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Highlights

  • Q1 2024 saw HWX's revenue rise 14.6% to CAD 112.4 million
  • The company’s average daily production surged 15% to 19,517 boe/d in Q1 2024
  • The company is targeting an average annual daily production of 20,000 (boe/d) for FY 2024

Headwater Exploration Inc (TSX: HWX) operating with a market capitalization of CAD 1.73 billion, is engaged in the exploration and development of oil and gas.

In Q1 2024, HWX’s net revenue rose to CAD 112.4 million, marking a 14.6% increment from CAD 98.1 million in the pcp. This rise was predominantly driven by a substantial uptick in average production to 19,517 barrels of oil equivalent per day (boe/d), reflecting a notable 15% surge compared to Q1 2023. Despite facing higher depreciation and production expenses, the company's earnings before income tax reached CAD 49.1 million for the quarter, up from CAD 39.1 million in pcp. As a result, HWX reported higher net earnings of CAD 37.6 million, compared to CAD 29.9 million in the pcp.

Further, in Q1 2024, the company had a higher operating margin of 42.8% and a higher net margin of 33.5%, compared to the industry median of 22.6% and 11.8%, respectively.

Recent business update

Recently, the company completed a capital expenditure program totaling CAD 65.3 million, which included CAD 11.7 million allocated to land expenditures, resulting in the acquisition of 81.4 net sections. The company also successfully drilled 20 net crude oil wells, including 6 exploration tests, achieving a 100% success rate.

On May 9, 2024, the company announced a quarterly cash dividend of CAD 0.10 per common share. Eligible shareholders are those who are at record as of the closing on June 28, 2024, and will receive the distribution on July 15, 2024.

Company outlook

The company is targeting an average annual daily production of 20,000 (boe/d) for FY 2024. For FY24, management anticipates achieving adjusted funds flow from operations totaling CAD 319 million.

Top 10 shareholders

The top ten shareholders of HWX collectively own approximately 21.46% of the total shares in the company. Ninepoint Partners LP holds the largest stake in the company at around 5.89%, followed by Franklin Templeton Investments Corporation with approximately 2.43%.

Stock information

Over the past week, HWX's stock price has declined by approximately 1.48%, while over the last month, it has risen by approximately 2.24%. Furthermore, the stock is currently trading above the average of its 52-week high of CAD 8.57 and its 52-week low of CAD 5.88.

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 July 9, 2024. The reference data in this report has been partly sourced from EODHD/Others.