|By Marketwired .||
|August 13, 2014 08:05 PM EDT||
CALGARY, ALBERTA -- (Marketwired) -- 08/14/14 -- Cardinal Energy Ltd. ("Cardinal" or the "Company") (TSX:CJ) is pleased to announce its operating and financial results for the quarter ended June 30, 2014 which marked the second full operating quarter for Cardinal as a public company. Cardinal also announces that its unaudited interim financial statements and related Management's Discussion and Analysis for the quarter ended June 30, 2014 are available on the System for Electronic Analysis and Retrieval ("SEDAR") and on Cardinal's website at www.cardinalenergy.ca.
-- Production averaged 6,501 boe per day in the second quarter of 2014, an increase of 4% over the first quarter of 2014 and an increase of 11% since December 31, 2013. -- Increased production and lower operating expenses increased cash flow from operations to $23.5 million for the quarter ended June 30, 2014, $0.62 per basic share, an increase of 17% over the first quarter cash flow from operations per share of $0.53.Operating expenses were reduced by $1.63 per boe to $22.20 per boe for the second quarter of 2014. -- Cardinal's total payout ratio was approximately 63% for the six months ended June 30, 2014 which includes 5% production growth over the year end production rate. -- Cardinal ended the quarter with a small working capital surplus (approximately $0.5 million) and nothing drawn on its $125 million credit facility.
Selected Quarterly Data
Three months Three months ended ended Percentage Jun 30, 2014 Mar 31, 2014 Change Production Oil and NGL (bbl/d) 5,800 5,513 5% Natural gas (mcf/d) 4,208 4,333 (3%) Oil equivalent (boe/d) 6,501 6,235 4% Financial ($000's, except share and per share amounts) Revenue 48,194 41,287 17% Cash flow from operating activities 25,703 12,530 105% Cash flow from operations 23,522 19,229 22% Basic per share ($) $ 0.62 $ 0.53 17% Diluted per share ($) $ 0.60 $ 0.51 18% Working capital (deficiency) 518 135 284% Bank debt - 4,002 (100%) Shareholders' Equity 363,943 362,866 - Common shares outstanding 37,804,824 37,675,910 -
In the second quarter of 2014, Cardinal focused on the core components of its business plan. Cardinal's simple payout ratio decreased during the period as a result of the Company's confidence in its business strategy and its ability to raise its dividend on a go forward basis. It is the Company's intention to review its dividend in the second quarter of each year and reset it to its targeted range of 30-35% of cash flow. Cardinal recently announced a dividend increase to $0.84 per share annually effective for the September dividend, payable on October 15, 2014.
Cardinal has successfully drilled, completed and tied in five Glauconite horizontal wells in Bantry. The wells drilled to date have exceeded expectations and Cardinal plans to drill two to three additional horizontal wells in the second half of 2014.
We continued to focus on operating expense reductions and optimization opportunities in Bantry in the second quarter. Management is pleased with the performance of the Company's base production and is continually working to further optimize and grow the area. Corporate operating expenses have dropped from $28.72/boe in the fourth quarter of 2013 to an average of $22.20/boe in Q2, a reduction of 23%.
We are currently shooting seismic to further delineate our drilling opportunities and aggressively working to expand our drilling inventory in the area.
In 2013, management identified Wainwright as an area that it would like to expand and turn into a core area because the area has the attributes considered important for a lower risk dividend paying company. The Wainwright area is an established oil producing area in East Central Alberta that offers all season access, minimal spring break concerns and existing infrastructure. The properties we currently own in Wainwright and the ones we target for acquisition typically have low declines, are medium quality oil and are under water flood.
During the quarter, Cardinal acquired minor working interests in the Chauvin area adding approximately 75 boe/d of working interest production and royalty interests at a combined purchase price of approximately $5.35 million.
Subsequent to June 30, Cardinal entered into an agreement to purchase an additional 1,900 boe/d in Wainwright. This acquisition is consistent with our strategy to build Wainwright into a new core area. The acquisition gives us economies of scale in the area, allowing us to pursue further acquisitions and to focus on increasing our drilling inventory in the area.
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 and Other Advisories
This press release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to Cardinal's plans and other aspects of Cardinal's anticipated future operations, management focus, objectives, strategies, financial, operating and production results and business opportunities, including our drilling and development plans and the timing thereof and Cardinal's plans to further delineate its drilling opportunities and expand its drilling inventory, future operating expenses and optimizations and the Company's dividend policy including anticipated dividend increases and the amount and timing of such increases, target cash flow from operations and simple payout ratio. In addition, and without limiting the generality of the foregoing, this press release contains forward-looking information regarding the Wainwright acquisition and the benefits to be acquired therefrom. Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend" or similar words suggesting future outcomes, statements that actions, events or conditions "may", "would", "could" or "will" be taken or occur in the future. 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; future production rates and estimates of operating expenses; performance of existing and future wells; reserve and resource volumes; 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; results of operations; performance; business prospects and opportunities; the availability and cost of financing, labor and services; the impact of increasing competition; ability to market oil and natural gas successfully; Cardinal's ability to access capital, and obtaining the necessary regulatory approvals and satisfaction of the other conditions to closing the acquisition and on the timeframe contemplated.
Although the Company believes that the expectations and assumptions on which such forward-looking information is based are reasonable, undue reliance should not be placed on the forward-looking information because Cardinal can give no assurance that they will prove to be correct. Since forward-looking information addresses future events and conditions, by its very nature they involve inherent risks and uncertainties. The Wainwright acquisition may not be completed on the anticipated time frames or at all and Cardinal's actual results, performance or achievement could differ materially from those expressed in, or implied by, the forward-looking information and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking information will transpire or occur, or if any of them do so, what benefits that Cardinal will derive there from. Management has included the above summary of assumptions and risks related to forward-looking information provided in this report in order to provide securityholders with a more complete perspective on Cardinal's future operations and such information may not be appropriate for other purposes.
Readers are cautioned that the foregoing lists of factors 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).
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 information, 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 the terms "cash flow from operations", "simple payout ratio" and "total payout ratio"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 financial and operating performance. Cardinal feels these benchmarks are key measures of profitability and overall sustainability for the Company. Each of these terms is commonly used in the oil and gas industry. 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 financial 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 "Total payout ratio" represents the ratio of the sum of dividends declared plus management's expectation of the amount of capital expenditures necessary to maintain our 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. Simple payout ratio and total payout ratio are other key measures to assess our ability to finance dividends, operating activities and capital expenditures.
Advisory Regarding Oil and Gas Information
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.
Cardinal Energy Ltd.
M. Scott Ratushny
Chief Executive Officer and Chairman
Cardinal Energy Ltd.
Chief Financial Officer
Cardinal Energy Ltd.
(403) 234-0603 (FAX)