Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (February 2022)
24 slides from Headwater Exploration's investor presentation, February 2022
Slide 1: Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX February 2022
Slide 2: Capitalization and Guidance
CAPITALIZATION AND GUIDANCE Outlook Capitalization 2022 Revised 2022 Headwater Exploration Inc. TSX HWX Guidance Guidance st Average Daily Production (1) Share Price (January 31 , 2022) $/sh. $7.10 Annual Daily Production (boe/d) 12,500 12,500 Shares Outstanding (Basic) MM 217.8 Q4 Average Daily Pro
Slide 3: Core Area Development Outlook
CORE AREA DEVELOPMENT OUTLOOK 5 Year Core Area Development Strategy (1) @ $75/US/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 Adjusted Funds Capital Reinvestment Free Cash Flow Adjusted Working Distribut
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 Waterflood Pilots and 2022 Expansion 00/16-35-074-25W4/00 (15-34) (8 Legs) First Oil Date: 2019-12-17 Year-end 2022 – 35 injectors drilled Data Current to: 2022-01-23 ~35% of core under waterflood 900 10000 Total Fluid (bbl/d) by Q1 2023 Oil (bbl/d) Injection (bbl/d) 800 GO
Slide 6: Exploration Success
EXPLORATION SUCCESS 13-07-076-02W5 RR: 12/17/2021 IP 19 - 215 bbls/d, 19 API 11-05-076-02W5 RR: 12/08/2021 IP 31 - 275 bbls/d 21 API 15-29-075-01W5 RR: 01/16/2022 CLGP B 08-34-075-03W5 RR: 11/27/2021 IP 42 - 155 bbls/d 19 API Core Area 16-27-074-01W5 RR: 01/26/2022 Exploration Well Economics - US$75
Slide 7: Regional Clearwater
REGIONAL CLEARWATER West Marten Hills Nipisi CLGP B Regional Shoreface Trend See Slide Notes & Advisories 6
Slide 8: Exploration Success: Clearwater A West Marten Hills Delta Complex
EXPLORATION SUCCESS Clearwater A – West Marten Hills Delta Complex Clearwater A Discovery • 27.5 Identified Low Risk Sections • 27.5 Identified Medium Risk Sections • 14.0 Identified Drilling Extension Sections • Viscosity suggests strong waterflood potential • Prospective and Identified areas have
Slide 9: Exploration Success: CLGP B Lower Clearwater Shoreface
EXPLORATION SUCCESS CLGP B – Lower Clearwater Shoreface CLGP B Discovery • 15 Identified Low Risk Sections • 6 Identified Medium Risk Sections • Viscosity suggests strong waterflood potential • OOIP: 5-15 MMBbl/section Low Risk Medium Risk CLGP B 08-34-075-03W5 RR: 11/27/2021 IP 42 – 155 bbls/d 19 A
Slide 10: Exploration Upside
EXPLORATION UPSIDE Exploration Strategy • 350 sections of exploration Illustrative Exploration Upside lands • Exploration lands annual capital 20,000 allocation: • 5-10% for drilling 18,000 • 5-10% for new land 16,000 acquisitions 14,000 Exploitation Strategy Production boepd 12,000 • Multiple succe
Slide 11: Clearwater Regional Map
CLEARWATER REGIONAL MAP Strategy • Additional prospective lands will be added through crown land sales and other M&A • 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 S
Slide 12: Why Headwater
WHY HEADWATER Upside Opportunity Sustainability Resiliency ▪ Exploration upside with 350 ▪ Zero leverage maintained through ▪ EOR implementation reducing sections of exploration lands business cycle sustaining capital requirements ▪ Exploration success has validated ▪ Expected reinvestment rate of 6
Slide 13: Appendix
Headwater Exploration Inc. Appendix TSX:HWX
Slide 14: Management Alignment and ESG Leadership
MANAGEMENT ALIGNMENT AND ESG LEADERSHIP Board and Management Alignment ESG Leadership Insiders are Owners First ▪ 6% of basic shares 53% estimated reduction in Scope 1 emissions in 2021 ▪ 13% of fully diluted shares Short Term Incentive Plan ▪ Shareholder return 50% ▪ Financial and operational perfo
Slide 15: 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 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 ~ 434 bbls/day (1.4x 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 ~ 169 bbls/day (1.6x 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. Forecasted 2022 annual average production of 12,500 boe/d is comprised of 11,500 bbls/d of heavy oil and 6.2 mmcf/d of natural gas. Forecasted fourth quarter 2022 production of 15,000 boe/d is comprised of 13,770 bbls/d of heavy oil and 7.4 mmcf/d of natural gas. 2. 2021 exit
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-GAAP Advisory
ADVISORIES Non-GAAP Advisory NON-GAAP MEASURES AND RATIOS Free cash flow This investor presentation contains the terms “adjusted funds flow from operations (“AFFO”)”, “adjusted working capital”, “operating cash flow", "reinvestment rate”, “payout”, “distributable cash per fully diluted share” and “f
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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