Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (November 2022)
24 slides from Headwater Exploration's investor presentation, November 2022
Slide 1: Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX November 2022
Slide 2: Capitalization, Guidance and Business Strategy
CAPITALIZATION, GUIDANCE AND BUSINESS STRATEGY Outlook Capitalization 2022 Revised 2023 Guidance (1) Guidance (1) Headwater Exploration Inc. TSX HWX Average Daily Production (2) Share Price (Nov 2, 2022) $/sh. $7.21 Annual Daily Production (boe/d) 13,000 18,000 Shares Outstanding (Basic) MM 229.9 Fi
Slide 3: Regional Clearwater
REGIONAL CLEARWATER Expanding Exploration Footprint – Total Land Holdings > 400 net sections Falher/Clearwater Fairway 110.5 sections (100% WI) 5 prospects to be tested in Q4 2022 West Marten Hills CLWTR SS and CLGP B Development Utikima Lake 7.0 sections (100% WI) 3 prospective zones Marten Hills D
Slide 4: Headwater Exploration 5 Year Development Strategy
HEADWATER EXPLORATION 5 YEAR DEVELOPMENT STRATEGY Headwater Exploration 5 Year Development Strategy 30,000 25,000 20,000 BOE/d 15,000 10,000 5,000 0 2022 2023 2024 2025 2026 2027 Free Cash Dividend Post Adjusted Production Adjusted Capital Reinvestment Post Dividend Production Flow Payment @ Dividen
Slide 5: Exploration and Extension Success
EXPLORATION AND EXTENSION SUCCESS Exploration Success Marten Hills West 600+ MMbbl OOIP Highlights Q1 2023 West Marten Hills Waterflood pilot • Successful Marten Hills West southern extension test at 16-22-075-02W5 with IP30 100/16-27-075-02W5 RR: 10/29/2022 rate of 330 bbls/d 102/16-14-75-26W4 • Su
Slide 6: Marten Hills Core Area
MARTEN HILLS CORE AREA Summary 2024 2023 2024 • Current production of ~10,000 bbls/d • Cumulative recovery to date of 6.5 million bbls representing less than 1.5% of OOIP 2023 3.5 sections • Asset duration being enhanced through currently under waterflood implementation of waterflood • Reduces decli
Slide 7: Greater Peavine
GREATER PEAVINE Expanding The Exploration Footprint Greater Peavine Exploration Plan Falher/Clearwater Fairway Shadow 110.75 sections (100% WI) • 61 sections of land 5 prospective zones 4 locations planned in Q4 2022 • 3 prospective zones with 10-15 mmbbls of OOIP per section • 3 prospects to be tes
Slide 8: Greater Peavine: Shadow
GREATER PEAVINE Shadow – Potential Peavine look alike? Shadow Exploration Shadow • 61 sections of land 1-3-75-19 - spud Nov 4th FLHR D • 3 prospective zones with 10-15 mmbbls of OOIP per section • ~750m TVD supports better oil quality and viscosity • Strat well and coring will be completed 8-14-74-1
Slide 9: Greater Peavine: Peavine and Seal
GREATER PEAVINE Peavine and Seal Peavine / Seal Exploration Plan Baytex 12-34 Peavine IP: 138 bbls/d Cum: 26 MBbl • 12.75 sections of land • Analog to successful Baytex Peavine wells 13-6-83-15W5 spud Jan 15th 2023 • First test to be drilled in Q4 2022 with results expected in February 2023 5-21-82-
Slide 10: Utikima Lake
14 UTIKIMA LAKE Exploration Plan Utikima Spur has recently licensed • 7.0 sections of land 7 CLWTR target wells Spur 100/16-20-078-09W5 IP: 150 bbl/d • 3 prospective zones with 10-15 mmbbls Cum: 8.1 MBbl of OOIP per section 16° API Oil 2 laterals only • First drill planned in Q1 2023 as a follow All
Slide 11: Why Headwater
WHY HEADWATER Business Strategy Outcome Build a sustainable business of combined growth • Expected growth to 25,000 boe/d by 2027 while paying and free cash flow out $500 million in dividends and generating $550 - $800 million of incremental free cash flow Implement a return of capital strategy at t
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 HWX Waterflood Pilots and 2022 Expansion 35-074-25W4 & N/2 26-074-25W4 Pattern 2,500 1,250 Oil (bbl/d) GOR Collapsing Injection (bbl/d) GOR (scf/bbl) 2,000 1,000 1,500 750 GOR (scf/bbl) Rate (bbl/d) 1,000 500 Oil Decline Flattening 500 250 0 0 Jan-20 May-20 Sep-20 Jan-21 Ma
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 405 bbls/day (1.35x VRRi Full Pattern ) • Gas-Oil-Ratio decreasing • Cumulative voidage replacement of 0.9x for
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 188 bbls/day (1.7x VRRi) • Gas-Oil-Ratio trending lower • No premature water breakthrough • Oil rates continue to increase towards initial peak rates
Slide 17: Other Clearwater Waterflood Pilots
OTHER CLEARWATER WATERFLOOD PILOTS Tamarack Valley Nipisi Section 19-076-07W5 • 6 leg producer • 3 single leg injectors • Highly encouraging results ~3 m • Oil bank resulting in well performance achieving rates greater than initial production rates • Pilot has similar oil quality and geology to HWX
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. The assumptions used in the 2022 revised guidance include: WTI US$94.90/bbl, WCS Cdn$99.90/bbl, AGT US$15.10/mmbtu, foreign exchange rate of US$/Cdn$ of 0.77, blending expense of WCS less $2.00, royalty rate of 20%, operating and transportation costs of $10.00/boe, financial d
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 areas to a sustainable production base of 25,0000 boe/d. The five-year develop
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: 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 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
Headwater Exploration — Investor Presentation (November 2022) on 6ix