HIGHWOOD ASSET MANAGEMENT LTD. ANNOUNCES SECOND QUARTER 2025 RESULTS AND OPERATIONAL UPDATE

Executive Summary

• Highwood Asset Management Ltd. reported financial and operating results for the second quarter and first half of 2025, highlighting a 7% increase in average corporate production to 5,632 boe/d.
• The company reported Adjusted EBITDA of $15.2 million ($1.00 per share) for Q2 2025 and net income of $13.4 million ($0.92 per share), representing a $2.9 million increase from the same period in 2024.
• Significant operational and financial updates include the commencement of the second-half 2025 drilling program, a borrowing base increase from $120 million to $140 million, and the addition of the Business Development Bank of Canada as a new lender.

Key Details

• Production Metrics:
  • Average corporate production in Q2 2025 was 5,632 boe/d, up ~7% from Q1 2025 (5,264 boe/d).
  • Q2 2025 Production Breakdown: 2,861 bbls/d crude oil, 915 boe/d NGLs, and 11,134 mcf/d natural gas.
  • Six Months Ended June 30, 2025 Average Production: 5,449 boe/d.
• Financial Performance (Three Months Ended June 30, 2025):
  • Total revenues, net of royalties: $37.1 million (up 8% from $34.3 million in Q2 2024).
  • Income: $13.4 million ($0.92 per share), up from $10.5 million in Q2 2024.
  • Adjusted EBITDA: $15.2 million ($1.00 per share), down from $22.5 million in Q2 2024.
  • Adjusted Funds Flow: $13.4 million ($0.88 per share).
  • Funds flow from operating activities: $13.4 million.
  • Capital expenditures: $9.0 million.
• Financial Performance (Six Months Ended June 30, 2025):
  • Total revenues, net of royalties: $58.1 million (up 16% from $50.3 million in H1 2024).
  • Income: $15.7 million, up 58% from $9.9 million in H1 2024.
  • Adjusted EBITDA: $28.8 million, down 28% from $39.9 million in H1 2024.
  • Net debt: $117.9 million (up from $98.4 million at end of 2024).
  • Shareholder's equity: $147.9 million (up from $114.0 million at end of 2024).
• Operational Updates & Drilling:
  • Spudded the 100/13-15-048-14W5 unbooked well in the Basal Belly River sand at Brazeau on June 12, 2025.
  • Spudded the 100/02-034-061-09W4 well on July 18, 2025, the first unbooked multi-lateral openhole well (MLOH) into the Stacked Mannville Sands play near Bonnyville, Alberta.
  • Anticipates drilling four gross wells (3.4 net) in H2 2025: three gross (2.4 net) booked locations in Wilson Creek and one unbooked location near Bonnyville.
  • H1 2025 Capital Program: Executed $40 million in capital expenditures, including one well spud in Dec 2024 and seven gross (5.2 net) additional wells. One well came online in Q1, five gross (4.2) in Q2, and the Brazeau well is expected online in Q3.
• Financing & Hedging:
  • Borrowing base increased from $120 million to $140 million due to significant PDP reserves growth.
  • Added Business Development Bank of Canada as a new lender, joining RBC, ATB Financial, CIBC, and Macquarie Bank.
  • Hedging Program: Hedged ~2,200 bbls/day of oil for remainder of 2025 at ~$95.00 CAD/bbl (WTI-NYMEX) and ~2,050 bbls/day of oil for 2026 at ~$93.00 CAD/bbl. Hedged ~6,000 GJ/day of natural gas at ~$3.15/GJ (AECO).
  • Market value of commodity contracts was approximately $13 million in the money as of August 13, 2025.
• Outlook:
  • Company has ~$325 million in tax pools (including ~$100 million in non-capital losses) and does not anticipate being cash taxable for 2-3 years.
  • Focus remains on executing the 2025 capital program, growing free cash flow per share, and maintaining prudent leverage for organic growth or M&A.

Notable Quotes

• "As a result of significant PDP reserves growth, the Company's borrowing base has been increased from $120 million to $140 million. Furthermore, Highwood was pleased to add Business Development Bank of Canada as a new lender..."
• "With the continued volatility in commodity prices, Highwood has strategically added hedging... The market value of Highwood's commodity contracts is approximately $13 million in the money as of August 13, 2025."