Headwater Exploration Inc T.HWX

Ink Research

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Morning Report: Headwater Exploration makes headway up the INK Edge rankings 

March 15, 2023

Today we look at oil & gas exploration & development firm Headwater Exploration (HWX) which makes it debut in our morning report as it grabbed the 21st spot in our March Top Energy report. Headwater is focused on heavy oil production at Marten Hills, an area about 250km north of Edmonton within the Clearwater play. It also produces some natural gas in the McCully field near Sussex, New Brunswick.

On March 9th, Headwater reported 2022 production of 12,841 barrels of oil equivalent per day (88.9% heavy oil), up from 7,393 boe/d (90.2% heavy oil) in 2021. Sales for the year came in at $430.0 million, up from $179.5 million the year before due to increased volume and improved pricing for both heavy oil and natural gas. Adjusted funds flow from operations was $1.21 per diluted share in 2022, up from $0.55 in 2021. In Q4, Headwater declared its inaugural quarterly dividend of $0.10 per share. That works out to an indicated annual dividend yield of 6.5%.

Going forward, Headwater reaffirmed its 2023 guidance previously issued in November of 18,000 boe/d average production and adjusted funds flow from operations of $280 million. Capital expenditures are expected to total $200 million.

Some options-related selling have made insiders net dollar sellers over the past 180 days, but they have been net acquirers on a volume basis, helping it to climb up the INK Edge rankings.