Highwood Oil Company Ltd. announces its results for the first quarter of 2021 as well as an update on industrial metals and mining permits

/ NOT FOR DISTRIBUTION IN THE UNITED STATES OR THROUGH US NEWS FILMS /

CALGARY, AB, May 28, 2021 / CNW / – Highwood Oil Company Ltd., (“Highwood“or the”Company“) (TSXV: HOCL) is pleased to report its financial and operating results for the quarter ended March 31, 2021. The Company also announces that its unaudited financial statements and related MD&A (“Management report“) for the completed quarter March 31, 2021, can be found at www.sedar.com and www.highwoodoil.com.

Q1 2021 results and 2021 activity

  • Highwood announced the signing of a definitive agreement on November 13, 2020 to sell the assets of Red Earth to a Alberta producer for a cash consideration of $ 2.0 million. The transaction was then closed on March 25, 2021 after regulatory approval and license transfers. The deleted provision $ 36.0 million balance sheet decommissioning liabilities or approximately 92% of the company’s decommissioning obligations. The transaction did not include an interest in the intermediate assets of the Company’s Wabasca River Pipeline.
  • As announced on March 25, 2021, the company intends to become an asset management entity in order to focus on return to shareholders. The asset management structure will oversee various operations, including ESG and other clean energy transition sub-sectors, which may include industrial metals and minerals (lithium, iron, rare earth elements including scandium and carbon). gadolinium, vanadium, silica, alumina, etc.), clean energy technologies, upstream and halfway oil and gas production and processing. Shareholder approval to begin the transition to Highwood Asset Management will be made at the company’s AGM on June 17, 2021.
  • Within the Industrial Metals and Minerals business unit, the Company has already accumulated metal and mineral industrial permits of more than 3,100,000 acres in Alberta and British Columbia and hired a third-party resource assessor to prepare a 43-101 technical report on licensed acreage.
  • Within the upstream and downstream oil and gas production and processing business unit, the company delivered an average production of 1,008 b / d of oil in the first quarter of 2021. Highwood’s current net production is about 125 b / d of oil after Earth’s Red Disposition.
  • Business, net debt to March 31, 2021 has been $ 1.9 million.

Summary of financial and operational results


Three months ended March 31

Financial (expressed in thousands)

2021

2020

% Switch

Oil and natural gas sales

$

5 158

$

6 545

(20)

Transmission pipeline revenues


969


1 160

(16)

Total revenues, net of royalties (1)


4,175


16,265

(74)

Loss


(778)


(3,724)

(81)

Cash flow from operations (5)


726


1,076

(33)

Capital expenditure


117


4,191

(97)

Adjusted net debt (2)


544


44 623

(99)

Equity (end of period)


9,228


14 544

(36)

Outstanding shares (end of period)


6,014


6,014

Weighted average number of basic shares outstanding


6,014


6,014







Operations (3)






Production






Crude oil (b / d)


1,008


1 872

(46)

Total (boe / d)


1,008


1 872

(46)

Average realized prices (4)






Crude oil (by bbl)


56.87


38.42

50

Operating netback (by boe) (5)


15.93


2.95

465







Drilled wells:






Gross (6)



4.0


Report (6)



2.0


Success (%)



100








(1)

Includes gains and losses on commodity contracts.

(2)

Adjusted net debt consists of bank debt and excess (deficit) working capital excluding commodity contract assets and / or liabilities

(3)

For a description of the boe conversion rate, see “Oil equivalent barrel basis”.

(4)

Before the cover.

(5)

See “Non-GAAP Measures”.

(6)

Includes 1 raw well (0.5 net) outstanding for drilling past the casing point.

(7)

The production and revenues of natural gas and NGLs are not material to the company.

First quarter 2021 operations

Highwood’s goal in the first quarter of 2021 was to amass a significant position in industrial mining and mineral permits throughout Western Canada assess for the purpose of creating a 43-101 Means of Assessment.

Although Highwood sold the majority of its producing oil assets in the first quarter of 2021, the Company has assessed and will continue to assess opportunities in the M&A market, but will remain disciplined to pursue only those opportunities that are accretive with low to moderate responsibility profiles.

On a corporate level, the Company intends to create a growing profile of recurring free cash flow that will provide maximum flexibility for growth and / or other strategic M&A opportunities on a non-dilutive basis.

Outlook and update of metal and industrial mining permits

As announced on March 25, 2021, the Company intends to become an asset management entity overseeing various operations, including ESG and other clean energy transition sub-sectors, which may include industrial metals and minerals (lithium, iron, rare earth elements including scandium and gadolinium, vanadium, silica, alumina, etc.), clean energy technologies, upstream and downstream oil and gas production and processing downstream, and potentially other business ventures. The transition is subject to shareholder and stock exchange approval.

Within the Industrial Metals and Minerals business unit, the company hired a third-party resource assessor to prepare a 43-101 technical report on the 3,100,000 acres allowed in the 195 blocks of Alberta and British Columbia.

Given its own balance sheet which offers considerable financial and operational flexibility, the Company expects to be able to complete several accretive acquisitions to catalyze significant organic growth in 2021. The Company is currently engaged in several encouraging dialogues regarding various acquisitions. and partnership opportunities. Global optimism around COVID-19 mitigation and restoration of previous economic and industrial activities has created positive sentiment in the market and investments both inside and outside the space. oil and gas.

Oil and gas measurements

Readers should consult the “Selected Technical Terms” in the Annual Information Form filed on April 30, 2019 for the definition of certain oil and gas terms.

Barrel of oil equivalent basis – This press release discloses certain information on barrels of oil equivalent (“boe”) production, with natural gas being converted to barrels of oil equivalent using a conversion factor of six thousand cubic feet of gas (Mcf) in 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 can be misleading, especially if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is roughly based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent value equivalence at the point of sale. Although the 6: 1 conversion ratio is an accepted industry standard, it does not reflect the differences in price or market value between product types. Based on current commodity prices, the value ratio of crude oil, NGLs and natural gas is very different from the energy equivalency ratio of 6: 1. Therefore, the use of a ratio conversion rate of 6 Mcf: 1 bbl can be misleading as a value indication.

Mcfe Conversions: Thousands of cubic feet of gas equivalent (“Mcfe”) were calculated using the conversion ratio of one barrel of oil (1 bbl) to six thousand cubic feet (6 Mcf) of natural gas. Mcfe amounts can be misleading, especially if used in isolation. A conversion ratio of 1 bbl to 6 Mcf is based on an energy equivalence conversion method primarily applicable at the burner tip and does not represent value equivalence at the wellhead. Since the value ratio based on the current price of natural gas to oil is significantly different from the energy equivalent of 1: 6, using a conversion on a 1: 6 basis can be misleading in as an indication of the value.

Non-GAAP measures

“Cash 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 net royalty income, less freight and handling charges and operating expenses, then divided by BOE or Mcf sold.

Other warnings

The Bourse has in no way conveyed the merits of the proposed transaction and has neither approved nor disapproved the contents of this press release.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this press release.

This press release contains forward-looking statements relating to the future business of the company and other statements that are not historical facts. Forward-looking statements are often identified by words such as “will”, “may”, “should”, “anticipate”, “expect” and similar expressions. All statements other than statements of historical fact included in this press release, including, without limitation, statements regarding the future plans and objectives of the Company, are forward-looking statements that involve risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Significant factors that could cause actual results to differ materially from the Company’s expectations include the risks detailed from time to time in the Company’s filings with securities regulations.

The reader is cautioned that the assumptions used in the preparation of any forward-looking information may prove to be incorrect. Events or circumstances may cause actual results to differ materially from those expected, due to many known and unknown risks, uncertainties and other factors, many of which are beyond the control of the Company. The reader is cautioned not to place undue reliance on forward-looking information. This information, although considered reasonable by management at the time of preparation, may prove to be incorrect and actual results may differ materially from those expected. The forward-looking statements contained in this press release are expressly qualified by this cautionary statement. The forward-looking statements contained in this press release are made as of the date of this press release and the Company will publicly update or revise any of the included forward-looking statements, as expressly required by Canadian securities laws.

SOURCE Highwood Oil Company Ltd.

For further information: For further information on the Company, please contact: Greg Macdonald, President and CEO, 587.393.0862, [email protected]

Related links

https://highwoodoil.com/

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