Cardinal Energy arranges $8.65-million financing

Executive Summary

• Cardinal Energy Ltd. announced an $86.5 million bought deal offering of 10 million common shares at $8.65 per share, with a 30-day overallotment option for up to 1 million additional shares.
• The company made the final investment decision (sanctioned) for its Reford 2 SAGD project, a $140-million expansion located north of its existing Reford 1 facility, expected to produce 4,250 bbl/d initially.
• Cardinal updated its 2026 capital expenditure budget to $160 million (an $85 million increase) to fund Reford 2 construction, while maintaining 2026 production guidance of 25,000–25,500 boe/d.

Key Details

• Financing Structure:
  • Type: Bought deal offering of common shares.
  • Underwriters: Syndicate co-led by RBC Capital Markets and CIBC Capital Markets.
  • Shares Issued: 10 million common shares.
  • Issue Price: $8.65 per common share.
  • Gross Proceeds: $86.5 million.
  • Overallotment Option: Up to 1 million additional shares exercisable within 30 days of closing.
  • Max Gross Proceeds (with Overallotment): ~$95.15 million.
  • Use of Proceeds: Repay/reduce senior credit facility indebtedness, advance Reford 2 development, and general corporate purposes.
  • Closing Date: Expected on or about Feb. 4, 2026.
  • Dividend Eligibility: Purchasers will not be eligible for the Feb. 17, 2026 dividend if closing occurs after the Jan. 30, 2026 record date.
• Reford 2 Project Update:
  • Decision: Final investment decision sanctioned; construction to begin.
  • Location: ~10 km north of existing Reford 1 SAGD project.
  • Initial Scope: 4,250 bbl/d (100% heavy oil).
  • Expansion Potential: Expandable to 6,500 bbl/d for an incremental cost of ~$40 million.
  • Capital Cost: ~$140 million (plus applicable taxes) for initial scope.
  • Construction Timeline: ~18 months; first steam expected summer 2027; production ramp to nameplate capacity by early Q4 2027.
  • Economics: Project payout of ~2 years at $60 U.S./bbl WTI.
  • Design: Analogous to Reford 1 (proven SAGD well design and facilities).
• Reford 1 Performance:
  • Status: Completed in 2025; delivered on budget and ahead of schedule.
  • Current Production: Forecasted 6,500 bbl/d in Q1 2026 (8% ahead of nameplate capacity).
  • Efficiency: Recent steam-oil-ratios (SORs) below 2.5x.
• 2026 Budget and Guidance:
  • Capital Expenditures: Increased by ~$85 million to total $160 million (including original $75 million budget).
  • Production Guidance: Unchanged at 25,000–25,500 boe/d average corporate production.
  • Growth Drivers: Reford 1 expected to drive 15% year-over-year production growth in 2026; Reford 2 volumes not expected until early Q4 2027.
  • Debt Management: Net debt expected to remain flat to exit 2025 levels at current strip pricing.
• Regulatory/Listing:
  • Subject to customary regulatory approvals, including Toronto Stock Exchange approval.
  • Distributed in all Canadian provinces (except Quebec) via prospectus supplement and in the US via Rule 144A private placement.