Headwater Exploration (HWX) investor relations material

Executive summary

• Achieved record production of 24,567 boe/d in Q2 2026, up 10% year-over-year, with significant growth in heavy crude oil volumes and continued expansion in secondary recovery projects.

• Realized record adjusted funds flow from operations of $117.7 million ($0.50 per share basic), and net income of $85.4 million ($0.36 per share basic), both up over 60% and 125% respectively from Q2 2025.

• Executed $81.6 million in capital expenditures, focusing on development, land, exploration, and secondary recovery implementation.

• Declared a quarterly cash dividend of $0.12 per share, with cumulative dividends paid to date totaling $372.3 million.

• Maintained strong liquidity with $9.0 million in adjusted working capital and no outstanding bank debt as of June 30, 2026.

Financial highlights

• Total sales, net of blending expense, rose 64% year-over-year to $227.7 million for Q2 2026.

• Adjusted funds flow from operations increased 59% to $117.7 million; cash flow from operating activities nearly doubled to $134.6 million.

• Net income surged 125% to $85.4 million, with EPS (basic and diluted) at $0.36, up from $0.16 in Q2 2025.

• Operating netback, including financial derivatives, was $59.88/boe, up 40% year-over-year.

• Capital expenditures for the quarter totaled $81.6 million, up 61% from the prior year.

Outlook and guidance

• Forecasts secondary recovery to support approximately 16,000 bbls/d (64% of corporate oil volumes) from 30 sections by year-end 2026.

• Plans to continue expanding Marten Hills West and Greater Pelican, with additional wells and polymer flood expansion.

• Sustained production growth expected, with corporate decline rates stabilizing near 15% and sustaining capital below 20% of adjusted funds flow at US$70 WTI.

• Focus remains on maximizing shareholder returns through organic growth, secondary recovery, dividends, and share buybacks.