Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Corridor Resources — Investor Presentation (August 2017)
24 slides from Headwater Exploration's investor presentation, August 2017
Slide 1: Corporate Presentation August 2017
Corporate Presentation August 2017 All forward looking statements in this Corporate Presentation are qualified in their entirety by the "Forward Looking Information" on slide 24. 1
Slide 2: Why Invest in Corridor
Why Invest in Corridor • Excellent balance sheet with an estimated working capital balance in excess of $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
Slide 3: Board of Directors
Board of Directors • J. Douglas Foster, LL.B., • Steve Moran Chairman Ø President and CEO, Corridor Resources Ø Formerly President and CEO of Bellamont Ø President, Fostco Holdings (private Exploration Ltd. investments) Ø Former Partner, Bennett Jones LLP • Jim McKee, CPA, CA Ø Independent Businessm
Slide 4: Corporate Snapshot
Corporate Snapshot • Stock Symbol – TSX CDH • Shares Outstanding (2017/03/31) Ø Basic 88,655,299 Ø Diluted (Avg. exercise price $0.78) 92,053,467 • Q1 - 2017 Cash Flow From Operations* $3.7 MM • Q1 - 2017 Field Operating Netback ($/boe) $39.49 • Tax Pools (2017/03/31) Ø CEE $93.9 MM Ø CDE $61.7 MM Ø
Slide 5: Land and Reserves
Land and Reserves • Undeveloped Land (net acres) 446,000 Ø New Brunswick 195,000 Ø Old Harry - Quebec & NL 251,000 • December 31, 2016 Reserves* MM boe PV@BT10% Ø Proved Developed Producing 2.67 $43.3 million Ø Total Proved 2.75 $45.8 million Ø 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* Ø Proved Developed Producing $0.49 Ø Proved Undeveloped $0.03 Ø Probable Developed Producing $0.09 Ø Total Reserve Value $0.61 Working Capital (@ 2017/03/31) $0.37 Total Net Asset value per basic share $0.98 80% of
Slide 7: Q1 2017 Highlights
Q1 2017 Highlights • Achieved an industry top decile cash flow from operations of $34.20/BOE, a 26% increase over Q1 2016 • Increased Corridor’s cash flow from operations to $3.683 million in Q1 2017 from $3.353 million in Q1 2016, despite 24% lower average natural gas prices at AGT and 12% lower pr
Slide 8: Q1 2017 Netback Analysis
Q1 2017 Netback Analysis Superior Netbacks Three months ended March 31 thousands of dollars except $/boe (2) 2017 2016 Natural gas sales $ 4,166 $ 6,314 Realized financial derivatives gain 1,094 - Other revenues 301 181 Royalties (92) (137) Transportation expense (428) (1,355) Production expense (78
Slide 9: 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 10: Shifting Maritime Province's Natural Gas Market
Shifting Maritime Province’s Natural Gas Market • The Maritime’s 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 pr
Slide 11: AGT Futures Pricing Strong for the Foreseeable Future
AGT Futures Pricing Strong for the Foreseeable Future • AGT futures pricing* is Nymex Strip Pricing (USD$/mmbtu) May 1, 2017 expected to remain robust to 2023 Nymex Henry Hub AGT Differential AGT Yearly Average Price $10 • Significant premiums over Nymex in the $8 winter months Gas Price (US$/mmbtu)
Slide 12: 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 during winter months (se
Slide 13: 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 14: Two High Impact Prospects
Two High Impact Prospects Focused on de-risking three high-impact prospects with tremendous upside potential while demonstrating prudent financial management New Brunswick Old Harry • Frederick • One of the Brook Shale largest • Unconvention Old Harry Canadian al gas 251,000 East Coast prospect Net
Slide 15: 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 16: Controlled Source Electro-Magnetic (CSEM) Survey
Controlled Source Electro- Magnetic (CSEM) Survey • Corridor is planning on purchasing a multi-client CSEM survey over the Newfoundland side of Old Harry. Data acquisition is planned for fall 2017, pending regulatory approvals and survey ship availability. • Survey time 7-10 days, plus mob/demob tim
Slide 17: Old Harry Go Forward Plan
Old Harry Go Forward Plan • If the CSEM results are positive, Corridor intends increase efforts to secure a joint venture partner to drill an exploratory well (as of April 2017, estimated at ~$US45 MM) • Corridor successfully secured a re-issuance of lease EL-1105, commencing in January 2017 for a 4
Slide 18: New Brunswick Assets
New Brunswick Assets • Approximately 195,000 net acres • McCully natural gas production: Ø Hiram Brook formation produces from conventional tight sandstone reservoirs Ø 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 19: Corridor's New Brunswick Facilities at McCully
Corridor’s New Brunswick Facilities at McCully • Natural Gas Facilities (100% WI) include: Ø Gas Plant- processing capacity of 35 mmcf/d Ø 50 km of 8” transmission line to Maritimes and Northeast Pipeline NB PEI Ø 15 kilometers of gathering NS system Ø 32 producing wells from 11 well pads 19
Slide 20: 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 20
Slide 21: 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 ~180 mcf/d Monthly Production Rate (mcf/d) • Very flat production curve with annual decline <2% annually • 2014 wells have proved productivity and reserves • Al
Slide 22: Frederick Brook Shale Development Potential Next Steps
Frederick Brook Shale Development Potential Next Steps • Work towards removal of the hydraulic fracturing moratorium • Drill 5 vertical evaluations wells • Complete with high volume water fracture stimulations • Identify “sweet spots” and drill a second round of horizontal wells • Establish producti
Slide 23: 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 24: 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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