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Cardinal Energy Ltd. First Quarter 2023 Results

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   |    Thursday,May 18,2023

Cardinal Energy Ltd. announced first quarter 2023 results.


  • Production increased 5% over the same period in 2022 due to ongoing strong base performance and excellent 2022 drilling results across our asset base;
  • Adjusted funds flow(1) was $52.3 million which was allocated to capital expenditures(1) of $25.3 million and dividends of $28.7 million;
  • Cardinal’s net debt(1) has decreased by 47% in the last 12 months closing at $78 million at March 31, 2023;
  • Achieved a net debt to adjusted funds flow ratio(1) of 0.2x for the first quarter of 2023;
  • In the last 12 months, Cardinal has repaid approximately $69 million of net debt and returned approximately $130 million to shareholders in the form of dividends, treasury share purchases and common share cancellations through our normal course issuer bid (“NCIB”); and
  • Drilled four (4.0 net) Clearwater oil wells in the first quarter with initial production coming on in the last week of March and currently producing at rates well above expectations.
Cardinal Energy Ltd. is pleased to announce its operating and financial results for the first quarter ended March 31, 2023.


First quarter 2023 adjusted funds flow of $52.3 million was 23% lower than the prior quarter primarily due to reduced global oil prices combined with wide Western Canadian Select (“WCS”) oil differentials. WCS differentials averaged almost US$25/bbl in the first quarter but have materially decreased in the second quarter averaging approximately US$15/bbl to date. On a per diluted share basis, adjusted funds flow was $0.33 per share while first quarter 2023 free cash flow(1)of $28.8 million was utilized for shareholder returns through our $0.06 per month dividend.29dk2902l

First quarter 2023 net operating expenses per boe were slightly lower than the prior quarter at $25.40/boe due to lower Alberta electricity costs. Although lower than the prior quarter, power costs remain higher than historical levels. To mitigate these high power costs, Cardinal has entered into power contracts that fix the price of about 70% of the Company’s average monthly Alberta power usage at an average price of approximately $85/MWh, which is 40% lower than the average price in the first quarter of 2023.

Cardinal’s net debt closed the first quarter of 2023 at $78.0 million which included $45.3 million of bank debt and $32.7 million of adjusted working capital deficiency(1). The $45.3 million of bank debt represents drawings of 29% on our $155 million credit facility. The higher debt level as compared to year-end levels was mainly the result of a one-time withholding tax payment of $8.4 million upon the annual vesting of our bonus share awards. Cardinal’s net debt to adjusted funds flow ratio remained low at 0.2x. During the first quarter, despite materially higher Canadian interest rates, Cardinal’s low debt levels resulted in a 38% reduction in interest and other costs per boe over the same period in 2022.


Cardinal’s average production increased 445 boe/d compared to Q4 2022 to 21,726 boe/d in the first quarter a result of ongoing optimization of our base production. The Company’s capital expenditures were $25.3 million during the quarter. This included drilling another four (4.0 net) successful Clearwater multilateral wells on our lands at Nipisi, upgrading and expanding infrastructure capacity within our asset base, and reactivating and recompleting wells.

Our 2023 Nipisi Clearwater drilling program has yielded exceptional results. Production began in late March with first oil showing up at each well within days. Currently these four wells combined are producing at over 1,000 bbl/d of oil which has pushed current corporate production over 22,000 boe/d. Drilled last winter and on-stream for over a year, our first four (4.0 net) Nipisi Clearwater multilateral wells, delivered a weekly peak average production of a combined 800 boe/d, these wells continued to produce above our forecasts, with current aggregate production of approximately 500 boe/d and have paid out over two times to date. The Company will continue with its measured development pace at Nipisi and expects to proceed with another drilling program here in early 2024.

Our Wainwright Central Alberta Rex multilateral discovery well, drilled and brought on production during the summer of 2022, continues to produce above expectation with current production of approximately 100 boe/d. We significantly expanded our land position here through additional acquisitions in in the first quarter. The Company has identified over 90 potential multi-lateral follow up locations on this trend to develop over the next several years and preparations are being made to resume drilling on this project this summer.

Optimization efforts during the first quarter across our asset base have continued to uphold Cardinal’s top decile base decline rate.

The Company will resume its 2023 drilling program during the second quarter, with programs starting in each of our Wainwright, Bantry, and Midale, Saskatchewan areas in May and June.


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