Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (May 2021)
23 slides from Headwater Exploration's investor presentation, May 2021
Slide 1: Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX May 2021
Slide 2: Capitalization and Guidance
CAPITALIZATION AND GUIDANCE 2021 Revised Guidance Summary Capitalization Average Daily Production Headwater Exploration Inc. TSX HWX Annual 2021 Daily Production (boe/d) 7,000 - 7,250 Share Price (May 11, 2021) $/sh. $ 4.51 Q4 2021 Average Daily Production(boe/d) 9,000 - 9,500 Shares Outstanding (Ba
Slide 3: HWX Core Area Q1 Drilling Results
HWX CORE AREA Q1 DRILLING RESULTS Drilling Strategies Offer Insight to Optimization • Multiple drilling strategies were employed throughout the quarter testing capital efficiency and cycle time • Mud systems, drill bit design, weight on bit, and steering techniques were all evaluated • Data analytic
Slide 4: HWX Core Area – Next Steps
HWX CORE AREA – NEXT STEPS Q3/Q4 2021 ▪ Placed rig mats on 3 pads in Q1, allowing earlier post break-up access for drilling rigs ▪ 3 rigs expected to spud early July ▪ 1 rig will be moved to exploration locations in mid August ▪ Gas plant to be commissioned and operational by early July, significant
Slide 5: HWX Exploration Next Steps
HWX EXPLORATION NEXT STEPS Ready to Q3 exploration tests Ready to license follow up exploration tests Aug/Sep Drills Setup wells @ 20-30 bbls/d per lateral • Multiple additional exploration prospects have been identified throughout our land base • Three to five of these additional exploration prospe
Slide 6: Two Waterflood Strategies Being Evaluated
TWO WATERFLOOD STRATEGIES BEING EVALUATED Bottom Waterflood Center Waterflood Clearwater Core Area EOR Development Clearwater Core Area EOR Development F1 F1 F2 F2 F3 F3 4/6/8 leg producing multi-laterals 6/8 leg producing multi-lateral Injection row 4 leg multi-laterals Injection row (4 leg / dual
Slide 7: Headwater Marten Hills 16-35-74-25W4 Water Injection
CAPITALIZATION AND GUIDANCE HEADWATER MARTEN HILLS 16-35-74-25W4 WATER INJECTION 16-35-074-25W4 Pattern: ▪ Initial results are exceptionally encouraging with • First injection: April 15, 2021 the 4-lateral injector on vacuum at 600 bbls/d. Current injection rates are greater than 2x • Four leg F3 in
Slide 8: Clearwater Bottom Waterflood Projects
CLEARWATER BOTTOM WATERFLOOD PROJECTS Spur Marten Hills Section 32-073-24W4 Spur Marten Hills Section 20-074-25W4 • 6 leg producer (F2) • 6 leg producer • 5 leg injector (F3) • 6 leg injector • Bottom waterflood • Bottom waterflood • Injecting at ~ 375 bbls/day • Injecting at ~ 150 bbls/day • Instan
Slide 9: Clearwater Regional Exploration/Competitor Update
CLEARWATER SI REGIONAL EXPLORATION/COMPETITOR UPDATE See Slide Notes and Advisories 8
Slide 10: Headwater Execution Strategy
HEADWATER EXECUTION STRATEGY 2022 + ▪ Continue core acreage development and EOR implementation to get to sustainable production base of 13,000-14,000 boe/d ▪ Low decline EOR supported asset provides long term free cash flow generation ▪ Polymer pilot contemplated in 2023 ▪ Evaluate additional multip
Slide 11: Why Headwater
WHY HEADWATER Relevance Returns Resiliency ▪ Headwater is the only way for ▪ Headwater’s business plan shows ▪ Headwater provides investors with investors to gain pure play access significant free cash flow, debt an attractive alternative that will to the Clearwater, a unique high adjusted funds flo
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 McCulley Daily Production mcfd 30,000 Average year over year 25,000 decline since intermittent New Brunswick 20,000 production implemented is MNP pipeline 4.2% per year Production mcfd
Slide 14: Nipisi EOR Projects
NIPISI EOR PROJECTS Spur Nipisi Section 31-076-06W5 Spur Nipisi Section 31-76-06W5 • Dual leg producer • 4 leg producer • Single leg injector • Single leg injector • Lateral flood • Lateral flood • Injecting at ~ 55 bbls/day (<1 VRRi) • Injecting water at ~ 120 bbls/day (<1 VRRi) • Gas-Oil-Ratio hol
Slide 15: EOR Analogy: Pelican Lake versus Marten Hills
EOR ANALOGY Pelican LakeSummary versus Marten Hills • Pelican Lake analyzed as Marten Hills Clearwater analog • HWX analysis of various Pelican Lake production areas indicate: • Estimated primary recovery of 3 - 6% • Estimated waterflood recovery of 12 - 15% • Estimated polymer flood recovery of 22
Slide 16: Clearwater Regional Map
CLEARWATER REGIONAL MAP Clearwater Competitor Map (1) Clearwater Net Pay Map (2) Headwater lands are located in the heart of the Marten Hills fairway with net pay >20m See Slide Notes and Advisories 15
Slide 17: 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 18: CVE Transaction Overview
CVE TRANSACTION OVERVIEW Unique Mutually Beneficial Transaction With Cenovus Asset Attributes ▪ 270 net sections of Clearwater rights at 100% working interest ▪ 2020 average December production of 2,900 bbls/d located in the most prolific part of the Clearwater play at Marten Hills ▪ Proved plus pro
Slide 19: Slide Notes
SLIDE NOTES Slide 1 1. Basic shares outstanding consists of 195.6 million common shares of Headwater (“Headwater Shares”) as at May 11, 2021. Fully diluted shares outstanding assumes 100% exercising of the Cenovus purchase warrants (15 million outstanding at a strike price $2.00/share), 100% exercis
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: Forward Looking Statements Advisory
ADVISORIES Forward Looking Statements Advisory Additional information on these and other factors that could affect Headwater's operations and financial are included in its Annual Information Form for the year ended December 31, 2020 and other reports on file with Canadian securities regulatory autho
Slide 22: Non-IFRS Measures and Certain Oil and Gas Advisories
ADVISORIES Non-IFRS Measures and Certain Oil and Gas Advisories NON-IFRS MEASURES This investor presentation contains the terms "debt adjusted funds flow growth", “adjusted funds flow from operations (“AFFO”)“, “free cash flow”, “adjusted working capital "and “operating cash flow” which do not have
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
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