Highwood Asset Management Ltd. press release

HIGHWOOD ASSET MANAGEMENT LTD. ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2025 RESULTS, 2025 YEAR-END RESERVES AND OPERATIONAL UPDATE

2026-03-17

TSXV - TSX Venture Exchange · Oil · Natural Gas · Natural Gas Liquids · Lithium · Canada · Corporate Finance

Canada NewsWire

/NOT FOR DISSEMINATION IN THE U.S. OR THROUGH U.S. NEWSWIRES/

CALGARY, AB, March 17, 2026/CNW/ - Highwood Asset Management Ltd. ("Highwood" or the "Company") (TSXV: HAM) is pleased to announce its financial and operating results for the three and twelve months ended December 31, 2025 and to provide the results of its independent oil and gas reserves evaluation as of December 31, 2025, prepared by GLJ Ltd. ("GLJ"). The Company also announces that its audited consolidated financial statements and associated Management's Discussion and Analysis ("MD&A") for the year ended December 31, 2025, are available on Highwood's website at www.highwoodmgmt.comand on SEDAR+ at www.sedarplus.ca.

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Highlights

Average corporate production of 5,040 boe/d in Q4 2025. Highwood expects Q1 2026 production to be approximately 6,000 boe/d, representing an increase of approximately 20% from Q4 2025.

For the fourth quarter of 2025, Highwood delivered Adjusted EBITDA of $10.9 million ($0.72 per share) and adjusted funds flow of $10.6 million ($0.70 per share).(1)(2)

Highwood continues to be encouraged by the results of the 102/13-02-043-06W5 (the "13-02 well") and the 100/11-33-042-05W5 (the "11-33 well") that were drilled and brought online in mid December. For the month of January 2026, both the 13-02 well and 11-33 well were recognized by multiple third parties as two of the top net oil wells in Alberta, based on production, with both wells exceeding 25,000 bbl of gross oil production. The 13-02 well and 11-33 well combined, averaged gross production of approximately 1,650 bbls/d light oil and 2,500 boe/d (80% liquids) including associated gas and natural gas liquids (1,450 bbls/d and 2,225 boe/d net). Both wells have remained strong in February averaging gross total production of approximately 2,100 boe/d (76% liquids, 1,860 boe/d net). In aggregate, the Company expects the wells to pay out in less than 3 months at current strip pricing.(1)(3)

Highwood's top priority remains shareholder value, and the Company achieved growth in all reserve categories, including the addition of 3,371 Mboe of new Proved Developed Producing ("PDP") reserves. Overall PDP reserves increased 7% to 19,594 Mboe, Total Proved ("1P") reserves increased 7% to 39,600 Mboe and Total Proved plus Probable ("2P") reserves increased 9% to 66,441 Mboe. As a result of the increase in reserves, Highwood realized a PDP NAV of $7.96/share, 1P NAV of $22.39/share and 2P NAV of $41.23/share. (2)

Highwood's hedging program helps mitigate volatility in commodity pricing with approximately 2,400 bbls/day and 1,400 bbls/day of oil hedged throughout 2026 and 2027, respectively, at an average contract price of approximately $94.00CAD/bbl and $91.00CAD/bbl (WTI-NYMEX). With the recent conflict in the Middle East and the resulting increase in oil prices, Highwood layered in approximately 350 bbls/day and 1,300 bbls/day of oil throughout 2026 and 2027, respectively, which is included in the volumes noted above. In addition, the Company has approximately 6,975GJ/day of natural gas hedged in 2026 at an average contract price of approximately $3.15/GJ (AECO). The Company realized a gain on commodity contracts of $3.1 million during the fourth quarter of 2025.

The Company is focused on reducing Net Debt / EBITDA to increase flexibility for the Company moving forward. At December 31, 2025, Highwood had approximately $325 million in tax pools, including more than $100 million in non-capital losses. Highwood does not anticipate being cash taxable for approximately three years or more.

Notes to Highlights:

| (1) | See ‎"Caution Respecting Reserves Information"‎ and ‎‎"Non-GAAP and other Specified Financial Measures"‎. | | (2) | Basic shares at December 31, 2025 is 15,171,169 which includes shares held in trust. Fully diluted shares at December 31, 2025 is 15,599,131. | | (3) | Based on Management's projections (not Independent Qualified Reserves Evaluators' forecasts) and applying the following pricing ‎assumptions: Actual pricing up to February 28, 2026 and thereafter, WTI: ‎‎US$70.00/bbl; MSW Diff: ‎‎US$3.50/bbl; AECO: C$1.75/GJ; 0.735 CAD/USD‎. Management ‎projections are used in place of Independent Qualified Reserves Evaluators' ‎‎‎forecasts as Management believes it provides investors with valuable ‎‎information concerning the liquidity of the Company.‎ |

Summary of Financial & Operating Results

| | Three months ended December 31, | | Year ended December 31, | | | | | | | | | 2025 | | 2024 | % | | 2025 | | 2024 | % | | Financial (in thousands) | | | | | | | | | | | Petroleum and natural gas sales | $ 21,463 | $ | $ 33,775 | (36) | | $ 98,169 | | $ 135,794 | (28) | | Transportation pipeline revenues | $ 534 | | $ 621 | (14) | | $ 2,172 | | $ 2,670 | (19) | | Total revenues, net of royalties(1) | $ 25,392 | | $ 21,167 | 20 | | $ 101,853 | | $ 109,498 | (7) | | Income | $ 5,719 | | $ 1,914 | 199 | | $ 21,707 | | $ 27,950 | (22) | | Funds flow from operations(5) | $ 8,973 | | $ 16,791 | (47) | | $ 45,877 | | $ 68,876 | (33) | | EBITDA(5) | $ 12,511 | | $ 20,365 | (39) | | $ 55,340 | | $ 80,760 | (31) | | Adjusted EBITDA(5) | $ 10,883 | | $ 18,995 | (43) | | $ 53,286 | | $ 79,144 | (33) | | Capital expenditures | $ 9,931 | | $ 10,999 | (10) | | $ 59,578 | | $ 66,451 | (10) | | Net debt (2) | | | | | | $ 116,723 | | $ 97,832 | 19 | | Shareholder's equity (end of year) | | | | | | $ 154,063 | | $ 132,087 | 17 | | Shares outstanding (end of year) (6) | | | | | | 14,186 | | 14,671 | (3) | | Weighted-average basic shares | | | | | | 14,443 | | 14,837 | (3) | | outstanding | | | | | | | | | | | | | | | | | | | | | | Operations (3) | | | | | | | | | | | Production | | | | | | | | | | | Crude oil (bbls/d) | 2,623 | | 3,638 | (28) | | 2,773 | | 3,580 | (23) | | NGLs (boe/d) | 759 | | 775 | (2) | | 853 | | 752 | 13 | | Natural gas (mcf/d) | 9,943 | | 9,319 | 7 | | 10,020 | | 8,965 | 15 | | Total (boe/d) | 5,040 | | 5,966 | (16) | | 5,296 | | 5,781 | (9) | | Average realized prices(4) | | | | | | | | | | | Crude oil (Cdn$/bbl) | 72.71 | | 91.63 | (21) | | 81.76 | | 93.82 | (13) | | NGL (Cdn$/boe) | 26.88 | | 29.51 | (9) | | 29.70 | | 31.76 | (6) | | Natural gas (Cdn$/mcf) | 2.23 | | 1.17 | 91 | | 1.68 | | 1.30 | 29 | | Operating netback (per BOE) | $ 22.67 | | $ 36.58 | (38) | | $ 26.31 | | $ 38.30 | (31) |

| (1) | Includes realized and unrealized gain and losses on commodity contracts. | | (2) | Net debt consists of bank debt and working capital deficit excluding commodity contract assets and/or liabilities, current portion of decommissioning liabilities and lease liabilities. | | (3) | For a description of the boe conversion ratio, see "Basis of Barrel of Oil Equivalent". | | (4) | Before hedging. | | (5) | See "Non-GAAP and Other Specified Financial Measures". | | (6) | Shares outstanding is adjusted for treasury shares purchased and held in trust. |

2025 Reserves Summary

Highwood's assets were evaluated by GLJ effective December 31, 2025, in a report dated February 27, 2026, using the three Consultants' Average price forecast (the "Reserves Report"). GLJ is the Company's independent qualified reserves evaluator.

Key highlights of the Company's PDP, 1P and total 2P reserves from the Reserves Report are highlighted below:

PDP reserves increased by 1,351 Mboe to 19,594 Mboe, representing a 7% increase to volume when compared to YE2024 yielding a RLI of 8.6 years. 1P reserves increased by 2,680 Mboe to 39,600 Mboe, representing a 7% increase to volume when compared to YE2024 yielding a RLI of 12.5 years. 2P reserves increased by 5,241 Mboe to 66,441 Mboe, representing a 9% increase to volume when compared to YE2024 yielding a RLI of 18.8 years.

Significant intrinsic value recognized in Year-End 2025 Reserves. Realized before-tax net present value, after debt, of booked reserves as follows:

PDP BTNPV10 of $237 million representing NAV $7.96/share and $7.74/share fully diluted. 1P BTNPV10 of $456 million representing NAV $22.39/share and $21.78/share fully diluted. 2P BTNPV10 of $742 million representing NAV $41.23/share and $40.10/share fully diluted.

Strong Recycle Ratios -- Highwood expects strong netbacks as a result of its highly economic oil plays, which result in the recycle ratios listed below:

PDP reserves: converted reserves in 2025 at FD&A of $19.46 with associated recycle ratio of 1.4. 1P reserves: FD&A of $13.28/boe with associated recycle ratio of 2.0. 2P reserves: FD&A of $7.97/boe with associated recycle ratio of 3.3.

Further recycle ratios are listed below:

| | F&D | FD&A | F&D | FD&A | | Recycle Ratio | (Excluding FDC) | (Including FDC) | | | | 1P Reserves | 2.4 | 2.4 | 2.0 | 2.0 | | 2P Reserves | 3.8 | 3.8 | 3.3 | 3.3 |

2025 Reserves by Category

The following table provides a summary of specific details from the Reserves Report, which was created in accordance with the procedures and standards contained in the Canadian Oil and Gas Evaluation Handbook and the requirements of National Instruments 51-101 -- Standards of Disclosure for Oil and Gas Activities.

| Working interest | Mboe | BTNPV10 ($M) | | Proved Developed Producing | 19,594 | 237,488 | | Total Proved | 39,600 | 456,447 | | Proved Plus Probable | 66,441 | 742,246 |

Company Reserves (working interest)

| | Light and Medium Oil | Heavy Oil | Conventional Natural Gas | Shale Gas | Natural Gas Liquids | Oil Equivalent | | | | | | | | | Reserves Category | Company Gross Mbbl | Company Net Mbbl | Company Gross Mbbl | Company Net Mbbl | Company Gross MMcf | Company Net MMcf | Company Gross MMcf | Company Net MMcf | Company Gross Mboe | Company Net Mboe | Company Gross Mboe | Company Net Mboe | | | Proved | | | | | | | | | | | | | | | Producing | 6,571 | 5,309 | 29 | 27 | 56,099 | 47,335 | 0 | 0 | 3,638 | 2,886 | 19,594 | 16,117 | | | Developed Non-Producing | 328 | 231 | 0 | 0 | 4,745 | 3,654 | 0 | 0 | 290 | 201 | 1,409 | 1,041 | | | Undeveloped | 10,862 | 9,011 | 186 | 156 | 28,971 | 26,629 | 2,087 | 1,908 | 2,372 | 1,980 | 18,597 | 15,904 | | | Total Proved | 17,764 | 14,552 | 215 | 183 | 89,815 | 77,618 | 2,087 | 1,908 | 6,307 | 5,072 | 39,600 | 33,061 | | | Total Probable | 10,066 | 7,798 | 408 | 339 | 62,602 | 55,277 | 2,574 | 2,316 | 5,505 | 4,346 | 26,843 | 22,081 | | | Total Proved Plus Probable | 27,829 | 22,349 | 623 | 522 | 152,217 | 132,895 | 4,661 | 4,224 | 11,812 | 9,418 | 66,441 | 55,143 | | | | | | | | | | | | | | | | |

Net Present Values for Future Net Revenues before Income Taxes Discounted at (% per year)

| | Net Present Values of Future Net Revenue Before Income Taxes Discounted At (%/year) | Net Present Values of Future Net Revenue After Income Taxes Discounted At (%/year) | Unit Value Before Income Tax Discounted at 10%/year | | | | | | | | | | | | Reserves Category | 0% M$ | 5% M$ | 10% M$ | 15% M$ | 20% M$ | 0% M$ | 5% M$ | 10% M$ | 15% M$ | 20% M$ | $/boe | $/Mcfe | | | Proved | | | | | | | | | | | | | | | Producing | 424,110 | 300,224 | 237,488 | 199,393 | 173,584 | 402,060 | 291,606 | 233,545 | 197,397 | 172,503 | 21.64 | 3.61 | | | Developed Non-Producing | 19,719 | 12,968 | 9,570 | 7,569 | 6,245 | 15,175 | 10,516 | 8,148 | 6,701 | 5,695 | 13.99 | 2.33 | | | Undeveloped | 459,076 | 300,006 | 209,390 | 151,370 | 111,753 | 352,667 | 227,194 | 155,563 | 109,834 | 78,736 | 24.69 | 4.11 | | | Total Proved | 902,905 | 613,198 | 456,447 | 358,332 | 291,583 | 769,872 | 529,315 | 397,256 | 313,932 | 256,934 | 22.80 | 3.80 | | | Total Probable | 755,135 | 433,326 | 285,779 | 205,172 | 151,753 | 580,573 | 330,723 | 216,261 | 153,953 | 116,008 | 28.13 | 4.69 | | | Total Proved Plus Probable | 1,658,039 | 1,046,524 | 742,246 | 563,504 | 447,336 | 1,350,445 | 860,039 | 613,517 | 467,885 | 372,942 | 24.96 | 4.16 | | | | | | | | | | | | | | | | |

| | | | Note: | Unit values are based on Company Net Reserves. |

_‎_Operational Update

The 13-02 well and the 11-33 well are Belly River wells in the Wilson Creek area that were completed and brought onstream late in the fourth quarter of 2025. The 13-02 well and 11-33 well continue to deliver strong results with current combined gross production of approximately 2,050 boe/d (75-80% liquids, 1,800 boe/d net).

Highwood continues to be encouraged by the results from the Basal Belly River play within its portfolio and the recent successes reinforce the Company's confidence in our inventory. The Company currently carries 16.5 net booked and 13 net unbooked locations in Wilson Creek.

Highwood has drilled two booked gross (1.1 net) wells in the first quarter of 2026, with one booked gross (1.0 net) in Brazeau and 1 booked gross (0.1 net) in Wilson Creek. Subject to market conditions, Highwood plans to drill 4-7 wells in the Belly River horizon for the remainder of 2026, with the next drills currently planned for the summer of 2026. Prior to the next drill in Wilson Creek, which will be the summer of 2026, Highwood is planning to upgrade infrastructure in the area to support further development.

Outlook

The primary focus in the near-term is reducing leverage while continuing to focus on shareholder returns. Corporately, the Company is dedicated to growing Free Cash Flow, on a per share basis, while using prudent leverage to provide maximum flexibility for organic growth and/or other strategic M&A opportunities, with a longer-term goal to provide significant returns of capital to shareholders. Highwood will continue to review and assess opportunities which are accretive to the Company as Highwood seeks to grow its operations. The Company will also continue to assess land offerings in strategic areas where the Company sees significant growth opportunities.

Long Term Incentive Plan Grants

The Company has granted 185 thousand Options, 69 thousand Restricted Share Units ("RSUs"), 143 thousand Performance Share Units ("PSUs") to Officers of the Company and 22 thousand Deferred Share Units ("DSUs") to non-management directors. All Options, RSUs, PSUs and DSUs ‎were granted effective March 16, 2026 and pursuant to the Company's share based compensation plan and are subject to the terms of the applicable grant ‎agreements and the requirements of the TSX Venture Exchange ("TSXV").‎

The Options and RSUs granted vest 1/3 each on the first, second and third anniversary date of the grant. The exercise price of the Options will be the market closing price on March 17, 2026 per option.

The PSUs granted vest on the third anniversary of the date of grant.

The DSUs shall ‎vest on the first anniversary of the date of grant. The Company relied on exemptions provided for by Multilateral Instrument 61-101 for the grants to the Directors and Officers ‎of ‎the Company.‎

ADVISORIES

Forward-Looking Information

Certain information contained in the press release may constitute forward-looking statements and information (collectively, "forward-looking statements") within the meaning of applicable securities legislation that involve known and unknown risks, assumptions, uncertainties and other factors. Forward-looking statements may be identified by words like "anticipates", "estimates", "expects", "indicates", "intends", "may", "could" "should", "would", "plans", "target", "scheduled", "projects", "outlook", "proposed", "potential", "will", "seek" and similar expressions. Forward-looking statements in this press release include statements regarding, among other things: plans to continue the Company's active capital program while commodity prices remain strong; Highwood's business, strategy, objectives, strengths and focus; the Company's drilling plans and expectations; and the performance and other characteristics of the Company's properties and expected results from its assets. Such statements reflect the current views of management of the Company with respect to future events and are subject to certain risks, uncertainties and assumptions that could cause results to differ materially from those expressed in the forward-looking statements. With respect to forward-looking statements contained in this press release, the Company has made assumptions regarding, among other things: that commodity prices will be consistent with the current forecasts of its engineers; field netbacks; the accuracy of reserves ‎estimates; average production rates; costs to drill, complete and tie-in wells; ultimate recovery of reserves; that royalty ‎regimes will not be subject to material modification;‎future exchange and interest rates; supply of and demand for commodities; inflation; the availability of capital on satisfactory terms; the availability and price of labour and materials; the impact of increasing competition; conditions in general economic and financial markets; that the Company will be able to access capital, including debt, on acceptable terms; the receipt and timing of regulatory, exchange and other required approvals; the ability of the Company to implement its business strategies and complete future acquisitions; the Company's long term business strategy; and effects of regulation by governmental agencies.

Factors that could cause actual results to vary from forward-looking statements or may affect the operations, performance, development and results of the Company's businesses include, among other things: assumptions concerning operational reliability; risks inherent in the Company's future operations; the Company's ability to generate sufficient cash flow from operations to meet its future obligations; increases in maintenance, operating or financing costs; the realization of the anticipated benefits of future acquisitions, if any; the availability and price of labour, equipment and materials; competitive factors, including competition from third parties in the areas in which the Company intends to operate, pricing pressures and supply and demand in the oil and gas industry; fluctuations in currency and interest rates; inflation; risks of war, hostilities, civil insurrection, pandemics, political and economic instability overseas and its effect on commodity pricing and the oil and gas industry (including ongoing military actions between Russia and Ukraine, military action in Iran and the crisis in Israel and Gaza and related areas); severe weather conditions and risks related to climate change, such as fire, drought and flooding; terrorist threats; risks associated with technology; changes in laws and regulations, including environmental, regulatory and taxation laws, and the interpretation of such changes to the management team's future business; availability of adequate levels of insurance; difficulty in obtaining necessary regulatory approvals and the maintenance of such approvals; general economic and business conditions and markets; and such other similar risks and uncertainties. The impact of any one assumption, risk, uncertainty or other factor on a forward-looking statement cannot be determined with certainty, as these are interdependent and the Company's future course of action depends on the assessment of all information available at the relevant time. For additional risk factors relating to Highwood, please refer to the Company's annual information form and management discussion and analysis for the year ended December 31, 2025, as well as the Company's management discussion and analysis for the period ended December 31, 2025, which are available on the Company's SEDAR+ profile at www.sedarplus.ca. The forward-looking statements contained in this press release are made as of the date hereof and the parties do not undertake any obligation to update or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities laws.

_Short Term Results. __References in this press release to production test rates, initial test production rates, 7-day initial production rates, 30-day initial production rates and other short-term production rates that are useful in confirming the presence of hydrocarbons; however, such rates are not determinative of the rates at which such wells will commence production and decline thereafter and are not indicative of long term performance or of ultimate recovery. While encouraging, readers are cautioned not to place reliance on such rates in calculating the aggregate production for Highwood. A pressure transient analysis or well-test interpretation has not been carried out in respect of all wells. Accordingly, the Company cautions that the test results should be considered to be preliminary._