Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (March 2023)
25 slides from Headwater Exploration's investor presentation, March 2023
Slide 1: Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX March 2023
Slide 2: Capitalization, Guidance and Business Strategy
CAPITALIZATION, GUIDANCE AND BUSINESS STRATEGY Outlook Capitalization 2023 Original 2023 Guidance at Headwater Exploration Inc. TSX HWX Guidance (1) Strip Pricing(1) th (2) Share Price (March 9 , 2023) $/sh. $6.30 Average Daily Production Annual Daily Production (boe/d) 18,000 18,000 Shares Outstand
Slide 3: Regional Clearwater
REGIONAL CLEARWATER Expanding Exploration Footprint – Total Land Holdings > 400 net sections Falher/Clearwater Fairway 112.75 sections (100% WI) 2 prospects tested Q1 2023 West Marten Hills CLWTR SS and CLGP B Development West Nipisi 38.5 sections (100% WI) 5 producing wells 3 potential zones Upper
Slide 4: Headwater Exploration Development Strategy
HEADWATER EXPLORATION DEVELOPMENT STRATEGY Total Clearwater OOIP of 3.2 Billion Barrels 775 Identified Clearwater Locations 575 25 772 237 353 465 1332 161 Marten Hills Core Marten Hills West West Nipisi Greater Peavine Marten Hills Core Marten Hills West West Nipisi Greater Peavine • Identified inv
Slide 5: Year End 2022 Reserves Summary
HEADWATER - YEAR END 2022 RESERVES SUMMARY 2022 Year End Reserves Year Over Reserve Category (1) Reserves F&D inc Heavy Oil Gas Total Year Recycle Replacement Δ FDC (Mbbl) (MMcf) (Mboe) Change Ratio (%) ($/boe) (%) Proved Producing 13,026 21,526 16,614 69% 245% 21.42 2.8 Total Proved 17,255 23,222 2
Slide 6: Marten Hills Core Area
MARTEN HILLS CORE AREA HWX ALL 5,000 1,600 Oil (bbl/d) Injection (bbl/d) 4,500 GOR (scf/bbl) 1,400 Current VRRi = 1.3 2024 2024 4,000 1,200 3,500 Q3 2023 Q1 2023 Program 1,000 3,000 GOR (scf/bbl) Rate (bbl/d) 2,500 800 2024 2,000 2024 Q4 2023 600 1,500 400 1,000 Previous VRRi = 0.8 200 500 Waterfloo
Slide 7: Marten Hills West
MARTEN HILLS WEST Continued Exploration Success / Initiating Waterflood West Marten Hills Performance 500 Marten Hills West 1,300 MMbbl OOIP 450 400 350 300 Oil Rate (bbl/d) 250 200 102/16-27-075-02W5 150 Average well IP30: 224 bbl/d 2023 West Marten Hills Waterflood pilots 100 100/16-22-075-02W5 50
Slide 8: West Nipisi
14 WEST NIPISI West Nipisi Development • 7.0 sections of land • 3 prospective zones with 10-15 mmbbls of OOIP per section Spur has recently licensed 12 CLWTR target wells • 5 successful wells drilled to date with an average IP 30 rate of 240 bbl/d Spur 100/16-20-078-09W5 IP: 150 bbl/d 100/13-16-078-
Slide 9: West Nipisi Expansion
WEST NIPISI EXPANSION 38.5 Net Sections 464 MMBBbl of mapped OOIP 3 potential zones (all tested by April 2023) West Nipisi Development Newly acquired 31.5 sections See Advisories including “OOIP” 8
Slide 10: Greater Peavine
GREATER PEAVINE Peavine and Seal Peavine / Seal Initial Results Peavine • 13 sections of land • Discovery well 10-08-080-17W5 • IP14 of 120 bbl/d • 13° API oil 13-6-83-15W5 • Second well 11-08-080-17W5 RR: March 1/2023 • Recently recovered load fluid • Currently producing 200 bbl/d • Fishbone well d
Slide 11: Why Headwater
WHY HEADWATER Business Strategy Outcome Build a sustainable business of combined growth • 40% production / share growth in 2023 with a 72% re- and free cash flow investment rate generating $80 million of free cash flow • Quarterly cash dividend of $0.10/share Implement a return of capital strategy i
Slide 12: Appendix
Headwater Exploration Inc. Appendix TSX:HWX
Slide 13: McCully Producing Asset
MCCULLY PRODUCING ASSET DRY GAS WITH 100% OWNED INFRASTRUCTURE AND LIMITED LIABILITY McCully Asset Daily Production McCully Daily Production mcf/d Production period 25000 New Brunswick 20000 Production mcf/d MNP pipeline 15000 10000 5000 0 Nov-16 Nova Scotia Nov-08 Nov-10 Nov-12 Nov-14 Nov-18 Nov-20
Slide 14: Waterflood Implementation
WATERFLOOD IMPLEMENTATION Waterflood Pilots and 2023 Expansion 35-074-25W4 & N/2 26-074-25W4 Pattern Green: Flooded prior to 2023 2,000 1,500 Oil (bbl/d) Injection (bbl/d) GOR (scf/bbl) 1,800 VRRc VRRi 1,250 1,600 Current VRRi = 1.1 Q1 2023 1,400 GOR (scf/bbl) & VRR / 1,000 1,000 VRR = 1 1,200 Rate
Slide 15: Other Clearwater Waterflood Pilots
OTHER CLEARWATER WATERFLOOD PILOTS Tamarack Valley Nipisi Section 19-076-07W5 • 8 Leg producer wells • 3 single leg drilled injectors • Oil rate increasing with low GOR (<2X Rs) • Exceptional response with no water breakthrough Rate vs Cumulative Oil Rate vs Time Operator: Tamarack Valley Enrg Ltd 1
Slide 16: Other Clearwater Waterflood Pilots
OTHER CLEARWATER WATERFLOOD PILOTS Spur Marten Hills Section 32-073-24W4 (Grandpa Burger) • 4 leg producer (F1), 6 leg producer (F2), 5 leg injector (F3) • Bottom up waterflood • Gas-Oil-Ratio decreasing • Continued strong response with no water breakthrough Operator: Spur Petrl Ltd 103/14-32-073-24
Slide 17: Other Clearwater Waterflood Pilots
OTHER CLEARWATER WATERFLOOD PILOTS Spur Marten Hills Section 20-074-25W4 • 6 leg producer (F1), 6 leg injector (F2) • Bottoms up waterflood • Continued strong response with no water breakthrough Operator: Spur Petrl Ltd 103/13-20-074-25W4/00 First Prod: Sep-18 Operator: Spur Petrl Ltd 103/13-20-074-
Slide 18: Experienced Team
EXPERIENCED TEAM Headwater Exploration Inc. Management Team Neil Roszell, P. Eng. ▪ Former President, CEO and/or Executive Chairman and founder of Raging River Exploration Inc., Wild Stream Exploration Inc. CEO & Chairman and Wild River Resources Ltd. Jason Jaskela, P. Eng. ▪ Former COO and founder
Slide 19: Slide Notes
SLIDE NOTES Slide 1 1. Original 2023 guidance as released on November 3, 2022, has been updated for current strip pricing. The assumptions used in the 2023 guidance include: WTI US$75.21/bbl, WCS Cdn$77.67/bbl, AGT US$7.61/mmbtu, foreign exchange rate of US$/Cdn$ of 0.74, blending expense of WCS les
Slide 20: Forward Looking Statements Advisory
ADVISORIES Forward Looking Statements Advisory This investor presentation of Headwater Exploration Inc. ("Headwater") contains forward-looking statements and forward-looking information (collectively, "forward-looking statements"). More particularly, this investor presentation contains forward-looki
Slide 21: Three-Year Development Strategy Advisory
ADVISORIES Three-Year Development Strategy Advisory Advisory Relating to Development Strategy (Slide 3) The Company has presented herein a three-year development strategy. The development strategy is based on a number of assumptions as presented in such slides including, without limitation: the requ
Slide 22: Non-GAAP Advisory
ADVISORIES Non-GAAP Advisory NON-GAAP MEASURES AND RATIOS Non-GAAP Measures This investor presentation contains the terms “adjusted funds flow from operations (“AFFO”)”, “adjusted working Capital expenditures or capital program capital”, “capital expenditures or capital program”, “free cash flow”, “
Slide 23: Non-GAAP Advisory
ADVISORIES Non-GAAP Advisory Non-GAAP Ratios Reinvestment Rate Management believes the reinvestment rate is a useful measure to analyze the ratio of funds generated by the Company and used for reinvestment and is calculated as total capital expenditures divided by AFFO. Post dividend free cash flow
Slide 24: Certain Oil and Gas Advisories
ADVISORIES Certain Oil and Gas Advisories TYPE CURVE INFORMATION AND WELL ECONOMICS Headwater has presented certain type curve information and well economics for certain development, exploration and waterflood wells in the Clearwater area. The type curve information and well economics presented are
Slide 25: Certain Oil and Gas Advisories
ADVISORIES Certain Oil and Gas Advisories BARRELS OF OIL EQUIVALENT The term "boe" or barrels of oil equivalent may be misleading, particularly if used in isolation. A boe conversion ratio of six thousand cubic feet of natural gas to one barrel of oil equivalent (6 Mcf: 1 bbl) is based on an energy
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