Cardinal Energy Targets $217 Million in Adjusted Funds Flow for 2025

Cardinal Energy (TSX: CJ) announced its 2025 budget this week, highlighting both the expansion of its Reford Steam Assisted Gravity Drainage project and further investments in conventional asset maintenance.

Oil markets have seen slight fluctuations over the past several weeks, with West Texas Intermediate hovering around US$70 per barrel. Analysts believe this pricing environment provides a stable foundation for Cardinal’s 2025 budget assumptions, which rely on a US$70 WTI benchmark and a US/CAD exchange rate of 0.71.

Cardinal’s management projects adjusted funds flow of approximately $217 million or $1.30 per diluted share. These figures assume an average annual production between 21,300 and 21,700 barrels of oil equivalent per day, supported by a low decline rate in Cardinal’s conventional assets.

According to the company, this level of funds flow would allow Cardinal to maintain its monthly dividend at $0.06 per share. The 2025 capital program calls for $71 million in conventional spending, targeting drilling and completion of seven wells. Meanwhile, $120 million is earmarked for thermal development, primarily to finalize the Reford SAGD project and de-risk a second thermal initiative at Kelfield, Saskatchewan.

“Our low corporate decline rate allows us to focus on optimizing our long-life asset base,” the firm stated, emphasizing that nearly 70% of the total corporate capital budget will be deployed in the first half of 2025.

Cardinal aims to exit 2025 with production exceeding 24,500 boe/d, buoyed by the Reford project’s initial outputs in the fourth quarter. Management anticipates that once Reford reaches full production levels—estimated at around 6,000 barrels of heavy oil per day—overall corporate output will receive a significant boost in early 2026.

“At budgeted prices, we expect to generate approximately $146 million of free cash flow after conventional capital expenditures, which will help fund our monthly dividend, abandonment and reclamation expenditures, and the 2025 thermal expenditures required to complete the Reford SAGD project,” explains the firm.

Reford SAGD Project

Reford is Cardinal’s flagship SAGD development located in Saskatchewan, designed to extract heavy oil in a more efficient and environmentally conscious manner compared to traditional methods. Construction has been underway since January, with drilling on six thermal well pairs having already commenced. The company projects that first steam injections will start in the third quarter of 2025, leading to initial production in the fourth quarter and full-scale output by the first quarter of 2026.

“Fuel gas and water source pipeline construction has begun, and the facility site is being prepared for modular deliveries,” reads the company’s statement. “We remain on time and on budget as originally projected.”

Market watchers generally view SAGD developments as critical for unlocking additional heavy oil resources, though cost overruns and environmental challenges often pose risks in the thermal space. So far, Cardinal has expressed confidence in its cost structure and timelines, citing the strategic allocation of capital during the first half of 2025 when spending is expected to be most intense.

Beyond Reford, Cardinal is allocating funds to “de-risk” its second thermal initiative at Kelfield, also located in Saskatchewan. The company hopes to replicate the SAGD strategy deployed at Reford if results meet or exceed expectations.

Earlier this year, Cardinal closed a $60 million term debt financing deal, which complements its existing $275 million credit facility. The firm’s 2025 budget anticipates drawing up to 55% of that facility during peak spending, with plans to reduce the debt load later in the year.

“We expect to exit 2025 with a net debt to adjusted funds flow ratio at or below 1.0x,” Cardinal said in its press release. Management noted that as more free cash flow is generated—particularly once Reford starts producing in earnest—the company intends to direct some of that capital toward debt reduction.

Cardinal Energy last traded at $6.57 on the TSX.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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