CALGARY – Highwood Oil Company Ltd. (TSXV:HOCL) (“Highwood” or the “Corporation“) announces revisions to the previously announced 2020 capital budget and an update to operations in 2020.
2020 Capital Budget
Given the weakness and uncertainty in today’s future oil price environment and the advent of the COVID-19 outbreak, Highwood has chosen to cease all non-discretionary capital activity for the balance of 2020 until realized pricing in Western Canada rebounds from these historic lows. Highwood’s main goal in these times will be to protect its balance sheet.
Highwood had previously planned to drill between 12 and 18 gross wells (6-9 net) in the Clearwater play over 2020. The Corporation successfully drilled 5 gross (2.5 net) wells in the Clearwater in January & February 2020 before the industry saw the drastic decline in market pricing.
Highwood has evaluated economics for all production fields and has shut-in production which is uneconomic in today’s price environment. Current production from Highwood is approximately 250 bbl/d of oil proforma the previously announced Red Earth divestiture from February 18, 2020. Until price recoveries are seen, Highwood does not plan to bring additional production back online. Highwood is currently hedged an average of 467 bbl/d for the duration 2020 at an average realized price of $66.89 CAD WTI.
Production capacity is approximately 1,150 bbl/d proforma the Red Earth divestiture. The Red Earth divestiture continues to be under review by the Alberta Energy Regulator where approval is required in order to close the transaction.
Highwood has begun a series of G&A reduction initiatives including a reduction of employee salaries and non-essential G&A expenditures to manage cashflows during this tumultuous period. The Corporation also plans to apply for the Government of Canada wage subsidy initiative in response to the Covid-19 outbreak.