Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Corridor Resources — Investor Presentation (November 2017)
25 slides from Headwater Exploration's investor presentation, November 2017
Slide 1: Corporate Presentation November 2017
Corporate Presentation November 2017 All forward looking statements in this Corporate Presentation are qualified in their entirety by the "Forward Looking Information" on slide 25. 1
Slide 2: Why Invest in Corridor
Why Invest in Corridor • Excellent balance sheet with a working capital balance of approximately $50.0 million • Long life reserves with minimal future development capital and predictable, low decline natural gas production (~10% annually) • Superior field operating cash flow netback per boe due to
Slide 3: Board of Directors
Board of Directors • J. Douglas Foster, LL.B., • Steve Moran Chairman President and CEO, Corridor Resources Formerly President and CEO of Bellamont President, Fostco Holdings (private Exploration Ltd. investments) Former Partner, Bennett Jones LLP • Jim McKee, CPA, CA Independent Businessm
Slide 4: Corporate Snapshot
Corporate Snapshot • Stock Symbol – TSX CDH • Shares Outstanding (2017/09/30) Basic 88,655,299 Diluted (Avg. exercise price $0.78) 92,053,467 • Tax Pools (2017/09/30) CEE $94.0 MM CDE $55.2 MM Other $23.3 MM Total $172.5 MM • Forecast from April 1, 2017 to March 31, 2018 Cash Flow From O
Slide 5: Land and Reserves
Land and Reserves • Undeveloped Land (net acres) 446,000 New Brunswick 195,000 Old Harry - Quebec & NL 251,000 • December 31, 2016 Reserves* MM boe PV@BT10% Proved Developed Producing 2.67 $43.3 million Total Proved 2.75 $45.8 million Total Proved plus Probable 3.45 $54.1 million • Reserve
Slide 6: Net Asset Value Per Basic Share
Net Asset Value Per Basic Share Reserves valued @ BT10% effective December 31, 2016* Proved Developed Producing $0.49 Proved Undeveloped $0.03 Probable Developed Producing $0.09 Total Reserve Value $0.61 Working Capital (2017/09/30) $0.56 Total Net Asset value per basic share $1.17 80% of Co
Slide 7: McCully Field Production Optimization Strategy
McCully Field Production Optimization Strategy • To take advantage of the premium winter pricing at AGT, over the past two years Corridor has strategically shut-in production during the summer/fall months. The resulting build-up in reservoir pressure yielded flush production (see next slide) during
Slide 8: Production Optimization Strategy
Production Optimization Strategy Corridor Net Gas Production Gas Rate Original 2015 Forecast Flush production periods Higher 10 production rates preserved MMSCF/D Strategic shut-in periods 1 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18 Dec-19 Dec-20 Note
Slide 9: Winter 2017/2018 Hedging Program
Winter 2017/2018 Hedging Program Average Volume Period (mmbtu/d) Price ($US/mmbtu) Dec. 2017 – Mar. 2018 2,500 $7.400 Dec. 2017 – Feb. 2018 2,500 $7.826 These hedges represent approximately 48% of Corridor’s estimated production from December 1, 2017 to March 31, 2018 and secure $4.8 million out of
Slide 10: Market Guidance
Market Guidance (April 1, 2017 to March 31, 2018) Press Release (Oct. 11, 2017) AGT average natural gas price $4.24US/mmbtu USD/CAD exchange rate 1.24 USD/CAD Average natural gas price realized $9.50/mscf Average daily natural gas production* 2.9 mmscfpd Field operating netback $ 7.1 million Cash fl
Slide 11: Q1 2018 Netback Forecast
Q1 2018 Netback Forecast Winter Pricing Premiums offer Superior Netbacks Three months ended March 31 2018 2017 thousands of dollars except $/boe (2) Forecast Natural gas sales $ 7,245 $ 4,166 Realized financial derivatives gain - 1,094 Other revenues 257 301 Royalties (224) (92) Transportation expen
Slide 12: Understanding Corridor's Premium Natural Gas Market
Understanding Corridor’s Premium Natural Gas Market • Corridor’s production connected to Maritimes and Northeast Pipeline (MN&P) • Corridor's gas is priced at Algonquin City-gates (“AGT”) • There is typically a shortage of natural gas supply capacity for the winter months • No new major pipeline exp
Slide 13: Shifting Maritime Province's Natural Gas Market
Shifting Maritime Province’s Natural Gas Market • The Maritimes’ primary gas supply has historically been sourced from Sable Island and, since 2013, Deep Panuke • Sable Island nearing end of life, decommissioning is expected to begin in 2018 and take 2 years to complete* • Deep Panuke experiencing p
Slide 14: AGT Futures Pricing Strong for the Foreseeable Future
AGT Futures Pricing Strong for the Foreseeable Future Nymex Strip Pricing (USD$/mmbtu) • AGT futures pricing* is October 20, 2017 expected to remain Nymex Henry Hub AGT Differential AGT Yearly Average Price robust to 2023 $10 • Significant premiums $8 over Nymex in the winter months Gas Price (US$/m
Slide 15: Two High Impact Prospects
Two High Impact Prospects Focused on de-risking two high-impact prospects with tremendous upside potential while demonstrating prudent financial management New Old Harry Brunswick • One of the • Frederick Brook largest Shale Old Harry Canadian East • Unconventional 251,000 Coast gas prospect Net Acr
Slide 16: Old Harry Offshore Potential
Old Harry Offshore Potential • One of the largest undrilled geological structures in Eastern Canada (43,000 acres/67 sq miles) under simple four-way closure • Several direct hydrocarbon indicators identified: satellite seepage slicks, frequency anomalies, amplitude anomalies, and AVO anomalies • Ove
Slide 17: Controlled Source Electro-Magnetic (CSEM) Survey
Controlled Source Electro- Magnetic (CSEM) Survey • Corridor is purchasing a multi-client CSEM survey over the Newfoundland side of Old Harry. Data acquisition is expected to be completed by mid- November 2017 • Recording instruments are placed on the sea bottom and an electro-magnetic (EM) source i
Slide 18: Old Harry Go Forward Plan
Old Harry Go Forward Plan • If the CSEM results are positive, Corridor intends to increase efforts to secure a joint venture partner to drill an exploratory well (as of April 2017, estimated at ~$US45 MM) • Corridor’s Exploration License term in effect until January 2021 • Strategic Environmental As
Slide 19: New Brunswick Assets
New Brunswick Assets • Approximately 195,000 net acres • McCully natural gas production: Hiram Brook formation produces from conventional tight sandstone reservoirs 54.4 BCF produced to date up to y/e 2016 • Current productive capacity up to ~10 mmcf/d net (flush volumes) • Frederick Brook has s
Slide 20: Corridor's New Brunswick Facilities at McCully
Corridor’s New Brunswick Facilities at McCully • Natural Gas Facilities (100% WI) include: Gas Plant - processing capacity of 35 mmcf/d 50 km of 8” transmission line to Maritimes and Northeast Pipeline NB PEI 15 kilometers of gathering system NS 32 producing wells from 11 well pads 20
Slide 21: Frederick Brook Shale
Frederick Brook Shale • 13 wells drilled into the Frederick Brook shale to date • Frederick Brook shale mapped over wide area – in excess of 20 kilometers laterally • Depth to top Frederick Brook ranges from 1,600 to 4,000 m • Potential for vertical or horizontal development 21
Slide 22: Frederick Brook Shale Production History
Frederick Brook Shale Production History • F-58 production at ~180 mcf/d for F-58 Shale Production past 9 years (1.65 Bcf 2P EUR, GLJ) 1000 Monthly Production Rate (mcf/d) • Very flat production curve with ~180 mcf/d annual decline <2% annually • 2014 wells have proved productivity and reserves • Al
Slide 23: Frederick Brook Shale Development Potential Next Steps – Pilot Project
Frederick Brook Shale Development Potential Next Steps – Pilot Project • Pursue a termination of the hydraulic fracturing moratorium • Secure joint venture capital funding to undertake a pilot program as follows: Drill 5 vertical evaluation wells Recomplete 3 existing wells Complete with high
Slide 24: Strategic Priorities
Strategic Priorities • Maximize cash flow and value of McCully assets by implementing optimization strategies unique to the Northeast U.S. and Maritimes gas markets • Continue to advance government and stakeholder relations, social responsibility and regulatory agendas in our plays • Seek opportunit
Slide 25: Forward Looking Information
Forward Looking Information • This presentation contains certain forward-looking statements and forward-looking information (collectively referred to herein as "forward-looking statements") within the meaning of Canadian securities laws. All statements other than statements of historical fact are fo
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