Cardinal Energy Ltd. is pleased to present the results of its independent reserve report effective December 31, 2022. One hundred percent of Cardinal's year-end 2022 reserves were evaluated by independent reserves evaluator GLJ Ltd. ("GLJ") with an effective date of December 31, 2022 (the "2022 Reserve Report"). The 2022 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 2022 year-end reserves reflect the quality and sustainability of our low decline asset base. In 2022, Cardinal’s focus was to reduce financial risk and improve on the long term sustainability of our assets.
RESERVE REPORT HIGHLIGHTS
All reserves information contained in this news release are based on the 2022 Reserve Report.
Cardinal’s efficient capital program and commitment to reduce debt resulted in PDP reserves per diluted share(2) increasing by 8%, and the associated PDP NPV10 per diluted share(2) increasing by 34%.
Cardinal’s Proved Developed Producing ("PDP") reserves increased to 78 mmboe, representing a 4% increase year over year, through the addition of 11 mmboe, replacing 1.4x 2022 annual production.
PDP reserves were added at Finding, Development and Acquisition ("FD&A") costs(1) of $12.03/boe, resulting in a recycle ratio(1) of 4.1 times. PDP Finding and Development ("F&D") costs(1) were $11.73/boe, resulting in a recycle ratio(1) of 4.2 times.
The before tax Net Present Value ("NPV"), discounted at 10% ("NPV10") of our reserves increased 29% to $1,353 million, and 29% to $1,574 million for our PDP and Proved Plus Probable Producing ("P+PDP") reserves respectively.
The debt adjusted, NPV10 of the Company's PDP reserves was $8.25 per basic share(3)(4), a 51% increase over 2021 and PDP reserves increased 22% on a debt adjusted basic per share basis(3)(4).
On a Proved plus Probable ("TPP") basis, Cardinal’s reserves increased to 113 mmboe, a 2% increase year over year, an addition of 10.5 mmboe at a FD&A cost(1) of $11.40/boe.
NPV10 of TPP reserves increased 30% to $1,784 million, a 25% increase on an NPV10 per basic share basis(2) and a 52% change on a debt adjusted basic per share basis(3)(4).
Cardinal maintains a high percentage of reserves as producing with the P+PDP reserves accounting for 88% of the Company's TPP reserves.
91% of Cardinal's TPP reserves are associated with oil and natural gas liquids.
CARDINAL’S TOP TIER RESERVE LIFE ASSETS
Cardinal continues to maintain a long producing reserve life index ("RLI")(1) of 10 years PDP and 12.7 years P+PDP based on fourth quarter 2022 production of 21,281 boe/d(2) which reflects the low decline, low risk, predictable nature of our asset base.
We effect a measured approach to developing and booking our reserves. There are 66 gross undeveloped drilling locations booked(3) which represents approximately four years of forecast drilling plans. These locations only represent a small percentage of our overall economic drilling inventory of more than 600 net locations, leaving substantial room for future reserve additions within our existing asset base.
OIL AND GAS RESERVES
The 2022 Reserve Report encompasses 100% of Cardinal's oil and gas properties and 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 2022 Reserve Report uses the price forecast of the three consultant's average (GLJ, McDaniel & Associates Consultants Ltd. and Sproule Associates Ltd. (collectively, the "Consultants")) used by GLJ. The forecast crude oil reference prices are higher as compared to the 2021 Reserve Report forecast. Improvement in pricing along with our 2022 successful drilling program and continued optimization of our enhanced recovery schemes have added 11.5 million boe of P+PDP reserves.
In the 2022 Reserve Report, Cardinal has included all abandonment, decommissioning and reclamation ("ADR") costs for active and inactive wells, pipelines and facilities. The ADR costs for the active assets are considered in the PDP reserves category. Full inclusion of all ADR costs is recommended by COGEH. Cardinal's full inclusion of costs exceeds the NI 51-101 minimum requirement of ADR for only those assets assigned reserves.
Consistent with prior years and in accordance with COGEH recommendations, Cardinal has included all operating costs for active and inactive assets. The Company also includes the consideration of future maintenance costs which is included as part of the operating costs or as future development capital ("FDC").
Summary of Oil and Gas Reserves (1)(3)
The following tables summarize certain information contained in the 2022 Reserve Report. Reserves included below are the Company's estimated gross reserves as at December 31, 2022, as evaluated in the 2022 Reserve Report.
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. Cardinal has identified over 600 net unbooked potential locations(1) which provide long term confidence in the sustainability of our production base and the potential to deliver future organic growth.
FDC included at year-end 2022 for CO2 purchases, maintenance and facility capital in PDP, TP and TPP were $82 million, $89 million and $101 million, respectively. This represents 45% of Cardinal's TPP FDC of $225 million.
