Stifel FirstEnergy Morning Research Package

Cardinal Energy (CJ-TSX); BUY, C$3.50 | Cenovus Energy (CVE-TSX); BUY, C$15.50

Deleveraging strategy continues to shine through low declines and significant FCF

Production of 20,407 boe/d was in line with both GMPFE and consensus estimates of 20,312 boe/d and 20,530 boe/d, respectively, as the company largely kept production flat due to the Alberta production curtailments.

4Q18 Production and funds flow as expected, impairment reversal positive for earnings

Production of 20,365 boe/d (87% liquids) was in line with expectations as it was discussed previously in the 2018 reserve update earlier this month. (HYPERLINK to our Comment dated March 7)

2019e guidance focused on debt repayment, opex improvements and possible dividend lift

Cardinal has unveiled its 2019e capital budget, one which sees the company investing $47mm to maintain volumes between 20,400- 20,800 boe/d, which remains consistent with the level mandated by the current Alberta curtailments. Management anticipates excess cash generation of $29 -$39 mm beyond capex and current dividend payouts, with which it will prioritize debt repayment, operating efficiencies and dividend sustainability ahead.

Temporarily reduces monthly dividend ~70%

Cardinal’s Board of Directors has approved a temporary 71% reduction to its dividend to $0.01/sh (down from $0.035/sh) prior, reflective of a ~4.2% yield (as of the December 6th close).

3Q18 results modestly behind, bumpy 4Q18e expected before turnaround in 2019e

Production of 20,949 boe/d (87% liquids) was reasonably in line with both GMPFE and consensus estimates of 21,522 boe/d and 21,280 boe/d, respectively. Funds flow of ~$27.1 mm was shy, albeit in a minor fashion, of both GMPFE and consensus expectations of ~$28.7 mm and ~$30 mm, respectively.

Announces 4Q17 results and 2017 reserve book

Cardinal announced 4Q17 results which were generally in line with expectations, as production of 20,948 boe/d and funds flow of $28.6 mm, or $0.26/sh, largely tracked GMP FE and consensus estimates. While full reserve disclosures have not been provided as of yet, FD&A and F&D performance markers of $10.76/boe and $12.67/boe were disclosed, signalling attractive additions costs focused on light oil assets. There were no further updates surrounding further asset dispositions beyond the $24 mm in

Tops Estimates in 2Q16, Guidance Increased for 2H16e

Cardinal’s 2Q16e production was 3% ahead of our forecast while CFPS also beat by 19% (or 13% higher than consensus). Management is increasing its base 2016e capital budget by $10 mm (to $35 mm) which, in combination with an expanded Bantry program after continued success, will drive 4Q16e volumes of 15,100 boe/d which improves by 3% over the prior guidance. In June the Company’s LMR was 1.69 and was subsequently increased to 1.75 in July at no cost. With a modest increase to its abandonment budg

2Q16e Quarterly Preview

Some Recovery on Segmented Cash Flow Generation Over Q1 Though Still Down 56% Y/Y. In aggregate, the Intermediate, Mid, and Small Cap groups are expected to generate 2Q16e cash flow of $1,281 mm, $183 mm, and $53 mm, or $1.517 billion in total, that while depressed relative to the same period last year (~$2.647 billion combined), is up 17% sequentially from the prior quarter, largely on the strength of crude oil price recovery in the period. Severely weak natural gas pricing picture markedly rev

Intermediates, Mid Caps & Small Cap Commodity Price Update

With this publication we highlight forecast revisions associated with our commodity price update (Natural Gas Update; Crude Oil Update), reaffirming a view of commodity price recovery in 2017e. In the interim until then, 2016e Canadian oil price realizations are up ~11% in the synthetic and Edmonton Light streams, with heavy WCS crude up ~20% which is amplified by Canadian oilsands output curtailments. While 2016e Canadian natural gas prices are projected to be ~20% lower, we expect much of this

Cardinal Energy Bolsters Balance Sheet with $67 mm Equity Financing

We are updating our estimates after coming off research restriction following our participation in Cardinal’s $67 mm equity financing, wherein the Company issued 7.15 mm shares at $9.35 per share. Post-financing, Cardinal solidifies an already peer group leading balance sheet and sustainability outlook, which will enable the Company to expand opportunities in its core operating areas through opportunistic tuck-in acquisitions while continuing to advance both organic growth efforts and pursue l

1Q16 Results Match Expectations

Cardinal’s 1Q16 volumes of 14,245 boe/d overlaid our estimates while CFPS of $0.12 was ahead of our call of $0.10 and inline with consensus at $0.12 per share. Strong operational performance saw the Company, once again, reduce operating costs with 1Q16 figures coming in >$2.00/boe lower than those reported in 4Q15 when they acquired the Mitsue assets. The Company continues layering in hedges to protect its capital program and dividend payout, helping to solidify Cardinal as the most sustainable

REPORTS SOLID 1Q16 RESULTS

Impact: Neutral to slightly positive. In a relatively quiet quarter of operations, Cardinal managed to lower its unit operating costs 9% q/q , which we view as noteworthy given the inclusion of the higher cost Mitsue asset.

Intermediates, Mid Caps & Small Caps

With this publication we briefly summarize our projections for 1Q16e quarterly results for the Junior E&P (Intermediate, Mid & Small Cap) segments of our coverage universe

Domestic E&P Statistical Package and FD&A Review

With this publication we highlight various metrics and statistics forthcoming from yearend reserve books for our Domestic E&P coverage universe (Integrateds, Large Cap, Oilsands, Intermediate, Mid Cap, and Small Cap). Similar charts for YE2014 reserves can be found in our Statistical Package dated April 7, 2015.

i3 Energy (I3E LN) - Canada site visit review

Last week we attended a site visit to i3’s assets in central Alberta in Canada – the company’s largest producing area. We were left with a favourable impression of the magnitude of the company’s operations in the region, of the professional operational running of these, and of the overall level of opportunity in this well-established oil and gas province.

Reabold Resources - Payment received from Shell

Good news for Reabold, which is set to receive £5.2m of the second tranche payment from Shell imminently for the Victory gas field it acquired last year. The final £4.4m payment is due once the development approval for the field is received from the NSTA in the coming months. These funds will allow RBD to progress its two onshore gas developments in the UK and Italy and consider further distributions to shareholders. Partner funding of these projects remains an issue, but RBD’s risk/reward profi

Oil & Gas - Cavendish sector note

88 Energy, Falcon Oil & Gas, Trinity Exploration & Production, Plexus Holdings, Baron Oil, Harbour Energy, EnQuest, Capricorn Energy, Arrow Exploration, Southern Energy, Serinus Energy, SDX Energy, Panoro Energy, Eco (Atlantic) Oil & Gas, OKEA ASA, Equinor Source: FactSet, weekly change 27/11/23-1/12/23 Oil extended declines, closing out a sixth straight weekly drop, as the OPEC+ output cuts announced Thursday failed to dispel the market’s gloom over swelling global supplies. West Texas Intermed

Pan African Resources - Valuation up 22.2% with new gold price forecasts

On 22 November, Pan African Resources (PAF) announced that operations to date in FY24 had performed in line with, or better than, expected, with gold production for H124 anticipated to be in the range 94,000–98,000oz (cf 92,307oz in H123). As a result, it increased its production guidance for FY24 to 180,000–190,000oz, which caused us to increase our production estimate in turn by 1.9% (or 3,575oz) to 189,725oz. The change made only a modest difference to our EPS forecasts for FY24 (see Exhibit

Morning Note – 4 December 2023

Tower Resources (TRP LN) - Initiation Report (SPECULATIVE BUY, 0.12p/sh TP)

Cameroon: Ready for the Rig

New Debt Facility – Lowering TRR Cost of Capital

We have been roadshowing Trident Royalties all week during which time the company released an announcement that they have entered into a commitment letter with BMO and CIBC for a new $40m revolving credit facility (RCF), with the potential to increase the facility to $60m via an accordion feature. The proceeds from the $40m are going to be used to repay the existing secured debt facility of $40m with Macquire in Q1 next year.

Hartshead Resources - Fully Funded Solution

Hartshead has secured a funding solution with partner Rockrose Energy to fund 100% of the Phase I development costs. Under the agreement, Hartshead has the option to exchange an additional 20% licence interest for an uncapped free carry, thereby covering the total cost of the Phase I development project (financing backstop). Importantly, Hartshead maintains at its election the option not to proceed with the RockRose financing solution, and introduce other financing solutions (eg project debt, pr

SP Angel Morning View: Ford takes 8.5% stake in Indonesian nickel project as Automakers swim upstream

SP Angel Morning View: Gold powers through $2,100/oz on outlook for Fed rate cuts

Southern Energy - 3Q Results and Comprehensive Update Note

Southern Energy delivered solid 3Q results with the focus of attention now turned towards the completion of 4 drilled uncompleted wells (“DUCs”). We see our investment thesis for Southern Energy – premised on the scale, location, quality, deliverability, low-cost nature of the company's Gwinville gas field in Mississippi, USA – very much strengthening based on our structural commodity price outlook and our growing confidence in the highly prolific Gwinville gas field, sharpening our interest in

Oil & Gas - Cavendish sector note

Jersey Oil & Gas, Serica Energy, Trinity Exploration & Production, Longboat Energy, Ithaca Energy, Neptune Energy, Pantheon Resources, Nostrum Oil & Gas, Kufpec, ORLEN.

UK-Listed Energy Sector: Review of the UK oil and gas landscape – why the country needs it, current policy and tax

The front of this note takes a look at the UK oil and gas sector, why domestic production is advantageous, what the main political parties think, and what could happen going forward. The latter part contains a review of the companies in our coverage – some that are UK centric, which give exposure to the note’s wider theme, and others that are focused elsewhere.

Thor Energy - High-Grade Uranium Intercepts at Groundhog Prospect

Thor today announces the final downhole gamma results for the reverse circulation drill programme undertaken at the Wedding Bell and Radium Mountain projects in the USA. Downhole gamma readings are a commonly used proxy for physical uranium assays.

Diversified Energy Company - Delivering Consistent and Reliable Results

DEC’s Q3/23 trading update was in line with expectations as the company continued to deliver despite further commodity price headwinds. The Q3/23 Adjusted EBITDA margin of 52% (H1/23: 52%) reflects the quality of DEC’s asset base and its ability to efficiently manage every aspect of its operations. Average net daily production in Q3/23 was 134Mboepd (H1/23: 142Mboepd), with exit rate production of 134.4Mboepd. DEC has maintained its dividend at US$0.04375 per share. Since its IPO in 2017, DEC ha