Here in Canada, Neil Roszell's Headwater Exploration Inc. (HWX) reached an intraday low of $6.38 before recovering to close at $6.81, down 13 cents, on 4.82 million shares. The early sigh of disappointment reflected an exploration update from the Alberta Clearwater play. There, Headwater's first two wells at a new exploration prospect called Shadow have both come up dry. Although the plan was to drill a third well in the area, Headwater has changed its mind and will move the rig to a new prospect.
The duds are a blow to Headwater's management, which only two weeks ago was daydreaming on the company's website that Shadow could be a "potential Peavine look-alike" (though it has since whisked away that phrasing and replaced it with a notice that drilling is "paused"). Peavine has quickly made a name for itself in the Clearwater for turning up some of the best results in the entire play. Notably, Baytex Energy Corp. (BTE: $7.34) drilled a Peavine well that peaked at 1,200 barrels a day. Baytex is currently the dominant Peavine producer, while most of Headwater's activity (and most of the general industry activity in the Clearwater) has been taking place in the more developed Marten Hills area. Headwater was keen to carve out a splashy new subregion at Shadow. The two dry wells have put an end to that reverie.