Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (August 2022)
24 slides from Headwater Exploration's investor presentation, August 2022
Slide 1: Headwater Exploration Inc. Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX August 2022
Slide 2: Capitalization, Guidance and Business Strategy
CAPITALIZATION, GUIDANCE AND BUSINESS STRATEGY Outlook Capitalization 2022 Previous 2022 Revised Headwater Exploration Inc. TSX HWX Guidance Guidance (1) Average Daily Production (2) Share Price (Aug 4, 2022) $/sh. $5.54 Annual Daily Production (boe/d) 13,000 13,000 Shares Outstanding (Basic) MM 229
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 7 prospects to be tested in Q4 2022 West Marten Hills CLWTR SS and CLGP B Development Utikima Lake 5.5 sections (100% WI) 3 prospective
Slide 4: Building a Sustainable Business: Growth to 22,500 boe/d
BUILDING A SUSTAINABLE BUSINESS “GROWTH TO 22,500 BOE/D WITH DEVELOPMENT ACREAGE” 5 Year Development Strategy Marten Hills + Marten Hills West Development 25,000 20,000 Production boepd 15,000 10,000 5,000 0 2022 2023 2024 2025 2026 2027 Production Atax Funds Capital Reinvestment Free Cash Adjusted
Slide 5: Building a Sustainable Business: Additional Exploration Potential
BUILDING A SUSTAINABLE BUSINESS “WHAT IS NEXT – ADDITIONAL EXPLORATION POTENTIAL” Exploration Strategy • Identify prospective acreage • Acquire incremental lands through Illustrative Additional Exploration Potential • Crown land sales 20,000 • Joint ventures • M&A 18,000 • Drill proof of concept wel
Slide 6: Clearwater Full Cycle Illustrative Exploration
CLEARWATER FULL CYCLE ILLUSTRATIVE EXPLORATION Exceptional Velocity of Cash Flow Illustrative Clearwater Exploration Development Capital Efficiency vs Production Growth Highlights 100,000 5,000 • Exceptional continued velocity of cash flow 90,000 4,500 • Successful exploration results in self 80,000
Slide 7: Marten Hills Area Summary
MARTEN HILLS AREA SUMMARY Results • 2022 capital allocation is approximately $110 million • Capital expansion accelerates secondary recovery • Producing well results have remained consistent with IP 30’s ranging from 300-400 bbls/d • 15,000 bbls/d oil processing facility fully commissioned that has
Slide 8: West Marten Hills Development Area
WEST MARTEN HILLS DEVELOPMENT AREA Results to Date • 16 Clearwater A and 3 Clearwater B wells drilled to date 11-05-076-02w5 CLWTR A Waterflood Pilot • Delineation/exploration wells drilled to date have identified: • ~225 CLWTR A drilling locations • ~70 CLGP B drilling locations • Area has grown fr
Slide 9: 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) • $30 million of land expenditures 5 prospective zones 7 locations planned in Q4 20
Slide 10: Greater Peavine - Utikima Lake
14 GREATER PEAVINE - UTIKIMA LAKE Exploration Plan Utikima • 5.5 sections of land • 3 prospective zones with 10-15 mmbbls of OOIP per section Spur 100/16-20-078- 09W5 • First drill planned in Q4 2022 as a follow IP: 150 bbls/d up to successful Spur well at 16-20 Cum: 8.1 MBbl 16° API Oil • Up to 5-1
Slide 11: Why Headwater
WHY HEADWATER Business Strategy Outcome to Date Build a sustainable business with no debt • June 30, 2022 adjusted working capital of $130.2 million • Year over year production growth of ~75% • EOR implementation to decrease sustaining capital Grow the sustainable business through • Success at Marte
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 Waterflood Pilots and 2022 Expansion N/2 35-074-25W4 Pattern 800 900 Green: Currently on flood Oil (bbl/d) Blue: To be on flood in H1 2023 Injection (bbl/d) GOR (scf/bbl) 800 700 700 600 600 500 GOR (scf/bbl) 500 Rate (bbl/d) 400 400 300 300 200 Added 03/09-35 200 and F3 in
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 438 bbls/day (1.6x VRRi Full Pattern ) • Gas-Oil-Ratio decreasing • Cumulative voidage replacement of 0.87x 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 119 bbls/day (1.1x VRRi) • Gas-Oil-Ratio continues to decrease • No premature water breakthrough • Oil rates continue to increase towards initial pea
Slide 17: 1/2 Cycle Type Well Economics
½ CYCLE TYPE WELL ECONOMICS Exceptional Velocity of Cash Flow After Tax 1 Year Recycle Ratio & NPV, 10% 3.0 2.5 $6.5 $5.6 2.0 $5.1 1 Year Recycle Ratio $4.6 $4.4 $3.9 1.5 $3.5 $3.2 $2.5 Highlights 1.0 $2.4 $1.9 $1.5 $1.3 $1.0 • Exceptional continued velocity of cash flow 0.5 $0.6 • At US$80 WTI well
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$96.30/bbl, WCS Cdn$101.70/bbl, AGT US$17.70/mmbtu, foreign exchange rate of US$/Cdn$ of 0.78, blending expense of WCS less $2.50, royalty rate of 20%, operating and transportation costs of $10.00/boe, financial
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 Marten Hills and Marten Hills West areas to a sustainable production base of 2
Slide 22: 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”, “recycle ratio”, "reinvestment rate”
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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