Cardinal Energy Ltd. — Capital/Financing Update 2020

Dec 16, 2020

MATERIAL CHANGE REPORT

1.

Name and Address of Company:

Cardinal Energy Ltd. (" Cardinal " or the " Company ") 600, 400 – 3 Avenue SW Calgary, AB T2P 4H2

2. Date of Material Change:

December 6, 2020

3. News Release:

A news release was issued and disseminated through the facilities of a recognized newswire service on December 7, 2020 relating to the material change.

4.

Summary of Material Change:

On December 7, 2020, Cardinal announced it has entered into subscription agreements for a non-brokered private placement offering (the " Private Placement ") of 8,122,000 units (" Units ") at a subscription price of $0.50 per Unit for gross proceeds of $4,061,000 and $16,920,833 principal amount of 2[nd] lien secured notes (the " Notes "), issued at a 4% discount for gross proceeds of $16,244,000.

5. Full Description of Material Change:

5.1

Full Description of Material Change

On December 7, 2020, Cardinal announced that it has entered into subscription agreements for a nonbrokered private placement of $16,920,833 principal amount of Notes issued at a 4% discount for gross proceeds of $16,244,000. As part of the Note offering, each subscriber is also required to subscribe for a pro rata number of Units, totaling 8,122,000 Units, at a subscription price of $0.50 per Unit for gross proceeds of $4,061,000.

The Notes will bear interest at 12% per annum (all interest shall accrue semi-annually and be added to the principal amount outstanding and shall be payable on maturity) and will be due on June 30, 2022, subject to extension to November 30, 2022 by either Cardinal or the holders on 30 days' prior written notice. Each Unit will consist of one common share of Cardinal (a " Common Share ") and one common share purchase warrant (a " Warrant "). Each Warrant will entitle the holder to purchase one Common Share at an exercise price of $0.55 per Common Share for a period of three years from the closing date of the Private Placement.

The closing of the Private Placement is expected to occur on or about December 29, 2020, and is subject to the approval of the TSX, certain other funding conditions and satisfactory completion of the finalization of the terms of Cardinal's new credit facility.

The proceeds of the Private Placement will be used to repay Cardinal's outstanding 5.50% extendible convertible subordinated debentures which are maturing on December 31, 2020 and for general corporate purposes.

Related Party Matters

It was a condition to the financing that insiders of Cardinal also participate in the Private Placement. As a result, certain directors of Cardinal are participating in the Private Placement and will subscribe for $3,906,251 principal amount of the Notes and 1,875,000 Units, representing approximately 23% of the total Notes and Units to be issued pursuant to the Private Placement.

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Insider participation in the Private Placement will be "related party transactions" within the meaning of Multilateral Instrument 61-101 ( "MI 61-101 "). Scott Ratushny, John Brussa, David D. Johnson and Stephanie Sterling (the " Related Parties " and each a " Related Party" ) are directors of Cardinal and have entered into subscription agreements pursuant to the Private Placement that contain customary terms and are in the same form as the subscription agreements entered into by other non-related subscribers. The following table sets out the number of Notes and Units each Related Party has subscribed for under the Private Placement and the number of securities of Cardinal that each Related Party will beneficially own, or will exercise control or direction over, directly or indirectly, immediately following the completion of the Private Placement:

Placement:
				Number of	Number of
	Private PlacementSubscriptions		Present Direct andIndirect Holdingof Common	Common SharesHeld After PrivatePlacement	Common SharesHeld After PrivatePlacement
Related Party	Notes ($)	Units	Shares	(excl. Warrants)	(incl. Warrants)(2)
Scott Ratushny(1)	1,041,667	500,000	1,945,361 (1.70%)	2,445,361 (1.99%)	2,945,361 (2.25%)
John Brussa	1,562,500	750,000	1,456,435 (1.27%)	2,206,435 (1.80%)	2,956,435 (2.26%)
David D. Johnson	1,041,667	500,000	447,225 (0.39%)	947,225 (0.77%)	1,447,225 (1.11%)
Stephanie Sterling(3)	260,417	125,000	54,564 (0.05%)	179,564 (0.15%)	304,564 (0.23%)

(1) Includes $781,250 principal amount of Notes and 375,000 Units to be registered and held in Mr. Ratushny's RRSP account.

(2) Assumes the full exercise of all Warrants issued under the Private Placement.

(3) Includes Common Shares held by Ms. Sterling's spouse.

The Private Placement was approved by Cardinal's board of directors, provided that each of the Related Parties disclosed an interest in the resolutions relating to the approval of the Private Placement in accordance with the provisions of the Business Corporations Act (Alberta), and each such Related Party abstained from voting with respect to his or her participation in the Private Placement, but otherwise voted to approve the Private Placement.

The Private Placement will be completed in reliance on the available exemption from the formal valuation requirement of MI 61-101 provided in paragraph (a) of Section 5.5 of MI 61-101 and in reliance on the available exemption from the minority shareholder approval requirement of MI 61-101 provided in paragraph (a) of Section 5.7(1) of MI 61-101. Neither the fair market value of the Notes and Units to be issued nor the consideration to be paid for the Notes and Units pursuant to the portion of the Private Placement subscribed for by Related Parties will exceed 25% of the Company’s market capitalization.

Cardinal does not expect to file another material change report more than 21 days prior to the anticipated closing date of the Private Placement, as the Company intends to complete the Private Placement as soon as reasonably practical after it has obtained approval of the TSX, certain other funding conditions have been satisfied, and the terms of Cardinal's new credit facility have been satisfactorily completed.

5.2 Disclosure of Restructuring Transaction

Not applicable.

6. Reliance on subsection 7.1(2) of National Instrument 51-102:

Not applicable.

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7. Omitted Information:

Not applicable.

8. Executive Officer:

The name and business numbers of the executive officer of us who is knowledgeable of the material change and this report is:

M. Scott Ratushny Chief Executive Officer

Shawn Van Spankeren Chief Financial Officer

Laurence Broos Vice President, Finance

Telephone: (403) 234-8681 Email: info@cardinalenergy.ca Website: www.cardinalenergy.ca

9. Date of Report:

December 15, 2020

Note Regarding Forward-Looking Statements

Some statements in this material change report may contain forward-looking information, including the expected timing of completion of the Private Placement; the size of the Private Placement; the participation of Related Parties in the Private Placement; the required TSX approvals and the satisfaction of the conditions of closing of the Private Placement; the intended use of the proceeds of the Private Placement; and the anticipated timeframes. All statements, other than of historical fact, that address activities, events or developments that the Company believes, expects or anticipates will or may occur in the future are forward-looking statements. Forward-looking statements are generally identifiable by use of the words "may", "will", "should", "continue", "expect", "anticipate", "estimate", "believe", "intend", "plan" or "project" or the negative of these words or other variations on these words or comparable terminology. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond the Company's ability to control or predict, that may cause the actual results of the Company to differ materially from those discussed in the forward-looking statements. Cardinal believes that the expectations reflected in such forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking information included in this material change report should not be unduly relied upon. These statements speak only as of the date of this material change report. Cardinal undertakes no obligation to publicly update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities laws.

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