Headwater Exploration (HWX) investor relations material

Executive summary

• Achieved record adjusted funds flow from operations of $97.4 million for Q1 2026, up 5% year-over-year, with net income of $35.6 million.

• Quarterly dividend increased to $0.12 per share, a 9% rise, reflecting strong operational and financial performance.

• Production averaged 24,154 boe/d, a 9% increase compared to Q1 2025, driven by heavy oil growth and secondary recovery projects.

• Updated 2026 guidance raises annual production target to 25,000 boe/d and adjusted funds flow from operations to $385 million, up from $300 million.

• Strategic capital allocation includes accelerated secondary recovery, infrastructure investment, and land acquisition for organic growth.

Financial highlights

• Adjusted funds flow from operations: $97.4 million ($0.41 per share basic), up from $92.4 million in Q1 2025.

• Net income: $35.6 million ($0.15 per share basic), down from $50.0 million in Q1 2025.

• Capital expenditures: $66.7 million, up 6% year-over-year.

• Cash flows from operating activities: $40.1 million, down 43% year-over-year.

• Dividends declared: $26.2 million ($0.11 per share), cumulative dividends paid to date total $343.7 million.

Outlook and guidance

• Quarterly dividend to increase to $0.12 per share starting Q2 2026.

• 2026 annual production guidance raised to 25,000 boe/d from 24,500 boe/d.

• Adjusted funds flow from operations guidance increased to $385 million from $300 million.

• Capital expenditures for 2026 updated to $250 million, with $65 million for secondary recovery and $25 million each for infrastructure and land.

• Focus remains on shareholder returns via organic growth, enhanced recovery, dividends, and share buybacks.