Cardinal Energy Ltd. reported its Q2 2019 results.

Highlights from the second quarter of 2019:

• Record second quarter 2019 adjusted funds flow of $35.7 million increased 21% over Cardinal's previous high of $29.6 million in first quarter of 2019 while adjusted funds per diluted share increased to $0.31/share, an increase of 24% over the first quarter.

• Cardinal's initial power-generating projects came online during the second quarter, which helped contribute to the 10% decrease in operating expenses per boe compared to the first quarter of 2019.

• Cardinal completed the annual review of its credit facility in the quarter, which saw the bank line unchanged at $325 million while extending the term by a year. We continue to delever our balance sheet and have decreased our net debt by $20 million or 7% in 2019.

• Reduced the net debt to second quarter annualized adjusted funds flow ratio to 1.7x from 2.2x in the first quarter of 2019.

• Total payout ratio was 58% and 54%, respectively, for the three and six months ended June 30, 2019, resulting in significant free cash flow which was used to reduce debt by $20 million and to purchase $6.2 million of Cardinal shares in the public market to settle the future vesting of restricted awards.

Operationally, Cardinal accelerated approximately $7 million of its capital program originally planned for the third quarter into the second quarter to take advantage of continuity and pricing on services. The Company also focused on operating cost reduction initiatives, completing power generation projects to reduce our Alberta electrical grid usage and to take advantage of government incentive programs. During the second quarter, four of these projects successfully came online in our Central area. With the success of these projects, the Company is currently expanding the program and implementing power generation projects at additional sites. Additionally, Cardinal continues to reduce our environmental footprint by proactively upgrading and replacing pipelines and continued our enhanced oil recovery scheme with CO2 injection at Midale.

In the second quarter of 2019, Cardinal's operating costs decreased 9% to $20.28/boe as compared to the prior quarter. This was primarily a result of reduced workover and Alberta electricity costs combined with increased production. With electricity costs currently making up approximately 20% to 25% of our total operating costs, Cardinal's power generation program is expected to significantly reduce our electricity costs as more projects are brought on in the future.

In a growth-restricted environment, Cardinal continues to focus on cost reduction, which includes general and administrative ("G&A") costs. During the second quarter, we reduced our G&A costs per boe by 19% over the same period in 2018 and 11% over the first quarter of 2019. We continually scrutinize our costs to ensure we operate our assets in an efficient manner.

During the quarter, Cardinal continued to focus on debt repayment to solidify our balance sheet as the increase in adjusted funds flow was allocated to reducing net debt by $8.3 million in the second quarter. In the first six months of 2019, the Company has reduced net debt by $20 million or 7%. The debt repayment has taken the form of the maximum allowable buyback and cancellation of $5 million of convertible debentures through the normal course issuer bid in the first quarter and the repayment of approximately $15 million of net bank debt in the first and second quarters of 2019. Our lower net debt and increased second quarter adjusted funds flow reduced the Company's second quarter annualized run rate net debt to adjusted funds flow ratio to 1.7x while our total payout ratio for the first six months of 2019 is 54%. As our goal is to make the Company's stock-basedcompensation program non- dilutive to the shareholders going forward, Cardinal has established a trust to buy treasury shares on the open market through an independent trustee. During the first six months of 2019, the trustee bought 2.2 million common shares for $6.2 million, which can be used at our option, to settle the future vesting of restricted awards. These common shares are currently estimated to be sufficient to settle the vesting of existing restricted awards for approximately two years.

Cardinal's risk management program is an important component of our business strategy as it is designed to mitigate the volatility in oil and gas prices experienced throughout the year and fix the downside of commodity prices to support our capital program and dividend. The Company was opportunistic with the Canadian oil pricing increases experienced in early 2019, as we were able to lock in differentials and pricing for a significant portion of our oil production for 2019 and into 2020. Cardinal has 3,500 bbl/d hedged with WTI-WCS pricing differential hedges averaging approximately US$17 and 3,250 bbl/d at an average wellhead CAD$57 WCS pricing for the remainder of 2019. The Company has also protected the downside with pricing floors averaging over CAD$69/bbl but retained upside on WTI pricing by locking in 4,750 bbl/d of our light oil with an average ceiling price of over CAD$85/bbl or with no ceiling at all through various puts. This risk management program has given Cardinal the ability to achieve its budgeted capital expenditures and asset retirement obligations and support our dividend program while continuing to reduce our debt or acquire our shares on the open market.

Outlook

Strong realized pricing and lower operating costs from our cost reduction initiatives combined with controlled capital spending have allowed Cardinal to execute our debt reduction strategy through the first half of 2019. The Company plans to continue with this strategy through 2019 and into 2020 and will be disciplined with our capital spending but also plans to take advantage of opportunities that may arise in a challenging industry environment. The low decline of our asset base allows us to be selective with our capital spending to take advantage of our land base and infrastructure. In addition, Cardinal continues to proactively upgrade our infrastructure to minimize our future environmental impact and to accelerate our future abandonment and site remediation obligations.

We expect our second half adjusted funds flow will continue to support our debt reduction strategy, disciplined capital program and maintain our dividend, which was increased in July 2019 while keeping our total payout ratio well below 100%. The Company has also implemented an NCIB, as described below, which we expect to utilize to assist us in achieving per share growth in an era of curtailed oil production.

Cardinal is able to provide shareholders with a sustainable dividend and a continually improving asset base all supported by free cash flow. We would like to thank our employees and Board of Directors for their contributions and our shareholders for their continuing confidence and support of Cardinal.