CARDINAL ENERGY LTD. ANNOUNCES FOURTH QUARTER 2019 YEAR-END FINANCIAL RESULTS AND UPDATED CAPITAL BUDGET AND DIVIDEND SUSPENSION

CARDINAL ENERGY LTD

CALGARY, Alberta, March 17, 2020 (GLOBE NEWSWIRE) — Cardinal Energy Ltd. (“Cardinal” or the “Company“) (TSX: CJ) is pleased to announce its operating and financial results for the fourth quarter and year ended December 31, 2019.2019 FINANCIAL HIGHLIGHTSProduction for the fourth quarter of 2019 averaged 20,227 boe/d with crude oil production increasing by 1% over the third quarter of 2019.  As the Company is no longer limited by the Alberta government’s curtailment program, current production in March is approximately 21,500 boe/d (18,400 bbl/d of crude oil) or 10% higher than the fourth quarter of 2019 average;We generated $121.9 million or $1.06 per share of adjusted funds flow(1) in 2019 representing a 43% increase over 2018;Cardinal continued to generate free cash flow(1) during the quarter bringing the total free cash flow for 2019 to $40.3 million or 33% of adjusted funds flow which was utilized in part to reduce net debt(1) and reduce our outstanding common shares;Reduced 2019 net debt by $22 million or a reduction of 8% over the balance at December 31, 2018;Purchased and cancelled 1.7 million common shares under our normal course issuer bid (“NCIB”) implemented in August 2019 and funded the acquisition of 2.3 million common shares through an independent trust for potential future settlement of restricted bonus awards.  Subsequent to year-end, Cardinal has purchased and cancelled an additional 0.9 million common shares and an additional 0.3 million shares for the potential future settlement of restricted bonus awards; In 2019, reduced operating costs per boe from a high of $22.63/boe in the first quarter of 2019 to $20.31/boe in the fourth quarter of 2019 representing a 10% decrease in operating costs per boe throughout the year;Reduced general and administrative (“G&A”) costs per boe to $2.14/boe, a 7% decrease over 2018; andCardinal’s total payout ratio decreased to 67% as compared to 127% in 2018 illustrating our disciplined capital and dividend program.      (1)        See non-GAAP measuresFinancial and Operating Highlights      (1)        See non-GAAP measures
      (2)        See Supplemental Information Regarding Product Types
FOURTH QUARTER AND 2019 HIGHLIGHTSCardinal focused on long-term sustainability during 2019.  As the Company’s ability to grow its production was limited by the Alberta government’s oil production curtailment program, Cardinal’s focus was on debt repayment, share buybacks, operating cost reduction projects and infrastructure upgrades.  Cardinal reduced its net debt by $22 million in 2019 while spending $10.2 million acquiring 3.9 million common shares for cancellation under our NCIB and through an independent trust for the potential future settlement of restricted bonus awards.  In addition, during the first quarter of 2020, Cardinal has purchased and cancelled an additional 0.9 million common shares and acquired 0.3 million common shares through our independent trust for the potential future settlement of restricted bonus awards bringing the total common shares acquired to approximately 4.4% of the Company’s outstanding shares prior to the implementation of these programs in 2019.      During 2019, West Texas Intermediate (“WTI”) oil prices decreased 12% over 2018 to average $57.03 in 2019.  The Alberta government’s oil production curtailment program was implemented in 2019 which decreased inventory levels and stabilized Canadian oil pricing differentials.  The Edmonton light (“MSW”) pricing differential to WTI averaged USD$5.00/bbl, 55% narrower than 2018 while the Western Canadian Select (“WCS”) differential averaged USD$12.75/bbl which was 52% narrower than the 2018 average.  In the fourth quarter of 2019, the rules for the curtailment program were eased and Cardinal is not subject to curtailment at this time. As a result of Cardinal’s oil production no longer being curtailed, we increased our 2019 capital budget in the fourth quarter to take advantage of land earning farm-in drilling opportunities in our Bantry, Alberta area.  During the fourth quarter of 2019, Cardinal drilled six (6.0 net) oil wells in Southern Alberta.  Two (2.0 net) of these wells were completed in the fourth quarter, three (3.0 net) were completed in 2020 and one well was considered not commercially productive and was abandoned in the fourth quarter.  During the quarter, Cardinal also spent $10.6 million on infrastructure and pipeline upgrades which include enhanced oil recovery projects in Midale, Saskatchewan and power generation projects in our Central Alberta business unit.  Two of these power projects were completed in early 2020 and are expected to reduce annual power costs by approximately $1.6 million in 2020 and beyond bringing our total estimated annual power cost savings to approximately $2.3 million from our 2019 power generation projects.With oil production being curtailed for most of 2019, Cardinal’s average annual production decreased 3% from 2018.  As a result of the accelerated fourth quarter drilling program, current oil production, based on field estimates, is averaging 18,400 bbl/d of crude oil, a 10% increase over the fourth quarter of 2019 average oil production.  Operating costs in the first quarter of 2019 averaged $22.63/boe due to higher well servicing and power costs.  With field operating efficiencies and power generation projects being implemented, the Company’s goal was to reduce our costs by 8% through 2019.  In the fourth quarter, operating costs per boe averaged $20.31/boe, a 10% decrease throughout the year.  Average annual operating costs were $20.94/boe which are forecasted to decrease in 2020 as additional power generation projects and other field efficiencies are implemented.              The Company’s adjusted funds flow remained strong during the fourth quarter of 2019 increasing to $28.9 million, an increase of 5% over the prior quarter and over 400% greater than the fourth quarter of 2018.  Annual 2019 adjusted funds flow increased by 43% over 2018 to $121.8 million or $1.06 per diluted share.  A combination of strong adjusted funds flow and a disciplined capital and dividend program led to a total payout ratio of 67% as compared to 127% in 2018.  The Company’s 2019 net debt to annual adjusted funds flow ratio decreased to a level within its targeted range of 2.0x from 3.2x in 2018.                  OUTLOOKIn light of the rapidly changing world in which both COVID-19 and talk of supply increases from Saudi Arabia and Russia have dramatically decreased the price of crude oil, we felt it was necessary to protect our shareholders and our Company by making some rapid changes to the framework of our business.As of March 9, 2020 we have significantly decreased our capital budget to a minimal level. Our original budget called for capital spending of $67 million with $27 million to be spent in Q1. As of March 9, we were able to safely suspend drilling and completion operations as well as other capital programs having spent approximately $22 million.  This resulted in the drilling and completing of the majority of our Southern area drill program for the year and leaves us currently producing approximately 21,500 boe/d.  We still have several wells that are completed but not tied in and one well requiring completion. We anticipate that the production from this drill program will allow us to maintain approximately the same average production levels as 2019 with minimal capital spending for the remainder of the year.Our revised 2020 capital budget is now $31 million, of which $22 million has been spent and $9 million is planned for the balance of the year.  These funds are necessary to complete scheduled facility turnarounds and to maintain safe operations as well as to maintain our base production. Our revised budget contemplates exiting 2020 at a similar net debt level as 2019.As part of the revised capital program the Board of Directors has elected to suspend the dividend for March, April, May and June after which we will evaluate market conditions and either reinstate a dividend or continue with another temporary suspension.We will continue to navigate through these challenging times by acting quickly to implement change on both the downside and the upside.  We have reduced our office staff compensation to account for the reduced activity and will look for additional ways to reduce costs and other long term cost saving initiatives.We thank our shareholders and stakeholders for their perseverance and look forward to coming out of this crisis with a stronger sustainable Company.ANNUAL FILINGS
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