Headwater Exploration Inc.
Q4 Volumes Slightly Ahead of Street; Additional Lands Acquired
TSX: HWX | CAD 6.86 | Sector Perform | Price Target CAD 9.00
Sentiment: Positive
HWX announced Q4/24 production volumes of 21,500 boe/d which were slightly ahead of street expectations (21,300 boe/d) but in line with RBC, driving FY24 volumes at ~20,300 boe/d. Additionally, the company announced a partnership with Bigstone Cree Nation in the Greater Pelican area which features a four well commitment to earn 34.5 net sections of land; 23 incremental net sections were also acquired offsetting the farmout lands. In our view, results from the company's initial wells at Pelican (Q1/25, Wabiskaw) represent important catalysts for the stock.
Q4 Production Volumes - In Line with RBC. HWX reported Q4 volumes of 21,500 boe/d which is in line with RBC estimates (RBC/ Street: 21,500/21,300 boe/d) pointing toward FY24 volumes of ~20,300 mboe/d.
Partnership with Bigstone Cree Nation - Greater Pelican. HWX announced a new farmout agreement and partnership with Bigstone Cree nation featuring a four well commitment positioned to earn 34.5 sections of prospective land. The company anticipates to target its first Wabiskaw multi-lateral well in the area in Q1/25. Additionally, HWX has acquired 23 sections of land in Greater Pelican through crown land sales that offset Bigstone Cree lands. HWX has identified multiple locations within the newly acquired 57.5 sections of land and plans to test 2-3 prospects in 2025.
Greater Peavine. HWX has acquired an additional 10 sections of land in Greater Peavine, which offsets its core Seal lands and offers a multi-zone opportunity in the Bluesky and Falher formations. In total, HWX now has 65 net sections of Greater Peavine land.
Other Land and Acquisition Activity. In 2024, the company acquired 193 sections of land with acreage now mapping to over 600 sections of Clearwater land plus 192 sections of non-Clearwater acreage. HWX expects to spend $25 million on exploratory drilling in 2025 and testing 5-7 new play concepts with follow up tests on 8-10 wells that were discovered in 2024.