Cardinal Energy Ltd.
TSX : CJ

Cardinal Energy Ltd.

July 28, 2015 07:30 ET

Cardinal Energy Ltd. Announces Second Quarter Results

CALGARY, ALBERTA--(Marketwired - July 28, 2015) - 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, 2015. The Company also announces that its unaudited financial statements and management's discussion and analysis for the quarter ended June 30, 2015, are available 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

  • Production for the second quarter increased 74% to 11,294 boe/d compared to the second quarter of 2014. Development capital expenditures totaled $11.3 million and included drilling 4 wells at Bantry and optimizing wells and facilities to maintain production. The new wells at Bantry had average drilling and completion costs $1.7 million, significantly lower than similar wells drilled in 2014.

  • Cash flow from operations for the second quarter of 2015 increased 27% to $29.9 million compared to the corresponding period in 2014.

  • In the second quarter of 2015 Cardinal unit operating expenses decreased by 5% to $21.99/boe from the first quarter.

  • During the second quarter of 2015 Cardinal closed its light oil acquisition of Pinecrest Energy Inc. ("Pinecrest").

  • Cardinal's total payout ratio for the second quarter of 2015 was 77%, lower than the expected total payout ratio of 82% for the year. The simple payout ratio for the quarter was 40%.

Guidance Confirmation

There has been no change to Cardinal's base capital expenditures budget ("budget") for 2015. The budget is anticipated to result in average and exit production for 2015 of approximately 11,200 boe/d and deploys total development capital of $30 million. We continue to expect $95 million in cash flow from operations based on a forecast WTI price of USD $55/barrel, an exchange rate of 0.80 $USD/CAD, a differential to WCS of $15.75 and the effect of our existing 2015 hedges. The budget achieves a total payout ratio of 82%.

Management believes that with the Company's high quality low decline reserve base and development inventory, excellent balance sheet and hedging program, Cardinal is well positioned to meet its planned growth and development activities and generate strong operating and financial results through 2015 and beyond.

FINANCIAL AND OPERATING HIGHLIGHTS
Three months ended
June 30
Six months ended
June 30
(000's except shares, per share and per boe amounts) 2015 2014 %
Change
2015 2014 %
Change
Financial
Petroleum and natural gas revenue 53,442 48,194 11 91,851 89,481 3
Cash flow from operations 29,937 23,522 27 51,881 42,751 21
basic per share 0.52 0.62 (16 ) 0.91 1.15 (21 )
fully diluted per share 0.51 0.60 (16 ) 0.89 1.12 (21 )
Net earnings 21,685 3,780 n/m 8,838 4,677 89
basic per share 0.38 0.10 277 0.15 0.13 22
fully diluted per share 0.37 0.10 280 0.15 0.12 23
Dividends declared 12,076 6,134 97 24,098 12,126 99
per share 0.21 0.16 29 0.42 0.33 29
Net debt 62,432 (518 ) n/m 62,432 (518 ) n/m
Net debt to cash flow from operations 0.5 (0.0 ) n/m 0.5 (0.0 ) n/m
Development capital expenditures 11,074 8,747 27 13,785 17,495 (21 )
Weighted average shares outstanding
basic 57,438 37,734 52 57,320 37,121 54
fully diluted 58,814 38,962 51 58,575 38,274 53
Operating
Average daily production
Crude oil and NGL (bbl/d) 10,430 5,800 80 10,329 5,657 83
Natural gas (mcf/d) 5,179 4,208 23 4,983 4,269 17
Total (boe/d) 11,294 6,501 74 11,159 6,369 75
Netback
Petroleum and natural gas revenue 52.00 81.46 (36 ) 45.48 77.63 (41 )
Royalties 6.48 11.11 (42 ) 5.69 9.72 (41 )
Operating expenses 21.99 22.20 (1 ) 22.58 23.00 (2 )
Netback 23.53 48.15 (51 ) 17.21 44.91 (62 )
Realized gain (loss) on derivatives 8.98 (4.53 ) (298 ) 11.98 (3.67 ) (426 )
Netback after risk management 32.51 43.62 (25 ) 29.19 41.24 (29 )

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.

Note Regarding Forward Looking Statements

This press release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to the Cardinal's plans and other aspects of Cardinal's anticipated future operations, management focus, objectives, strategies, financial, operating and production results. Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend", " may", "would", "could" or "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this press release speak only as of the date thereof and are expressly qualified by this cautionary statement.

Specifically, this press release contains forward-looking statements relating to our dividend policy, future payout ratios and other financial results, capital expenditure plans and 2015 budget, expected development capital, average and exit production, anticipated cash flow from operations, anticipated decline rates, Cardinal's asset base and future prospects for development and growth therefrom, hedging plans and future acquisitions, drilling, completion and optimization opportunities.

Forward-looking statements regarding Cardinal are based on certain key expectations and assumptions of Cardinal concerning anticipated financial performance, business prospects, strategies, regulatory developments, current and future commodity prices and exchange rates, applicable royalty rates, tax laws, future well production rates and reserve volumes, future operating costs, the performance of existing and future wells, the success of its exploration and development activities, the sufficiency and timing of budgeted capital expenditures in carrying out planned activities, the availability and cost of labor and services, the impact of increasing competition, conditions in general economic and financial markets, availability of drilling and related equipment, effects of regulation by governmental agencies, the ability to obtain financing on acceptable terms which are subject to change based on commodity prices, market conditions, drilling success and potential timing delays.

These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Cardinal's control. Such risks and uncertainties include, without limitation: the impact of general economic conditions; volatility in market prices for crude oil and natural gas; industry conditions; currency fluctuations; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; competition from other producers; the lack of availability of qualified personnel, drilling rigs or other services; changes in income tax laws or changes in royalty rates and incentive programs relating to the oil and gas industry; hazards such as fire, explosion, blowouts, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; and ability to access sufficient capital from internal and external sources.

Management has included the forward-looking statements above and a summary of assumptions and risks related to forward-looking statements provided in this press release in order to provide readers with a more complete perspective on Cardinal's future operations and such information may not be appropriate for other purposes. Cardinal's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Cardinal will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. These forward-looking statements are made as of the date of this press release and Cardinal disclaims any intent or obligation to update publicly any forward-looking statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws.

This press release contains future-oriented financial information and financial outlook information (collectively, "FOFI") about our prospective results of operations, cash flows, payout ratio and components thereof, all of which are subject to the same assumptions, risk factors, limitations, and qualifications as set forth in the above paragraphs. FOFI contained in this press release were made as of the date hereof and is provided for the purpose of describing our anticipated future business operations. We disclaim any intention or obligation to update or revise any FOFI contained in this press release, whether as a result of new information, future events or otherwise, unless required pursuant to applicable law. Readers are cautioned that the FOFI contained in this press release should not be used for purposes other than for which it is disclosed herein.

Non-GAAP measures

This press release contains the terms "cash flow from operations", "simple payout ratio", "total payout ratio", "netback", "net debt" and "net debt to cash flow from operations" which do not have a standardized meaning prescribed by International Financial Reporting Standards ("IFRS" or, alternatively, "GAAP") and therefore may not be comparable with the calculation of similar measures by other companies. Cardinal uses cash flow from operations and total payout ratio to analyze operating performance and assess leverage. Cardinal feels these benchmarks are key measures of profitability and overall sustainability for the Company. Cash flow from operations and total payout ratio are not intended to represent operating profits nor should they be viewed as an alternative to cash flow provided by operating activities, net earnings or other measures of performance calculated in accordance with GAAP. Cash flow from operations is calculated as cash flows from operating activities adjusted for changes in non-cash working capital and decommissioning expenditures. "Netback" is calculated on a boe basis and is determined by deducting royalties and operating expenses from petroleum and natural gas revenue. Netback is utilized by Cardinal to better analyze the operating performance of its petroleum and natural gas assets against prior periods. "Simple payout ratio" represents the ratio of the amount of dividends declared, divided by cash flow from operations. "Total payout ratio" represents the ratio of the sum of dividends declared plus development capital expenditures necessary to maintain the Company's base production divided by cash flow from operations. Simple payout ratio and total payout ratio are key measures to assess our ability to finance operating activities, capital expenditures and dividends. The term "net debt" is not recognized under GAAP and is calculated as bank debt plus working capital deficiency or minus working capital surplus (adjusted for the fair value of financial instruments and the current portion of the decommissioning obligation). "Net debt" is used by management to analyze the financial position, liquidity and leverage of Cardinal. "Net debt to cash flow from operations" is calculated as net debt divided by cash flow from operations for the most recent quarter, annualized. The ratio of net debt to cash flow from operations is used to measure the Company's overall debt position and to measure the strength of the Company's balance sheet. Cardinal monitors this ratio and uses this as a key measure in making decisions regarding financing, capital expenditures and dividend levels.

Contact Information

  • Cardinal Energy Ltd.
    M. Scott Ratushny
    Chief Executive Officer and Chairman
    (403) 216-2706

    Cardinal Energy Ltd.
    Douglas Smith
    Chief Financial Officer
    (403) 216-2709

    Cardinal Energy Ltd.
    Laurence Broos
    VP Finance
    (403) 727-2021

    Cardinal Energy Ltd.
    Suite 600, 400 - 3rd Avenue S.W.
    Calgary, Alberta T2P 4H2
    (403) 234-8681
    (403) 234-0603 (FAX)
    info@cardinalenergy.ca