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Headwater Exploration Second Quarter 2020 Results

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Headwater Exploration Inc. reported its Q2 2020 results.

Highlights:

• As at June 30, 2020, Headwater has cash and short-term investments (consisting of redeemable guaranteed investment certificates) of $112.8 million, a working capital surplus of $113.7 million and no outstanding debt.
• April 2020 natural gas production averaged 7.2 mmcf/d, consistent with April 2019, before the Company shut-in its natural gas production effective May 1, 2020 pursuant to its production optimization strategy.
• Locked into financial derivative contracts for a total of 5,000 mmbtu/d at NYMEX CAD$4.05/mmbtu for the period from December 2020 to March 2021.
• Efficiently executed the integration of east coast operations with all corporate functions now being handled from the Company’s head office in Calgary.

2020 Guidance

Headwater is pleased to re-confirm its previously released guidance as follows:

• 2020 average production of 4.1 mmcf/d (approximately 99% natural gas and 1% natural gas liquids) (assumes shut-in from May 1 to November 1, 2020).
• Operating cash flow of $6.8 million (inclusive of realized financial derivatives).
• 2020 adjusted funds flow from operations of $5.5 million.
• 2020 exit working capital (assuming no other acquisitions or development) of $115 million.

With the integration of the operations now complete, the Headwater team is actively optimizing future cash flow through operating costs and third-party processing revenue initiatives.

2020 Outlook

Patience continues to be the overriding theme in our business plan. With a relative stabilizing of commodity prices in the last month, the acquisition market is beginning to show signs of activity.  The Headwater team continues to pursue multiple opportunities that ultimately, if successful, are expected to provide significant returns to our shareholders. We appreciate the continued support and patience that the investment community continues to have with our business and look forward to reporting back to you as some of the opportunities come to fruition.