BUILT TO LAST April, 2015 Built for Purpose Decline focused acquisitions Low debt structure Strong capital efficiency Risk Management 2 2 Cardinal Energy Ltd. - Profile TSX: CJ Shares Outstanding (1): • Basic 56,819,301 • Fully Diluted 58,906,424 Annual dividend ($/share): 2015 average production (boe/d): • % oil and NGLs $0.84/share 11,200 92% Reserves (Mboe) (1)(2) • Total Proved 32,078 • Total P&P 43,030 • RLI Total P&P (years) Net Debt(1): 11 $54MM 1. As at December 31, 2014 2. See Advisory 3 Manage Debt Corporate goal to always maintain a ratio of less than 1.0 x net debt to cash flow from operations Significant undrawn liquidity $220 million credit facility borrowing base $54 million year end 2014 net debt No anticipated change in credit facility for 2015 4 4 Debt to Cash Flow Ratio(1) 1. Source cite: FirstEnergy Capital (February 2015) 5 5 Low Decline 1. Source cite: FirstEnergy Capital (February 2015) 6 Hedging Strategy Cardinal currently has the following crude oil hedges for 2015: 7 7 Hedging Strategy Cardinal has the following crude oil hedges for 2016: 1. Required volume to fund development capital and dividend at $US 65 WTI. 8 8 Production Growth Per Share 10,821 9 Reserve Growth Per Share $14.73 $10.73 10,821 1. Net present value before tax discounted at 10% (See advisory) 10 Asset Characteristics Base production decline rate approximately 10% 97% operated production 90% working interest >92% oil weighted Concentrated in “2 Core Areas” Multi year drilling inventory 11 11 Cardinal Asset Base Solid Base of Oil Production from 2 Core Areas Wainwright Bantry Approximately 5,500 boe/d production forecast for Q1 2015 Approximately 5,700 boe/d production forecast for Q1 2015 Both areas have extensive development drilling, consolidation and growth potential 12 12 Wainwright Dominant land position with over 55 sections of land Oil production under waterflood with less than 10% decline 98% operated, average 95% working interest Control key infrastructure By pass uphole drilling targets Consolidation and growth opportunities 13 13 Wainwright Drilling Average well cost $1.0 mm (estimated) IP (365) < $40,000/flowing boe Reserves 83 mboe(1) F&D $12.05/boe(1) Multiyear drilling inventory in excess of 30 locations Only 2.5 net locations booked 1. Based on TPP reserves assigned by GLJ at year end 2014 14 14 Wainwright Sparky Pools Large oil in place (241 mmbbls) The Wainwright B pool is a model for the Wainwright Sparky Pools Due to effective line drive water flood the recovery is 45% to date Current 2P reserve bookings forecast a recovery factor (“RF“) of in excess of 50% Manage the water floods to increase recovery factors 1% increase in recovery factors yields 2.4 million barrels OOIP(1) (mmbbls) Pool Wain B Wain West Wain East 1. 2. 114 95 32 Cum Oil Current Booked (mmbbls) RF RF(2) 51 22 11 45% 23% 36% 50% 30% 40% OOIP internal estimate by Cardinal. Cardinal year end 2014 reserve report. 15 15 Bantry Dominant land position with over 246 sections of land 97% operated, average 94% working interest oil production Solid Glauc drilling results to date with over 80 locations identified. The majority of base production is currently under waterflood Control key infrastructure Solid low decline base production Opportunities to expand area 16 16 Bantry Glauc Type Curve Economics Type Curve SAL* Drilled results to date* D&C ($MM) $2.1 $2.1 Production, IP30 (boepd) 240 350 Production IP365 (boepd) estimate 140 200 Total P&P Reserves (Mboe) * 150 185 Year 1 Oil & NGLs (%) 92% 92% NPV BT10(1) ($MM) 2.2 3.3 Rate of Return (%) 78% 189% 1.4 0.8 14.00 11.35 Production Efficiency ($/boed IP 365) 15,000 10,500 Netback Year 1 $31.00 $31.00 2.2 2.7 Payout (Years) Reserve Cost ($/boe) Recycle Ratio Sproule escalated December 31, 2014 price forecast *Based on TPP reserves assigned by Sproule at year end 2014 1. Net present value before tax discounted at 10%, see Advisory. 17 17 Sensitivities Oil (USD WTI) WCS (CAD) FX (USD/CAD) Aeco (CAD) $ $ 55.00 53.00 0.8 $ 2.75 $ $ 65.00 62.50 0.82 $ 2.75 $ $ 75.00 70.00 0.84 $ 2.75 $ $ Netback ($/boe) after risk management Average production target (boe/d) $ $ $ $ ($ millions) Cash flow from operations ("CF") Development capital Dividends declared Free cash flow Total payout ratio Net debt to CF 26.50 11,200 28.75 11,200 31.25 11,200 85.00 78.00 0.86 $ 2.75 33.50 11,200 95 30 48 17 104 30 48 26 114 30 48 36 125 30 48 47 82% 75% 68% 62% 0.6 0.5 0.3 0.2 18 18 2015 Guidance 2014 2015e % change Operational Average production (boe/d) Development capital ($MM)(1) Wells drilled 7,815 $36 7 11,200 $30 7 43% ‐17% 0% Financial Cashflow from operations ($MM)(2) ‐per share (basic) Total dividend ($MM) ‐per share (basic) Total payout ratio Net debt/cashflow from operations $95 $2.18 $33 $0.71 73% 0.5 $95 $1.67 $48 $0.84 82% 0.6X ‐% ‐23% 45% 18% 12% 20% 1. Development capital includes land and seismic. 2. 2015 WTI $US55 per bbl and FX rate of 0.8 $USD/CAD 19 19 Track Record – Value Creation Proven performance across commodities and throughout the cycle • Positive return on all equity issued in all companies Campion Resources Ltd. 1998 - 2002 B.C.- Beg – Halfway $5 Million - $35 Million (Equity) Java Energy Ltd. 2001 - 2004 AB - Rainbow – Bluesky Sask - Oil $2 Million - $22 Million (Equity) Southpoint Resources Ltd. 2003 - 2005 BC – Oil/Gas $19 Million - $42 Million (Equity) Pilot Energy Ltd. 2004 - 2008 Sask. – Bakken $13 Million - $76 Million (Equity) Midway Energy Ltd. 2009-2012 AB - Cardium - Beaverhill Lake $118 Million - $550 Million (Equity) (Sale Price) (Sale Price) (Sale Price) Cardinal Energy Ltd. 2012 - present AB – Mannville Oil (Sale Price) (Sale Price) 20 20 Corporate Information Corporate Headquarters: 600, 400 – 3rd Avenue S.W. Calgary, AB T2P 4H2 Bankers: ATB Financial CIBC World Markets Inc. RBC Dominion Securities Inc. Scotia Capital Inc. Auditors: KPMG LLP Legal: Burnet Duckworth & Palmer LLP Reserves: Sproule Associates Limited GLJ Petroleum Consultants Contacts: Scott Ratushny Email: [email protected] Tel: (403) 216-2706 Laurence Broos Email: [email protected] Tel: (403) 727-2021 21 21 Research Coverage Target BMO $15.00 Target Macquarie Equity Research $19.00 (Feb 26-2015) CIBC World Markets Inc. $15.75 National Bank Financial $15.50 (Feb 26-2015) FirstEnergy Capital $17.25 RBC Capital Markets (Feb 27-2015) GMP Securities $17.00 (Feb 26-2015) $18.00 (Feb 26-2015) Scotiabank $17.50 (Feb 27-2015) 22 22 Advisory Forward-looking Statements Certain information in this document contains forward-looking statements. These statements relate to future events or the Company's future performance. All information and statements contained herein that are not clearly historical in nature constitute forward looking statements, and the words "may", "will", "should", "could", "expect", "plan", "intend", "anticipate", "believe", "estimate", "propose", "predict", "potential", "continue", or the negative of these terms or other comparable terminology are generally intended to identify forward looking statements. Specifically, this presentation contains forward-looking statements relating to: Cardinal’s business plans and model; drilling, development and acquisition plans, costs and focus; cash flow from operations; free cash flow; debt levels; hedging and other risk management plans and strategies; expectations relating to the success of exploration and development efforts, forecast production and targeted production growth, payout ratios; netbacks; anticipated capital requirements and capital expenditure plans and the results therefrom; drilling inventory; expansion opportunities; base maintenance capital; anticipated cash available for the payment of dividends and funding of capital expenditures; decline rates; the performance of existing and future wells; Cardinal’s dividend projections and policy and anticipated reserves. Statements relating to "reserves" are deemed to be forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future. The reader is cautioned that assumptions used in the preparation of this information, although considered reasonable by Cardinal at the time of preparation, may prove to be incorrect. Actual results achieved will vary from the information provided herein as a result of certain risks and assumptions made by Cardinal and numerous known and unknown risks and uncertainties and other factors. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking information prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking information. Accordingly, prospective investors should not place undue reliance on these forward-looking statements. The forward‐looking information is based on certain key expectations and assumptions made by Cardinal's management, including expectations and assumptions concerning prevailing commodity prices, exchange rates, interest rates, applicable royalty rates and tax laws; capital efficiencies; decline rates; future production rates and estimates of operating costs; the ability to produce and transport crude oil and natural gas to market; performance of existing and future wells; reserve estimates and production level estimates; anticipated timing and results of capital expenditures; the success obtained in drilling new wells; the sufficiency of budgeted capital expenditures in carrying out planned activities; the timing, location and extent of future drilling operations; the state of the economy and the exploration and production business; assessments of the value of acquisitions; integrating acquisitions; the decisions or approvals of administrative tribunals; environmental and other regulations, results of operations; performance; business prospects and opportunities; the availability and cost of financing, labor and services; the impact of increasing competition; and Cardinal's ability to access capital and such information may not be appropriate for other purposes. Readers are cautioned that the foregoing lists of assumptions and risks are not exhaustive. Additional information on these and other factors that could affect Cardinal's operations or financial results are included in reports on file with applicable securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com). The forward-looking information includes forward-looking financial information or financial outlook, within the meaning of securities laws, such as projected net debt, cash flows and projected net debt to cash flow ratio and capital expenditures. The forward-looking financial information is based on assumptions which management of Cardinal considers reasonable as of March 31, 2015 however such information may prove to be incorrect. Cardinal is providing the forward-looking financial information set out in this presentation for the purposes of providing readers with some context for the base cases presented herein; such information may not be appropriate for other purposes other than as described herein. These forward-looking statements are made as of the date of this presentation and, other than as required by applicable securities laws, Cardinal does not assume any obligation to update or revise them to reflect new events or circumstances. Other Advisories Cash dividends are not guaranteed. Although Cardinal intends to make dividends in the amounts indicated to shareholders, cash dividends may be reduced or suspended. The actual amount distributed, if any, will depend on numerous factors and conditions existing from time to time. 23 23 Advisory Non-GAAP Measures Throughout this presentation the Company uses the terms “cash flow from operations”, “netback”, “net debt”, “free cash flow”, “simple payout ratio” and “total payout ratio”. These terms do not have a standardized prescribed meaning under GAAP and these measurements may not be comparable with the calculation of similar measurements of other entities. “Cash flow from operations” is calculated based on cash flow from operating activities before the change in non-cash working capital and decommissioning expenditures. Cardinal believes the timing of collection, payment or incurrence of these items involves a high degree of discretion and as such may not be useful for evaluating Cardinal’s operating performance. Management utilizes cash flow from operations as a key measure to assess the ability of the Company to finance dividends, operating activities and capital expenditures. Cash flow from operations should not be construed as an alternative to net earnings or cash flow from operating activities determined in accordance with GAAP as an indication of Cardinal’s performance. A reconciliation of cash flow from operating activities to cash flow from operations is available in Cardinal’s management, discussion and analysis available on SEDAR. The term “net debt” is calculated as total bank debt (long term bank debt plus the current portion of bank debt) plus other current liabilities less current assets adjusted for the fair value of financial instruments. Net debt is used by management to analyze the financial position and leverage of Cardinal. “Free cash flow" represents cash flow from operations less cash dividends declared and less development capital expenditures necessary to maintain the Company's base production. "Total payout ratio" represents the ratio of the sum of cash dividends declared plus development capital expenditures necessary to maintain the Company's base production divided by cash flow from operations. "Simple payout ratio" represents the ratio of the amount of dividends declared, divided by cash flow from operations. Free cash flow and total payout ratio are other key measures to assess Cardinal's ability to finance dividends, operating activities and capital expenditures. “Netback” is calculated on a per 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. Advisory Regarding Oil and Gas Information The crude oil, natural gas and natural gas liquid reserves and related future net revenue of Cardinal presented herein were evaluated by Sproule Associates Limited ("Sproule") and GLJ Petroleum Consultants (“GLJ“), Cardinal's independent reserves evaluators, in accordance with the requirements of National Instrument 51-101 (“NI 51-101”) and the Canadian Oil and Gas Evaluation Handbook effective as of December 31, 2014 and using Sproule's December 31, 2014 forecast product prices Where applicable, oil equivalent amounts have been calculated using a conversion rate of six thousand cubic feet of natural gas to one barrel of oil. BOEs may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency of 6 Mcf: 1 Bbl, utilizing a conversion ratio at 6 Mcf: 1 Bbl may be misleading as an indication of value. This presentation contains estimates of the net present value of our future net revenue from our reserves. Such amounts do not represent the fair market value of our reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of our crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein. Reserves included herein are stated on a company gross basis (working interest before deduction of royalties without including any royalty interests) unless noted otherwise. The estimates of reserves for individual properties may not reflect the same confidence level as estimates of reserves for all properties due to the effects of aggregation. References herein to short-term production rates are useful in confirming the presence of hydrocarbons, however such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating aggregate production for us. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, we caution that the test results should be considered to be preliminary. 24 24 Advisory Drilling Locations This presentation discloses drilling locations in three categories: (i) proved locations; (ii) probable locations; and (iii) unbooked locations. Proved locations and probable locations are derived from the Company’s most recent independent reserves evaluation as prepared by Sproule or GLJ as of December 31, 2014 and account for drilling locations that have associated proved and/or probable reserves, as applicable. Unbooked locations are internal estimates based on the Company’s prospective acreage and an assumption as to the number of wells that can be drilled per section based on industry practice and internal review. Unbooked locations do not have attributed reserves or resources. Of the drilling locations identified herein, are proved locations, are probable locations and are unbooked locations. Unbooked locations have been identified by management as an estimation of our multi-year drilling activities based on evaluation of applicable geologic, seismic, engineering, production and reserves information. There is no certainty that the Company will drill all unbooked drilling locations and if drilled there is no certainty that such locations will result in additional oil and gas reserves, resources or production. The drilling locations on which we actually drill wells will ultimately depend upon the availability of capital, regulatory approvals, seasonal restrictions, oil and natural gas prices, costs, actual drilling results, additional reservoir information that is obtained and other factors. While certain of the unbooked drilling locations have been derisked by drilling existing wells in relative close proximity to such unbooked drilling locations, the majority of other unbooked drilling locations are farther away from existing wells where management has less information about the characteristics of the reservoir and therefore there is more uncertainty whether wells will be drilled in such locations and if drilled there is more uncertainty that such wells will result in additional oil and gas reserves, resources or production. “OOIP” is the Original Oil in Place as determined internally by Cardinal Energy Ltd. The estimates of OOIP have been prepared internally by a qualified reserves evaluator in accordance with NI 51-101 and the COGEH handbook. 25 25
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