Cardinal Energy Ltd. ("Cardinal" or the "Company") (TSX:CJ) is pleased to announce its operating and financial results for the quarter ended March 31, 2017. The Company also announces that its unaudited financial statements and management's discussion and analysis for the quarter ended March 31, 2017, will be available on the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.com and on Cardinal's website at www.cardinalenergy.ca.
Highlights from the first quarter of 2017:
During the quarter we drilled and completed three horizontal multi stage frac wells in Mitsue. The intent of the drill program was to test three different play concepts within the Gilwood Unit. All three of the wells are successful light (41° API) oil wells. We have limited production data from the wells as frac delays pushed production out into Q2 for the wells. The production rates for each of the wells below are based on limited data and may vary as the wells continue to produce.
Our core Bantry area continues to deliver excellent drilling results. Our recent 16-26 Glauconite horizontal well had an IP30 of 518 boe/d and looks to be one of the strongest wells we have drilled in the Bantry area. On a group basis, the Glauconite horizontals continue to outperform the type curve our reserve evaluators have used in our 2016 year end engineering report.
We are currently drilling our 7th Glauconite horizontal well in Bantry and completing our 6th well. We expect to drill and complete 8 of our 9 planned Bantry wells by the end of Q2.
Cardinal closed an acquisition late in Q1 in our North operating area where we expect to build and develop a Dunvegan light oil drilling inventory. We plan to drill two light oil horizontal wells in the area in Q2/Q3 to be followed up with two additional wells later in the year. Cardinal has identified 15 additional locations on these lands and expects to be able to further increase its drilling inventory in the area as the year unfolds.
Cardinal had significant completion delays in Q1 but has caught up with its backlog of uncompleted wells. We intend to reschedule our completions program in the future to other quarters that are not as busy for these service providers.
Production averaged 14,600 boe/d in Q4/16, 15,200 boe/d in Q1/17 and, after having caught up with the completion backlog we are currently producing approximately 17,000 boe/d.
Operating costs are trending back down to normalized levels as we have reduced the workover frequency on our base production. Operating costs averaged $22.90 per boe in Q1 and are expected to drop to $20.00 per boe in Q2. Operating costs for 2017 are expected to remain in the $20.00 per boe range. The Alberta Government's carbon tax program has resulted in an increase in Cardinal's operating costs as of January 1, 2017. Net of this levy we expect to continue to lower operating costs on a per unit basis in 2017. We have also initiated several projects to reduce our dependence on the power grid and the effects of the carbon tax program.
Our 2017 capital program, which had originally been weighted equally per quarter, will now be weighted to our first three quarters of the year. Q4 2017 is expected to have a reduced capital program.
Cardinal spent $21.2 million (37%) of its annual exploration and development capital budget for 2017 in the first quarter. In addition to the 3 (2 net) wells at Mitsue, the Company drilled five wells in Bantry and completed three of the wells prior to the end of the quarter. Expenditures included approximately $3.6 million for pipeline replacements and facility/well optimizations.
With the drilling success in Mitsue, we expect to increase our drilling activity in this area in 2018. The increased focus on light oil in the Gilwood and Dunvegan zones will help increase the overall netback of Cardinal's production base.
Cardinal continues to maintain an active hedging program with 43% of our 2017 crude oil production hedged at an average floor price of $62.73 Cdn/bbl.
Cardinal continues to follow its business strategy of being a low decline, low risk oil producer. We continue to pursue conventional light oil acquisitions and drilling opportunities which in time will increase our operating netbacks and further enhance our sustainability.
Our goal is to create long term shareholder value through accretive growth and regular dividends. We recognize that the public markets are transitioning capital to larger producers and are evaluating several options that would give us increased market capitalization in an accretive manner.
Our drilling program in Mitsue has increased our knowledge of the play types. We are confident that the next round of Mitsue drilling will produce even better results and further set up the property for long term developments.
Cardinal experienced some service company challenges in Q1 2017 which we believe have been fixed on a go forward basis. We look forward to reporting a much stronger Q2 and building on those results through the balance of 2017.
Cardinal confirms that a dividend of $0.035 per common share will be paid on June 15, 2017 to shareholders of record on May 31, 2017. The Board of Directors of Cardinal has declared the dividend payable in cash. This dividend has been designated as an "eligible dividend" for Canadian income tax purposes.
About Cardinal Energy Ltd.
Cardinal is a junior Canadian oil focused company built to provide investors with a stable platform for dividend income and growth. Cardinal's operations are focused in all season access areas in Alberta.
SOURCE: Cardinal Energy Ltd.
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