Headwater Exploration Inc. Announces Second Quarter Operating and Financial Results and Operations Update

Source Company Press Release
Company Headwater Exploration Inc.
Tags Corporate: Corporate Results, Guidance, Overview/Strategy, Country: Canada, Financial - Costs & Metrics: Capital Expenditures, Hedging
Date August 05, 2020

Headwater Exploration Inc. (the "Company" or "Headwater") (TSX: HWX) announces its operating and financial results for the three and six months ended June 30, 2020.  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  sedar.com and the Company's website at  headwaterexp.com.

 Financial and Operating Highlights

  Three months
ended June 30, 
Percent
Change 
Six months ended June 30,  Percent
Change 
  2020  2019    2020  2019   
Financial (thousands of dollars except share data)             
Sales  565  1,014  (44)  2,873  7,023  (59) 
Cash flow provided by operating activities  863  1,675  (48)  2,045  9,395  (78) 
Per share - basic  0.01  0.02  (50)  0.02  0.11  (82) 
- diluted  0.01  0.02  (50)  0.02  0.11  (82) 
Adjusted funds flow (used in) from operations (1)  (610)  151  (504)  4,803  7,705  (38) 
Per share - basic  0.00  0.00  0.04  0.09  (56) 
- diluted  0.00  0.00  0.04  0.09  (56) 
Net income (loss)  (1,679)  (274)  513  (8,489)  2,686  (416) 
Per share - basic  (0.01)  (0.00)  100  (0.07)  0.03  (333) 
- diluted  (0.01)  (0.00)  100  (0.07)  0.03  (333) 
Capital expenditures  398  211  89  468  389  20 
Working capital        113,718  63,744  78 
Shareholders' equity        156,386  114,148  37 
Weighted average shares (thousands)             
Basic  144,749  88,724  63  125,401  88,821  41 
Diluted  144,749  88,724  63  125,401  89,104  41 
Shares outstanding, end of period (thousands)             
Basic        145,044  88,301  64 
Diluted (4)        151,381  89,089  70 
Operating (6:1 boe conversion)             
             
Average daily production             
Natural gas (mmcf/d)  2.4  2.4  5.6  5.7  (2) 
Natural gas liquids (bbl/d)  (100)  (50) 
Barrels of oil equivalent (2)(boe/d)  396  402  (1)  942  953  (1) 
             
Netbacks ($/boe)             
Operating             
Sales  15.67  27.75  (44)  16.76  40.74  (59) 
Royalties  (0.39)  (0.53)  (26)  (0.42)  (1.03)  (59) 
Production expenses  (14.79)  (16.64)  (11)  (6.89)  (7.86)  (12) 
             
Field netback (1)  0.49  10.58  (95)  9.45  31.85  (70) 
Realized gains on financial derivatives  1.43  (100)  22.97  16.81  37 
Operating netback (1)  0.49  12.01  (96)  32.42  48.66  (33) 
General and administrative expense  (23.33)  (15.89)  47  (8.90)  (6.86)  30 
Interest income and other (3)  6.00  8.46  (29)  4.50  2.96  52 
Decommissioning liabilities settled  (0.44)  (100)  (0.07)  (100) 
Adjusted funds flow netback(1)  (16.84)  4.14  (507)  28.02  44.69  (37) 

   
(1)  See "Non-IFRS" measures 
(2)  See '"Barrels of Oil Equivalent." 
(3)  Excludes accretion on decommissioning liabilities. 
(4)  Includes in-the-money dilutive securities as at June 30, 2020. 

SECOND QUARTER 2020 HIGHLIGHTS

  • As at June 30, 2020, Headwater has cash and short-term investments (consisting of redeemable guaranteed investment certificates) of $112.8 million, a working capital surplus of $113.7 million and no outstanding debt.
  • April 2020 natural gas production averaged 7.2 mmcf/d, consistent with April 2019, before the Company shut-in its natural gas production effective May 1, 2020 pursuant to its production optimization strategy.
  • Locked into financial derivative contracts for a total of 5,000 mmbtu/d at NYMEX CAD$4.05/mmbtu for the period from December 2020 to March 2021.
  • Efficiently executed the integration of east coast operations with all corporate functions now being handled from the Company's head office in Calgary.

2020 GUIDANCE

Headwater is pleased to re-confirm its previously released guidance as follows:

  • 2020 average production of 4.1 mmcf/d (approximately 99% natural gas and 1% natural gas liquids) (assumes shut-in from May 1 to November 1, 2020).
  • Operating cash flow of $6.8 million (inclusive of realized financial derivatives).
  • 2020 adjusted funds flow from operations of $5.5 million.
  • 2020 exit working capital (assuming no other acquisitions or development) of $115 million.

With the integration of the operations now complete, the Headwater team is actively optimizing future cash flow through operating costs and third-party processing revenue initiatives.

2020 OUTLOOK

Patience continues to be the overriding theme in our business plan. With a relative stabilizing of commodity prices in the last month, the acquisition market is beginning to show signs of activity.  The Headwater team continues to pursue multiple opportunities that ultimately, if successful, are expected to provide significant returns to our shareholders. We appreciate the continued support and patience that the investment community continues to have with our business and look forward to reporting back to you as some of the opportunities come to fruition.

RESPONSE TO COVID-19

Headwater continues to prioritize the health and safety of the Company's employees, contractors, partners, service providers and the communities in which we operate. The Company remains committed to protecting the well–being of all stakeholders and following the guidance of public health officials, while maintaining safe operations and business continuity.

Source: EvaluateEnergy® ©2024 EvaluateEnergy Ltd