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Notes:
(1) F&D costs and recycle ratios are non-GAAP financial ratios. Operating netback and development costs are non-GAAP financial measures and are used as components of the non-GAAP financial ratio. See "Oil and Gas Metrics" and "Non-GAAP and Other Financial Measures" in this news release for information relating to these non-GAAP financial ratios and measures.
(2) 2024 recycle ratios are based on a 2024 operating netback of $36.35/boe.
(3) Company interest reserves were utilized in the calculation of F&D costs. This included the consideration of royalty interest volumes produced of 13 mboe (1 mbbl of heavy crude oil; 10 mbbl of light and medium crude oil and 9 mmcf of natural gas).
(4) See also "Note Regarding Forward-Looking Statements", "Reserves Advisories" and "Reserve Definitions".

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 years proved plus PDP based on fourth quarter 2024 production of 21,900 boe/d⁽²⁾ which reflects the low risk and predictable nature of our asset base that continues to demonstrate a low decline profile of 10% per year.

• Cardinal's non-thermal three-year average Finding Development and Acquisition Cost ("FD&A")⁽¹⁾ for PDP, TP and TPP is $12.41/boe, $12.40 and $12.08/boe respectively.

• The RLI for TPP increases significantly to greater than 15 years with the initiation of our thermal reserves.

• The Company has multiple years of conventional inventory to be developed along side the continued expansion of our thermal assets.

Notes:
(1) See "Oil and Gas Metrics".
(2) See "Supplemental Information Regarding Product Types".
(3) See also "Note Regarding Forward-Looking Statements", "Reserves Advisories" and "Reserve Definitions".

OPERATIONAL UPDATE

Cardinal is pleased to report that operations in Q1/2025 are progressing as expected with the underpinning conventional business tracking 2025 guidance projections, while elevated activity on the Reford thermal project remains on budget and on schedule. Entering the busiest phase of construction, fabrication, installation, numerous concurrent activities are ongoing, both at Propak Systems Ltd.'s fabrication facility (north of Calgary) and on site at Reford including:

• Two of three steam generators have been delivered to the Reford facility site.

• 50% of the required facility tankage is now on lease.

• Drilling of the six initial SAGD well pairs is more than halfway to completion.

• Construction of the 18 km water source pipeline and 10 km fuel gas supply line are now well underway and adhering to budgeted timelines.

• As of January 31, 2025, Cardinal has now deployed more than 50% of the total project budget at Reford.

In the fourth quarter of 2024, Cardinal was ahead of schedule on certain aspects of the Reford project and accelerated its spend by approximately $5 million. We also continued to de-risk and advance additional thermal projects spending approximately $5 million on land, seismic and other future development costs. In 2024, Cardinal incurred approximately $74 million of costs directly related to the Reford SAGD project and also incurred $9 million of SAGD expenditures de-risking and expanding future projects through land and seismic expenditures and other indirect costs.

At year-end, Cardinal was approximately $86 million drawn on its $275 million credit facility (not including the $60 million term debt financing that closed in January). Cardinal continues to anticipate a capitally intensive H1/2025 with ramping activity at Reford, which is expected to drive net debt peaking around mid-year, before retreating meaningfully prior to the end of 2025.

OIL AND GAS RESERVES

The 2024 Reserve Report 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 2024 Reserve Report uses the price forecast of the three consultant's average (GLJ, McDaniel and Sproule Associates Ltd. (collectively, the "Consultants")). The success of Cardinal's 2024 drilling program, continued optimization of our enhanced recovery schemes and non-thermal drilling program have added 8.4 million boe of PDP reserves in 2024.

Summary of Oil and Gas Reserves ⁽¹⁾⁽³⁾

The following tables summarize certain information contained in the 2024 Reserve Report. Reserves included below are the Company's estimated gross reserves as at December 31, 2024, as evaluated in the 2024 Reserve Report.

 

 

Summary of Net Present Values of Future Net Revenue (Before Tax)
(Based on forecast price and costs)

As at December 31, 2024^(1)(2)(3)

 

Reconciliation of Changes in Reserves⁽¹⁾⁽⁴⁾

The following table sets out a reconciliation of the changes in the Company's gross reserves as at December 31, 2024 against such reserves at December 31, 2023 based on forecast prices and cost assumptions in effect at the applicable reserve evaluation date.

 

 

Price Forecast

The following table summarizes Consultant's average commodity price forecast and foreign exchange rate assumptions as at December 31, 2024, as applied in the 2024 Reserve Report, for the next five years.

 

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. Thermal reserves are an initial assignment at Reford only with potential future reserve expansion of other potential thermal projects currently not recognized in the 2024 Reserve Report.

FDC reflects the best estimate of the capital costs required to produce the Company's reserves. The FDC associated with the TPP reserves at year-end 2024 is $779 million undiscounted ($413 million discounted at 10%).

 

FDC included at year-end 2024 for CO₂ purchases, maintenance and facility capital in PDP, TP and TPP were $70 million, $78 million and $142 million, respectively. Reford thermal project accounts for 69% ($535 million) of the inflated, undiscounted TPP FDC.

Note Regarding Forward-Looking Statements

This news release contains forward-looking statements and forward-looking information (collectively "forward-looking information") within the meaning of applicable securities laws relating to the 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 news release speak only as of the date thereof and are expressly qualified by this cautionary statement.

Specifically, this news release contains forward-looking statements relating to: our asset base and its future potential and opportunities; that the Company has multiple years of conventional inventory to be developed along side the continued expansion of our thermal assets; future development capital, the life of our reserves; the booking of undeveloped locations which reflect our current drilling plans, our views that significant potential drilling inventory exists beyond those currently booked, our view on the confidence in the sustainability of our production base and the potential to deliver future organic growth and the potential for reserve expansion to other considered projects currently not recognized in the 2024 Reserve Report.

In addition, information and statements relating to reserves are deemed to be forward-looking statements, as they involve implied assessment, based on certain estimates and assumptions, that the reserves described exist in quantities predicted or estimated, and that the reserves can be profitably produced in the future.

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, applicable royalty rates, tax laws, future well production rates and reserve volumes, future operating costs, inflation, the performance of existing and future wells, the success of its exploration and development activities, the development of current and other potential thermal properties, the sufficiency and timing of budgeted capital expenditures in carrying out planned activities, the availability and cost of labor and services, the impact of competition, conditions in general economic and financial markets, access to 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 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 exploration and development programs; 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; 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 news 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 news 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.

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.

This news release contains metrics commonly used in the oil and natural gas industry which have been prepared by management, such as "development costs", "F&D costs", "operating netback", "recycle ratio" and "reserve life index". These terms do not have a standardized meaning and may not be comparable to similar measures presented by other companies, and therefore should not be used to make such comparisons.

"Development costs" means the aggregate exploration and development costs including land and seismic incurred in the financial year on reserves that are characterized as development but exclude capitalized general and administration costs. The aggregate of the development costs incurred in the most recent financial year and the change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserves additions for that year. Costs associated with exploration and evaluation assets have been excluded from this calculation. See "Non-GAAP Financial Measures".

"F&D costs" are calculated as the sum of development costs plus the change in FDC for the period when appropriate, divided by the change in company interest reserves within the applicable reserves category, excluding those reserves acquired or disposed. Costs associated with exploration and evaluation assets have been excluded from this calculation.

"FD&A costs" are calculated as the sum of development costs plus net acquisition costs plus the change in FDC for the period when appropriate, divided by the change in reserves within the applicable reserves category, inclusive of changes due to acquisitions and dispositions. Costs associated with exploration and evaluation assets have been excluded from this calculation.

"Operating netback per boe" is a non-GAAP financial measure. See "Non-GAAP Financial Measures".

"Recycle ratio" is calculated by dividing an unaudited operating netback per boe for 2024 of $36.35 by F&D costs per boe.

"Reserve life index" or "RLI" is calculated by dividing the applicable reserves by 2024 fourth quarter production of 21,900 boe/d for the PDP and TP reserve categories. RLI for TPP was based on a forecast rate.

"replacement rate" or similar terms does not have a standardized meaning and may not be comparable to similar measures presented by other companies and, therefore, should not be used to make such comparisons. Replacement rate (and similar terms) is the amount added to the Company's applicable reserves, divided by production. It is a measure of the ability of the Company to sustain production levels.

Management uses these oil and gas metrics for its own performance measurements and to provide shareholders with measures to compare our operations over time. Readers are cautioned that the information provided by these metrics, or that can be derived from the metrics presented in this news release, should not be relied upon for investment or other purposes.

Unaudited Financial Information

Certain financial and operating information included in this news release for the year ended December 31, 2024 are based on estimated unaudited financial results for the year then ended, and are subject to the same limitations as discussed under "Note Regarding Forward-Looking Statements". These estimated amounts may change upon the completion of audited financial statements for the year ended December 31, 2024 and changes could be material.

Supplemental Information Regarding Product Types

This news release includes references to 2024 production. The following table is intended to provide the product type composition as defined by NI 51-101.

 

Reserves Advisories

In the 2024 Reserve Report, Cardinal has included all ADR costs for active and inactive wells 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").

Unless otherwise indicated, all reserves reported in this news release are Company share gross reserves which represent Cardinal's total working interest reserves prior to the deduction of royalties payable.

Future net revenue is a forecast of revenue, estimated using forecast prices and costs arising from the anticipated development and production of resources, net of associated royalties, operating costs, development costs and all corporate abandonment and reclamation costs for all active and inactive wells, pipelines and facilities. It should not be assumed that the future net revenues undiscounted and discounted at 10% included in this news release represent the fair market value of the reserves.

Reserve Definitions

"Proved" reserves are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

"Probable" reserves are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

"Developed" reserves are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (e.g. when compared to the cost of drilling a well) to put the reserves on production.

"Developed Producing" reserves are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

"Developed Non-Producing" reserves are those reserves that either have not been on production, or have previously been on production, but are shut in, and the date of resumption of production is unknown.

"Undeveloped" reserves are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserve's classification (proved, probable, possible) to which they are assigned.

Non-GAAP and Other Financial Measures

Throughout this news release and in other materials disclosed by the Company, Cardinal employs certain measures to analyze its financial performance, financial position, and cash flow. These non-GAAP and other financial measures are not standardized financial measures under International Financial Reporting Standards ("IFRS" or, alternatively, "GAAP") and may not be comparable to similar financial measures disclosed by other issuers. The non-GAAP and other financial measures should not be considered to be more meaningful than generally accepted accounting principles ("GAAP") measures which are determined in accordance with IFRS, such as net earnings (loss) and cash flow from operating activities as indicators of Cardinal's performance.

Non-GAAP Financial Measures

"Development costs" means the aggregate property, property plant and equipment expenditures including land and seismic incurred in the financial year on reserves that are characterized as development but exclude capitalized general and administration costs.

"Operating Netback per boe" is determined by deducting royalties, net operating expenses, and transportation expenses from petroleum and natural gas revenue. Netback is a per boe measure utilized by Cardinal to better analyze the operating performance of its petroleum and natural gas assets against prior periods.

The following table sets forth a reconciliation of petroleum and natural gas revenues to operating netback per boe (all figures unaudited):

 

Non-GAAP Financial Ratios

"Development capital", "F&D costs", "Recycle ratio" are non-GAAP financial ratios. See "Oil and Gas Advisories". Management uses F&D costs as a measure of capital efficiency for organic reserves development. Management uses recycle ratio to relate the cost of adding reserves to the expected cash flows to be generated.

About Cardinal Energy Ltd.

Cardinal is a Canadian oil and natural gas company with operations focused on low decline oil in Western Canada. Cardinal differentiates itself from its peers by having the lowest decline conventional asset base in Western Canada. Cardinal has recently announced the commencement of its first thermal SAGD oil development project which will further increase the long-term sustainability of the Company. Cardinal works to continually improve its Environmental, Social and Governance profile and operates its assets in a responsible and environmentally sensitive manner.

For further information:

Shawn Van Spankeren, CFO, Laurence Broos, VP Finance or Cody Kwong, Manager Business Development

Email: info@cardinalenergy.ca
Phone: (403) 234-8681
Website: www.cardinalenergy.ca

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