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Highlights

  • Driven by higher production, Headwater's net revenue surged by 18.4% in FY23.
  • The company’s FY23 gross margin soared to 88.9%, surpassing industry median.
  • As of April 16, 2024, the company’s annual dividend yield was 5.04%.

Headwater Exploration Inc (TSX: HWX) is a publicly traded company specializing in oil and gas exploration and development. The company is actively involved in exploring, developing, and producing petroleum and natural gas resources within Canada. The company generates substantial revenue from the sale of commodities including natural gas, crude oil, and natural gas liquids.

In the financial year 2023, the company’s net revenue increased by 18.4% compared to FY22. The higher net revenue was driven by higher average production of 18,038 boe/d, an increase of 40% over 2022 annual production. Additionally, the company aims to expand its opportunities through strategic land purchases and beneficial mergers and acquisitions. It anticipates achieving a daily production rate of 20,000 (boe/d) in FY 2024.

Headwater posted a gross margin of 88.9% in FY23, beating the industry median of 59.7%. The company also had a lower debt-to-equity ratio of 0.00x in FY23 versus the industry median of 0.39x. Similarly, its EBITDA margin, operating margin, and net margin also beat the industry median as depicted in the picture below:

Business update

The company recently announced its first-quarter average production volumes of about 19,500 BOE/d, consistent with guidance. This trend aligns with the previously stated annualized production target of 20,000 BOE/d.

Dividend distribution

HWX recently paid a quarterly dividend of CAD 0.10 per share (April 15, 2024). At the last closing price of CAD 7.93 (as of April 16, 2024), the company’s dividend yield was 5.04%.

Top 10 Shareholders:

About 28.10% of the total shareholdings of HWX is held by its top 10 shareholders. Canoe Financial LP and Capital Research Global Investors hold the maximum stake in the company at ~­­­7.98% and ~3.82%, respectively.

Stock performance

The stock price of HWX has decreased by ~5.02% and increased by ~8.48% over the last 1 week and 1 month, respectively. Moreover, the stock is trading above the average of its 52-week high and low price of CAD 8.57 and CAD 5.755, respectively.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is April 16, 2024. The reference data in this report has been partly sourced from EODHD/Others.