Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (September 2022)
26 slides from Headwater Exploration's investor presentation, September 2022
Slide 1: Headwater Exploration Inc. Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX September 2022
Slide 2: Capitalization, Guidance and Business Strategy
CAPITALIZATION, GUIDANCE AND BUSINESS STRATEGY Outlook Capitalization 2022 Previous 2022 August 4th Headwater Exploration Inc. TSX HWX Guidance Revised Guidance (1) Average Daily Production (2) Share Price (Sept.9, 2022) $/sh. $5.78 Annual Daily Production (boe/d) 13,000 13,000 Shares Outstanding (B
Slide 3: Regional Clearwater
REGIONAL CLEARWATER Expanding Exploration Footprint – Total Land Holdings > 400 net sections Falher/Clearwater Fairway 104.75 sections (100% WI) 5 prospective zones 6 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
Slide 4: 5 Year Development Strategy
FREE CASHFLOW GENERATION OFFERING GROWTH / DISTRIBUTION OPTIONALITY 5 Year Development Strategy 25,000 20,000 Production boepd 15,000 10,000 5,000 0 2022 2023 2024 2025 2026 2027 Cumulative Production Atax Funds Capital Reinvestment Free Cash Adjusted Working Distributable Flow Program (1) Rate (2)
Slide 5: Additional Exploration Potential
ADDITIONAL EXPLORATION POTENTIAL Exploration Strategy Illustrative Additional Regional Exploration Potential • Identify prospective acreage 20,000 • Acquire incremental lands through • Crown land sales 18,000 • Joint ventures • M&A 16,000 • Drill proof of concept wells in years 14,000 1-2 • Execute
Slide 6: Marten Hills Area Summary
MARTEN HILLS AREA SUMMARY Summary • 2022 capital allocation is approximately $110 million • Current production of ~10,000 bbls/d • Producing well results have remained consistent with IP 30’s ranging from 300-400 bbls/d 100/12-08-075-24W5 longest Clearwater drill in • 15,000 bbls/d oil processing fa
Slide 7: Waterflood Implementation
WATERFLOOD IMPLEMENTATION On Stream Waterflood IDA Waterflood 4,000 1400 Oil (bbl/d) Injection (bbl/d) GOR (scf/bbl) 3,500 1200 3,000 1000 2,500 800 GOR (scf/bbl) Rate (bbl/d) 2,000 Oil decline mitigated and oil rate now 600 1,500 increasing 400 1,000 200 500 0 0 Jan-20 May-20 Sep-20 Jan-21 May-21 S
Slide 8: West Marten Hills Development Area
WEST MARTEN HILLS DEVELOPMENT AREA Results 12-04-076-03W5 • 18 Clearwater A and 5 Clearwater B wells CLWR B Q4 step out drilled to date 11-05-076-02W5 • 10 development and 2 step out wells CLWTR A Waterflood Pilot scheduled for the remainder of 2022 14-27-075-02W5 CLWTR A Q4 step out • Results conti
Slide 9: Analogous Waterflood Design
ANALOGOUS WATERFLOOD DESIGN “Tuning Fork” Design Operator: Tamarack Valley Enrg Ltd 102/13-19-076-07W5/00 First Prod: Dec-21 8 Legs / 13,641m Total Lateral Length Last Prod: Jul-22 900 1000 Oil (bbl/d) Good Injectivity Injection (bbl/d) BS&W (%) 800 GOR (scf/bbl) Results 700 • Highly encouraging res
Slide 10: 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 104.75 sections (100% WI) 5 prospective zones • $30 million of land expenditures 7 locations planned in Q4 20
Slide 11: Greater Peavine: Shadow
GREATER PEAVINE Shadow – Potential Peavine look alike? Shadow Exploration Shadow • 61 sections of land FLHR D • 3 prospective zones with 10-15 mmbbls of OOIP per section • ~750m TVD depth supports better oil quality and viscosity • Strat well and coring will be completed early Q4 2022 FLHR F • Q4 dr
Slide 12: Greater Peavine: Peavine and Seal
GREATER PEAVINE Peavine and Seal Peavine / Seal Exploration Plan Peavine Baytex 12-34 IP: 138 bbl/d Cum: 22 MBbl • 12.75 sections of land • Direct analog to successful Baytex Peavine wells • First test to be drilled in Q4 2022 with anticipated spud in early December with results expected in February
Slide 13: Utikima Lake
14 UTIKIMA LAKE Exploration Plan Utikima • 7.0 sections of land Spur 100/16-20-078-09W5 • 3 prospective zones with 10-15 mmbbls IP: 150 bbl/d of OOIP per section Cum: 8.1 MBbl 16° API Oil • First drill planned in Q4 2022 as a follow 2 laterals only up to successful Spur well at 16-20 All weather roa
Slide 14: Why Headwater
WHY HEADWATER Business Strategy Outcome Build a sustainable business of combined growth Potential for significant distributable cash per share and free cashflow • 2023 - $0.63/share • 2024 - $0.50 - $0.60/share • 2025 and beyond - > $1.00/share Grow the sustainable business through • Success at Mart
Slide 15: Appendix
Headwater Exploration Inc. Appendix TSX:HWX
Slide 16: 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 17: Waterflood Implementation
WATERFLOOD IMPLEMENTATION HWX Waterflood Pilots and 2022 Expansion 35-074-25W4 & N/2 26-074-25W4 Pattern Green: Currently on flood 2,500 1200 Oil (bbl/d) Blue: To be on flood by Q1 2023 GOR Collapsing Injection (bbl/d) GOR (scf/bbl) 1000 2,000 800 1,500 GOR (scf/bbl) Rate (bbl/d) 600 1,000 400 Oil D
Slide 18: 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 440 bbls/day (1.4x VRRi Full Pattern ) • Gas-Oil-Ratio decreasing • Cumulative voidage replacement of 0.88x for
Slide 19: 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 152 bbls/day (1.5x VRRi) • Gas-Oil-Ratio trend continues to decrease • No premature water breakthrough • Oil rates continue to increase towards initi
Slide 20: 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 21: Slide Notes
SLIDE NOTES Slide 1 1. 2022 revised guidance due to updated WTI and WCS pricing. The assumptions used in the 2022 revised guidance include: WTI US$94.00/bbl, WCS Cdn$99.00/bbl, AGT US$17.00/mmbtu, foreign exchange rate of US$/Cdn$ of 0.78, blending expense of WCS less $2.50, royalty rate of 20%, ope
Slide 22: 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 23: 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 22,500 BOE/d. The five-year developm
Slide 24: 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”, "reinvestment rate” and “distributab
Slide 25: 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 26: 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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