HEADWATER EXPLORATION INC. ANNOUNCES YEAR END 2025 OPERATING AND FINANCIAL RESULTS, OPERATIONS UPDATE AND DECLARES QUARTERLY DIVIDEND
Executive Summary
- Headwater Exploration reported FY 2025 net income of $153.2 M ($0.64/share) and Q4 2025 net income of $29.3 M ($0.12/share), both down year‑over‑year but reflecting record production levels.
- Average daily production reached a record 22,776 boe/d for the year (24,259 boe/d in Q4), up ~12‑13% versus 2024, driven by successful secondary‑recovery and new discoveries in Grand Rapids and Greater Pelican.
- The Board declared a quarterly cash dividend of $0.11 per common share (annualized $0.44) payable April 15 2026; total dividends paid FY 2025 were $104.7 M ($0.44/share).
Key Details
- Financial Highlights – Q4 2025 vs. 2024
- Total sales, net of blending: $145.3 M (‑7%).
- Adjusted funds flow from operations: $79.3 M (‑10%); cash flow from operating activities: $72.7 M (‑4%).
- Operating netback (incl. derivatives): $41.14/boe (‑21%).
-
Capital expenditures: $46.1 M (‑5%).
-
Financial Highlights – FY 2025 vs. 2024
- Total sales, net of blending: $593.8 M (≈0%).
- Adjusted funds flow from operations: $326.2 M (‑3%); cash flow from operating activities: $297.1 M (‑6%).
- Operating netback (incl. derivatives): $45.22/boe (‑15%).
-
Capital expenditures: $228.3 M (+2%).
-
Production
- Q4 average production: 24,259 boe/d (13% increase YoY).
- FY average production: 22,776 boe/d (12% increase YoY).
- Heavy crude oil: 20,707 bbls/d in Q4; 20,689 bbls/d FY.
-
Natural gas: 11.5 mmcf/d in Q4; 11.5 mmcf/d FY.
-
Operating Netbacks – Q4: $41.14/boe (incl. derivatives); FY: $45.22/boe.
-
Dividends
- Quarterly dividend declared: $0.11 per share, payable April 15 2026 (record date March 31 2026).
-
FY 2025 total dividends paid: $104.7 M ($0.44/share), cumulative to date $317.6 M ($1.34/share).
-
Share Repurchases – NCIB approved; 1.05 M shares repurchased in FY 2025 at $7.30 average price for $7.7 M total proceeds.
-
Operations Update – Key Discoveries & Development
- Grand Rapids formation: 9 multi‑laterals delivering avg. 30‑day IP of 265 bbls/d; total zone production >2,200 bbls/d within 10 months.
- Q4 step‑out test (03/13‑22‑075‑02W5): 60‑day IP 335 bbls/d; water injection commissioned Feb 2026.
- Additional Grand Rapids wells drilled in FY: two tests with 30‑day IP of 230 bbls/d and 15‑day IP of 65 bbls/d (85% water cut).
-
Greater Pelican area: polymer‑flooded 4‑leg laterals producing avg. 90‑day IP 430 bbls/d; discovery well produced >150,000 bbls oil in first 10 months.
-
Secondary Recovery – As of Dec 31 2025, secondary recovery supports ~12,000 bbls/d; target >14,000 bbls/d by year‑end 2026 (≈60% of corporate production). Plans for additional 4–5 sections in Marten Hills West and 2 sections in Grand Rapids in 2026.
-
Exploration Outlook – $25 M budget for 2026 exploration; acquisition of 68 contiguous sections in Duncan area; first multi‑lateral test spudded.
-
McCully Asset – Back on production Dec 1 2025; ~90% of Dec 2025–Apr 2026 volumes hedged at C$14.25/MMBtu, expected cash flow ≈ $17 M for winter season.
-
Capital Structure – No bank debt as of year‑end; working capital $30.0 M; adjusted working capital $23.6 M.
Notable Quotes
“Headwater achieved monumental success in 2025, generating 12% production per share growth while reducing our corporate decline to approximately 20% through investment in secondary recovery.” – Jason Jaskela, President & CEO
All figures are presented as disclosed by Headwater Exploration Inc. and reflect the company’s audited financial statements for the periods indicated.