HEADWATER EXPLORATION INC. ANNOUNCES THIRD QUARTER OPERATING AND FINANCIAL RESULTS, DECLARATION OF Q4 DIVIDEND AND SUCCESSION PLAN
Canada NewsWire
CALGARY, AB, Nov. 9, 2023
CALGARY, AB, Nov. 9, 2023 /CNW/ - Headwater Exploration Inc. (the "Company" or "Headwater") (TSX: HWX) is pleased to announce its operating and financial results for the three and nine months ended September 30, 2023. Selected financial and operational information is outlined below and should be read in conjunction with the unaudited condensed interim financial statements and the related management's discussion and analysis ("MD&A"). These filings will be available at www.sedarplus.ca and the Company's website at www.headwaterexp.com.
Financial and Operating Highlights
Three months Percent Nine months Percent
endedSeptember 30, endedSeptember 30, Change
Change
2023 2022 2023 2022
Financial (thousands of
dollars except share data)
Sales, net of blending (1)
(4) 144,003 94,949 52 351,133 327,073 7
Adjusted funds flow from
operations (2) 80,887 58,441 38 206,279 207,899 (1)
Per share - basic 0.34 0.25 36 0.88 0.92 (4)
-
diluted 0.34 0.25 36 0.87 0.89 (2)
Cash flows provided by
operating activities 85,568 72,060 19 212,626 217,477 (2)
Per share - basic 0.36 0.31 16 0.90 0.96 (6)
-
diluted 0.36 0.30 20 0.90 0.93 (3)
Net income 49,677 31,545 57 110,603 122,320 (10)
Per share - basic 0.21 0.14 50 0.47 0.54 (13)
-
diluted 0.21 0.13 62 0.47 0.53 (11)
Capital expenditures (1) 70,208 71,001 (1) 203,796 183,818 11
Adjusted working capital (2) 35,921 117,967 (70)
Shareholders' equity 587,380 525,006 12
Dividends declared 23,638 - 100 70,763 - 100
Per share 0.10 - 100 0.30 - 100
Weighted average shares
(thousands)
Basic 236,191 229,909 3 235,305 225,794 4
Diluted 239,167 236,658 1 237,683 232,984 2
Shares outstanding, end of
period (thousands)
Basic 236,384 229,911 3
Diluted (5) 241,175 241,593 -
Operating (6:1 boe
conversion)
Average daily production
Heavy crude oil (bbls/d) 16,902 10,842 56 15,775 10,695 47
Natural gas (mmcf/d) 6.1 4.3 42 9.1 7.2 26
Natural gas liquids (bbl/d) 103 55 87 100 43 133
Barrels of oil equivalent
(9) (boe/d) 18,027 11,612 55 17,398 11,929 46
Average daily sales (6)
(boe/d) 17,862 11,680 53 17,331 11,925 45
Netbacks ($/boe) (3) (7)
Operating
Sales, net of blending
(4) 87.63 88.36 (1) 74.22 100.46 (26)
Royalties (16.26) (21.93) (26) (13.06) (20.21) (35)
Transportation (5.32) (3.94) 35 (5.43) (4.31) 26
Production expenses (7.43) (5.95) 25 (7.11) (5.79) 23
Operating netback (3) 58.62 56.54 4 48.62 70.15 (31)
Realized gains (losses)
on financial
derivatives 0.18 - 100 1.66 (1.29) (229)
Operating netback, including
financial derivatives
(3) 58.80 56.54 4 50.28 68.86 (27)
General and
administrative expense (1.52) (1.46) 4 (1.46) (1.49) (2)
Interest income and
other (8) 0.85 1.18 (28) 0.98 0.58 69
Current tax expense (8.91) (1.87) 376 (6.20) (4.09) 52
Adjusted funds flow netback
(3) 49.22 54.39 (10) 43.60 63.86 (32)
(1) Non-GAAP measure. Refer to "Non-GAAP and Other Financial
Measures" within this press release.
(2) Capital management measure. Refer to "Non-GAAP and
Other Financial Measures" within this press release.
(3) Non-GAAP ratio. Refer to "Non-GAAP and Other Financial
Measures" within this press release.
(4) Heavy oil sales are netted with blending expense to
compare the realized price to benchmark pricing while
transportation expense is shown separately. In the
interim financial statements blending expense is recorded
within blending and transportation expense.
(5) In-the-money dilutive instruments as at September
30, 2023 includes 2.8 million stock options with a
weighted average exercise price of $3.67 and 2.0 million
performance share units ("PSUs"). The number of PSUs
has been adjusted for dividends. Restricted share
units have been excluded as the Company intends to
cash settle these awards.
(6) Includes sales of unblended heavy crude oil, natural
gas and natural gas liquids. The Company's heavy crude
oil sales volumes and production volumes differ due
to changes in inventory.
(7) Netbacks are calculated using average sales volumes.
For the three months ended September 30, 2023, sales
volumes comprised of 16,738 bbs/d of heavy oil, 6.1
mmcf/d of natural gas and 103 bbls/d of natural gas
liquids (2022- 10,910 bbls/d, 4.3 mmcf/d and 55 bbls/d).
For the nine months ended September 30, 2023, sales
volumes comprised of 15,709 bbls/d of heavy oil, 9.1
mmcf/d of natural gas and 100 bbls/d of natural gas
liquids (2022- 10,690 bbls/d, 7.2 mmcf/d and 43 bbls/d).
(8) Excludes unrealized foreign exchange gains/losses,
accretion on decommissioning liabilities, interest
on lease liability and interest on repayable contribution.
(9) See '"Barrels of Oil Equivalent."
HIGHLIGHTS FOR THREE MONTHS ENDED SEPTEMBER 30, 2023
-- Achieved record production averaging 18,027 boe/d (consisting of 16,902
bbls/d heavy oil, 6.1 mmcf/d natural gas and 103 bbls/d natural gas
liquids), representing an increase of 55% from the third quarter of 2022.
-- Realized record adjusted funds flow from operations (1) of $80.9 million
($0.34 per share basic) and cash flows from operating activities of $85.6
million ($0.36 per share basic).
-- Achieved an operating netback, including financial derivatives (2) of
$58.80/boe and an adjusted funds flow netback (2) of $49.22/boe.
-- Achieved record net income of $49.7 million ($0.21 per share basic)
equating to $30.23/boe.
-- Executed a $70.2 million capital expenditure (3) program focusing on
development in Marten Hills West drilling a total of 26 crude oil wells
in the area at a 100% success rate.
-- Returned $0.10/share to shareholders. Since announcing the Company's
inaugural dividend in November 2022, Headwater has returned a total of
$0.40/share to shareholders.
-- As at September 30, 2023, Headwater had adjusted working capital (1) of
$35.9 million, working capital of $43.5 million and no outstanding bank
debt.
(1) Capital management measure. Refer to "Non-GAAP and
Other Financial Measures" within this press release.
(2) Non-GAAP ratio that does not have any standardized
meaning under IFRS and therefore may not be comparable
with the calculation of similar measures of other
entities. Refer to "Non-GAAP and Other Financial Measures"
within this press release.
(3) Non-GAAP measure that does not have any standardized
meaning under IFRS and therefore may not be comparable
with the calculation of similar measures of other
entities. Refer to "Non-GAAP and Other Financial Measures"
within this press release.
OPERATIONS UPDATE
Marten Hills West
Marten Hills West continues to be an exceptional growth engine. Production has increased from 750 bbls/d in the first quarter of 2022 to current rates greater than 10,000 bbls/d. The area has been characterized by continuous pool extensions and more recently new pool discoveries that are anticipated to add to the long-term growth profile of the area.
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November 09, 2023 17:39 ET (22:39 GMT)
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