Headwater Exploration (HWX) Q2 2024 earnings summary

Executive summary

• Achieved 15% year-over-year production growth to 19,805 boe/d in Q2 2024, driven by heavy oil and successful drilling programs in Marten Hills West and Seal.

• Net income rose 74% year-over-year to $53.9 million, with adjusted funds flow from operations up 33% to $88.0 million.

• Declared a quarterly dividend of $0.10 per share, maintaining a strong balance sheet with $62.4 million in adjusted working capital and no bank debt.

Financial highlights

• Sales, net of blending, increased 40% year-over-year to $157.1 million for Q2 2024.

• Adjusted funds flow from operations per share (basic) was $0.37, up 32% year-over-year.

• Operating netback including financial derivatives was $57.66/boe, up 23% year-over-year.

• Capital expenditures were $50.7 million in Q2, down 21% from the prior year.

Outlook and guidance

• Positive working capital and credit facility position the company for opportunistic acquisitions and land expansion.

• Focus remains on delivering long-term top quartile returns through growth and capital returns.

• Exploration to continue in 2024 with new tests planned in Little Horse, Heart River, and Clearwater E.