Earnings release
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NEWS RELEASE JULY 30, 2025 CARDINAL ENERGY LTD. ANNOUNCES SECOND QUARTER 2025 OPERATING AND FINANCIAL RESULTS Calgary, Alberta – Cardinal Energy Ltd. ("Cardinal" or the "Company") (TSX: CJ) is pleased to announce its operating and financial results for the second quarter ended June 30, 2025. FINANCIAL AND OPERATING HIGHLIGHTS FROM THE SECOND QUARTER OF 2025 • Second quarter 2025 production of 21,184 boe/d which was 3% higher than budget despite drilling only one (1.0 net) conventional oil producer in the first half of 2025 as we continued to focus our capital expenditures on the completion of the Reford steam-assisted gravity drainage ("SAGD") project; • Adjusted funds flow(1) in the second quarter of 2025 was $49.4 million, which was directed to funding of the Company's Reford SAGD project and the corporate dividend; • Net operating expenses(1) per boe decreased 5% in the second quarter compared to the prior period; • As forecasted, Cardinal's net debt(1) increased to $227.1 million at the end of the second quarter of 2025. The Company was drawn $94.6 million (39%) on our $240 million credit facilities at the end of the second quarter. At the end of the second quarter, Cardinal had a net debt to adjusted funds flow ratio(1) of 0.9x; • In the second quarter, we continued with our disciplined conventional capital program investing $12.7 million of capital expenditures which included the drilling and completion of one (1.0 net) oil well; • During the second quarter of 2025, Cardinal incurred approximately $32.3 million on our thermal project at Reford, Saskatchewan which has now moved into the testing and commissioning stage with first steam scheduled for later in the third quarter. The project continues to remain on budget and on schedule; • Cardinal remained committed to our successful shareholder return strategy with a consistent $0.06 per share per month dividend leading to $28.9 million being returned to shareholders in the second quarter of 2025 resulting in an 84% total payout ratio(1). (1) See non-GAAP and other financial measures.
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2 The following table summarizes our second quarter financial and operating highlights: (1) See non-GAAP and other financial measures. n/m - Not meaningful or not calculable ($000's except shares, per share and operating amounts) Three months ended June 30 Six months ended June 30 2025 2024 % Chg 2025 2024 % Chg Financial Petroleum and natural gas revenue 127,377 169,353 (25) 277,145 309,579 (10) Cash flow from operating activities 43,591 71,463 (39) 107,840 110,827 (3) Adjusted funds flow (1) 49,419 81,827 (40) 111,665 134,633 (17) per share – basic 0.31 0.51 (39) 0.70 0.85 (18) per share – diluted 0.31 0.51 (39) 0.69 0.84 (18) Earnings 15,516 40,650 (62) 36,918 57,401 (36) per share – basic 0.10 0.26 (62) 0.23 0.36 (36) per share – diluted 0.10 0.25 (60) 0.23 0.36 (36) Development capital expenditures (1) 12,672 18,759 (32) 25,772 51,133 (50) Other capital expenditures (1) 34 758 (96) 756 1,326 (43) Capital expenditures 12,706 19,517 (35) 26,528 52,459 (49) Exploration & evaluation expenditures ("E&E") 41,339 10,814 282 112,356 26,882 318 Common shares, net of treasury shares (000s) 160,562 159,178 1 160,562 159,178 1 Dividends declared 28,896 29,116 (1) 57,634 58,151 (1) Per share 0.18 0.18 - 0.36 0.36 - Total Payout ratio (1) 84% 59% 42 75% 81% (7) Bank debt 94,649 77,904 21 Debentures 99,482 - - Adjusted working capital deficiency(1) 32,958 21,313 55 Net debt (1) 227,089 99,217 129 Net debt to adjusted fund flow ratio (1) 0.9 0.4 125 Operating Average daily production Light oil (bbl/d) 7,332 7,516 (2) 7,464 7,397 1 Medium/heavy oil (bbl/d) 10,822 11,757 (8) 11,034 11,396 (3) NGL (bbl/d) 832 811 3 855 832 3 Conventional natural gas (mcf/d) 13,190 13,752 (4) 13,438 14,453 (7) Total (boe/d) 21,184 22,376 (5) 21,593 22,034 (2) Netback ($/boe) (1) Petroleum and natural gas revenue 66.08 83.17 (21) 70.91 77.20 (8) Royalties (12.02) (15.33) (22) (13.66) (14.21) (4) Net operating expenses (1) (23.04) (23.65) (3) (23.69) (24.89) (5) Transportation expenses (0.87) (1.15) (24) (0.97) (1.13) (14) Netback (1) 30.15 43.04 (30) 32.59 36.97 (12) Realized gain/(loss) on commodity contracts (0.83) (0.02) n/m (0.19) 0.02 n/m Interest and other (0.76) (0.18) n/m (0.94) (0.63) 49 G&A (2.92) (2.66) 10 (2.89) (2.78) 4 Adjusted funds flow (1) 25.64 40.18 (36) 28.57 33.58 (15)
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3 SECOND QUARTER OVERVIEW Adjusted funds flow for the second quarter of 2025 was $49.4 million ($0.31 per basic and diluted share) compared to $62.2 million ($0.39 per basic and diluted share) in the prior quarter. The decrease in adjusted funds flow was mainly due to a 13% reduction in realized commodity pricing and lower production, partially offset by lower net operating and transportation expenses. During the second quarter, the average West Texas Intermediate ("WTI") oil price decreased 11% over the first quarter of 2025. Average production for the second quarter was 21,184 boe/d, which spotlights our peer leading decline profile with the Company drilling only one (1.0 net) conventional operated oil well in the first half of 2025 while our capital expenditures have been focused on the completion of our Reford SAGD project. Despite the impact of forest fires in the Swan Hills area and unplanned third-party outages at Nipisi, production for the quarter remained above budget forecast mainly due to significant optimization successes at Midale and Nipisi. Net operating expenses in the second quarter continued to improve to $23.04/boe compared to $24.33/boe in the first quarter of 2025. The 5% decrease in net operating expenses was due in part to less workover activity, lower- than-budgeted infrastructure maintenance, and slightly lower electricity costs. As previously disclosed, during the first quarter of 2025, Cardinal closed two five-year debenture issuances totalling $105 million. During the second quarter, Cardinal elected to voluntarily reduce our credit facility and remove one member of our syndicate to decrease incremental renewal fees and stand-by fees on unutilized capacity. The Company reduced our credit facility to $240 million and at the end of the second quarter was drawn $94.6 million or 39% of the existing bank line. SASKATCHEWAN THERMAL PROJECT UPDATE During the second quarter, Cardinal invested $32.3 million into our Reford thermal project. We continue to track to budget as forecasted. All remaining modular components were transported and installed in the second quarter of 2025. To date, the following has been completed at Reford: 100% of the facility and well pad modulars are now on site, installed, and mechanically complete. This includes the once-through-steam-generators, power generators, oil and water treatment vessels, heat exchangers, fluid transfer pumps, storage tanks, MCC buildings and sales oil trucking terminals. Drilling of the six initial SAGD well pairs concluded ahead of schedule; Completion of the observation wells, disposal wells, and water source wells has concluded; Full completion of the SAGD well pairs has concluded ahead of schedule with the installation of the distributed temperature sensing ("DTS") fibre systems in the producer wells now collecting downhole reservoir data; Commissioning and energizing of the 10-kilometer fuel gas pipeline and meter station has been completed and is ready for service; Commissioning and energizing of the 18-kilometer water source pipeline and high lift pump station has been completed and is ready for service; Cardinal's fully staffed thermal field operations group is now working regular day and night shift rotations and are in the final stages of commissioning activities; and First steam downhole to commence the SAGD warm-up phase is expected to take place in coming weeks.
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4 Full execution of the construction and commissioning of the Reford project is coming to a close with costs and timeframe tracking to our initial plan and budget. During the second quarter, the Company also invested $8.7 million of other E&E expenditures which includes preparing for future thermal development opportunities with additional land and seismic data. CONVENTIONAL OPERATIONS UPDATE As budgeted, in the first half of 2025, Cardinal focused our conventional capital program on continued optimization of our low decline base. During the second quarter, Cardinal drilled, completed and brought on production one (1.0 net) well. Conventional development capital expenditures were reduced by 32% to $12.7 million as compared with $18.8 million in the second quarter of 2024. For the first six months of 2025, we have spent $25.8 million in conventional development capital expenditures compared to $51.1 million in the same period of 2024. Currently, four (4.0 net) operated conventional development wells are planned in the second half of 2025, while the final stages of Reford construction and commissioning is being completed. ENVIRONMENTAL, SOCIAL AND GOVERNANCE ("ESG") Cardinal continued our CO2 sequestration activities in Saskatchewan, with approximately 42,000 tonnes sequestered during the second quarter of 2025. As part of our enhanced oil recovery operation at Midale, Saskatchewan, 5.9 million tonnes of CO2 have been sequestered here. This has helped to increase production within this project by 10%, over the past year. Cardinal's safety record continues to be in the top tier of the industry, as is our regulatory compliance level. OUTLOOK Cardinal looks forward to the completion of our first thermal oil facility in the third quarter of 2025 with first steam expected in late August. We expect that the warm up phase heading into first production will occur in 2025 with designed production rates of 6,000 bbl/d of heavy oil being achieved in early Q1 2026. Our thermal oil exploration and development program continues as we work to prove up and derisk a multi-year inventory of thermal projects. We expect to drill another five stratigraphic test wells in 2025 and shoot additional seismic to further delineate projects on our lands. With the continuous fluctuations in oil prices, we remain flexible with our conventional capital program. Approximately 98.5% of capital spending has been completed in Reford. At current commodity prices, we expect to begin reducing debt incurred in the Reford build out in Q4 2025. Our conventional asset base has proven to be very resilient over the first six months of 2025, showing a 4% production decline with only one conventional oil well in southern Alberta being drilled in June. The shallow decline profile of our conventional assets and the minimal amount of sustaining capital required to hold production flat enables us to undertake larger projects like Reford. We expect to drill another four (4.0 net) conventional oil wells with two (2.0 net) at our Buffalo Clearwater and two (2.0 net) at our Southern Alberta Mannville plays in the back half of 2025. The focus of 2025 has been the Reford capital program. In 2026, we anticipate increasing development intensity on our conventional assets to more normalized rates of approximately 20 wells per year.
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5 Note Regarding Forward-Looking Statements 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. Forward-looking information typically uses words such as "anticipate", "believe", "project", "expect", "goal", "plan", "intend", "may", "would", "could" or "will" or similar words suggesting future outcomes, events or performance. The forward-looking statements contained in this press release speak only as of the date thereof and are expressly qualified by this cautionary statement. Specifically, this press release contains forward-looking statements relating to: that first steam associated with Reford is scheduled for later in the third quarter; that first steam downhole to commence the SAGD warm-up phase is expected to take place in coming weeks; that full execution of the construction and commissioning of the Reford project is coming to a close with costs and timeframe tracking to our initial plan and budget; that the Company is preparing for future thermal development opportunities with additional land and seismic data; that four (4.0 net) operated conventional development wells are planned in the second half of 2025, while the final stages of Reford construction and commissioning is being completed; various matters under "Outlook" including expectations of the completion of the Company's first thermal oil facility in the third quarter of 2025 with first steam expected in late August; that the Company expects that the warm up phase heading into first production will occur in 2025 with designed production rates of 6,000 bbl/d of heavy oil being achieved in early Q1 2026; that the Company expects to drill another five stratigraphic test wells in 2025 and shoot additional seismic to further delineate projects on our lands; that at current commodity prices, the Company expects to begin reducing debt incurred in the Reford build out in Q4 2025; that the Company expects to drill another four (4.0 net) conventional oil wells with two (2.0 net) at our Buffalo Clearwater and two (2.0 net) at our Southern Alberta Mannville plays in the back half of 2025; and that in 2026, the Company anticipates increasing development intensity on its conventional assets to more normalized rates of approximately 20 wells per year; the Company's planned Saskatchewan thermal project in its Reford, Saskatchewan operating area including the expected financial and operational benefits therefrom, future production levels, the timing of completion of the project, the ability to continue to efficiently deploy capital to enhance the quality, predictability, and sustainability of the Company's low-decline asset base and the Company's business strategies, plans and objectives, future ESG and related environmental performance, and the quality of the asset base and decline rates. Forward-looking statements regarding Cardinal are based on certain key expectations and assumptions of Cardinal concerning anticipated financial performance, business prospects, strategies, regulatory developments, current and future commodity prices and exchange rates, project development costs, effects of inflation, applicable royalty rates, tax laws, industry conditions, availability of government subsidies and abandonment and reclamation programs, future well production rates and reserve volumes, future operating costs, the performance of existing and future wells and projects (including Reford), budgeted expenditures; the operational performance of Reford meeting expectations described herein; the success of our exploration and development activities, the sufficiency and timing of budgeted capital expenditures in carrying out planned activities, that Cardinal will complete its capital budget in the manner as currently contemplated, the timing and success of our cost cutting initiatives and power projects, the Reford project will be completed on time and on budget, the availability and cost of labor and services, the impact of competition, conditions in general economic and financial markets, availability of drilling and related equipment, effects of regulation by governmental agencies, the ability to obtain financing on acceptable terms which are subject to change based on commodity prices, market conditions and drilling success and potential timing delays. These forward-looking statements are subject to numerous risks and uncertainties, certain of which are beyond Cardinal's control. Such risks and uncertainties include, without limitation: the impact of general economic conditions; volatility in market prices for crude oil and natural gas; industry conditions; currency fluctuations; imprecision of reserve estimates; liabilities inherent in crude oil and natural gas operations; environmental risks; incorrect assessments of the value of acquisitions and exploration and development programs; changes to budgets;
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6 that commissioning of the Reford project will not be on time or on budget; that the Reford project will not be operational on the time frames contemplated herein, or for the costs contemplated herein; that the Reford project will commence operations, without interruptions and at production levels currently contemplated; construction and related risks related to the Reford project, including as it relates to third party contractors; competition from other producers; the lack of availability of qualified personnel, drilling rigs or other services; changes in income tax laws or changes in royalty rates and incentive programs relating to the oil and gas industry including abandonment and reclamation programs; hazards such as fire, explosion, blowouts, and spills, each of which could result in substantial damage to wells, production facilities, other property and the environment or in personal injury; and ability to access sufficient capital from internal and external sources. Management has included the forward-looking statements above and a summary of assumptions and risks related to forward-looking statements provided in this press release in order to provide readers with a more complete perspective on Cardinal's future operations and such information may not be appropriate for other purposes. Cardinal's actual results, performance or achievement could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do so, what benefits that Cardinal will derive there from. Readers are cautioned that the foregoing lists of factors are not exhaustive. 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 statements, whether as a result of new information, future events or results or otherwise, other than as required by applicable securities laws. Supplemental Information Regarding Product Types This news release includes references to 2025 and 2024 production. The Company discloses crude oil production based on the pricing index that the oil is priced from. The following table is intended to provide the product type composition as defined by NI 51-101. Light/Medium Crude Oil Heavy Oil NGL Conventional Natural Gas Total (boe/d) Q2/2025 47% 39% 4% 10% 21,184 Q2/2024 48% 38% 4% 10% 22,376 1H/2025 48% 38% 4% 10% 21,593 1H/2024 50% 35% 4% 11% 22,034 Non-GAAP and Other Financial Measures This news release contains certain specified measures consisting of non-GAAP financial measures, capital management measures, non-GAAP financial ratios, and supplementary financial measures. Since these specified financial measures may not have a standardized meaning, they must be clearly defined and, where required, reconciled with their nearest GAAP measure and may not be comparable with the calculation of similar financial measures disclosed by other entities.
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7 Non-GAAP Financial Measures Net operating expenses Net operating expenses is calculated as operating expense less processing and other revenue primarily generated by processing third party volumes at processing facilities where the Company has an ownership interest, and can be expressed on a per boe basis. As the Company's principal business is not that of a midstream entity, management believes this is a useful supplemental measure to reflect the true cash outlay at its processing facilities by utilizing spare capacity to process third party volumes. The following table reconciles operating expenses to net operating expenses: Netback Cardinal utilizes netback as key performance indicator and is utilized by Cardinal to better analyze the operating performance of its petroleum and natural gas assets against prior periods. Netback is calculated as petroleum and natural gas revenue deducted by royalties, net operating expenses, and transportation expenses. The following table reconciles petroleum and natural gas revenue to netback: Capital expenditures and development capital expenditures Cardinal utilizes capital expenditures as a measure of capital investment on property, plant and equipment compared to the annual budgeted capital expenditure. Capital expenditures are calculated as cash flow from investing activities excluding change in non-cash working capital and exploration and evaluation. Cardinal utilizes development capital expenditures as a measure of capital investment on property, plant and equipment excluding capitalized G&A, other assets, net acquisitions and is compared to the annual budgeted capital expenditures. Other capital expenditures include capitalized G&A and office expenditures. The following table reconciles cash flow from investing activities to total capital expenditures to total development capital expenditures: Three months ended Six months ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Operating expenses 45,573 49,939 94,919 102,628 Less: Processing and other revenue (1,158) (1,785) (2,322) (2,810) Net operating expenses 44,415 48,154 92,597 99,818 Three months ended Six months ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Petroleum and natural gas revenue 127,377 169,353 277,145 309,579 Royalties (23,174) (31,213) (53,387) (57,001) Net operating expenses (44,415) (48,154) (92,597) (99,818) Transportation expenses (1,684) (2,340) (3,799) (4,519) Netback 58,104 87,646 127,362 148,241 Three months ended Six months ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Cash flow from investing activities 99,699 32,507 157,408 78,344 Change in non-cash working capital (45,654) (2,176) (18,524) 997 Exploration and evaluation (41,339) (10,814) (112,356) (26,882) Capital expenditures 12,706 19,517 26,528 52,459 Less: Capitalized G&A (305) (314) (977) (977) Other 271 (444) 221 (349) Development capital expenditures 12,672 18,759 25,772 51,133
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8 Adjusted working capital deficiency Management utilizes adjusted working capital to monitor its capital structure, liquidity, and its ability to fund current operations. Adjusted working capital is calculated as current liabilities less current assets (adjusted for the fair value of financial instruments, current decommissioning obligation, and current lease liabilities). The following table reconciles working capital to adjusted working capital: As at June 30, 2025 June 30, 2024 Working capital deficiency / (surplus) 45,945 28,688 Less current portion of: Lease liabilities 1,861 1,595 Decommissioning obligation 9,665 7,857 Fair value of financial instruments, net 1,461 (2,077) Adjusted working capital deficiency 32,958 21,313 Net debt Management utilizes net debt to analyze the financial position, liquidity and leverage of Cardinal. Net debt is calculated as the sum of bank debt, debentures and adjusted working capital. The following table reconciles bank debt to net debt: As at June 30, 2025 June 30, 2024 Bank debt 94,649 77,904 Debentures 99,482 - Adjusted working capital deficiency / (surplus) 32,958 21,313 Net debt 227,089 99,217 Funds flow Management utilizes funds flow as a useful measure of Cardinal's ability to generate cash not subject to short-term movements in non-cash operating working capital. As shown below, funds flow is calculated as cash flow from operating activities excluding the change in non-cash working capital. Adjusted funds flow Management utilizes adjusted funds flow as a key measure to assess the ability of the Company to generate the funds necessary for financing activities, operating activities, capital expenditures and shareholder returns. As shown below, adjusted funds flow is calculated as funds flow excluding decommissioning expenditures since Cardinal believes the timing of payment or incurrence of these items involves a high degree of discretion and variability. Expenditures on decommissioning obligations vary from period to period depending on the maturity of the Company's operating areas and availability of adjusted funds flow and are viewed as part of the Company's capital budgeting process.
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9 Free cash flow Management utilizes free cash flow as a measure to assess Cardinal's ability to generate cash, after taking into account the development capital expenditures, to increase returns to shareholders, repay debt, or for other corporate purposes. As shown below, free cash flow is calculated as adjusted funds flow less development capital expenditures. The following table reconciles cash flow from operating activities, funds flow, adjusted funds flow, and free cash flow: Non-GAAP Financial Ratios Netback per boe Cardinal utilizes operating netback per boe to assess the Company's operating performance of its petroleum and natural gas assets on a per unit of production basis. Netback per boe is calculated as netback divided by total production for the applicable period. The following table details the calculation of netback per boe: Net debt to adjusted funds flow ratio Cardinal utilizes net debt to adjusted funds flow to measure the Company's overall debt position and to measure the strength of the Company's balance sheet. Cardinal monitors this ratio and uses this as a key measure in making decisions regarding financing, capital expenditures and shareholder returns. Net debt to adjusted funds flow is calculated as net debt divided by the adjusted funds flow for the trailing twelve month period. Total payout ratio Cardinal utilizes this ratio as key measure to assess the Company's ability to fund financing activities, operating activities, and capital expenditures. Total payout ratio is calculated as the sum of dividends declared plus development capital expenditures divided by adjusted funds flow for the trailing twelve-month period. Net operating expenses per boe Cardinal utilizes net operating expenses per boe to assess Cardinal's operating efficiency of its petroleum and natural gas assets on a per unit of production basis. Net operating expense per boe is calculated as net operating expenses divided by total production for the applicable period. Three months ended Six months ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Cash flow from operating activities 43,591 71,463 107,840 110,827 Change in non-cash working capital 5,181 8,904 1,480 18,041 Funds flow 48,772 80,367 109,320 128,868 Decommissioning expenditures 647 1,460 2,345 5,765 Adjusted funds flow 49,419 81,827 111,665 134,633 Total development capital expenditures (12,672) (18,759) (25,772) (51,133) Free cash flow 36,747 63,068 85,893 83,500 Three months ended Six months ended June 30, 2025 June 30, 2024 June 30, 2025 June 30, 2024 Petroleum and natural gas revenue 66.08 83.17 70.91 77.20 Royalties (12.02) (15.33) (13.66) (14.21) Net operating expenses (23.04) (23.65) (23.69) (24.89) Transportation expenses (0.87) (1.15) (0.97) (1.13) Netback per boe 30.15 43.04 32.59 36.97
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10 Adjusted funds flow per boe Cardinal utilizes adjusted funds flow per boe as a measure to assess the ability of the Company to generate the funds necessary for financing activities, operating activities, capital expenditures and shareholder returns on a per boe basis. Adjusted funds flow per boe is calculated using adjusted funds flow divided by total production for the applicable period. Adjusted funds flow per basic share Cardinal utilizes adjusted funds flow per share as a measure to assess the ability of the Company to generate the funds necessary for financing activities, operating activities, capital expenditures and shareholder returns on a per basic share basis. Adjusted funds flow per basic share is calculated using adjusted funds flow divided by the weighted average basic shares outstanding. Adjusted funds flow per diluted share Cardinal utilizes adjusted funds flow per share as a measure to assess the ability of the Company to generate the funds necessary for financing activities, operating activities, capital expenditures and shareholder returns on a per diluted share basis. Adjusted funds flow per diluted share is calculated using adjusted funds flow divided by the weighted average diluted shares outstanding. Supplementary Financial Measures NI 52-112 defines a supplementary financial measure as a financial measure that: (i) is, or is intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of an entity; (ii) is not disclosed in the financial statements of the entity; (iii) is not a non-GAAP financial measure; and (iv) is not a non-GAAP ratio. The supplementary financial measures used in this news release are either a per unit disclosure of a corresponding GAAP measure, or a component of a corresponding GAAP measure, presented in the financial statements. Supplementary financial measures that are disclosed on a per unit basis are calculated by dividing the aggregate GAAP measure (or component thereof) by the applicable unit for the period. Supplementary financial measures that are disclosed on a component basis of a corresponding GAAP measure are a granular representation of a financial statement line item and are determined in accordance with GAAP. Oil and Gas Metrics The term "boe" or barrels of oil equivalent 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 equivalent (6 Mcf: 1 bbl) is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Additionally, given that the value ratio based on the current price of crude oil, as compared to natural gas, is significantly different from the energy equivalency of 6:1; utilizing a conversion ratio of 6:1 may be misleading as an indication of value. The term "Payout" means the revenue from production from a well required to fully pay for the drilling, completion, equipping and tie-in of such well. Market, Independent Third Party and Industry Data Cardinal may use certain market, independent third party and industry data in respect of comparisons of Cardinal to certain peer entities, including as it relates to its decline rates, which data is based upon information from public sources, including as reported by such entities and other government or other independent industry publications and reports or based on estimates derived from such publications and reports. Cardinal has not conducted its own
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11 independent verification of such information. While Cardinal believes this data to be reliable, third party, market and industry data is subject to variations and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary nature of the data gathering process and other limitations and uncertainties inherent in any statistical survey. Cardinal had not independently verified any of the data from independent third party sources or ascertained the underlying assumptions relied upon by such sources. About Cardinal Energy Ltd. Cardinal is a Canadian oil and natural gas company with operations focused on low decline sustainable oil production in Western Canada. Cardinal is currently completing its first thermal SAGD project in Southwest Saskatchewan which will further increase the long-term nature of our assets. For further information: Shawn Van Spankeren, CFO or Laurence Broos, VP Finance or Cody Kwong, Manager Business Development Email: info@cardinalenergy.ca Phone: (403) 234-8681 Website: www.cardinalenergy.ca