Headwater Exploration Inc. · TSX:HWX
Headwater Exploration — Investor Presentation (March 2022)
27 slides from Headwater Exploration's investor presentation, March 2022
Slide 1: Corporate Presentation
Headwater Exploration Inc. CORPORATE PRESENTATION TSX:HWX March 2022
Slide 2: Capitalization, Guidance and Business Strategy
CAPITALIZATION, GUIDANCE AND BUSINESS STRATEGY Outlook Capitalization 2022 Original Revised 2022 Headwater Exploration Inc. TSX HWX Guidance Guidance Average Daily Production (1) Share Price (March 9th, 2022) $/sh. $6.94 Annual Daily Production (boe/d) 12,500 12,500 Shares Outstanding (Basic) MM 223
Slide 3: Core Area Development Outlook
CORE AREA DEVELOPMENT OUTLOOK 5 Year Core Area Development Strategy (1) @ US $88/$80/$75 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 Capital Reinvestment Free Cash Adjusted Working Distributable AFFO Pr
Slide 4: Core Area Summary
CORE AREA SUMMARY Core Area Asset Duration • Production built to 14,500 boe/d and maintained with minimal reinvestment • Implementation of secondary recovery • Decrease corporate decline to 10-12% • Increase RLI(1) to 12-16 years Core Area • Expect 100% of lands under waterflood by year-end 2024 Fac
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 – 39 injectors drilled 900 Data Current to: 2022-02-27 10000 ~50% of core under waterflood Total Fluid (bbl/d) by Q1 2023 Oil (bbl/d) 800 Injection (bbl/d) GO
Slide 6: Headwater - Year End 2021 Reserves Summary
HEADWATER - YEAR END 2021 RESERVES SUMMARY 2021 Year End Reserves Reserve Category Year Over Year Heavy Oil (1) Gas Total Recycle Change (Mbbl) (MMcf) (Mboe) Ratio (%) Proved Producing 6,645 19,039 9,818 96% 2.4 Total Proved 11,992 22,027 15,663 65% 2.2 Total Proved Plus Probable 18,871 29,517 23,79
Slide 7: Exploration Success
EXPLORATION SUCCESS 13-07-076-02W5 RR: 12/17/2021 IP 60: 215 bbls/d, 19° API 11-05-076-02W5 RR: 12/08/2021 IP 60: 225 bbls/d 21° API 15-29-075-01W5 RR: 01/16/2022 IP24: 82 bbls/d, 21° API CLGP B 08-34-075-03W5 RR: 11/27/2021 IP 60 - 149 bbls/d 19° API Core Area 100/09-34-075-03W5 RR: 02/22/2022 Curr
Slide 8: Regional Clearwater
REGIONAL CLEARWATER West Marten Hills CLGP B Regional Shoreface Trend Nipisi See Slide Notes & Advisories 7
Slide 9: West Marten Hills Clearwater A Delta Complex
WEST MARTEN HILLS CLEARWATER A DELTA COMPLEX West Marten Hills Delta Complex: • Delineation/exploration drilling has proven hydrocarbon charge of 17-21° API oil along a ~25km long, 6km wide fairway • Expected variability encountered with IP rates of 70-270 bbls/d at 100% economic success • Further d
Slide 10: Exploration Success
EXPLORATION SUCCESS Clearwater A – West Marten Hills Delta Complex Clearwater A Discovery • 27.5 Identified Low Risk Sections • 36 Identified Medium Risk Sections • Viscosity suggests strong waterflood potential 15-29-075-01W5 RR: 01/16/2022 • Prospective and Identified areas have OOIP IP24: 82 bbls
Slide 11: Clearwater B Shoreface Trend
CLEARWATER B SHOREFACE TREND Spur 100/15-19-076-03W5 CLGP B Discovery Spud: 01/03/2022 • 15 Identified Low Risk Sections • 6 Identified Medium Risk Sections • Viscosity suggests strong waterflood potential and possible extension of pool boundaries • OOIP: 5-15 MMBbl/section Spur 100/15-19-076-03W5 S
Slide 12: Exploration Upside
EXPLORATION UPSIDE Exploration Strategy • 350 sections of exploration Illustrative Exploration Upside lands 20,000 • Exploration drilling to account for 5-10% of AFFO 18,000 16,000 Exploitation Strategy 14,000 • Multiple successful discoveries Production boepd 12,000 executed in 2021 de-risking 43 s
Slide 13: 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 14: 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 5
Slide 15: Appendix
Headwater Exploration Inc. Appendix TSX:HWX
Slide 16: Management Alignment and ESG Leadership
MANAGEMENT ALIGNMENT AND ESG LEADERSHIP Board and Management Alignment ESG Leadership Insiders are Owners First Scope 1 Emissions Intensity Comparison To Industry Peer Group (kgCO2e/boe) Emissions Intensity (kg CO2e/boe) ▪ 6% of basic shares 40.0 ▪ 13% of fully diluted shares 35.0 30.0 25.0 Short Te
Slide 17: 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 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 431 bbls/day (1.4x VRRi Full Pattern ) • Gas-Oil-Ratio decreasing • No premature water breakthrough • Approxima
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 155 bbls/day (1.5x VRRi) • Gas-Oil-Ratio continues to decrease • No premature water breakthrough • Oil rates continue to increase towards initial pea
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. 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. Capital ex
Slide 22: Slide Notes
SLIDE NOTES Slide 16 1. Proved plus probable producing (P+P) reserves life index (“RLI”) is calculated by dividing the P+P producing reserves by the average annual production for 2021. 2. As at December 31, 2021. 3. Headwater has made the following assumptions: 2022E AGT (1) US$/mmbtu $ 14.20 FX US$
Slide 23: 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 24: 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 25: 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”, “recycle ratio”, "reinvestment rate”, “payout” and “distrib
Slide 26: 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 27: 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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