Highwood Asset Management Ltd. Announces 2022 First Quarter Financial And Operating Results Along With Operational Update


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

Three Months Ended

March 31, 

2022

2021

%

 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)

(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)

 Production

   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

56.87

88

 Upstream Operating netback (per BOE) (5)

49.33

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.

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