Headwater Exploration (HWX) Q3 2024 earnings summary

Executive summary

• Achieved record Q3 2024 production averaging 20,342 boe/d, up 13% year-over-year, driven by heavy oil growth and successful drilling in Marten Hills West.

• Net income for Q3 2024 was $47.6 million ($0.20 per share basic), with adjusted funds flow from operations of $84.2 million ($0.35 per share basic).

• Returned $23.8 million to shareholders via quarterly dividend; maintained strong balance sheet with $64.4 million adjusted working capital and no bank debt.

Financial highlights

• Q3 2024 sales, net of blending, were $151.7 million, up 5% year-over-year; nine-month sales reached $436.2 million, up 24%.

• Adjusted funds flow from operations for Q3 2024 was $84.2 million (up 4%); nine-month total was $248.7 million (up 21%).

• Free cash flow in Q3 2024 was $26.0 million; capital expenditures were $58.2 million, down 17% year-over-year.

• Operating netback, including financial derivatives, was $52.21/boe in Q3 2024, down 11% year-over-year.

• Shareholders’ equity increased 17% year-over-year to $684.5 million.

Outlook and guidance

• 2024 annual average production guidance increased to 20,250 boe/d; Q4 daily production guidance set at 21,500 boe/d.

• 2024 capital expenditures guidance raised by $20 million to $220 million to accelerate secondary recovery projects.

• 2024 adjusted funds flow from operations expected at $319 million; exit adjusted working capital forecasted at $86 million.

• Quarterly dividend maintained at $0.10 per share; 2025 capital budget to be released in December.