Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (January 2022)
24 slides from Headwater Exploration's investor presentation, January 2022
Slide 1: Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX January 2022
Slide 2: Capitalization and Guidance
CAPITALIZATION AND GUIDANCE Outlook Capitalization 2022 Headwater Exploration Inc. TSX HWX Guidance th Average Daily Production (1) Share Price (January 4 , 2022) $/sh. $5.51 Annual Daily Production (boe/d) 12,500 Shares Outstanding (Basic) MM 217.7 Q4 Average Daily Production(boe/d) 15,000 Dilutive
Slide 3: Core Area Development Outlook
CORE AREA DEVELOPMENT OUTLOOK 5 Year Core Area Development Strategy (1) @ US$75/bbl WTI 16,000 14,000 12,000 Production boepd 10,000 8,000 6,000 4,000 2,000 0 2021 2022 2023 2024 2025 2026 Core Area Development Production Atax Funds Capital Reinvestment Free Cash Flow Adjusted Working Distributable
Slide 4: Core Area Summary
CORE AREA SUMMARY Core Area Asset Duration • Conventional reservoir with low primary base declines of ~25%/yr • Production built to 14,500 boe/d and maintained with minimal reinvestment • Implementation of secondary recovery Core Area • Decrease corporate decline from 25% to 10-12% • Increase RLI(1)
Slide 5: Waterflood Implementation
WATERFLOOD IMPLEMENTATION Year-end 2022 – 34 injectors 2022 Injector Wells drilled Year-end 2021 – 7 injectors drilled ~36% of core under waterflood ~11% of core under waterflood 102/16-35-074-25W4 Pilot by Q1 2023 by Q1 2022 16-35-074-25W4 Pilot • Pilot performance continues to be excellent 00/16-3
Slide 6: Waterflood Implementation
WATERFLOOD IMPLEMENTATION 02-35-074-25W4 Pilot 02-35-074-25W4 Pattern: • First injection: October 14, 2021 • Five leg F3 injector (04/02-35-074-25W4) • Four leg F3 injector (05/02-35-074-25W4) 02-35-074-25W4 Pilot • Bottom-up waterflood N 07/16-26-074-25W4/00 (16-27) (6 Legs) 03/02-35-074-25W4/03 (1
Slide 7: First Exploration Success
FIRST EXPLORATION SUCCESS 13-07-076-02W5 RR: 12/17/2021 IP 30 by the end of January 11-05-076-02W5 RR: 12/08/2021 IP 30 by the end of January 16-14 – IP 30 of 67 bbl/d With improved reservoir identified for follow-up 11-32 – IP 30 127 bbl/d, 16.5° API oil CLGP B 08-34-075-03W5 RR: 11/27/2021 Core Ar
Slide 8: Exploration Area Detail
EXPLORATION AREA 2 DETAIL 13-07-076-02W5 RR: 12/17/2021 11-05-076-02W5 RR: 12/08/2021 CLGP B 08-34-075-03W5 RR: 11/27/2021 See Advisories 7
Slide 9: Regional Clearwater
REGIONAL CLEARWATER See Slide Notes & Advisories 8
Slide 10: Exploration Upside
EXPLORATION UPSIDE Exploration Strategy Illustrative Exploration Upside • 285 sections of exploration 16,000 lands • Annual capital allocation to 14,000 exploration of 5%-10% of adjusted funds flow from operations 12,000 • Continue to selectively add additional lands through Production boepd 10,000
Slide 11: Management Alignment and ESG Leadership
MANAGEMENT ALIGNMENT AND ESG LEADERSHIP Board and Management Alignment ESG Leadership Insiders are Owners First ▪ 6% of basic shares 53% estimated reduction in Scope 1 emissions in 2021 ▪ 13% of fully diluted shares Short Term Incentive Plan ▪ Shareholder return 50% ▪ Financial and operational perfo
Slide 12: Clearwater Consolidation Potential
CLEARWATER CONSOLIDATION POTENTIAL Consolidation • The team is experienced and proficient with M&A and continues to be patient • If profitable consolidation is not possible, significant capital will be returned to shareholders See Slide Notes 11
Slide 13: Why Headwater
WHY HEADWATER Alignment Returns Resiliency ▪ Insiders are owners first, owning ▪ Headwater’s business plan shows ▪ Zero leverage maintained with expected 6% of basic shares and 13% of fully the ability to return 100% of ability to pay back 100% of enterprise diluted shares enterprise value in 6 year
Slide 14: Appendix
Headwater Exploration Inc. Appendix TSX:HWX
Slide 15: 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 Production period 25,000 decline since intermittent New Brunswick 20,000 production implemented is MNP pipeline 4.2% per ye
Slide 16: Enhanced Oil Recovery (EOR) Analogy
ENHANCED OIL RECOVERY (“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 po
Slide 17: 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 waterflood • Injecting at ~ 427 bbls/day (1.4x VRRi Full Pattern ) • Gas-Oil-Ratio decreasing • No premature water breakthrough • Cumulat
Slide 18: Other Clearwater Waterflood Pilots
OTHER CLEARWATER WATERFLOOD PILOTS Spur Marten Hills Section 20-074-25W4 • 6 leg producer (F1), 6 leg injector (F2) • Bottom waterflood • Injecting at ~ 149 bbls/day (1.5x VRRi) • Gas-Oil-Ratio continues to decrease • No premature water breakthrough • Oil rates continue to increase towards initial p
Slide 19: 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 20: Slide Notes
SLIDE NOTES Slide 1 1. 2022 annual average production of 12,500 boe/d is comprised of 11,500 bbls/d of heavy oil and 6.2 mmcf/d of natural gas. Fourth quarter 2022 production of 15,000 boe/d is comprised of 13,770 bbls/d of heavy oil and 7.4 mmcf/d of natural gas. 2. 2021 and 2022 exit adjusted work
Slide 21: 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 22: Five-Year Base Strategy Advisory
ADVISORIES Five-Year Base Strategy Advisory Advisory Relating to Five-Year Base Strategy (Slide 2) The Company has presented herein a five-year base strategy that provides for developing the Company's core area to a sustainable production base of 14,500 BOE/d. The five-year base strategy is based on
Slide 23: 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 “enterprise value”, “reinvestment rate”, “payout”, “EBITDA”, “distributable cash”, “operating cash flow”, “funds flow from operations/funds flow (“FFO”), “adjusted funds fl
Slide 24: 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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