Cardinal Energy Ltd. ("Cardinal" or the "Company") is pleased to present the results of its independent reserve report effective December 31, 2024. Consistent with prior years, Cardinal's year-end 2024 non-thermal reserves were evaluated by GLJ Ltd. ("GLJ"). The thermal reserves were independently evaluated by McDaniel & Associates Consultants Ltd. ("McDaniel") (the GLJ report and the McDaniel report being collectively the "2024 Reserve Report").
The 2024 financial information in this news release is unaudited and accordingly, such financial information is subject to change based on the results of the Company's year-end audit.
Cardinal's 2024 year-end reserves reflect the quality, predictability, and sustainability of our low decline conventional asset base now supplemented and strengthened with the initial recognition of reserves and value from the Company's first thermal heavy oil development at Reford, Saskatchewan.
RESERVE REPORT HIGHLIGHTS
All reserves information contained in this news release are based on the 2024 Reserve Report.
The Company's Total Proved plus Probable ("TPP") reserves grew by 30% over the prior year to 154 million boe at a Finding and Development ("F&D")(1)(3) cost of $15.84/boe, primarily with the initial addition of Reford heavy oil reserves. The full potential of this project and inclusion of future identified thermal projects has not been incorporated in the 2024 Reserve Report;
Reford TPP reserve additions contributed to the 31% increase to the year over year Before Tax Net Present Value discounted at 10% ("NPV10") of $2.4 billion;
Cardinal replaced proved developed producing ("PDP") reserves by 1.0x. With the initial booking of the Reford reserves this year, the TPP annual production replacement was 5.5x;
Cardinal's non-thermal asset base delivered PDP reserves at F&D costs(1)(3) of $9.93/boe PDP, $10.74/boe total proved ("TP") and $13.39/boe TPP (including the change in Future Development Capital ("FDC") associated with these assets), utilizing less than 40% of the Company's annual adjusted funds flow;
It was another year of profitable and predictable additions for the non-thermal assets with 2024 recycle ratios(1)(2) of 3.7x for PDP, 3.4x for TP and 2.7x for TPP(1);
Cardinal's TPP reserves consist of 93% light, medium and heavy crude oil and natural gas liquids ("NGL's") and 7% natural gas.
CARDINAL'S TOP TIER RESERVE LIFE ASSETS
Cardinal continues to maintain a long producing reserve life index ("RLI")(1) of ~10 years PDP and ~12 years proved plus PDP based on fourth quarter 2024 production of 21,900 boe/d(2) which reflects the low risk and predictable nature of our asset base that continues to demonstrate a low decline profile of 10% per year.
Cardinal's non-thermal three-year average Finding Development and Acquisition Cost ("FD&A")(1) for PDP, TP and TPP is $12.41/boe, $12.40 and $12.08/boe respectively.
The RLI for TPP increases significantly to greater than 15 years with the initiation of our thermal reserves.
The Company has multiple years of conventional inventory to be developed along side the continued expansion of our thermal assets.
OPERATIONAL UPDATE
Cardinal is pleased to report that operations in Q1/2025 are progressing as expected with the underpinning conventional business tracking 2025 guidance projections, while elevated activity on the Reford thermal project remains on budget and on schedule. Entering the busiest phase of construction, fabrication, installation, numerous concurrent activities are ongoing, both at Propak Systems Ltd.'s fabrication facility (north of Calgary) and on site at Reford including:
Two of three steam generators have been delivered to the Reford facility site.
50% of the required facility tankage is now on lease.
Drilling of the six initial SAGD well pairs is more than halfway to completion.
Construction of the 18 km water source pipeline and 10 km fuel gas supply line are now well underway and adhering to budgeted timelines.
As of January 31, 2025, Cardinal has now deployed more than 50% of the total project budget at Reford.
In the fourth quarter of 2024, Cardinal was ahead of schedule on certain aspects of the Reford project and accelerated its spend by approximately $5 million. We also continued to de-risk and advance additional thermal projects spending approximately $5 million on land, seismic and other future development costs. In 2024, Cardinal incurred approximately $74 million of costs directly related to the Reford SAGD project and also incurred $9 million of SAGD expenditures de-risking and expanding future projects through land and seismic expenditures and other indirect costs.
At year-end, Cardinal was approximately $86 million drawn on its $275 million credit facility (not including the $60 million term debt financing that closed in January). Cardinal continues to anticipate a capitally intensive H1/2025 with ramping activity at Reford, which is expected to drive net debt peaking around mid-year, before retreating meaningfully prior to the end of 2025.
OIL AND GAS RESERVES
The 2024 Reserve Report was prepared in accordance with definitions, standards and procedures contained in the Canadian Oil and Gas Evaluation Handbook ("COGEH") and National Instrument 51-101 - Standards of Disclosure for Oil and Gas Activities ("NI 51-101"). Please also refer to "Note Regarding Forward-Looking Statements", "Reserves Advisories" and "Reserve Definitions" in this news release.
Reserves Detail
Our 2024 Reserve Report uses the price forecast of the three consultant's average (GLJ, McDaniel and Sproule Associates Ltd. (collectively, the "Consultants")). The success of Cardinal's 2024 drilling program, continued optimization of our enhanced recovery schemes and non-thermal drilling program have added 8.4 million boe of PDP reserves in 2024.
Future Development Costs
Cardinal has conservatively booked undeveloped locations, reflecting our current drilling plans for the next three to four years. Significant potential drilling inventory exists beyond those locations and the associated reserves currently booked. Thermal reserves are an initial assignment at Reford only with potential future reserve expansion of other potential thermal projects currently not recognized in the 2024 Reserve Report.
FDC reflects the best estimate of the capital costs required to produce the Company's reserves. The FDC associated with the TPP reserves at year-end 2024 is $779 million undiscounted ($413 million discounted at 10%).
FDC included at year-end 2024 for CO2 purchases, maintenance and facility capital in PDP, TP and TPP were $70 million, $78 million and $142 million, respectively. Reford thermal project accounts for 69% ($535 million) of the inflated, undiscounted TPP FDC.