Cardinal Energy Announces First Quarter Results
CALGARY, ALBERTA--(Marketwired - May 5, 2014) - Cardinal Energy
Ltd. ("Cardinal") (TSX:CJ) is pleased to announce its operating and
financial results for the quarter ended March 31, 2014. Cardinal
also announces that its unaudited interim financial statements and
related Management's Discussion and Analysis for the quarter ended
March 31, 2014 is available on the System for Electronic Analysis
and Retrieval ("SEDAR") and on Cardinal's website at
www.cardinalenergy.ca.
Highlights
- Production averaged 6,235 boe/day in the first quarter of 2014
an increase of 7% over the year end exit rate of approximately
5,850 boe/day;
- Increases in production and commodity prices resulted in cash
flow from operations for the quarter of $19.2 million;
- Cardinal's simple payout ratio was 31% for the quarter;
- Operating costs were reduced by 17% to average $23.83 boe
compared to the fourth quarter of 2013;
- Field netbacks increased to $41.49 per boe, an increase of 42%
from the fourth quarter of 2013;
- Net debt was $3.9 million as at March 31, 2014; and
- Increased our land position in Bantry by 14 net sections which
are prospective for Manville oil.
March 31, 2014 marked the first full operating quarter for
Cardinal as a public company.
Our primary focus going into the quarter was to complete the
integration of the assets and new staff acquired in SE Alberta. We
also began to work on increasing our understanding of the base
assets as well as drilling and optimization upside.
Cardinal has seen some initial benefits from our early
initiatives, including:
Drilling: Successfully drilled and completed 2
Glauconite horizontal wells. The two wells are currently producing
at combined rate of 650 boe/day after being on production for 60
days. Subsequent to quarter end, we have drilled and completed a
third Glauconite horizontal well and are currently flowing back the
frac. Cardinal plans to drill one additional Glauconite horizontal
well in the second quarter.
Payout Ratio: We have seen our dividend payout ratio
drop month over month with the increase in production volumes as
well as higher field netbacks. Cardinal has set a target simple
dividend payout ratio of 30 - 35% and our average for the first
quarter was 31%. Including the effect of our stock dividend plans
(dividend reinvestment plan and stock dividend program) our
dividend payout ratio drops to 29% for the quarter. Cardinal will
continue to monitor our payout ratios as well as the actual
dividend rate, and adjust the dividend amount when it deems
appropriate.
Operating costs: Cardinal began several initiatives to
reduce operating costs in the first quarter 2014. We have seen
operating costs drop by 17% from $28.72/boe in the fourth quarter
of 2013 to an average of $23.83/boe in the first quarter of 2014.
We have identified several projects to further reduce operating
costs which we will undertake throughout 2014.
Field Netbacks: Field netbacks have improved
considerably from our exit 2013 numbers. A combination of strong
commodity prices and a reduction in operating costs have pushed our
field netbacks to an average of $41.48/boe for the quarter.
Liquidity: Our net debt was $3.9 million as at March
31, 2014. Our bank facility is currently set at $125 million
providing Cardinal with the necessary financial flexibility on a go
forward basis. We are currently undergoing our year end banking
review and expect to have our borrowing base increased in second
quarter.
Growth: We are continually adding to and expanding our
core areas. During the first quarter we completed 2 acquisitions
adding approximately 300 boe/d of production and 14 net sections of
land. During the quarter we also participated at a land sale adding
significant acreage which we feel is prospective of additional
Mannville drilling.
Management's primary focus for the first quarter of 2014, was to
successfully integrate the acquired assets in SE Alberta as well as
the staff associated with the acquisition; both in our Calgary
office and our new field office in Medicine Hat. We are pleased
with the results of this integration and with the quality and
resourcefulness of our new staff.
Cardinal was able to grow organically in the quarter while
spending only 69% of its cash flow (net of acquisitions and
financings); to pay its dividend, offset declines on base
production and grow production by 3 percent. As this is our first
full quarter of results as a public company, we are quite pleased
that we are able to demonstrate the strength in our business model
which focuses on a low corporate decline rate. Management estimates
that even with the drilling activity in the quarter, we were able
to maintain a corporate decline rate of less than 15 percent on an
annualized basis.
Cardinal exited the quarter with $3.9 million of net debt (we
currently have no debt). This, combined with a peer group leading
low decline rate and a disciplined allocation of capital, make it
one of the most sustainable companies in the junior/intermediate
dividend paying oil focused companies. We look forward to reporting
our next quarterly results as we feel confident that we can achieve
more aggressive growth rates while still spending on an all in
basis, less than 100 percent of our cash flow.
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.
Advisory Regarding Forward-Looking Statements
In the interest of providing Cardinal's shareholders and
potential investors with information regarding Cardinal, including
management's assessment of Cardinal's future plans and operations,
certain statements in this press release are "forward-looking
statements" within the meaning of applicable Canadian securities
legislation. In some cases, forward-looking statements can be
identified by terminology such as "anticipate", "believe",
"continue", "could", "estimate", "expect", "forecast", "intend",
"may", "objective", "ongoing", "outlook", "potential", "project",
"plan", "should", "target", "would", "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 business strategies, focus, plans and
objectives; future drilling plans and targets; expected production
rates and decline rates; target payout ratios; dividend policy and
plans; plans to reduce operating costs; anticipated increases in
our credit facility and the timing thereof; and plans to achieve
more aggressive growth rates while still spending less than 100
percent of anticipated cash flow. These forward-looking statements
are based on certain key assumptions regarding, among other things:
petroleum and natural gas prices and pricing differentials; well
production rates and reserve volumes; estimated operating costs;
our ability to market our oil and natural gas successfully; our
ability to add production and reserves through our exploration and
development activities; capital expenditure levels; the receipt, in
a timely manner, of regulatory and other required approvals for our
operating activities; the availability and cost of labour and other
industry services; the availability and cost of financing and our
ability to access capital; the amount of future cash dividends that
we intend to pay; interest and foreign exchange rates; the
continuance of existing and, in certain circumstances, proposed tax
and royalty regimes; our ability to develop our crude oil and
natural gas properties in the manner currently contemplated; and
current industry conditions, laws and regulations continuing in
effect (or, where changes are proposed, such changes being adopted
as anticipated). You are cautioned that such assumptions, although
considered reasonable by Cardinal at the time of preparation, may
prove to be incorrect.
Actual results achieved during the forecast period will vary
from the information provided herein as a result of numerous known
and unknown risks and uncertainties and other factors. Such factors
include, but are not limited to: declines in oil and natural gas
prices; risks related to the accessibility, availability, proximity
and capacity of gathering, processing and pipeline systems; risks
inherent in oil and gas operations; variations in interest rates
and foreign exchange rates; access to external sources of capital;
risks associated with the exploitation of our properties and our
ability to acquire reserves; increases in operating costs; changes
in government regulations that affect the oil and gas industry;
changes to royalty or mineral/severance tax regimes; risks relating
to hydraulic fracturing; changes in income tax or other laws or
government incentive programs; uncertainties associated with
estimating petroleum and natural gas reserves; changes in
environmental, health and safety regulations; competition in the
oil and gas industry for, among other things, acquisitions of
reserves, undeveloped lands, skilled personnel and drilling and
related equipment; or key personnel and information systems; risks
associated with the ownership of our securities, including the
discretionary nature of dividend payments and changes in
market-based factors; and other factors, many of which are beyond
the control of Cardinal.
The above summary of assumptions and risks related to
forward-looking statements in this press release has been provided
in order to provide shareholders and potential investors with a
more complete perspective on Cardinal's current and future
operations and such information may not be appropriate for other
purposes. There is no representation by Cardinal that actual
results achieved during the forecast period will be the same in
whole or in part as those forecast and Cardinal does not undertake
any obligation to update publicly or to revise any of the included
forward-looking statements, whether as a result of new information,
future events or otherwise, except as may be required by applicable
securities law.
Non-GAAP Financial Measures
Cardinal uses terms within this press release that 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.
The terms "cash flow from operations", "netback" or "netback per
boe", "net debt" and "simple payout ratio" in this press release
are not recognized measures under GAAP. Management believes that in
addition to net earnings and cash flow from operating activities as
defined by GAAP, these terms are useful supplemental measures to
evaluate operating performance and assess leverage. Users are
cautioned however, that these measures 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.
Management utilizes "cash flow from operations" as a key measure
to assess the ability of the Company to generate the funds
necessary to finance dividends, operating activities and capital
expenditures. All references to cash flow from operations
throughout this press release are based on cash from operating
activities before the change in non-cash working capital and
decommissioning expenditures since 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.
The term "net debt" is not recognized under GAAP and is
calculated as bank debt plus or minus working capital (adjusted for
the fair value of financial instruments). Net debt is used by
management to analyze the financial position and leverage of
Cardinal. "Simple payout ratio" represents the ratio of the amount
of dividends declared, divided by cash flow from operations. Simple
payout ratio is another key measure to assess Cardinal's ability to
finance dividends, operating activities and capital
expenditures.
Cardinal Energy Ltd.M. Scott RatushnyChief Executive Officer and
Chairman(403) 216-2706Cardinal Energy Ltd.Douglas SmithChief
Financial Officer(403) 216-2709Cardinal Energy Ltd.(403)
234-8681(403) 234-0603info@cardinalenergy.ca
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