Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (May 2022)
24 slides from Headwater Exploration's investor presentation, May 2022
Slide 1: Headwater Exploration Inc. Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX May 2022
Slide 2: Capitalization, Guidance and Business Strategy
CAPITALIZATION, GUIDANCE AND BUSINESS STRATEGY Outlook Capitalization 2022 Previous 2022 Revised Headwater Exploration Inc. TSX HWX Guidance (1) Guidance (2) Average Daily Production (3) Share Price (May 11, 2022) $/sh. $6.48 Annual Daily Production (boe/d) 12,500 13,000 Shares Outstanding (Basic) M
Slide 3: Regional Clearwater
REGIONAL CLEARWATER Expanding Exploration Footprint – Total Land Holdings > 400 net sections Falher/Clearwater Fairway 98 sections (100% WI) 5 prospective zones 7 prospects to be tested in Q4 2022 West Marten Hills CLWTR SS and CLGP B Development Utikima Lake 5.5 sections (100% WI) 3 prospective zon
Slide 4: Building a Sustainable Business: Growth to 22,500 boe/d
BUILDING A SUSTAINABLE BUSINESS “GROWTH TO 22,500 BOE/D WITH DEVELOPMENT ACREAGE” 5 Year Development Strategy Marten Hills + Marten Hills West Development 25,000 20,000 Production boepd 15,000 10,000 5,000 0 2022 2023 2024 2025 2026 2027 Production Adjusted Capital Reinvestment Free Cash Adjusted Wo
Slide 5: Building a Sustainable Business: Additional Exploration Potential
BUILDING A SUSTAINABLE BUSINESS “WHAT IS NEXT – ADDITIONAL EXPLORATION POTENTIAL” Exploration Strategy • Identify prospective acreage • Acquire incremental lands through Illustrative Additional Exploration Potential • Crown land sales 20,000 • Joint ventures • M&A 18,000 • Drill proof of concept wel
Slide 6: Clearwater Full Cycle Illustrative Exploration
CLEARWATER FULL CYCLE ILLUSTRATIVE EXPLORATION Exceptional Velocity of Cash Flow Illustrative Clearwater Exploration Development Capital Efficiency vs Production Growth Highlights 100,000 5,000 • Exceptional continued velocity of cash flow 90,000 4,500 • Successful exploration results in self 80,000
Slide 7: Marten Hills Area Summary
MARTEN HILLS AREA SUMMARY Results • 2022 capital allocation increased from approximately $90 million to $110 million • Capital expansion accelerates secondary recovery • Producing well results have remained consistent with IP 30’s ranging from 300-400 bbls/d • Current area production of 10,500-11,00
Slide 8: West Marten Hills Development Area
WEST MARTEN HILLS DEVELOPMENT AREA Results to Date • 13 Clearwater A and 2 Clearwater B wells drilled to date • Delineation/exploration wells drilled to date have identified: • ~225 drilling locations in the CLWTR A • ~70 drilling locations in the CLGP B • Area has grown from ~70 bbls/d in September
Slide 9: Greater Peavine
GREATER PEAVINE Expanding The Exploration Footprint And Setting The Stage For Material Growth Greater Peavine Exploration Plan Falher/Clearwater Fairway 2022 Capital Allocation - $50 million 98 sections (100% WI) • $30 million of land expenditures 5 prospective zones 7 locations planned in Q4 2022 •
Slide 10: Greater Peavine - Utikima Lake
14 GREATER PEAVINE - UTIKIMA LAKE Exploration Plan Utikima • 5.5 sections of land • 3 prospective zones with 10-15 mmbbls of OOIP per section Spur 100/16-20-078-09W5 IP: 150 bbls/d • First drill planned in Q4 2022 as a follow 16° API Oil up to successful Spur well at 16-20 2 laterals only • Up to 5-
Slide 11: Why Headwater
WHY HEADWATER Business Strategy Outcome to Date • Current positive working capital of ~$80 million Build a sustainable business with no debt • Year over year growth of 160% • EOR implementation to decrease sustaining capital Grow the sustainable business through • Success at Marten Hills West exploi
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 Nova Scotia 0 HWX Realized Pricing and Winter 2021/2022 Strip
Slide 14: Waterflood Implementation
WATERFLOOD IMPLEMENTATION Waterflood Pilots and 2022 Expansion ~40 injectors (55% of defined pool) under waterflood by Q1 2023 07/16-26-074-25W4/00 (16-27) (6 Legs) First Oil Date: 2021-09-21 Data Current to: 2022-05-01 600 10000 Total Fluid (bbl/d) Oil (bbl/d) Injection (bbl/d) GOR (scf/bbl) BS&W (
Slide 15: 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 433 bbls/day (1.5x VRRi Full Pattern ) • Gas-Oil-Ratio decreasing • No premature water breakthrough • Approxima
Slide 16: 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 142 bbls/day (1.4x VRRi) • Gas-Oil-Ratio continues to decrease • No premature water breakthrough • Oil rates continue to increase towards initial pea
Slide 17: 1/2 Cycle Type Well Economics
½ CYCLE TYPE WELL ECONOMICS Exceptional Velocity of Cash Flow 1 Year Recycle Ratio & NPV, 10% 3.5 $9.6 3.0 $8.6 $7.7 2.5 $7.4 $6.7 $5.9 1 Year Recycle Ratio $5.7 2.0 $5.1 $4.2 1.5 $3.7 Highlights $3.1 1.0 $2.5 $2.5 $2.0 • Exceptional continued velocity of cash flow $1.4 • At US$80 WTI wells payout 1
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. Previous guidance disclosed as of March 10, 2022. 2. The assumptions used in the revised 2022 guidance include: WTI US$97.50/bbl, WCS Cdn$107.30/bbl, AGT US$15.90/mmbtu, foreign exchange rate of US$/Cdn$ of 0.78, blending expense of WCS less $2.50, royalty rate of 20%, operati
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 Development Strategy Advisory
ADVISORIES Five-Year Development Strategy Advisory Advisory Relating to Five-Year Development Strategy (Slide 3) The Company has presented herein a five-year development strategy that provides for developing the Company’s Marten Hills and Marten Hills West areas to a sustainable production base of 2
Slide 22: Non-GAAP Advisory
ADVISORIES Non-GAAP Advisory NON-GAAP MEASURES AND RATIOS This investor presentation contains the terms “adjusted funds flow from operations (“AFFO”)”, “adjusted working capital”, “capital expenditures or capital program”, “free cash flow”, “operating cash flow”, “recycle ratio”, "reinvestment rate”
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
Slide 24: 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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