Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (June 2021)
22 slides from Headwater Exploration's investor presentation, June 2021
Slide 1: Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX June 2021
Slide 2: Capitalization and Guidance
CAPITALIZATION AND GUIDANCE 2021 Outlook Capitalization Guidance Current Strip (1) Headwater Exploration Inc. TSX HWX Average Daily Production Share Price (June 18, 2021) $/sh. $4.17 Annual 2021 Daily Production (boe/d) 7,000 - 7,250 7,000 - 7,250 Shares Outstanding (Basic) (2) MM 202.2 Q4 2021 Aver
Slide 3: HWX Current Operations Update
HWX CURRENT OPERATIONS UPDATE Q1 Learnings ▪ Optimal # of laterals to control losses and per lateral performance ▪ Drilling fluid systems influence performance in some areas Q2 Operations ▪ Rig 1 – TD the first well on June 18th ▪ Rig 1 - spudded second well on June 19th ▪ Rig 2 - spudded third well
Slide 4: Clearwater Regional Map
CLEARWATER REGIONAL MAP HWX roo oR ORI RIS RIG ORM ORD OR ORM OR ORD ORE RT an R10 Rowe 10 ped we : ~ Regional Clearwater Oi Current Production: ~42,186 peel ter a $03 Production by Operator: | Spur: 18,490 bbl/d Tes Deltastream: 10,268 bbl/d : HWX: 6,572 bbi/d Tee CNQ: 2,573 bbi/d Tamarack: 2,880 b
Slide 5: HWX Exploration Next Steps
HWX EXPLORATION NEXT STEPS Ready to Q3 exploration tests Ready to license follow up exploration tests Aug/Sep Drills Setup wells @ 20-30 bbls/d per lateral • Multiple additional exploration prospects have been identified throughout our land base • Three to five of these additional exploration prospe
Slide 6: Two Waterflood Strategies Being Evaluated
TWO WATERFLOOD STRATEGIES BEING EVALUATED Bottom Waterflood Center Waterflood Clearwater Core Area EOR Development Clearwater Core Area EOR Development F1 F1 F2 F2 F3 F3 4/6/8 leg producing multi-laterals 6/8 leg producing multi-lateral Injection row 4 leg multi-laterals Injection row (4 leg / dual
Slide 7: Headwater Marten Hills 16-35-74-25W4 Water Injection
CAPITALIZATION AND GUIDANCE HEADWATER MARTEN HILLS 16-35-74-25W4 WATER INJECTION Decreasing GOR Flat water cut Increasing Oil Rate 16-35-074-25W4 Pattern: • First injection: April 15, 2021 • Four leg F3 injector (02/16-35-074-25W4) • Eight leg F2 producer (00/16-35-074-25W4) • Bottom-up waterflood •
Slide 8: Clearwater Bottom Waterflood Projects
CLEARWATER BOTTOM WATERFLOOD PROJECTS Spur Marten Hills Section 32-073-24W4 (Grandpa Burger) • 4 leg producer (F1), 6 leg producer (F2), 5 leg injector (F3) • Bottom waterflood • Injecting at ~ 375 bbls/day (3x VRRi ) • Gas-Oil-Ratio decreasing • No premature water breakthrough • Cumulative voidage
Slide 9: Clearwater Bottom Waterflood Projects
CLEARWATER BOTTOM WATERFLOOD PROJECTS Spur Marten Hills Section 20-074-25W4 • 6 leg producer • 6 leg injector • Bottom waterflood • Injecting at ~ 150 bbls/day (2x VRRi) • Gas-Oil-Ratio continues to decrease • No premature water breakthrough • Oil rates continue to increase towards initial peak rate
Slide 10: Headwater Execution Strategy
HEADWATER EXECUTION STRATEGY 2022 + Production & Free Cash Flow Profile ▪ Continue core acreage 16,000 480,000 development and EOR implementation to get to sustainable production base of 13,000-14,000 boe/d 14,000 420,000 ▪ Low decline EOR supported asset provides long term free 12,000 360,000 cash
Slide 11: Why Headwater
WHY HEADWATER Relevance Returns Resiliency ▪ Headwater is the only way for ▪ Headwater’s business plan shows ▪ Headwater provides investors with investors to gain pure play access significant free cash flow, debt an attractive alternative that will to the Clearwater, a unique high adjusted funds flo
Slide 12: Appendix
Headwater Exploration Inc. Appendix TSX:HWX
Slide 13: HWX Core Area Q1 Drilling Results
HWX CORE AREA Q1 DRILLING RESULTS Drilling Strategies Offer Insight to Optimization • Multiple drilling strategies were employed throughout the quarter testing capital efficiency and cycle time • Mud systems, drill bit design, weight on bit, and steering techniques were all evaluated • Data analytic
Slide 14: McCully Producing Asset
MCCULLY PRODUCING ASSET DRY GAS WITH 100% OWNED INFRASTRUCTURE AND LIMITED LIABILITY McCully Asset Daily Production McCulley Daily Production mcfd 30,000 Average year over year 25,000 decline since intermittent New Brunswick 20,000 production implemented is MNP pipeline 4.2% per year Production mcfd
Slide 15: EOR Analogy
EOR ANALOGY Pelican LakeSummary versus Marten Hills • Pelican Lake analyzed as Marten Hills Clearwater analogy • HWX analysis of various Pelican Lake production areas indicate: • Estimated primary recovery of 3 - 6% • Estimated waterflood recovery of 12 - 15% • Estimated polymer flood recovery of 22
Slide 16: Clearwater Regional Map
CLEARWATER REGIONAL MAP Clearwater Competitor Map (1) Clearwater Net Pay Map (2) Headwater lands are located in the heart of the Marten Hills fairway with net pay >20m See Slide Notes and Advisories 15
Slide 17: 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 18: Slide Notes
SLIDE NOTES Slide 1 1. Current Strip commodity pricing as of June 18, 2021. The AGT price is the average for the winter producing months in the McCully field which include January – March and November – December. 2. Basic shares outstanding consists of 202.2 million common shares of Headwater (“Head
Slide 19: 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 20: Forward Looking Statements Advisory
ADVISORIES Forward Looking Statements Advisory Additional information on these and other factors that could affect Headwater's operations and financial are included in its Annual Information Form for the year ended December 31, 2020 and other reports on file with Canadian securities regulatory autho
Slide 21: Non-IFRS Measures and Certain Oil and Gas Advisories
ADVISORIES Non-IFRS Measures and Certain Oil and Gas Advisories NON-IFRS MEASURES This investor presentation contains the terms "debt adjusted funds flow growth", “adjusted funds flow from operations (“AFFO”)“, “free cash flow”, “adjusted working capital "and “operating cash flow” which do not have
Slide 22: Certain Oil and Gas Advisories
ADVISORIES Certain Oil and Gas Advisories ESTIMATED ULTIMATE RECOVERY (EUR) This investor presentation contains a metric commonly used in the oil and natural gas industry, "estimated ultimate recovery" or "EUR". The term EUR is the estimated quantity petroleum that is potentially recoverable or has
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