Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (November 2021)
23 slides from Headwater Exploration's investor presentation, November 2021
Slide 1: Headwater Exploration Inc. Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX November 2021
Slide 2: Capitalization and Guidance
CAPITALIZATION AND GUIDANCE Outlook Capitalization 2021 Headwater Exploration Inc. TSX HWX Revised 2022 th Guidance Guidance Share Price (November 9 , 2021) $/sh. $4.95 (1) Average Daily Production Shares Outstanding (Basic) MM 202.5 Annual Daily Production (boe/d) 7,400 12,500 Q4 Average Daily Prod
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 Year-end 2021 – 10 injectors drilled drilled 2022 Injector Wells ~11% of core under waterflood ~36% of core under waterflood by Q1 2022 by Q1 2023 16-35-074-25W4 Pilot • Pilot performance continues to be excellent 900 00/16-35-074-25W4/00 (15-34
Slide 6: First Exploration Success
FIRST EXPLORATION SUCCESS 2 - Q4 2021 delineation wells 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 13-32 – Similar inflow, recovering load fluid 1 - Q4 2021 CLGP B exploration well Core Area Exploration Well Economics IP 30 bbls/d
Slide 7: Exploration Area Detail
EXPLORATION AREA 2 DETAIL Q4 2021 CLWTR SS locations Q4 2021 CLGP B location See Advisories 6
Slide 8: Regional Clearwater
REGIONAL CLEARWATER See Slide Notes & Advisories 7
Slide 9: 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 10: Management Alignment and ESG Leadership
MANAGEMENT ALIGNMENT AND ESG LEADERSHIP Board and Management Alignment ESG Leadership Insiders are Owners First ▪ 9% of basic shares 53% estimated reduction in Scope 1 emissions in 2021 ▪ 15% of fully diluted shares Short Term Incentive Plan ▪ Shareholder return 50% ▪ Financial and operational perfo
Slide 11: 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 10
Slide 12: Why Headwater
WHY HEADWATER Alignment Returns Resiliency ▪ Insiders are owners first, owning ▪ Headwater’s business plan shows ▪ Zero leverage maintained with expected 9% of basic shares and 15% of fully the ability to return 100% of ability to pay back 100% of enterprise diluted shares enterprise value in 6 year
Slide 13: Appendix
Headwater Exploration Inc. Appendix TSX:HWX
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 Production period 25,000 decline since intermittent New Brunswick 20,000 production implemented is MNP pipeline 4.2% per ye
Slide 15: 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 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 waterflood • Injecting at ~ 439 bbls/day (1.5x VRRi Full Pattern ) • Gas-Oil-Ratio decreasing • No premature water breakthrough • Cumulat
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) • Bottom waterflood • Injecting at ~ 158 bbls/day (1.8x VRRi) • Gas-Oil-Ratio continues to decrease • No premature water breakthrough • Oil rates continue to increase towards initial p
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. 2021 revised annual average production of 7,400 boe/d is comprised of 6,690 bbls/d of heavy oil and 4.2 mmcf/d of natural gas. Fourth quarter 2021 production of 10,400 boe/d is comprised of 9,410 bbls/d of heavy oil and 6.0 mmcf/d of natural gas. 2022 annual average production
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: 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 22: 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 23: 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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