CALGARY, AB – Highwood Oil Company Ltd., (“Highwood” or the “Company“) (TSXV: HOCL) is pleased to announce financial and operating results for the quarter ended March 31, 2021. The Company also announces that its unaudited financial statements and associated Management’s Discussion and Analysis (“MD&A“) for the quarter ended March 31, 2021, can be found at www.sedar.com and www.highwoodoil.com.
Q1 2021 Results and 2021 Activity
- Highwood announced the signing of a definitive agreement on November 13, 2020 to vend the Red Earth assets to an Alberta producer for cash consideration of $2.0 million. The transaction subsequently closed on March 25, 2021 following regulatory approval and license transfers. The disposition removed $36.0 million of balance sheet decommissioning liabilities or approximately 92% of the Company’s decommissioning obligations. The transaction did not include an interest in the Company’s Wabasca River Pipeline midstream asset.
- As announced on March 25, 2021, the Company intends to transition into an asset management entity to drive its focus on shareholder return. The asset management structure will oversee various operations including ESG and other clean energy transition subsectors, which may include industrial metals and minerals (Lithium, Iron, Rare Earth Elements including Scandium & Gadolinium, Vanadium, Silica, Alumina etc), clean energy technologies, upstream and midstream oil & gas production & processing. Shareholder approvals to begin the transition to Highwood Asset Management will be undertaken at the Company’s AGM on June 17, 2021.
- Within the industrial metals and minerals business unit, the Company has already amassed industrial metallic and mineral permits of over 3,100,000 acres in Alberta and British Columbia and it has engaged a third-party resource evaluator to prepare a 43-101 technical report on the permitted acreage.
- Within the upstream and midstream oil & gas production & processing business unit, the Company delivered average production of 1,008 bbl/d of oil in the first quarter of 2021. Current net production from Highwood is approximately 125 bbl/d of oil subsequent to the Red Earth disposition.
- Corporately, net debt at March 31, 2021 was $1.9 million.
Summary of Financial & Operating Results
Three months ended March 31, |
|||||
Financial (expressed in thousands) |
2021 |
2020 |
% Change |
||
Oil and natural gas sales |
$ |
5,158 |
$ |
6,545 |
(20) |
Transportation pipeline revenues |
969 |
1,160 |
(16) |
||
Total revenues, net of royalties (1) |
4,175 |
16,265 |
(74) |
||
Loss |
(778) |
(3,724) |
(81) |
||
Funds flow from operations (5) |
726 |
1,076 |
(33) |
||
Capital expenditures |
117 |
4,191 |
(97) |
||
Adjusted Net debt (2) |
544 |
44,623 |
(99) |
||
Shareholders’ equity (end of period) |
9,228 |
14,544 |
(36) |
||
Shares outstanding (end of period) |
6,014 |
6,014 |
– |
||
Weighted-average basic shares outstanding |
6,014 |
6,014 |
– |
||
Operations (3) |
|||||
Production |
|||||
Crude oil (bbls/d) |
1,008 |
1,872 |
(46) |
||
Total (boe/d) |
1,008 |
1,872 |
(46) |
||
Average realized prices (4) |
|||||
Crude oil (per bbl) |
56.87 |
38.42 |
50 |
||
Operating netback (per boe) (5) |
15.93 |
2.95 |
465 |
||
Wells drilled: |
|||||
Gross (6) |
– |
4.0 |
|||
Net (6) |
– |
2.0 |
|||
Success (%) |
– |
100 |
|||
(1) |
Includes gains and losses on commodity contracts. |
(2) |
Adjusted 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”. |
(6) |
Includes 1 gross (0.5 net) well outstanding to drill past casing point. |
(7) |
Natural gas and NGL production and revenues are immaterial to the Company. |
2021 First Quarter Operations
Highwood’s focus in the first quarter of 2021 was to amass a sizeable position of industrial mines and minerals permits throughout Western Canada to evaluate for purposes of creating a 43-101 resource assessment.
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.
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.
Outlook and Update to Metallic and Industrial Mineral Permits
As announced on March 25, 2021, the Company intends to transition into an asset management entity overseeing various operations including ESG and other clean energy transition subsectors, which may include industrial metals and minerals (Lithium, Iron, Rare Earth Elements including Scandium & Gadolinium, Vanadium, Silica, Alumina etc), clean energy technologies, upstream and midstream oil & gas production & processing, and potentially other business ventures. The transition is subject to shareholder and exchange approval.
Within the industrial metals and minerals business unit, the company has engaged a third-party resource evaluator to prepare a 43-101 technical report over the 3,100,000 permitted acres within 195 blocks in Alberta and British Columbia.
Given its clean balance sheet which provides considerable financial and operational flexibility, the Company expects that it will be able to complete several accretive acquisition to catalyze material organic growth in 2021. 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.