CALGARY, AB – Highwood Asset Management Ltd., (“Highwood” or the “Company“) (TSXV: HAM) is pleased to announce financial and operating results for the quarter ended September 30, 2021. The Company also announces that its unaudited financial statements and associated Management’s Discussion and Analysis (“MD&A“) for the quarter ended September 30, 2021, can be found at www.sedar.com and www.highwoodmgmt.com.
Highlights
- On July 20, 2021, the Company changed its name from Highwood Oil Company Ltd. to Highwood Asset Management Ltd. to better reflect its renewed focus on driving shareholder return through a multitude of energy focused segments or divisions. The asset management structure will oversee various operations including ESG and other clean energy transition subsectors, which include industrial metals and minerals, clean energy technologies, upstream and midstream oil & gas production & processing.
- Within the industrial metals and minerals business unit, the Company has amassed industrial metallic and mineral permits of over 3,400,000 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 has also engaged the third-party resource evaluator to compile a 43-101 Lithium from Brine Resource Assessment specific to Drumheller, Alberta, comprising approximately 750,000 acres of the over 3,400,000 total acreage, which is anticipated to be completed in the fourth quarter of 2021.
- Within the upstream and midstream oil & gas production & processing business unit, the Company delivered average production of 108 bbl/d of oil in the third quarter of 2021. Current net production from Highwood is approximately 105 bbl/d of oil.
- Corporately, net debt at September 30, 2021 was $1.59 million.
Summary of Financial & Operating Results
|
Three months ended September 30, |
Nine months ended September 30, |
|||||||||
|
2021 |
2020 |
% |
2021 |
2020 |
% |
|||||
|
Financial (in thousands) |
||||||||||
|
Oil and natural gas sales |
$ |
721 |
$ |
5,752 |
(87) |
$ |
6,423 |
$ |
14,034 |
(54) |
|
Transportation pipeline revenues |
905 |
790 |
15 |
2,805 |
2,719 |
3 |
||||
|
Total revenues, net of royalties(1) |
1,325 |
5,981 |
(78) |
6,242 |
23,297 |
(73) |
||||
|
Income (Loss) |
150 |
(20,074) |
(101) |
(1,370) |
(27,635) |
(95) |
||||
|
Funds flow from operations(5) |
195 |
1,923 |
(90) |
(1,198) |
7,876 |
(115) |
||||
|
Capital expenditures |
79 |
67 |
18 |
270 |
4,482 |
(94) |
||||
|
Net debt (2) |
(1,588) |
(42,728) |
(96) |
|||||||
|
Shareholder’s equity (end of period) |
8,836 |
(4,910) |
(280) |
|||||||
|
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) |
108 |
1,585 |
(93) |
400 |
1,443 |
(72) |
||||
|
Total (boe/d) |
108 |
1,585 |
(93) |
400 |
1,443 |
(72) |
||||
|
Average realized prices (4) |
||||||||||
|
Crude Oil (per bbl) |
72.26 |
39.44 |
83 |
58.77 |
35.50 |
66 |
||||
|
Upstream Operating netback (per BOE) (5) |
26.36 |
6.47 |
307 |
19.16 |
2.76 |
595 |
||||
|
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 Third Quarter Operations
Highwood’s focus in the third 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 technical report. On July 16, 2021, the Company released its first 43-101 Technical Report on Lithium from Brine evidencing the likely presence of Lithium from Brine within the Company’s permitted acreage. On September 21, 2021, the Company released another 43-101 Technical Report on Ironstone-Vanadium evidencing the likely presence of Ironstone-Vanadium within the Company’s permitted acreage.
The Company focused time and resources in Q3 2021 on extracting and submitting brine and ironstone samples for purposes of determining the potential Lithium from Brine and Iron, Vanadium, Alumina, Rare Earth Elements and other potential metals and minerals within the Ironstone rock.
Outlook and Update to Metallic and Industrial Mineral Permits
Within the industrial metals and minerals business unit, the Company has 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 is anticipated to be completed in the fourth quarter of 2021.
Given its clean balance sheet which provides considerable financial and operational flexibility, the Company remains open to completing accretive acquisitions through the balance of 2021 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.
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