occurred despite a 50% decrease in the posted price for West Texas Intermediate Crude during the second half of 2014. The higher revenues reflect the ramping up of production from the company's north-central Texas oil and gas leases which were acquired in 2014.

2014 Capital Expenditures Increase 7 Fold from 2013 Levels

Capital expenditures for 2014 totaled $2,265,419 versus $332,619 for the year ended December 31, 2013. The current year total includes $2,047,603 spent to acquire and develop oil and gas properties and $217,816 to purchase and build-out a regional operations office and yard complex and to acquire rolling stock, well-testing equipment and additional technology information assets to support the Company's growing operations. Capital expenditures in 2013 consisted primarily of our initial acquisition of a non-operating working interest in the Dawson-Conway lease in Texas plus miscellaneous equipment.

Changed Focus of Company Operations

In 2013 Cardinal Energy Group was an Ohio-based oil and gas exploration and production company with operating assets consisting primarily of one 2-well natural gas lease in California, numerous small non-operating working interests in oil and gas wells in several counties of Ohio plus a non-operating working interest in a single oil and gas property in Texas. In 2014, Cardinal's management decided to sell its various interests in oil and gas properties in California and Ohio and to focus its future operations in the north-central section of Texas.

The California and Ohio properties were sold to a former officer of the Company in exchange for the return of 3,000,000 shares of Company common stock with a market value of $2,010,000. The sale of these properties generated a significant gain for the Company, however, current accounting rules dictate that the sale not be recognized in the income statement of the Cardinal Energy Group, Inc.

During 2014 the Company acquired 100% working interests in the Stroebel-Broyles, Powers-Sanders and West Bradford leases and a 93.75% working interest in the Bradford "A" and Bradford "B" leases. In addition, Cardinal acquired the remaining 15% working interest in the Dawson-Conway lease that it did not already own and became the operator of record with the Texas Railroad Commission. The Company also acquired a 43.75% working interest in the Fortune prospect. All of these properties, with the exception of Stroebel-Broyles are located Shackelford County. Cardinal is the operator for all of the leases with the exception of the Fortune prospect.

The close proximity of the Shackelford County properties to our regional operations office in Albany, Texas and to one another afford operating synergies to Cardinal thus shortening development cycle times while simultaneously minimizing lease operating costs. We fully expect that rising production from our recently developed fields when combined with the anticipated production increases from the installation of water flood operations at the Bradford "A", Bradford "B", West Bradford and Powers-Sanders properties will be more than sufficient to fund our routine field operating expenses during 2015.

Bradford Drilling Program

On September 2, 2014 the Company sold its interests in the Bradford "A" and "B" leases to the Bradford Joint Venture Partnership ("Bradford JV") for $325,000. The Company's wholly-owned subsidiary CEGX of Texas, LLC ("CEGX") provides drilling and production services to Bradford JV.

The creation of the Bradford JV provides the opportunity for investors to participate directly in an oil and gas drilling program while simultaneously providing Cardinal with the capital required to develop the underlying oil and gas reservoirs in a cost efficient and timely manner. At the close of the initial phase of development at December 31, 2014 the Company acquired a 20% percent interest in the Bradford JV. As a direct result of this acquisition of units in the Bradford JV, CEGX's revenues related to providing drilling and production services to Bradford JV and any unpaid receivables related to these services are delineated as "Related Party" transactions on Cardinal's income statement and balance sheet, respectively.

As a result of the successful Bradford Drilling Program the Company may utilize the use of similar drilling programs in the future to develop oil and gas leases in which it owns a working interest. In addition, the Company may offer its production and development services to third parties for the development of properties in which it does not own an ownership interest thus opening up a new source of revenues for Cardinal.

Sources of Capital

During 2014 the Company was successful in replacing certain short-term borrowings with sources of funds with a longer maturity date. These sources of funds typically provide for larger total principal amounts available under the facility, larger initial drawdown amounts, fixed interest rates and longer repayment schedules. Such credit facilities allow Cardinal's management to focus on strategic issues and the execution of the Company's business plans. It is our intention to continue to seek additional similar long-term sources of capital during 2015.

Total shares of common stock outstanding at December 31, 2014 was 34,940,046 a 2.8% drop from the number of shares outstanding at December 31, 2013. The fewer number of shares currently outstanding provides a platform for higher shareholder returns in 2015 and beyond. In addition, the 3,100,000 shares of common stock reacquired as "Treasury Stock" by the Company during 2014 provide Cardinal an attractive source of capital for potential acquisitions in the future.

Thank You

2014 was a challenging year for Cardinal Energy Group, Inc. as we changed the strategic focus of the Company's operations to north-central Texas, overcame property title and regulatory issues and launched an aggressive oil and gas property acquisition and development program. We wish to thank our shareholders, noteholders, key suppliers, contractors, employees, consultants and other Cardinal stakeholders' whose patience, advice, dedication and hard work made our success possible in 2014 and has laid the foundation for continued success in the future.

More information on Cardinal Energy Group, Inc. is available at www.cegx.us.

Forward Looking Statements

In connection with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, Cardinal Energy Group, Inc., is hereby providing cautionary statements identifying important factors that could cause our actual results to differ materially from those projected in forward-looking statements (as defined in such act). Any statements that are not historical facts and that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions or future events or performance (often, but not always, indicated through the use of words or phrases such as "will likely result," "are expected to," "will continue," "is anticipated," "estimated," "intends," "plans," "believes" and "projects") may be forward-looking and may involve estimates and uncertainties which could cause actual results to differ materially from those expressed in the forward-looking statements. These statements include, but are not limited to, our expectations concerning our oil and gas production rates, and the expected demand, pricing and operating results for our oil and gas operations.

About Cardinal Energy Group, Inc.

Cardinal Energy Group, Inc. is a U.S producer of oil and natural gas within the United States. The Company is headquartered in Dublin, Ohio and has its regional operations office located in Albany, Texas. We are an environmentally responsible oil and gas Company. Cardinal focuses on known formations that have significant proven reserves remaining that can be produced economically. Cardinal targets fields with wells that may need remediation due to neglect or undercapitalization. We select prospects that offer a strong up-side for production. The upside we seek in a prospect is threefold - it must have the potential to be restarted or have its current production increased using newer technology and remediation methods and; it must also have additional lease acreage which can be further developed by completing development wells adjacent to existing producing wells, or it must be an overlooked or distressed project in highly prospective formations like the Permian Basin or Eagleford shale. Cardinal exploits these undervalued assets by acquiring a majority working interest in the prospect and then applies the Company's calculated development plan. Cardinal also seeks acquisitions of over-leveraged companies when there is a clear upside from their purchase based on strong commodity prices. More information on Cardinal Energy Group, Inc. is available at www.cegx.us.