Cardinal Energy Ltd. — Interim / Quarterly Report 2021

May 14, 2021

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Q1 2021 FINANCIAL STATEMENTS

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CONDENSED INTERIM BALANCE SHEET

CONDENSED INTERIM BALANCE SHEET
As at			March 31,		December 31,
(Unaudited, thousands)	Note		2021		2020
ASSETS
Current assets
Trade and other receivables		$	39,338	$	29,261
Deposits and prepaid expenses			2,065		2,876
Fair value of financial instruments	12		275		1,506
			41,678		33,643
Non‐current assets
Property, plant and equipment	3		708,732		715,490
Total Assets		$	750,410	$	749,133
LIABILITIES
Current liabilities
Trade and other payables		$	54,058	$	42,421
Lease liabilities	7		1,634		1,687
Decommissioning obligation	8		2,760		3,280
Fair value of financial instruments	12		15,835		8,415
Warrant liability	9		‐		3,530
			74,287		59,333
Non‐current liabilities
Lease liabilities	7		1,957		2,227
Bank debt	4		188,984		192,115
Secured notes	5		16,809		16,217
Liability component of convertible debentures	6		‐		26,886
Decommissioning obligation	8		79,620		79,507
			287,370		316,952
Total Liabilities			361,657		376,285
SHAREHOLDERS' EQUITY
Share capital	9		1,083,640		1,054,169
Treasury shares	9		(1,545)		(3,041)
Warrants	9		16,453		‐
Equity component of convertible debentures	6		‐		1,582
Contributed surplus			29,530		33,502
Deficit			(739,325)		(713,364)
Total Shareholders'Equity			388,753		372,848
Total Liabilities and Shareholders' Equity		$	750,410	$	749,133
Contractual obligations	13
Subsequent event	14

The accompanying notes are an integral part of these condensed interim financial statements.

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2

CONDENSED INTERIM STATEMENT OF LOSS AND COMPREHENSIVE LOSS

For the three months ended March 31,
(Unaudited, thousands except per share amounts)	Note		2021		2020
Revenue and other income
Petroleum and natural gas revenue	11	$	85,547	$	63,473
Royalties			(12,967)		(10,284)
			72,580		53,189
Realized gain (loss) on commodity contracts	12		(13,801)		8,221
Unrealized gain (loss) on commodity contracts	12		(8,651)		8,176
Processing and other revenue	11		848		617
Other income	8		1,145		‐
			52,121		70,203
Expenses
Operating			36,234		38,681
Transportation			496		575
General and administrative			3,067		4,874
Share‐based compensation	10		764		1,421
Finance			6,210		6,250
Re‐measurement loss on warrant liability	9		12,923		‐
Depletion and depreciation	3		17,142		23,507
Impairment			‐		343,000
Loss (gain) on conversion of convertible debentures and other	6		1,246		(40)
			78,082		418,268
Loss before deferred tax			(25,961)		(348,065)
Deferred tax expense			‐		102,879
Loss and comprehensive loss		$	(25,961)	$	(450,944)
Loss per share
Basic and diluted	9	$	(0.20)	$	(3.98)

The accompanying notes are an integral part of these condensed interim financial statements.

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CONDENSED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

													Equity
					Common							Component
					Shares, net of								of						Total
(Unaudited, thousands except number of					treasury				Treasury			Convertible		Contributed				Shareholders'
common shares)					shares	Share Capital			Shares		Warrants	Debentures			Surplus		Deficit		Equity
							(note 9)		(note 9)		(note 9)		(note 6)		(note 10)
As at January 1, 2020					113,657,247	$	1,062,194	$	(5,182)	$	‐	$	1,556	$	26,429	$	(347,095)	$	737,902
Purchase of common shares	for RAs	(1)			(303,495)		‐		(700)		‐		‐		‐		‐		(700)
settlements
Settlement of RAs (1)					898,191		‐		2,505		‐		‐		(3,021)		‐		(516)
Purchase of common shares	for cancellation				(897,500)		(8,526)		‐		‐		‐		6,040		‐		(2,486)
Share‐based compensation					‐		‐		‐		‐		‐		1,560		‐		1,560
Tax adjustment on excess value of RAs			(1)		‐		‐		‐		‐		‐		(697)		‐		(697)
Dividends ($0.03 per share)					‐		‐		‐		‐		‐		‐		(3,511)		(3,511)
Loss for the period					‐		‐		‐		‐		‐		‐		(450,944)		(450,944)
As at March 31, 2020					113,354,443	$	1,053,668	$	(3,377)	$	‐	$	1,556	$	30,311	$	(801,550)	$	280,608
As at January 1, 2021					121,348,705	$	1,054,169	$	(3,041)	$	‐	$	1,582	$	33,502	$	(713,364)	$	372,848
Purchase of common shares	for RAs	(1)and PAs		(2)
settlements					(589,843)		‐		(1,250)		‐		‐		‐		‐		(1,250)
Reclassification of warrants	to equity				‐		‐		‐		16,453		‐		‐		‐		16,453
Settlement of RAs (1)and PAs	(2)				1,218,400		‐		2,746		‐		‐		(4,827)		‐		(2,081)
Convertible debentures conversion
and redemption					22,410,400		29,596		‐		‐		(1,582)		‐		‐		28,014
Share‐based compensation					‐		‐		‐		‐		‐		855		‐		855
Share issue cost					‐		(125)		‐		‐		‐		‐		‐		(125)
Loss for the period					‐		‐		‐		‐		‐		‐		(25,961)		(25,961)
As at March 31, 2021					144,387,662	$	1,083,640	$	(1,545)	$	16,453	$	‐	$	29,530	$	(739,325)	$	388,753

(1) Restricted Bonus Awards ("RAs")

(2) Performance Awards ("PAs")

The accompanying notes are an integral part of these condensed interim financial statements.

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CONDENSED INTERIM STATEMENT OF CASH FLOWS

For the three months ended March 31,
(Unaudited, thousands)	Note		2021		2020
Cash provided by (used in)
Operating activities
Loss for the period		$	(25,961)	$	(450,944)
Adjustments for
Share‐based compensation	10		764		1,421
Depletion and depreciation	3		17,142		23,507
Impairment			‐		343,000
Re‐measurement loss of warrant liability	9		12,923		‐
Unrealized loss (gain) on commodity contracts	12		8,651		(8,176)
Unrealized foreign exchange loss			‐		1,109
Other income	8		(1,145)		‐
Deferred tax expense			‐		102,879
Accretion	6,8		1,937		2,192
Interest on secured notes	5		592		‐
Loss (gain) on conversion of convertible debentures	6		1,246		(40)
Decommissioning obligation settled	8		(1,731)		(1,472)
Change in non‐cash working capital			(1,143)		8,565
			13,275		22,041
Investing activities
Exploration and evaluation expenditures			‐		(11)
Property, plant and equipment expenditures	3		(6,201)		(22,130)
Property acquisitions			(3,326)		‐
Change in non‐cash working capital			3,195		(224)
			(6,332)		(22,365)
Financing activities
Dividends			‐		(3,511)
Repayment of lease liabilities	7		(481)		(481)
Share issue costs	9		(125)		‐
Purchase of common shares for cancellation			‐		(2,486)
Purchase of common shares for RA and PA settlements
and withholding tax	9		(3,331)		(1,216)
Purchase of convertible debentures for cancellation			‐		(29)
Convertible debentures redeemed	6		(194)		‐
Increase (decrease) in bank debt			(3,131)		9,770
Change in non‐cash working capital			319		(1,723)
			(6,943)		324
Change in cash and cash equivalents			‐		‐
Cash and cash equivalents, beginning of period			‐		‐
Cash and cash equivalents,end ofperiod		$	‐	$	‐

The accompanying notes are an integral part of these condensed interim financial statements.

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5

1 REPORTING ENTITY

NOTES TO CONDENSED INTERIM FINANCIAL STATEMENTS

For the three months ended March 31, 2021 and 2020

(Unaudited, thousands of dollars, except per share amounts or unless otherwise stated)

Cardinal Energy Ltd. ("Cardinal" or the "Company") was incorporated pursuant to the Business Corporations Act (Alberta) on December 21, 2010 and commenced activity on May 30, 2012. The Company's principal business activity is the acquisition, exploration and production of petroleum and natural gas in the provinces of Alberta and Saskatchewan. Cardinal's principal place of business is located at 600, 400 – 3[rd] Avenue SW, Calgary, Alberta, Canada, T2P 4H2.

2 BASIS OF PREPARATION

Statement of Compliance

These condensed interim financial statements ("financial statements") have been prepared in accordance with statement IAS 34 – Interim Financial Reporting of the International Financial Reporting Standards ("IFRS"). The financial statements were prepared using the same accounting policies, critical judgments and key estimates which the Company applied in its annual financial statements for the year ended December 31, 2020 and do not include certain disclosures that are normally required to be included in annual financial statements which have been condensed or omitted. Accordingly, these financial statements should be read in conjunction with the annual financial statements for the year ended December 31, 2020.

The financial statements were authorized for issue by the Board of Directors on May 13, 2021.

Use of Estimates and Judgements

The timely preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenue and expenses. As such, actual results may differ from these estimates as future confirming events occur. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

During the first three months of 2021, there has been improvement in the stability of the global crude oil prices as Organization of the Petroleum Exporting Countries (“OPEC”) continues to adhere to production curtailments and governments began to ease restrictions relating to the coronavirus pandemic (“COVID‐19”). In the fourth quarter of 2020, vaccines were approved and distribution began which also fueled optimism of the outlook for crude oil demand. Although the Company has benefited as a result of the improvement in crude oil prices, there continues to be uncertainty and risk related to OPEC production curtailments and COVID‐19.

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3 PROPERTY, PLANT AND EQUIPMENT

PROPERTY, PLANT AND EQUIPMENT
	Petroleum and
		natural gas	Right‐of‐use			Corporate
		assets		assets		assets		Total
Cost
As at January 1, 2020	$	1,664,876	$	6,178	$	4,233	$	1,675,287
Additions		31,886		469		128		32,483
Changes in decommissioning obligation		(31,473)		‐		‐		(31,473)
Disposition		(1,980)		(33)		‐		(2,013)
As at December 31, 2020		1,663,309		6,614		4,361		1,674,284
Additions		6,256		158		36		6,450
Acquisition, net		3,898		‐		‐		3,898
At March 31, 2021	$	1,673,463	$	6,772	$	4,397	$	1,684,632
Accumulated depletion and depreciation
As at January 1, 2020	$	(668,044)	$	(1,708)	$	(2,335)	$	(672,087)
Depletion and depreciation		(64,775)		(1,871)		(434)		(67,080)
Disposition		688		33		‐		721
Impairment		(220,348)		‐		‐		(220,348)
As at December 31, 2020		(952,479)		(3,546)		(2,769)		(958,794)
Depletion and depreciation, net		(16,577)		(425)		(104)		(17,106)
At March 31, 2021	$	(969,056)	$	(3,971)	$	(2,873)	$	(975,900)
Net book value
At December 31, 2020	$	710,830	$	3,068	$	1,592	$	715,490
At March 31, 2021	$	704,407	$	2,801	$	1,524	$	708,732

The calculation of depletion for the three months ended March 31, 2021 includes estimated future development costs of $219.3 million (December 31, 2020 ‐ $219.3 million) associated with the development of the Company's proved and probable oil and gas reserves.

For the three months ended March 31, 2021, Cardinal capitalized $0.3 million of general and administrative expenses (2020 ‐ $0.3 million) and $0.1 million (2020 ‐ $0.1 million) of share‐based compensation.

Impairment and impairment reversal

At March 31, 2021, there were no indicators of impairment or impairment reversal for oil and gas properties in any of the Company’s CGUs.

2020:

At December 31, 2020, Cardinal determined that the estimated recoverable amounts of the Alberta Central, Alberta South, and Alberta North CGUs exceeded the carrying amounts of $116.7 million, $90.7 million, and $222.9 million, respectively. Accordingly, an aggregate non‐cash impairment reversal of $122.7 million was recorded. The impairment reversal was the result of a partial recovery of the forecasted oil and gas commodity prices, increased economic stability, and certainty in the oil and gas industry. The estimated recoverable amounts were based on proved and probable oil and gas reserves as evaluated by the Company’s independent third party reserve evaluators as at December 31, 2020.

At March 31, 2020, Cardinal determined that the carrying amounts of the Alberta Central, Alberta South, and Alberta North CGUs exceeded the estimated recoverable amounts of $131.4 million, $103.4 million, and $250.4 million, respectively. Accordingly, an aggregate non‐cash impairment loss of $343.0 million was recorded. The impairment recognized was the result of a significant decline in forecasted oil and gas commodity prices due to oil demand issues caused by COVID‐19.

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4 BANK DEBT

The Company’s reserves‐based revolving credit facility of $225 million is comprised of a $205 million syndicated term credit facility and a $20 million non‐syndicated operating line credit facility (the "Facilities"). The Facilities are available on a revolving basis until May 31, 2021 and may be extended for a further 364 day period, subject to approval by the syndicate. If not extended, the Facilities will cease to revolve, the applicable margins will increase by 0.5% and all outstanding advances will be repayable on May 31, 2022. On a redetermination date, lenders could reduce the borrowing base to below amounts drawn, in which case, any short fall would have to be repaid within 30 days.

The available lending limits of the Facilities are reviewed semi‐annually based on the syndicate's interpretation of the Company's reserves, future commodity prices and costs. As the available lending limit of the Facilities is based on the syndicate's interpretation of the Company's reserves and future commodity prices and costs, there can be no assurance that the amount of the Facilities will not decrease at the next scheduled review. The next scheduled review date will be on or before May 31, 2021.

Advances under the Facilities are available by way of either prime rate loans, which bear interest at the banks' prime lending rate plus 2.0 to 5.5%, and bankers' acceptances, which are subject to fees and margins ranging from 3.0 to 6.5%. Interest and standby fees on the undrawn amounts of the Facilities depend upon certain ratios. The Facilities are secured by a general security agreement over all of the Company's assets. There are no financial covenants related to the Facilities, provided that Cardinal is not in default of the terms of the Facilities.

Letters of credit for $1.6 million were outstanding at March 31, 2021 (2020 – $1.6 million) that reduced the amount otherwise available to be drawn on the operating line credit facility.

Cardinal was in compliance with the terms of the Facilities at March 31, 2021. For the three months ended March 31, 2021 the effective interest rate on the Company's bank debt was 6.0% (2020 – 4.0%).

5 SECURED NOTES

SECURED NOTES
		Secured
		notes
As at January 1, 2020	$	‐
Issued		16,204
Interest		13
As at December 31, 2020	$	16,217
Interest		592
As at March 31, 2021	$	16,809

On December 30, 2020, Cardinal entered into a subscription agreements for a non‐brokered private placement (“Private Placement”) of $16.9 million principal amount of second lien secured notes (“Secured Notes”) issued at a 4% discount for net proceeds of $16.2 million.

The Secured Notes bears interest at 12% per annum with an effective interest rate of 14.6%, with interest compounded and accrued semi‐annually and added to the principal amount outstanding, payable on maturity. The Secured Notes mature on June 30, 2022, and contains an extension provision, exercisable by either Cardinal or the holders on 30 days’ prior written notice, to extend the maturity date to November 30, 2022. The fair value of the Secured Notes approximate their face value at March 31, 2021.

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6 CONVERTIBLE DEBENTURES

CONVERTIBLE DEBENTURES
	Number of
	convertible		Liability		Equity
8.0% Convertible debentures	debentures		component		component
As at January 1, 2020	‐	$	‐	$	‐
Issuance	28,207		26,625		1,582
Accretion	‐		261		‐
Balance at December 31, 2020	28,207	$	26,886	$	1,582
Accretion	‐		100		‐
Loss on conversion	‐		1,221		‐
Converted	(28,013)		(28,013)		(1,582)
Redeemed	(194)		(194)		‐
Balance at March 31, 2021	‐	$	‐	$	‐

On February 4, 2021, Cardinal issued a notice of redemption for all of the outstanding convertible debentures with a principal amount of $28.2 million, effective March 11, 2021. Prior to the redemption date, the majority of the holders of the convertible debentures exercised their conversion option whereby Cardinal issued 22,410,000 common shares upon the conversion of $28.0 million of principal amount of the convertible debentures, with a conversion price of $1.25 per share, representing approximately 99.3% of the outstanding debentures. The redemption of the remaining $0.2 million principal amount of the convertible debentures was funded through the Company's credit facility.

For the three months ended March 31, 2021 Cardinal recognized $0.3 million of interest, $0.1 million of accretion, and a loss on conversion of $1.2 million related to the convertible debentures.

7 LEASE LIABILITIES

LEASE LIABILITIES
	Three months ended		Year ended
		March 31, 2021	December 31, 2020
Balance, beginning of period	$	3,914	5,431 $
Additions		158	469
Dispositions		‐	‐
Finance cost		58	306
Lease payments		(539)	(2,292)
Balance,end ofperiod	$	3,591	3,914 $

At March 31, 2021, the Company had future commitments relating to lease liabilities as follows:

		As at		As at
		March 31, 2021	December	31, 2020
Less than 1 year	$	1,806	$	1,877
1 ‐ 3 years		2,063		2,351
4‐5 years		‐		9
Total undiscounted future lease payments		3,869		4,237
Amounts representing interest		(278)		(323)
Present value of net lease payments		3,591		3,914
Less current portion of lease liabilitles		(1,634)		(1,687)
Non‐currentportion of lease liabilities	$	1,957	$	2,227

The Company has lease liabilities for contracts related to office space, vehicles, and office equipment. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Discount rates

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9

8 DECOMMISSIONING OBLIGATION

during the three months ended March 31, 2021 were between 6% and 8% (2020 – between 6% and 8%), depending on the duration of the lease term.

DECOMMISSIONING OBLIGATION
	Three months ended			Year ended
		March 31, 2021	December 31, 2020
Balance, beginning of period	$	82,787	$	113,812
Liabilities incurred		‐		131
Liabilities acquired		689		‐
Liabilities disposed		(57)		(67)
Change in estimates		‐		(31,604)
Government subsidy for decommissioning expenditures		(1,145)		(4,563)
Decommissioning expenditures		(1,731)		(2,849)
Accretion		1,837		7,927
Balance,end ofperiod	$	82,380	$	82,787

The Company's decommissioning obligation results from its ownership interest in crude oil and natural gas assets including well sites, and facilities. At March 31, 2021, the total estimated amount to settle Cardinal's decommissioning obligation was $333 million (December 31, 2020 ‐ $331 million) on an uninflated and undiscounted basis and $443 million (December 31, 2020 ‐ $440 million) on an inflated and undiscounted basis.

The decommissioning obligation was determined by applying an inflation factor of 1.0% (2020 – 1.0%) and discounting the inflated amount using Cardinal's credit‐adjusted rate of 9.0% (2020 – 9.0%) over the expected useful life of the underlying assets of 20 to 50 years (2020 – 20 to 50 years).

9 SHARE CAPITAL

At March 31, 2021, the Company was authorized to issue an unlimited number of common voting shares without nominal or par value. Holders of common shares are entitled to one vote per share.

Treasury Shares

RAs and PAs may be settled in cash, common shares issued from treasury or common shares acquired by an independent trustee in the open market for such purposes. During the three months ended March 31, 2021, the trustee purchased 589,843 common shares (2020 – 303,495) for $1.3 million (2020 ‐ $0.7 million) for the potential settlement of future vesting RAs and PAs.

During the three months ended March 31, 2021, the Company utilized 1,218,400 (2020 – 898,191) treasury shares to settle vesting RAs and PAs. As at March 31, 2021, 720,567 (December 31, 2020 – 1,349,124) common shares remained classified as treasury shares to be potentially used for future settlements.

Warrants

On December 30, 2020, as part of the Private Placement, Cardinal issued 8,122,000 Units consisting of one common share and one warrant at $0.50 per unit for net proceeds of $4.0 million. The warrants are exercisable at $0.55 per warrant for one common share. The warrants vest six months subsequent to the issuance date and expire on December 30, 2023.

The fair value of the warrants at March 31, 2021 and December 31, 2020 was determined using the Black‐Scholes pricing model with the following inputs:

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10

	March 18 ‐ 31,	December 31,	December 31,
As at	2021		2020
Share Price	$2.04 ‐ $2.68	$	0.83
Risk‐free interest rate	0.25%		0.25%
Expected life (years)	2.75		3
Expected volatility	60%		60%

The warrants issued were classified as a financial liability as a result of a cashless exercise provision; however, during the three months ended March 31, 2021, all of the warrant holders waived their right to cashless exercise the warrants. As a result, on the date when the warrant holders relinquished their right to cashless exercise, the Company fair valued the warrant liability and recorded the resulting re‐measurement expense of $12.9 million and reclassified the warrant liability to shareholders equity.

Loss per share

For the three months ended March 31,		2021		2020
Loss	$	(25,961)	$	(450,944)
Loss per share
‐ Basic and diluted	$	(0.20)	$	(3.98)
Weighted average number of common shares
‐ Basic and diluted		130,152,916		113,162,523

The weighted average number of common shares is adjusted for shares purchased and cancelled and treasury shares purchased and held by the trustee.

For the three months ended March 31, 2021, 3,845,372 RAs (2020 – 4,619,464), 1,536,246 PAs (2020 – 846,369), nil convertible debentures (2020 – 4,279,143) and 8,122,000 warrants (2020 – nil) were excluded from the calculation of diluted loss per share as their effect was anti‐dilutive.

10 SHARE‐BASED COMPENSATION

The maximum number of common shares issuable under the Company's bonus award plan, in aggregate, cannot exceed five percent of the outstanding common shares. The Company's common shares traded at a weighted average share price of $1.74 (2020 ‐ $1.57) during the three months ended March 31, 2021.

Bonus Awards

The Company has a bonus award plan whereby RAs and PAs may be granted to directors, officers, employees and other service providers. Awards granted according to the plan vest equally over three years from the date of grant and expire on December 15[th] of the third year following the year in which the award was granted. In the case of PAs, the award value is adjusted for a payout multiplier which can range from 0.0 to 2.0 and is dependent on the performance of the Company relative to pre‐defined corporate performance measures for a particular period. Awards are adjusted for dividends declared, either with a cash payment or incremental common shares, and are to be settled with either cash, common shares or a combination thereof at the Company's discretion.

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11

	Number of PAs	Number of RAs
As at January 1, 2020	‐	4,613,495
Granted	846,369	1,732,385
Settled	‐	(2,089,340)
Adjustment for dividends declared	‐	45,610
Forfeited	‐	(307,777)
Expired	‐	(1,714)
As at December 31, 2020	846,369	3,992,659
Granted	972,000	1,705,600
Settled	(282,123)	(1,852,173)
Forfeited	‐	(714)
As at March 31, 2021	1,536,246	3,845,372

For the three months ended March 31, 2021, upon the vesting of 1,852,173 (2020 – 1,664,139) RAs and 282,123 (2020 – nil) PAs, when taking into account the performance multiplier for PAs, the Company issued 1,218,400 (2020 – 898,191) treasury shares and a payment of $2.1 million (2020 ‐ $0.5 million) for withholding taxes.

The fair value of the granted awards was determined based on the value of the Company's common shares at the grant date. The weighted average market price of the Company's common shares used to value the RAs and PAs granted was $2.12 (2020 – RAs – $0.48, PAs – $0.43).

Share‐based Compensation

Share‐based compensation for the three months ended March 31, 2021 of $0.8 million (2020 ‐ $1.4 million) was expensed and $0.1 million (2020 ‐ $0.1 million) was capitalized.

11 REVENUE

Cardinal sells its production pursuant to variable‐priced contracts. The transaction price for variable priced contracts is based on the commodity price, adjusted for quality, location or other factors, whereby each component of the pricing formula can be either fixed or variable, depending on the contract terms. Commodity prices are based on market indices that are determined on a monthly or daily basis. Under its contracts, the Company is required to deliver fixed or variable volumes of crude oil, natural gas and natural gas liquids to the contract counterparty. The amount of revenue recognized is based on the agreed transaction price, whereby any variability in revenue relates specifically to the Company’s efforts to transfer production, and therefore the resulting revenue is allocated to the production delivered in the period during which the variability occurs. As a result, none of the variable consideration is considered constrained.

Crude oil, natural gas, and natural gas liquids are sold under contracts of varying price and volume terms of up to one year. Revenues are typically collected on the 25th day of the month following production.

The following table details the Company’s petroleum and natural gas sales by product, and processing and other revenue generated by processing third party volume at facilities where the Company has an ownership interest:

For the three months ended March 31,		2021		2020
Crude oil	$	78,079	$	59,946
NGL		3,226		1,625
Natural gas		4,242		1,902
Petroleum and natural gas revenue		85,547		63,473
Processing and other revenue		848		617

Included in accounts receivable at March 31, 2021 is $32.4 million (2020 ‐ $12.0 million) of accrued petroleum and natural gas revenue.

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12 FINANCIAL RISK MANAGEMENT

Cardinal's financial assets and liabilities consist of trade and other receivables, trade and other payables, risk management assets and liabilities, bank debt, and secured notes. Risk management assets and liabilities arise from the use of derivative financial instruments.

The Company classifies fair value according to the following fair value hierarchy based on the amount of observable inputs used to value the instrument:

Level 1 ‐ Fair value is based on unadjusted quoted prices in active markets for identical assets or liabilities as of the reporting date.

Level 2 ‐ Fair value is based on inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices).

Level 3 ‐ Fair value is based on inputs for the asset or liability that are not based on observable market data.

Derivatives are recorded on the balance sheet at fair value at each reporting period with the change in fair value being recognized as an unrealized gain or loss in the statement of loss. The fair value of forward contracts and swaps is determined by discounting the difference between the contracted prices and published forward price curves as at the balance sheet date, using the remaining contracted volumes and a credit adjusted interest rate. The fair value of options and collars is based on option models that use published information with respect to volatility, prices and interest rates.

The Company does not apply hedge accounting for these contracts. The Company's production is usually sold using "spot" or near term contracts, with prices fixed at the time of transfer of custody or on the basis of a monthly average market price. However, the Company may give consideration in certain circumstances to the appropriateness of entering into long term, fixed price marketing contracts. The Company does not enter into commodity contracts other than to meet the Company’s expected sale requirements.

As at March 31, 2021 and December 31, 2020, the only assets or liabilities measured at fair value were the fair value of financial instruments which are classified as level 2, bank debt which is classified as level 2, and secured notes which are classified as level 2.

Carrying amount and fair value of financial assets and liabilities

Trade and other receivables are classified as financial assets at amortized cost and are reported at amortized cost. Trade and other payables, secured notes, and bank debt are classified as financial liabilities at amortized cost and are reported at amortized cost. The fair values of trade and other receivables, and trade and other payables approximate their carrying amount due to the short‐term maturity of these instruments. The fair value of bank debt approximates the carrying amount due to the floating rate of interest and the margin charged by the syndicate is indicative of current credit spreads. The fair values of secured notes fluctuates in response to changes in the market rates of interest payable on similar instruments and credit changes.

Risk management

Cardinal is exposed to normal market risks inherent in the oil and natural gas business, including, but not limited to, commodity price risk, foreign currency rate risk, credit risk, liquidity risk and interest rate risk. The Company seeks to mitigate these risks through various business processes and management controls and from time to time by using various derivative financial instruments and physical delivery sales contracts.

Commodity price risk

The Company is exposed to commodity price risk on petroleum and natural gas sales. Commodity prices for crude oil and natural gas are impacted by not only the relationship between the Canadian and United States dollar, but also by world economic events that dictate the levels of supply and demand.

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At March 31, 2021 Cardinal had the following commodity financial derivative contracts outstanding:

Type of instrument Remaining term Average quantity Average strike price	Fair value
CDN WTI Swap April 1, 2021 ‐ June 30, 2021 1,500 bbl/d 58.20 $ CDN WTI Swap April 1, 2021 ‐ September 30, 2021 1,000 bbl/d 59.00 $ CDN WTI Swap April 1, 2021 ‐ December 31, 2021 1,500 bbl/d 55.83 $ CDN WTI Swap April 1, 2021 ‐ June 30, 2021 500 bbl/d 58.55 $ USD WTI Swap April 1, 2021 ‐ June 30, 2021 1,000 bbl/d USD 42.80 $ CDN WTI Collar April 1, 2021 ‐ June 30, 2021 500 bbl/d 50.00 $ 65.00 $ CDN WCS Basis Swap April 1, 2021 ‐ June 30, 2021 1,500 bbl/d (16.42) $ USD WCS Basis Swap April 1, 2021 ‐ June 30, 2021 500 bbl/d USD (12.20) $ April 1, 2021 ‐ June 30, 2021 1,500 bbl/d USD (12.33) $ AECO Swap April 1, 2021 ‐ June 30, 2021 11,000 gj/d 2.40 $ AECO Swap July 1, 2021 ‐ December 31, 2021 11,000 gj/d 2.64 $	(2,187) (2,669) (6,987) (713) (1,862) (450) (430) (92) (298) (98) 226
	(15,560)

Cardinal limits its credit risk by executing counterparty risk procedures which include transacting only with members of the syndicate for our credit facilities or institutions with high credit ratings and by obtaining financial security in certain circumstances. Based on March 31, 2021 commodity prices, a $1 per barrel change in the price of crude oil would have changed the unrealized loss by $0.1 million (2020 – unrealized gain of $0.6 million) and a $0.10 per gigajoule change in the price of natural gas would have changed the unrealized loss by $0.3 million (2020 – unrealized gain of $0.1 million).

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The financial liabilities on the balance sheet consist of trade and other payables, fair value of financial instruments, bank debt, and secured notes. Trade and other payables are considered due within one year. The fair value of financial instruments, bank debt (see note 4), and secured notes (see note 5) are considered due between one and two years. The Company anticipates it will continue to have adequate liquidity to fund its financial liabilities. The Company has had no defaults or breaches on its financial liabilities.

13 CONTRACTUAL OBLIGATIONS

As at March 31, 2021, the Company had contractual obligations as follows:

		2021		2022	2023	2024	2025	Thereafter
Trade and other payables		54,058		‐	‐	‐	‐	‐
Lease liabilities		1,387		1,362	1,102	18	‐	‐
Bank debt(1)		‐		‐	188,984	‐	‐	‐
Secured notes		‐		20,156	‐	‐	‐	‐
Total contractual obligations	$	55,445	$	21,518	190,086	18	‐	‐

(1) Amount excludes interest; bank renewal completed on May 12, 2021

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14 SUBSEQUENT EVENT

On May 12, 2021, the Facilities were renewed on a revolving basis until May 31, 2022 and may be extended for a further 364 day period, subject to approval by the syndicate. The maturity date has been extended to May 31, 2023.

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