Cardinal Energy Ltd. — Capital/Financing Update 2021

Feb 15, 2021

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:

February 4, 2021

3. News Release:

A news release was issued and disseminated through the facilities of a recognized newswire service on February 4, 2021 relating to the material change.

4. Summary of Material Change:

On February 4, 2021, Cardinal announced that it is issuing a notice of redemption to holders of its currently outstanding $28,207,000 8.00% Convertible Unsecured Subordinated Debentures due on December 31, 2022 (the " Debentures "). As set out in the redemption notice, Cardinal will redeem, as of March 11, 2021 (the " Redemption Date "), all of the aggregate principal amount of the Debentures for cash. The redemption of the Debentures will be funded in whole or in part through the issuance of up to $26,884,423 of unsecured subordinated notes (the " Notes ') which will be issued at a 0.5% discount to the face value based on the maximum loan size (the " Redemption Financing ").

5. Full Description of Material Change:

5.1

Full Description of Material Change

On February 4, 2021, Cardinal announced that it is issuing a redemption notice to holders of the Debentures. The Debentures are not subject to a pre-payment penalty. As set out in the notice of redemption, Cardinal will redeem all of the aggregate principal amount of the Debentures for cash. On the Redemption Date, Cardinal will pay the aggregate principal amount of the Debentures (being $1,000 for each Debenture) plus all accrued and unpaid interest thereon to but excluding the Redemption Date (less any tax to be deducted) (collectively, the " Redemption Price "). The Debentures are listed on the Toronto Stock Exchange (the " TSX ") under the symbol "CJ.DB.A" (CUSIP 14150GAB9).

Holders of the Debentures have the right to convert their Debentures, at their option, into common shares of Cardinal (" Common Shares ") at a conversion price of $1.25 per Common Share at any time prior to 5:00 p.m. Toronto time on March 10, 2021. A holder electing to convert the principal amount of their Debentures will receive approximately 800 Common Shares per C$1,000 principal amount of Debentures converted plus a cash payment for accrued unpaid interest up to, but excluding, the date of conversion (less any tax required to be deducted). No fractional Common Shares will be issued on conversion but, in lieu thereof, the Company will pay the cash equivalent thereof determined on the basis of the Current Market Price (as defined in the Indenture governing the Debentures) of the Common Shares on the date of conversion.

The redemption of the Debentures will be funded in whole or in part through the the Redemption Financing. The amount of Notes to be issued will be dependent on the actual principal amount of Debentures outstanding on the Redemption Date, after giving effect to conversions, if any, occurring prior to the Redemption Date. The Notes will bear interest at 8% per annum from funding until September 30, 2021, and increasing to 9% per annum on October 1, 2021, to 10% per annum on April 1, 2022 and to 12% per annum on September 30, 2022 (all interest will accrue quarterly in arrears and be payable on the first business day following the last day of each fiscal quarter). The Notes will not be subject to a pre-payment penalty except in the case of a

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change of control and may include a commitment fee if the Redemption Financing is not fully funded. The closing of the Redemption Financing is expected to occur on or about the Redemption Date, and is subject the approval of the TSX and certain other funding conditions.

Related Party Matters

The Redemption Financing is being provided solely by certain insiders (or companies controlled by them) of the Company, some of whom also hold an aggregate of $720,000 principal amount of Debentures.

Insider participation in the Redemption Financing will be "related party transactions" within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in a Special Transaction (" MI 61101 "). Scott Ratushny, John Brussa, David D. Johnson and Stephanie Sterling, each directors of Cardinal, and a company controlled by N. Murray Edwards, a shareholder that currently owns, or exercise control or direction over approximately 14.1% of the issued and outstanding Common Shares (collectively, the " Related Parties " and each a " Related Party ") will provide the funding for the Notes. The following table sets out the number of Notes each Related Party will acquire and the number of Common Shares of Cardinal that each Related Party beneficially owns, or exercises control or direction over, directly or indirectly. The Notes will not convertible into Common Shares and will not affect the number of Common Shares of Cardinal that each Related Party beneficially owns, or exercises control or direction over, directly or indirectly.

Related Party	Notes ($)	Present Direct and Indirect Holding of Common Shares
N. Murray Edwards(1)	25,125,628	17,287,000 (14.1%)
Scott Ratushny	502,513	2,445,361 (1.99%)
John Brussa	502,513	2,206,435 (1.80%)
David D. Johnson(2)	502,513	947,225 (0.77%)
Stephanie Sterling(2)	251,256	179,564 (0.15%)

(1) The Notes are to be registered and held in a company controlled by Mr. Edwards.

(2) Includes Common Shares held by the Related Party's spouse.

The Redemption Financing was approved by Cardinal's board of directors, provided that each of the Related Parties that is a Cardinal board member disclosed their interest in the resolutions relating to the approval of the redemption of the Debentures and the Redemption Financing 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 redemption of the Debentures and Redemption Financing.

The Redemption Financing is not subject to the formal valuation requirements of MI 61-101since it does not fall within paragraphs (a) to (g) of the definition of related party transaction in MI 61-101 and is exempt from the minority approval requirements pursuant to sections 5.7(1)(a) and (f) of MI 61-101. Neither the fair market value of the Notes to be issued nor the consideration to be paid for the Notes subscribed for by Related Parties will exceed 25% of the Company's market capitalization. Additionally, the Redemption Financing is a loan from the Related Parties that has been obtained by the Company on reasonable commercial terms that are not less advantageous to the Company than if the Redemption Financing were obtained from a person dealing at arm's length with the Company and the Redemption Financing is not (a) convertible into equity or voting securities of the Company or any of its subsidiaries, or otherwise participating in nature; or (b) repayable as to principal or interest, directly or indirectly, in equity or voting securities of the Company or any of its subsidiaries or any of its subsidiaries.

5.2 Disclosure of Restructuring Transaction

Not applicable.

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

Not applicable.

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:

February 12, 2021

Note Regarding Forward-Looking Statements

Certain statements in this material change report constitute forward-looking information, including, without limitation, anticipated timing of the Redemption Date, anticipated completion of the Redemption Financing on the terms and timing contemplated; the amount of and anticipated use of proceeds; the required TSX approvals, the satisfaction of the conditions of closing of the Redemption Financing and the anticipation that no holders of Debentures will convert their Debentures into Common Shares. The use of any of the words "anticipate", "continue", "expect", "intend", "may", "will", "project", "should", "believe" and "confident" and similar expressions are intended to identify forward-looking information. These statements involve known and unknown risks, uncertainties and other factors including the risk that the conditions to closing will not be satisfied and that that closing will not occur which may cause actual results or events to differ materially from those anticipated in such forward-looking information.

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.