Capital Markets | Capital Expenditure | Drilling Program - Wells | Drilling Program-Rig Count | Corporate Strategy | Capital Expenditure - 2021

Headwater Expects 125% Production Growth in 2021; IDs Capex, Rigs, Well Plans

Share Print Bookmark    |    Tuesday,December 15,2020

Headwater Exploration Inc. has detailed its 2021 capital plans.

2021 Plans

- Capital Budget: $85 to $90 million (all focused on Marten Hills area, which it acquired from Cenovus on November 9, 2020) - down from 24% from 2020

- Production: 6,500-7,000 BOEPD

• 4Q21 Forecast: 8,000-8,500 BOEPD - growth of approximately 125% YOY

- D&C: 52 wells planned

• 24 8-leg multi-lateral wells

• 25 injector wells

• 3 source wells

- Rig Count: 4 rigs running starting in January 2021

The approved budget is expected to leave Headwater with a working capital surplus of approximately $45 million at the end of 2021.

Ops Plans for 2021

 It is anticipated that 4 drilling rigs will be operational in early January.  The budget contemplates expenditures of approximately $35 million in the first quarter inclusive of 10 to 12 producing wells, 3 stratigraphic test/saline source wells in addition to 5 injection wells and some preliminary facilities construction.

Development activities in the core area are expected to recommence in September with the drilling of an additional 8 to 10 producing wells, 20 injection wells and the construction commencement of our 15,000 bbls/d oil processing facility.  The oil processing facility construction will take several months with the expectation to commission the facility in March of 2022.

The budget contemplates drilling 4 to 5 exploration wells which, depending on access, is expected to commence in September.  

Enhanced Oil Recovery (EOR) has the potential to materially increase recovery factors and is an important part of the Headwater business plan.  The first 5 injection wells, drilled in the first quarter, are anticipated to have injection commence during the third quarter of 2021.  The source water wells being drilled are expected to provide sufficient saline water volumes for our first phase of injection.  The learnings from our first pilot phase are then expected to be applied to phase one of our full field EOR development. Phase one of our full scale EOR is expected to be on-stream with the commissioning of our facility in March of 2022.

Beyond 2021

The first quarter of 2022 will see the completion of our infrastructure spend allowing the majority of our production volumes to be pipeline connected.  This spend is expected to reduce corporate transportation costs by $3.50 – $4.00/boe in addition to allowing phase two and three of the development and waterflood implementation to occur with nominal future infrastructure expenditures.