BTE - Headwater Exploration: Slower Growth Ahead

2024-02-08 08:55:21 ET

Summary

• Headwater Exploration's management expects slower growth but still projects significant growth while paying a dividend.
• The dividend is backed by a debt-free balance sheet and a large cash balance.
• The Clearwater Play in the industry still has room for expansion.
• Spring Breakup idle time (or reduced activities time) will allow management to re-evaluate second half plans based upon industry conditions at the time.
• The Trans Mountain Pipeline Expansion Project is expected to decrease the heavy oil discount from WTI pricing.

Headwater Exploration ( CDDRF ) management has guided to a slower growth year ahead. This is still one of the few companies that I follow that project significant growth while paying a dividend to meet the market demands for shareholder returns. This guidance can change if heavy oil prices strengthen significantly more than the guidance assumes. Like most upstream producers, the capital budget is very dependent upon the commodity pricing throughout the fiscal year. Unlike many United States producers, this company will have reduced activities during the Spring Breakup. That allows management to completely re-evaluate second half plans after Spring Breakup is over....

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