Cardinal Energy's 2024 Year-End Reserves: A New Era with the Reford Thermal Project

Cardinal Energy Ltd. (TSX: CJ) has announced its 2024 year-end reserves, marking a significant milestone with the formal recognition of the Reford thermal project. This addition of reserves has significantly enhanced the company's long-term production outlook and valuation, as well as its overall financial and operational metrics.

The Reford project, a Steam Assisted Gravity Drainage (SAGD) project targeting the Reford property in Saskatchewan, is expected to contribute approximately 6,000 bbl/d of heavy oil to Cardinal's production profile. This addition of reserves has increased the company's total proved plus probable (TPP) reserves by 30% to 154 million boe, leading to a 31% increase in the year-over-year before tax net present value discounted at 10% (NPV10) of $2.4 billion.

The Reford project is expected to produce at these levels for 15 to 20 years, providing a long-term, low-decline production base for the company. This increased production outlook and valuation can be attributed to the following factors:

1. Increased Reserves: The addition of Reford's reserves has increased Cardinal's TPP reserves by 30%, providing a more substantial and diversified reserve base for the company.
2. Long-term Production: The Reford project is expected to produce at a significant rate for an extended period, contributing to Cardinal's long-term production outlook.
3. Valuation Impact: The increase in NPV10 by 31% reflects the positive impact of the Reford project on the company's valuation.
4. Diversification: The addition of thermal reserves to Cardinal's existing non-thermal assets provides diversification, reducing the company's reliance on a single production source and mitigating risks associated with fluctuations in commodity prices and production rates.

Cardinal Energy's 2024 year-end reserves reflect the quality, predictability, and sustainability of their low decline conventional asset base, now supplemented and strengthened with the initial recognition of reserves and value from the Company's first thermal heavy oil development at Reford, Saskatchewan. The Company's top-tier reserve life assets, with a long producing reserve life index (RLI) of ~10 years PDP and ~12 years proved plus PDP, demonstrate the low risk and predictable nature of their asset base that continues to demonstrate a low decline profile of 10% per year.

In conclusion, the formal recognition of the Reford thermal project in Cardinal Energy's 2024 year-end reserves has positively impacted the company's long-term production outlook and valuation. Investors should focus on key financial and operational metrics, such as TPP reserves, F&D cost, NPV10, reserve replacement, recycle ratio, RLI, capex, adjusted funds flow, and net debt to adjusted funds flow ratio, to evaluate the company's performance and prospects. As Cardinal Energy continues to execute its growth strategy, investors can expect the company to maintain its strong financial performance and deliver value to shareholders.