/NOT FOR DISSEMINATION IN THE U.S. OR THROUGH
U.S. NEWSWIRES/
CALGARY,
AB, May 2, 2022 /CNW/ - Highwood Asset
Management Ltd., ("Highwood" or the "Company") (TSXV:
HAM) is pleased to announce financial and operating results for the
three months and twelve months ended December 31, 2021 and to provide the results of
its independent oil and gas reserves evaluation as of December 31, 2021, 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, 2021, can be found at
www.sedar.com and www.highwoodmgmt.com.
Highlights
- Within the industrial metals and minerals business unit, the
Company has amassed industrial metallic and mineral permits of over
3,900,000 acres in Alberta and
British Columbia and issued its
National Instrument 43-101 technical report on Lithium from Brine
on July 16, 2021 and National
Instrument 43-101 technical report on Ironstone-Vanadium on
September 21, 2021 . The Company also
engaged the third-party resource evaluator to compile a 43-101
Lithium from Brine Resource Assessment specific to Drumheller, Alberta, which was completed and
released subsequent to December 31,
2021. The initial inferred Lithium-Brine resource at
Drumheller has been calculated
within 3 separate resource domains, the combined total of which is
estimated to contain 18.14 million metric tonnes lithium carbonate
equivalent ("LCE").
- Within the upstream oil & gas production & processing
business unit, the Company delivered average production of 125
bbl/d of oil in the fourth quarter of 2021. Current net production
from Highwood remains at approximately 125 bbl/d of oil.
- Corporately, net debt at December 31,
2021 was $2.2 million,
subsequent to year-end the Company has reduced this amount to
$1.4 million.
Summary of Financial & Operating Results
|
Three months
ended
December
31,
|
|
Year
ended
December
31,
|
|
2021
|
|
2020
|
%
|
|
2021
|
|
2020
|
%
|
Financial (in
thousands)
|
|
|
|
|
|
|
|
|
|
Oil and natural
gas sales
|
$
966
|
$
|
$ 6,686
|
(86)
|
|
$
7,389
|
|
$
20,719
|
(64)
|
Transportation
pipeline revenues
|
718
|
|
1,021
|
(30)
|
|
3,523
|
|
3,740
|
(6)
|
Total revenues,
net of royalties(1)
|
1,351
|
|
6,122
|
(78)
|
|
7,593
|
|
29,418
|
(74)
|
Income
(Loss)
|
(951)
|
|
18,347
|
(105)
|
|
(2,321)
|
|
(9,284)
|
(75)
|
Funds flow from
operations(5)
|
59
|
|
(985)
|
106
|
|
(75)
|
|
(239)
|
69
|
Capital
expenditures
|
3
|
|
228
|
(97)
|
|
273
|
|
4,710
|
(94)
|
Net debt
(2)
|
|
|
|
|
|
(2,244)
|
|
(1,132)
|
(98)
|
Shareholder's
equity (end of period)
|
|
|
|
|
|
7,993
|
|
9,763
|
(12)
|
Shares
outstanding (end of period)
|
|
|
|
|
|
6,014
|
|
6,014
|
-
|
Weighted-average
basic shares
|
6,014
|
|
6,014
|
-
|
|
6,014
|
|
6,014
|
-
|
outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations
(3)
|
|
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
|
|
|
Crude oil
(bbls/d)
|
125
|
|
1,908
|
(93)
|
|
331
|
|
1,560
|
(79)
|
Total
(boe/d)
|
125
|
|
1,908
|
(93)
|
|
331
|
|
1,560
|
(79)
|
Average realized
prices (4)
|
|
|
|
|
|
|
|
|
|
Crude Oil
(per bbl)
|
84.06
|
|
38.08
|
121
|
|
61.18
|
|
36.29
|
69
|
Upstream
Operating netback (per BOE) (5)
|
31.85
|
|
13.94
|
128
|
|
20.98
|
|
5.37
|
291
|
|
|
|
|
|
|
|
|
|
|
Wells
drilled:
|
|
|
|
|
|
|
|
|
|
Gross
|
-
|
|
-
|
-
|
|
-
|
|
4.0
|
(100)
|
Net
|
-
|
|
-
|
-
|
|
-
|
|
2.0
|
(100)
|
Success
(%)
|
-
|
|
-
|
-
|
|
-
|
|
100
|
-
|
|
|
|
|
|
|
|
|
|
|
(1) Includes
realized and unrealized gains and losses on commodity
contracts
|
(2) 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".
|
2021 Fourth Quarter Operations
Highwood's focus in the fourth quarter of 2021 was to evaluate
the sizeable position of industrial mines and minerals permits
throughout Western Canada for
purposes of creating a 43-101 inferred resource assessment.
Subsequent to December 31, 2021,
Highwood filed a NI 43-101 Technical Report Lithium Resource
Estimate for its Drumheller Property, resulting in a combined total
resource estimate of 18.14Mt LCE.
The Company also focused time and resources in Q4 2021 on
extraction technologies for Lithium from Brine.
With the strong improvement in commodity prices over the course
of 2021, the Company also reviewed and assessed several potential
acquisitions for its upstream operations. The Company will continue
to review and assess opportunities which are accretive to the
Company as Highwood seeks to grow this segment of its
operations.
Outlook and Update to Metallic and Industrial Mineral
Permits
Within the industrial metals and minerals business unit, the
Company engaged a third-party resource evaluator to prepare a
43-101 Resource Estimate covering the Lithium from Brine within the
region of Drumheller,
Alberta. This 43-101 Resource Estimate was released
subsequent to December 31, 2021 on
February 28, 2022. The results were
encouraging to Highwood as the combined total initial inferred
lithium-brine resource estimate at its Drumheller asset is 18.14Mt LCE.
Given its clean balance sheet which provides considerable
financial and operational flexibility, the Company remains open to
completing accretive acquisitions through the balance of 2022 and
beyond. 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.
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.
Neither TSX Venture Exchange nor its Regulation Services
Provider (as that term is defined in the policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
Cautionary Note Regarding Forward-Looking Information
This news release contains "forward-looking information" or
"FLI" within the meaning of the Canadian securities laws.
Forward-looking information is generally identifiable by use of the
words "believes," "may," "plans," "will," "anticipates," "intends,"
"budgets", "could", "estimates", "expects", "forecasts", "projects"
and similar expressions, and the negative of such expressions.
Forward-looking information in this news release include statements
about the Company's next steps which include resource assessment,
continued exploration and development work, including in respect of
the potential extraction technology, continued sampling and
developing a reservoir model, the completion and timing for the
Cretaceous ironstone NI 43-101 Technical Report, and the evaluation
and potential spinout of a pure play lithium company, as well as
the specific assumptions used to develop such FLI and the specific
risk factors.
In connection with the forward-looking information contained
in this news release, Highwood has made numerous assumptions,
regarding, among other things: the geological, metallurgical,
engineering, financial and economic advice that Highwood has
received is reliable and is based upon practices and methodologies
which are consistent with industry standards. While Highwood
considers these assumptions to be reasonable, these assumptions are
inherently subject to significant uncertainties and
contingencies.
Additionally, there are known and unknown risk factors which
could cause Highwood's actual results, performance, or achievements
to be materially different from any future results, performance or
achievements expressed or implied by the forward-looking
information contained herein. Known risk factors include, among
others: the Li-brine resource assessment may not be completed as
planned or at all, the exploration and continued sampling may
exceed the budget; continued sampling and the reservoir model may
not achieve the results expected; investor support for a pure play
lithium public spinout; the need to obtain additional financing;
uncertainty as to the availability and terms of future financing;
the possibility of delay in exploration or development programs and
uncertainty of meeting anticipated program milestones; uncertainty
as to timely availability of permits and other governmental
approvals.
A more complete discussion of the risks and uncertainties
facing Highwood is disclosed in Highwood's continuous disclosure
filings with Canadian securities regulatory authorities at
www.sedar.com. All forward-looking information herein is qualified
in its entirety by this cautionary statement, and Highwood
disclaims any obligation to revise or update any such
forward-looking information or to publicly announce the result of
any revisions to any of the forward-looking information contained
herein to reflect future results, events, or developments, except
as required by law.
Oil and Gas Measures
Readers should see the "Selected Technical Terms" in the
Annual Information Form filed on April 29,
2021 for the definition of certain oil and gas
terms.
Basis of Barrels of Oil Equivalent – This news release
discloses certain production information on a barrels of oil
equivalent ("boe") basis with natural gas converted to barrels of
oil equivalent using a conversion factor of six thousand cubic feet
of gas (Mcf) to one barrel (bbl) of oil (6 Mcf:1 bbl). Condensate
and other NGLs are converted to boe at a ratio of 1 bbl:1 bbl. Boe
may be misleading, particularly if used in isolation. A boe
conversion ratio of 6 Mcf:1 bbl is based roughly on an energy
equivalency conversion method primarily applicable at the burner
tip and does not represent a value equivalency at sales point.
Although the 6:1 conversion ratio is an industry-accepted norm, it
is not reflective of price or market value differentials between
product types. Based on current commodity prices, the value ratio
between crude oil, NGLs and natural gas is significantly different
from the 6:1 energy equivalency ratio. Accordingly, using a
conversion ratio of 6 Mcf:1 bbl may be misleading as an indication
of value.
Mcfe Conversions: Thousands of cubic feet of gas equivalent
("Mcfe") amounts have been calculated by using the conversion ratio
of one barrel of oil (1 bbl) to six thousand cubic feet (6 Mcf) of
natural gas. Mcfe amounts may be misleading, particularly if used
in isolation. A conversion ratio of 1 bbl to 6 Mcf is based on an
energy equivalency conversion method primarily applicable at the
burner tip and does not represent a value equivalency at the
wellhead. Given that the value ratio based on the current price of
natural gas as compared to oil is significantly different from the
energy equivalent of 1:6, utilizing a conversion on a 1:6 basis may
be misleading as an indication of value.
Non-GAAP Measures
"Funds flow from operations" is a non-GAAP financial measure
and is calculated as cash flow from operating activities adjusted
for changes in non-cash working capital.
"Netback" is a non-GAAP financial measure and is calculated
as revenues net of royalties, less transportation and processing
charges and operating expenses and then divided by BOE or Mcf
sold.
SOURCE Highwood Asset Management Ltd.