Headwater Exploration (HWX) Q2 2025 earnings summary

Executive summary

• Achieved record production of 22,235 boe/d in Q2 2025, up 12% year-over-year, with strong exploration results and new pool discoveries in Grand Rapids and Wabiskaw formations.

• Net income for Q2 2025 was $38.0 million ($0.16 per share basic), down 29% from Q2 2024, with adjusted funds flow from operations of $74.2 million ($0.31 per share basic).

• Declared a quarterly dividend of $0.11 per share, totaling $26.2 million, and cumulative dividends paid to date of $265.2 million.

• Maintained strong liquidity with $58.5 million in adjusted working capital and no outstanding bank debt as of June 30, 2025.

Financial highlights

• Total sales, net of blending expense, were $138.8 million for Q2 2025, down 12% year-over-year.

• Adjusted funds flow from operations decreased 16% year-over-year to $74.2 million in Q2 2025.

• Cash flow from operating activities was $68.7 million, down 24% from Q2 2024.

• Operating netback, including financial derivatives, was $42.66/boe, a 26% decrease year-over-year.

• Free cash flow for Q2 2025 was $23.5 million.

Outlook and guidance

• Flexible capital budget and positive working capital position support timely capital allocation adjustments in response to market conditions.

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

• Plans for further drilling and secondary recovery pilots in Grand Rapids, Wabiskaw, and Clearwater formations in the second half of 2025 and into 2026.