Highwood Asset Management Ltd. press release
HIGHWOOD ASSET MANAGEMENT LTD. ANNOUNCES FOURTH QUARTER AND FULL-YEAR 2024 RESULTS, 2024 YEAR-END RESERVES AND OPERATIONAL UPDATE
TSXV - TSX Venture Exchange · Oil · Natural Gas · Natural Gas Liquids · Lithium · Canada
Canada NewsWire
/NOT FOR DISSEMINATION IN THE U.S. OR THROUGH U.S. NEWSWIRES/
CALGARY, AB , March 21, 2025 /CNW/ - Highwood Asset Management Ltd. (" Highwood " or the " Company ") (TSXV: HAM) is pleased to announce financial and operating results for the three and twelve months ended December 31, 2024 and to provide the results of its independent oil and gas reserves evaluation as of December 31, 2024 , prepared by GLJ Petroleum Consultants Ltd. (" GLJ "). The Company also announces that its audited financial statements and associated Management's Discussion and Analysis (" MD&A ") for the year ended December 31, 2024 , are available on Highwood's website at www.highwoodmgmt.com and on SEDAR+ at www.sedarplus.ca .
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Highlights
Achieved average corporate production of 5,966 boe/d in Q4 2024, representing an increase of approximately 48% from the comparative period last year (average of 4,035 boe/d) as a result of successful 2024 drilling program. For the fourth quarter of 2024, Highwood delivered Adjusted EBITDA of $19.0 million ( $1.25 per share) and adjusted funds flow of $7.2 million ( $0.47 per share), representing increases of $8.7 million (85%) and $9.3 million (105%), respectively, over the comparative three-month period in 2023. (1) Highwood's top priority remains shareholder value where strong execution in 2024 was clearly demonstrated by NAV per share growth of approximately 35% on a PDP BTNPV10 NAV/share basis and approximately 13% on a 1P BTNPV10/share basis. Realized before-tax net present value, after debt, of booked reserves (1) : PDP BTNPV10 of $262 million representing NAV $10.86 /share and $10.07 /share fully diluted. Associated RLI of 9.1 years and delivered a recycle ratio of 2.2
1P BTNPV10 of $515 million representing NAV $27.51 /share and $23.42 /share fully diluted. Associated RLI of 14.1 years and recycle ratio of 2.2
2P BTNPV10 of $819 million representing NAV $47.61 /share and $39.54 /share fully diluted. Associated RLI of 21.0 years and recycle ratio of 2.9
The Company incurred capital expenditures of approximately $11 million in the fourth quarter of 2024, with the majority of costs related to two gross (1.5 net) wells drilled — one well in Brazeau (booked) and one well in Wilson Creek (booked), along with seismic purchased in Wilson Creek and Bonnyville to assist the Company with its 2025 drilling program. The 2025 drilling program included 6 gross (4.3 net) wells drilled in the first quarter, which are expected to come onstream within 60 days. Highwood reiterates its guidance of a 2025 capital plan of $60–65 million, 2025 average production guidance of 6,200–6,400 boe/d (+10% increase at midpoint), Adjusted EBITDA of $88 -92 million and a target 2025 Net Debt / 2025 Exit EBITDA ratio of approximately 0.8x. (1)(2) As a result of a successful drilling program that delivered significant PDP reserves growth, the Company's borrowing base has been increased from $110 million to $120 million during the fourth quarter of 2024. With the increase to the Company's borrowing base, the Company was able to extinguish the Promissory Note on November 26, 2024 which will result in a positive impact on interest expense with the credit facility bearing interest currently at approximately 7% per annum, compared to the 13% per annum borne by the Promissory Note. Furthermore, the early repayment will create additional financial flexibility for Highwood.
Notes to Highlights:
| (1) | See "Caution Respecting Reserves Information" and "Non-GAAP and other Specified Financial Measures". | | (2) | Based on Management's projections (not Independent Qualified Reserves Evaluators' forecasts) and applying the following pricing assumptions: WTI: US$70.00/bbl; WCS Diff: US$14.00/bbl; MSW Diff: US$3.75/bbl; AECO: C$2.00/GJ; 0.73 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, | | | | | | | | | 2024 | | 2023 | % | | 2024 | | 2023 | % | | Financial (in thousands) | | | | | | | | | | | Petroleum and natural gas sales | $ 33,775 | $ | $ 23,633 | 43 | | $ 135,794 | | $ 41,212 | 230 | | Transportation pipeline revenues | $ 621 | | $ 664 | (7) | | $ 2,670 | | $ 2,867 | (7) | | Total revenues, net of royalties (1) | $ 21,167 | | $ 29,918 | (29) | | $ 109,498 | | $ 41,038 | 167 | | Income | $ 1,914 | | $ 47,785 | (96) | | $ 27,950 | | $ 46,144 | (39) | | Funds flow from operations (5) | $ 16,791 | | $ 7,813 | 115 | | $ 69,134 | | $ 13,873 | 398 | | Adjusted EBITDA (5) | $ 18,995 | | $ 10,261 | 85 | | $ 79,144 | | $ 18,171 | 336 | | Capital expenditures | $ 10,999 | | $ 14,737 | (25) | | $ 66,451 | | $ 18,767 | 254 | | Net debt (2) | | | | | | $ 97,832 | | $ 97,051 | - | | Shareholder's equity (end of year) (6) | | | | | | $ 132,087 | | $ 104,199 | 27 | | Shares outstanding (end of year) | | | | | | 15,154 | | 15,114 | - | | Weighted-average basic shares | | | | | | 14,837 | | 9,723 | 53 | | outstanding | | | | | | | | | | | | | | | | | | | | | | Operations (3) | | | | | | | | | | | Production | | | | | | | | | | | Crude oil (bbls/d) | 3,638 | | 2,306 | 58 | | 3,580 | | 978 | 266 | | NGLs (boe/d) | 775 | | 526 | 47 | | 752 | | 210 | 259 | | Natural gas (mcf/d) | 9,319 | | 7,215 | 29 | | 8,965 | | 2,969 | 193 | | Total (boe/d) | 5,966 | | 4,035 | 48 | | 5,781 | | 1,682 | 1,682 | | Average realized prices (4) | | | | | | | | | | | Crude oil (Cdn$/bbl) | 91.63 | | 95.07 | (4) | | 93.82 | | 99.44 | (6) | | NGL (Cdn$/boe) | 29.51 | | 36.22 | (19) | | 31.76 | | 37.52 | (15) | | Natural gas (Cdn$/mcf) | 1.17 | | 2.57 | (55) | | 1.30 | | 2.63 | (50) | | Operating netback (per BOE) | $ 36.58 | | $ 32.42 | 13 | | $ 38.30 | | $ 35.54 | 8 |
| (1) | Includes realized and unrealized gain and losses on commodity contracts. | | (2) | Net debt consists of bank debt, promissory note, long-term accounts payable and accrued liabilities and working capital surplus (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. |
2024 Reserves Summary
Highwoods assets were evaluated by GLJ effective December 31, 2024 , in a report dated March 7, 2025 , using the three Consultants' Average price forecast (the " Reserves Report "). GLJ is the Company's independent qualified reserves evaluator.
Significant intrinsic value recognized in Year-End 2024 Reserves. Realized before-tax net present value, after debt, of booked reserves as follows:
PDP BTNPV10 of $262 million representing NAV $10.86 /share and $10.07 /share fully diluted. 1P BTNPV10 of $515 million representing NAV $27.51 /share and $23.42 /share fully diluted. 2P BTNPV10 of $819 million representing NAV $47.61 /share and $39.54 /share fully diluted.
Key highlights of the Company's proved developed producing (PDP), total proved (1P) and total proved plus probable (2P) reserves from the Reserves Report are highlighted below:
PDP reserves increased by 2,220 Mboe to 18,243 Mboe, representing a 14% increase to volume along with a $44 million increase in value when compared to YE2023 yielding a RLI of 9.1 years 1P reserves increased by 5,037 Mboe to 36,920 Mboe, representing a 16% increase to volume along with a $52 million increase in value when compared to YE2023 yielding a RLI of 14.1 years 2P reserves increased by 8,450 Mboe to 61,200 Mboe, representing a 16% increase to volume along with a $74 million increase in value when compared to YE2023 yielding a RLI of 21.0 years
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 2024 at FD&A of $17.75 with associated recycle ratio of 2.2 based on 2024 netback of $38.30 /boe 1P reserves: FD&A of $18.78 /boe with associated recycle ratio of 2.2. 2P reserves: FD&A of $14.48 /boe with associated recycle ratio of 2.9.
Further recycle ratios are listed below:
| | F&D | FD&A | F&D | FD&A | | Recycle Ratio | (Excluding FDC) | (Including FDC) | | | | 1P Reserves | 4.8 | 5.0 | 1.9 | 2.2 | | 2P Reserves | 7.0 | 7.2 | 2.5 | 2.9 |
2024 Reserves by Category
The following table provides a summary of specific details from the Reserves Report, which was created in accordance with the procedures and standards contained in the Canadian Oil and Gas Evaluation Handbook and the requirements of National Instruments 51-101 — Standards of Disclosure for Oil and Gas Activities .
| Working interest | Mboe | BTNPV10 ($M) | | Proved Developed Producing | 18,243 | 262,454 | | Total Proved | 36,920 | 514,700 | | Proved Plus Probable | 61,200 | 819,332 |
Company Reserves (working interest)
| | Light & Medium Oil | Conventional Natural Gas | Shale Gas | Natural Gas Liquids | Oil Equivalent | | | | | | | Reserves Category | Company Gross Mbbl | Company Net
Mbbl | Company Gross MMcf | Company Net
MMcf | Company Gross MMcf | Company Gross MMcf | Company Net
Mboe | Company Gross Mboe | Company Gross Mboe | Company Net
Mboe | | Proved | | | | | | | | | | | | Producing | 6,463 | 5,026 | 50,774 | 41,855 | 0 | 0 | 3,302 | 2,499 | 18,243 | 14,515 | | Developed Non-Producing | 314 | 223 | 3,641 | 2,718 | 0 | 0 | 243 | 155 | 1,164 | 831 | | Undeveloped | 10,323 | 8,485 | 26,712 | 24,550 | 2,087 | 1,900 | 2,203 | 1,804 | 17,513 | 14,850 | | Total Proved | 17,100 | 13,731 | 81,127 | 69,123 | 2,087 | 1,900 | 5,748 | 4,458 | 36,920 | 30,196 | | Total Probable | 9,504 | 7,280 | 54,650 | 47,643 | 2,574 | 2,299 | 4,833 | 3,707 | 24,280 | 19,639 | | Total Proved Plus Probable | 26,604 | 21,014 | 135,777 | 116,766 | 4,661 | 4,199 | 10,581 | 8,165 | 61,200 | 49,836 |
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 | 488,356 | 335,139 | 262,454 | 219,878 | 191,554 | 448,129 | 317,646 | 253,357 | 214,621 | 188,305 | 18.08 | 3.01 | | Developed Non-Producing | 23,303 | 15,510 | 11,438 | 8,987 | 7,357 | 17,931 | 12,226 | 9,265 | 7,475 | 6,267 | 13.76 | 2.29 | | Undeveloped | 518,437 | 340,991 | 240,808 | 176,959 | 133,462 | 398,528 | 257,424 | 177,773 | 127,276 | 93,124 | 16.22 | 2.70 | | Total Proved | 1,030,096 | 691,640 | 514,700 | 405,824 | 332,373 | 864,588 | 587,297 | 440,396 | 349,372 | 287,696 | 17.05 | 2.84 | | Total Probable | 784,700 | 455,447 | 304,632 | 221,659 | 170,212 | 603,253 | 347,418 | 230,124 | 165,721 | 125,962 | 15.51 | 2.59 | | Total Proved Plus Probable | 1,814,797 | 1,147,087 | 819,332 | 627,483 | 502,584 | 1,467,841 | 934,715 | 670,519 | 515,092 | 413,658 | 16.44 | 2.74 |
Note: Unit values are based on Company Net Reserves.
Operational Update
With continued strong commodity prices in the year ended December 31, 2024 , the Company focused primarily on the execution of its capital program. During this period, the Company executed a successful $66 million development capital program which included twelve additional wells, of which five were brought online in the first quarter, five in the third quarter and early fourth quarter of 2024 and the remainder in the first quarter of 2025. These twelve wells consisted of six fracture stimulated wells at Wilson Creek (booked), three fracture stimulated wells at Brazeau (booked) and three MLOH wells, two wells in Brazeau (two booked and one unbooked) and one well in Viking Kinsella (unbooked).
Highwood is set to drill six booked gross (4.3 net) wells in the first quarter or 2025. During this period, the Company's oil production has been impacted by long periods of severe cold weather, third party outages and delays in bringing new drills online. As a result, forecasted oil production for the first quarter is expected to be approximately 2,750 – 3,000 bbl/d and total first quarter production is expected to be 5,100 – 5,300 boe/d. Highwood still expects to achieve 2025 average production of 6,200–6,400 boe/d, as previously guided.
Outlook
The primary focus over the near-term is the execution of the Company's 2025 capital program while continuing to focus on shareholder returns. At December 31, 2024 , Highwood had over $300 million in tax pools, including more than $100 million in non-capital losses. Highwood does not anticipate being cash taxable for approximately three years.
Highwood is continuing to evaluate its undeveloped lands for drilling opportunities and is planning to continue its active capital program while commodity prices remain strong.
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 return of capital to shareholders. 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 176,500 Options, 92,250 Restricted Share Units (" RSU s"), $741 thousand worth of Performance Share Units (" PSUs ") to Officers of the Company and 20,000 Deferred Share Units (" DSUs ") to non-management directors. All Options, RSUs, PSUs and DSUs were granted effective March 21, 2025 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 RSU's 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 higher of $6.00 and the market closing price on March 21, 2025 per option.
The PSU's 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 DSUs are subject to TSXV acceptance. 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: development of Highwood's potential new core area in Eastern Alberta targeting the Mannville stack; in the first quarter of 2025, drilling six booked gross (4.2 net) wells; plans to continue the Company's active capital program while commodity prices remain strong; Highwood's 2025 guidance (including debt reduction of approximately 15–20%; production of 6.2–6.4 Mboe/d (Liquids 75–78%); Adjusted EBITDA of $88–92 million; capital expenditures of $60–65 million; operating netback (per boe) of $36–38.00; and Net Debt / 2025 Exit EBIDTA of ~0.8x); 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 and the crisis in Israel and Gaza ); 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, 2023 , as well as the Company's management discussion and analysis for the period ended June 30, 2024 , 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.