/NOT FOR DISSEMINATION IN THE U.S. OR THROUGH
U.S. NEWSWIRES/
CALGARY,
AB, Nov. 28, 2022 /CNW/ - Highwood Asset
Management Ltd., ("Highwood" or the "Company") (TSXV:
HAM) is pleased to announce financial and operating results for the
three and nine months ended September 30,
2022. The Company also announces that its unaudited
financial statements and associated Management's Discussion and
Analysis ("MD&A") for the period ended September 30, 2022, can be found at
www.sedar.com and www.highwoodmgmt.com.
Highlights
- Within the upstream oil & gas production unit, the Company
delivered average production of 116 bbl/d of oil in the third
quarter of 2022. Current net production from Highwood is
approximately 125 bbl/d of oil.
- During the third quarter of 2022, the Company and its 50%
working interest in the 14-05 terminal deployed capital funds to
reactive the terminal which was commissioned on October 2, 2022.
- During the third quarter of 2022, the Company purchased new
office space for consideration of $1.15
million. The purchase of the office space will result in
reduction in general and administrative expenses related to office
space. The Company also sees the value of the office space
increasing in the future with several major infrastructure projects
in the immediate vicinity planned.
- During the third quarter of 2022, the Company's operating
facility was increased from $2.0
million to $2.92 million, the
increase being mainly attributed to the borrowing base associated
with the new office space.
- Corporately, net debt at September 30,
2022 was $367 thousand and the
Company is in a working capital surplus position of $406 thousand. The Company has reduced net debt,
from $3.3 million at December 31, 2021, including a bank draw of
$1.1 million.
Summary of Financial &
Operating Results
|
Three months
ended September 30,
|
|
Nine months
ended September 30,
|
|
2022
|
|
2021
|
%
|
|
2022
|
|
2021
|
%
|
Financial (in
thousands)
|
|
|
|
|
|
|
|
|
|
Oil and natural
gas sales
|
$
1,135
|
$
|
$
721
|
57
|
|
$
3,411
|
|
$ 6,423
|
(47)
|
Transportation
pipeline revenues
|
842
|
|
905
|
(7)
|
|
2,486
|
|
2,805
|
(11)
|
Total revenues,
net of royalties(1)
|
1,720
|
|
1,325
|
30
|
|
4,791
|
|
6,242
|
(23)
|
Income
(Loss)
|
241
|
|
150
|
61
|
|
2,184
|
|
(1,370)
|
259
|
Funds flow from
operations(5)
|
485
|
|
(73)
|
764
|
|
1,086
|
|
(134)
|
910
|
Capital
expenditures
|
1,526
|
|
79
|
1,832
|
|
1,683
|
|
267
|
530
|
Net debt
(2)
|
|
|
|
|
|
(367)
|
|
(1,588)
|
(77)
|
Shareholder's
equity (end of period)
|
|
|
|
|
|
10,508
|
|
8,836
|
19
|
Shares
outstanding (end of period)
|
|
|
|
|
|
6,014
|
|
6,014
|
-
|
Weighted-average
basic shares
|
|
|
|
|
|
6,014
|
|
6,014
|
-
|
outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
(3)
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
|
Crude oil
(bbls/d)
|
116
|
|
108
|
7
|
|
111
|
|
400
|
(72)
|
Total
(boe/d)
|
116
|
|
108
|
7
|
|
111
|
|
400
|
(72)
|
Average realized
prices (4)
|
|
|
|
|
|
|
|
|
|
Crude Oil
(per bbl)
|
106.27
|
|
72.26
|
47
|
|
112.65
|
|
58.77
|
92
|
Upstream
Operating netback (per BOE) (5)
|
45.79
|
|
26.36
|
74
|
|
48.41
|
|
19.16
|
153
|
|
(1)
Includes realized and unrealized gains and losses on commodity
contracts
|
(2)
Net debt consists of bank debt and working capital surplus
(deficit) excluding commodity contract assets and/or
liabilities.
|
(3)
For a description of the boe conversion ratio, see "Basis of Barrel
of Oil Equivalent".
|
(4)
Before hedging.
|
(5)
See "Non-GAAP measures".
|
2022 Third Quarter
Operations
With the continued strong commodity prices and increased
interest in Canadian energy, the Company's focus in the third
quarter was reviewing and assessing several potential acquisitions
for its upstream operations. The Company will continue to review
and assess opportunities which are accretive to the Company as
Highwood seeks to grow this segment of its operations. The Company
will also assess land offerings in strategic areas where the
Company sees significant growth opportunities. During the third
quarter of 2022, the Company acquired lands in Ukalta that it
believes could have potential for Clearwater production.
The Company also focused time and resources in Q3 2022 on
extraction technologies for Lithium from Brine.
Outlook
As of today, the Company is minimally drawn on its credit
facility and has a working capital surplus, which provides
considerable financial and operational flexibility, the Company
remains open to completing accretive acquisitions through the
balance of 2022 and beyond. The Company is currently engaged
in several encouraging dialogues regarding various acquisitions and
partnership opportunities. Global optimism around mitigating
COVID-19 and restoring previous economic and industrial activities
has created positive market and investment sentiment both within
and outside oil & gas space.
While Highwood sold the majority of its producing oil assets in
the first quarter of 2021, the Company has, and will continue to
evaluate opportunities in the M&A market but will remain
disciplined to pursue only those opportunities that are accretive
with low to moderate liability profiles.
Highwood is continuing to evaluate its undeveloped lands for
drilling opportunities, particularly on its Ukalta lands. Highwood
is currently monitoring new production from directly offsetting
competitors Clearwater wells. Once
several months of data have been collected and economic viability
determined, Highwood will make a determination on what further
action will be taken on the lands.
Corporately, the Company intends to build a growing profile of
recurring free funds flow that will provide maximum flexibility for
growth and / or other strategic M&A opportunities in a
non-dilutive fashion.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" or
"FLI" within the meaning of the Canadian securities laws.
Forward-looking information is generally identifiable by use of the
words "believes," "may," "plans," "will," "anticipates," "intends,"
"budgets", "could", "estimates", "expects", "forecasts", "projects"
and similar expressions, and the negative of such expressions.
Forward-looking information in this news release include statements
about the Company's next steps which include resource assessment,
continued exploration and development work, including in respect of
the potential extraction technology, continued sampling and
developing a reservoir model, the completion and timing for the
Cretaceous ironstone NI 43-101 Technical Report, and the evaluation
and potential spinout of a pure play lithium company, as well as
the specific assumptions used to develop such FLI and the specific
risk factors.
In connection with the forward-looking information contained
in this news release, Highwood has made numerous assumptions,
regarding, among other things: the geological, metallurgical,
engineering, financial and economic advice that Highwood has
received is reliable and is based upon practices and methodologies
which are consistent with industry standards. While Highwood
considers these assumptions to be reasonable, these assumptions are
inherently subject to significant uncertainties and
contingencies.
Additionally, there are known and unknown risk factors which
could cause Highwood's actual results, performance, or achievements
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
information contained herein. Known risk factors include, among
others: the Li-brine resource assessment may not be completed as
planned or at all, the exploration and continued sampling may
exceed the budget; continued sampling and the reservoir model may
not achieve the results expected; investor support for a pure play
lithium public spinout; the need to obtain additional financing;
uncertainty as to the availability and terms of future financing;
the possibility of delay in exploration or development programs and
uncertainty of meeting anticipated program milestones; uncertainty
as to timely availability of permits and other governmental
approvals.
A more complete discussion of the risks and uncertainties
facing Highwood is disclosed in Highwood's continuous disclosure
filings with Canadian securities regulatory authorities at
www.sedar.com. All forward-looking information herein is qualified
in its entirety by this cautionary statement, and Highwood
disclaims any obligation to revise or update any such
forward-looking information or to publicly announce the result of
any revisions to any of the forward-looking information contained
herein to reflect future results, events, or developments, except
as required by law.
Oil and Gas Measures
Readers should see the "Selected Technical Terms" in the
Annual Information Form filed on May 2,
2022 for the definition of certain oil and gas
terms.
Basis of Barrels of Oil Equivalent – This news release
discloses certain production information on a barrels of oil
equivalent ("boe") basis with natural gas converted to barrels of
oil equivalent using a conversion factor of six thousand cubic feet
of gas (Mcf) to one barrel (bbl) of oil (6 Mcf:1 bbl). Condensate
and other NGLs are converted to boe at a ratio of 1 bbl:1 bbl. Boe
may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 Mcf:1 bbl is based roughly on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at sales point.
Although the 6:1 conversion ratio is an industry-accepted norm, it
is not reflective of price or market value differentials between
product types. Based on current commodity prices, the value ratio
between crude oil, NGLs and natural gas is significantly different
from the 6:1 energy equivalency ratio. Accordingly, using a
conversion ratio of 6 Mcf:1 bbl may be misleading as an indication
of value.
Mcfe Conversions: Thousands of cubic feet of gas equivalent
("Mcfe") amounts have been calculated by using the conversion ratio
of one barrel of oil (1 bbl) to six thousand cubic feet (6 Mcf) of
natural gas. Mcfe amounts may be misleading, particularly if used
in isolation. A conversion ratio of 1 bbl to 6 Mcf is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
natural gas as compared to oil is significantly different from the
energy equivalent of 1:6, utilizing a conversion on a 1:6 basis may
be misleading as an indication of value.
Non-GAAP Measures
"Funds flow from operations" is a non-GAAP financial measure
and is calculated as cash flow from operating activities adjusted
for changes in non-cash working capital and changes in long term
accounts payable and accrued liabilities.
"Netback" is a non-GAAP financial measure and is calculated
as revenues net of royalties, less transportation and processing
charges and operating expenses and then divided by BOE or Mcf
sold.
SOURCE Highwood Oil Company Ltd.