/NOT FOR DISSEMINATION IN THE U.S. OR THROUGH
U.S. NEWSWIRES/
CALGARY,
AB, May 27, 2022 /CNW/ - Highwood Asset
Management Ltd., ("Highwood" or the "Company") (TSXV:
HAM) is pleased to announce financial and operating results for the
three months ended March 31, 2022.
The Company also announces that its unaudited financial statements
and associated Management's Discussion and Analysis
("MD&A") for the period ended March 31, 2022, can be found at
www.sedar.com and www.highwoodmgmt.com.
Highlights
- Within the industrial metals and minerals business unit, the
Company engaged the third-party resource evaluator to compile a
43-101 Lithium from Brine Resource Assessment specific to
Drumheller, Alberta, which was
effectively dated February 21, 2022.
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 120
bbl/d of oil in the first quarter of 2021. Current net production
from Highwood is approximately 110 bbl/d of oil, with one well in
Deer Mountain currently shut in due to road bans. Highwood is
working to bring this well back on production as soon as
possible.
- During the first quarter of 2022, the Company sold a non-core
property for gross proceeds of $107
thousand that had a cost basis of $nil.
- Corporately, net debt at March 31,
2022 was $1.67 million,
subsequent to quarter-end, with cash flows form operations and
dispositions the Company has reduced net debt and is in a working
capital surplus position.
Summary of Financial &
Operating Results
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|
|
Three Months
Ended
March
31,
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|
|
|
|
|
|
2022
|
|
2021
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%
|
Financial (in
thousands)
|
|
|
|
|
|
|
|
|
|
Oil and natural
gas sales
|
|
|
|
|
|
$
1,151
|
|
$
5,518
|
(78)
|
Transportation
pipeline revenues
|
|
|
|
|
|
797
|
|
969
|
(18)
|
Total revenues,
net of royalties(1)
|
|
|
|
|
|
1,618
|
|
4,175
|
(61)
|
Income
(Loss)
|
|
|
|
|
|
456
|
|
(778)
|
159
|
Funds flow from
operations(5)
|
|
|
|
|
|
875
|
|
726
|
11
|
Capital
expenditures
|
|
|
|
|
|
138
|
|
114
|
21
|
Net debt
(2)
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|
|
|
|
|
(1,694)
|
|
(544)
|
(211)
|
Shareholder's
equity (end of period)
|
|
|
|
|
|
8,529
|
|
9,228
|
(8)
|
Shares
outstanding (end of period)
|
|
|
|
|
|
6,014
|
|
6,014
|
-
|
Weighted-average
basic shares outstanding
|
|
|
|
6,014
|
|
6,014
|
-
|
|
|
|
|
|
|
|
|
|
|
Operations
(3)
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|
|
|
|
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|
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Production
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|
|
|
|
|
|
|
|
|
Crude oil
(bbls/d)
|
|
|
|
|
|
120
|
|
1,008
|
(88)
|
Total
(boe/d)
|
|
|
|
|
|
120
|
|
1,008
|
(88)
|
Average realized
prices (4)
|
|
|
|
|
|
|
|
|
|
Crude Oil
(per bbl)
|
|
|
|
|
|
106.92
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|
56.87
|
88
|
Upstream
Operating netback (per BOE) (5)
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|
|
|
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49.33
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|
18.64
|
165
|
|
(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".
|
2022 First Quarter
Operations
With the strong improvement in commodity prices and increased
interest in Canadian energy, the Company's focus in the first
quarter was reviewing and assessing 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.
Highwood's focus in the first quarter of 2022 was also to
evaluate the sizeable position of industrial mines and minerals
permits throughout Western Canada
for purposes of creating a 43-101 inferred resource assessment.
During the first quarter of 2022, 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 Q1 2022 on
extraction technologies for Lithium from Brine.
Outlook
As of today, the Company is undrawn on its credit facility and
has a working capital surplus, 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.
Option and Restricted Share Unit
("RSU") Grant
On May 30, 2022, the Company will
grant 26,500 stock options and 26,500 RSU's to employees and
directors of the Company.
The options will be granted at an exercise price of the higher
of $11.00 per option or the market
price on the date of grant. The options granted vest 1/3 on each of
December 31, 2022, December 31, 2023 and December 31, 2024 and have a five year term.
The RSU's are exercisable for nominal consideration. The RSU's
granted vest 1/3 on each of December 31,
2022, December 31, 2023 and
December 31, 2024 and expire on
December 31, 2025.
Disposition
The Company is pleased to announce that it has entered into a
definitive agreement and closed the disposition of a 50% working
interest in the Company's 14-05 terminal to an arm's length private
Canadian midstream company (the "Purchaser") for gross proceeds of
$2.25 million. The Company and the
Purchaser will each own 50% of the terminal with the Company
remaining as operator.
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.