CDN NEWS | 
US NEWS 
- Within the upstream oil & gas production unit, the Company delivered average production of 116 bbl/d of oil in the third quarter of 2022. Current net production from Highwood is approximately 125 bbl/d of oil.
- During the third quarter of 2022, the Company and its 50% working interest in the 14-05 terminal deployed capital funds to reactive the terminal which was commissioned on October 2, 2022.
- During the third quarter of 2022, the Company purchased new office space for consideration of $1.15 million. The purchase of the office space will result in reduction in general and administrative expenses related to office space. The Company also sees the value of the office space increasing in the future with several major infrastructure projects in the immediate vicinity planned.
- During the third quarter of 2022, the Company’s operating facility was increased from $2.0 million to $2.92 million, the increase being mainly attributed to the borrowing base associated with the new office space.
- Corporately, net debt at September 30, 2022 was $367 thousand and the Company is in a working capital surplus position of $406 thousand. The Company has reduced net debt, from $3.3 million at December 31, 2021, including a bank draw of $1.1 million.
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Three months ended September 30, |
Nine months ended September 30, |
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|
2022 |
2021 |
% |
2022 |
2021 |
% |
||||
|
Financial (in thousands) |
|||||||||
|
Oil and natural gas sales |
$ 1,135 |
$ |
$ 721 |
57 |
$ 3,411 |
$ 6,423 |
(47) |
||
|
Transportation pipeline revenues |
842 |
905 |
(7) |
2,486 |
2,805 |
(11) |
|||
|
Total revenues, net of royalties(1) |
1,720 |
1,325 |
30 |
4,791 |
6,242 |
(23) |
|||
|
Income (Loss) |
241 |
150 |
61 |
2,184 |
(1,370) |
259 |
|||
|
Funds flow from operations(5) |
485 |
(73) |
764 |
1,086 |
(134) |
910 |
|||
|
Capital expenditures |
1,526 |
79 |
1,832 |
1,683 |
267 |
530 |
|||
|
Net debt (2) |
(367) |
(1,588) |
(77) |
||||||
|
Shareholder’s equity (end of period) |
10,508 |
8,836 |
19 |
||||||
|
Shares outstanding (end of period) |
6,014 |
6,014 |
– |
||||||
|
Weighted-average basic shares |
6,014 |
6,014 |
– |
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|
outstanding |
|||||||||
|
Operations (3) |
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|
Production |
|||||||||
|
Crude oil (bbls/d) |
116 |
108 |
7 |
111 |
400 |
(72) |
|||
|
Total (boe/d) |
116 |
108 |
7 |
111 |
400 |
(72) |
|||
|
Average realized prices (4) |
|||||||||
|
Crude Oil (per bbl) |
106.27 |
72.26 |
47 |
112.65 |
58.77 |
92 |
|||
|
Upstream Operating netback (per BOE) (5) |
45.79 |
26.36 |
74 |
48.41 |
19.16 |
153 |
|||
|
(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”. |
With the continued strong commodity prices and increased interest in Canadian energy, the Company’s focus in the third 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. The Company will also assess land offerings in strategic areas where the Company sees significant growth opportunities. During the third quarter of 2022, the Company acquired lands in Ukalta that it believes could have potential for Clearwater production.
The Company also focused time and resources in Q3 2022 on extraction technologies for Lithium from Brine.
As of today, the Company is minimally drawn 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.
Highwood is continuing to evaluate its undeveloped lands for drilling opportunities, particularly on its Ukalta lands. Highwood is currently monitoring new production from directly offsetting competitors Clearwater wells. Once several months of data have been collected and economic viability determined, Highwood will make a determination on what further action will be taken on the lands.
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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