Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (May 2023)
25 slides from Headwater Exploration's investor presentation, May 2023
Slide 1: Headwater Exploration Inc. Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX May 2023
Slide 2: Capitalization, Guidance and Business Strategy
CAPITALIZATION, GUIDANCE AND BUSINESS STRATEGY Outlook Capitalization 2023 Guidance (1) Headwater Exploration Inc. TSX HWX (2) Average Daily Production Share Price (May 11th, 2023) $/sh. $6.05 Annual Daily Production (boe/d) 18,000 Shares Outstanding (Basic) MM 235.6 Financial Summary ($millions) Di
Slide 3: Regional Clearwater
REGIONAL CLEARWATER Expanding Exploration Footprint – Total Land Holdings > 400 net sections Falher/Clearwater Fairway 113 sections (100% WI) 2 prospects tested Q1 2023 2 additional exploration tests in 2023 West Marten Hills CLWTR SS and CLGP B Development West Nipisi 38.5 sections (100% WI) 7 prod
Slide 4: Headwater Exploration Development Strategy
HEADWATER EXPLORATION DEVELOPMENT STRATEGY Total Clearwater OOIP of 3.2 Billion Barrels 775 Identified Clearwater Locations 575 25 772 237 353 465 1332 161 Marten Hills Core Marten Hills West West Nipisi Greater Peavine Marten Hills Core Marten Hills West West Nipisi Greater Peavine • Identified inv
Slide 5: Marten Hills Core Area
MARTEN HILLS CORE AREA 2024 2024 Current VRRi = 1.4 Q3 2023 Q1 2023 Program 2024 2024 Q4 2023 Previous VRRi = 0.8 Waterflood • 5 sections currently under waterflood providing support to >2,800 bbls/d Summary • 1.5 sections converted in Q1 of 2023 increasing • injection rates by 70% • Current product
Slide 6: Marten Hills West
MARTEN HILLS WEST Continued Exploration Success; Initiating Waterflood Marten Hills West Clearwater IP30 250 Well UWI Payout 1 (bbls/d) Average HWX MHW Clearwater A well to date achieves 100/05-27-075-02W5 396 4x payout in 41 months and 7x payout over its life Payout 2 Payout 3 102/06-27-075-02W5 36
Slide 7: West Nipisi Expansion
WEST NIPISI EXPANSION Further Development and New Exploration IP30 IP60 Well (UWI) West Nipisi Development (bbl/d) (bbl/d) 100/12-08-078-09W5 299 285 • 38.5 sections of land 100/13-08-078-09W5 289 282 100/05-08-078-09W5 276 261 • 2 producing zones and 2 100/13-16-078-09W5 201 140 additional explorat
Slide 8: Greater Peavine
GREATER PEAVINE Peavine and Seal Peavine / Seal Initial Results • Operators in the area have tested commercial hydrocarbon rates in 4 distinct zones across the fairway Peavine • 13 sections of land • Two FLHR E discovery wells are 13-06-083-15W5 consistent at 75-100 bbls/d IP50: 70 bbl/d 13 API Seal
Slide 9: Why Headwater
WHY HEADWATER Business Strategy Outcome Build a sustainable business of combined growth • 40% production / share growth in 2023 with a 72% re- and free cash flow investment rate generating $80 million of free cash flow • Quarterly cash dividend of $0.10/share Implement a return of capital strategy i
Slide 10: Appendix
Headwater Exploration Inc. Appendix TSX:HWX
Slide 11: 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 15000 MNP pipeline 10000 5000 0 Nova Scotia Nov-08 Nov-10 Nov-12 Jul-13 Nov-14 Nov-16 Nov-18
Slide 12: Waterflood Implementation
WATERFLOOD IMPLEMENTATION Waterflood Pilots and 2023 Expansion 35-074-25W4 & N/2 26-074-25W4 Pattern Green: Flooded prior to 2023 2,000 Oil (bbl/d) 1,500 Injection (bbl/d) Current VRRi = 1.1 GOR (scf/bbl) VRRc 1,800 VRRi 1,350 1,600 1,200 Q1 2023 1,400 1,050 GOR (scf/bbl) & VRR / 1,000 VRR = 1 1,200
Slide 13: Waterflood Implementation
WATERFLOOD IMPLEMENTATION 2023 Expansion with Optimized Injector Design Section 36-074-25W4 Pattern Green: Flooded prior to 2023 1,600 Oil (bbl/d) 2,400 Injection (bbl/d) GOR (scf/bbl) VRRc 1,400 VRRi 2,100 1,200 Current VRRi = 1.7 1,800 Q1 2023 GOR (scf/bbl) & VRR / 1,000 1,000 1,500 Rate (bbl/d) 8
Slide 14: Waterflood Implementation
WATERFLOOD IMPLEMENTATION West Marten Hills Pilots – Utilizing Marten Hills Core Learnings 02/13-07-076-02W5/00 Pattern 00/16-22-075-02W5/00 Pattern 300 3,000 400 1,200 Oil (bbl/d) Oil (bbl/d) Injection (bbl/d) Injection (bbl/d) GOR (scf/bbl) GOR (scf/bbl) VRRc VRRc VRRi 350 VRRi 1,050 250 2,500 300
Slide 15: Other Clearwater Waterflood Pilots
OTHER CLEARWATER WATERFLOOD PILOTS Tamarack Valley Section 19-076-07W5 • 8 Leg producer wells • 3 single leg drilled injectors • Lateral flood • Oil rate increasing with low GOR (~2X Rs) • Exceptional response with no water breakthrough Rate vs Cumulative Oil Rate vs Time Operator: Tamarack Valley E
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 up waterflood • Gas-Oil-Ratio decreasing • Continued strong response with no water breakthrough Operator: Spur Petrl Ltd 103/14-32-073-24
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 up waterflood • Continued strong response. Operator: Spur Petrl Ltd 103/13-20-074-25W4/00 First Prod: Sep-18 Operator: Spur Petrl Ltd 103/13-20-074-25W4/00 First Prod: Sep-18
Slide 18: Experienced Team – Management and Directors
EXPERIENCED TEAM – MANAGEMENT AND DIRECTORS Headwater Exploration Inc. 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 a
Slide 19: Slide Notes
SLIDE NOTES Slide 1 1. The assumptions used in the 2023 guidance include: WTI US$75.21/bbl, WCS Cdn$77.67/bbl, AGT US$7.61/mmbtu, foreign exchange rate of US$/Cdn$ of 0.74, blending expense of WCS less $2.00, royalty rate of 17%, operating and transportation costs of $11.50/boe, financial derivative
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: Three-Year Development Strategy Advisory
ADVISORIES Three-Year Development Strategy Advisory Advisory Relating to Development Strategy (Slide 3) The Company has presented herein a three-year development strategy. The development strategy is based on a number of assumptions as presented in such slides including, without limitation: the requ
Slide 22: Non-GAAP Advisory
ADVISORIES Non-GAAP Advisory NON-GAAP MEASURES AND RATIOS Non-GAAP Measures This investor presentation contains the terms “adjusted funds flow from operations (“AFFO”)”, “adjusted working Capital expenditures or capital program capital”, “capital expenditures or capital program”, “free cash flow”, “
Slide 23: Non-GAAP Advisory
ADVISORIES Non-GAAP Advisory Non-GAAP Ratios Reinvestment Rate Management believes the reinvestment rate is a useful measure to analyze the ratio of funds generated by the Company and used for reinvestment and is calculated as total capital expenditures divided by AFFO. Post dividend free cash flow
Slide 24: Certain Oil and Gas Advisories
ADVISORIES Certain Oil and Gas Advisories TYPE CURVE INFORMATION AND WELL ECONOMICS Headwater has presented certain type curve information and well economics for certain development, exploration and waterflood wells in the Clearwater area. The type curve information and well economics presented are
Slide 25: 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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