Hillcrest Energy Technologies. (CSE: HEAT)
From concept to commercialization, Hillcrest is investing in the development of energy solutions that will power a more sustainable and electrified future.
Over the past decade, Canadian energy stock Headwater Exploration (TSX: HWX) has delivered a remarkable 482% return to shareholders, climbing to nearly 560% with dividend reinvestments. With a current market cap of CAD 1.65 billion, the stock has recently retreated 17% from its all-time high. Analysts suggest this pullback presents a promising “buy-the-dip” opportunity for long-term investors.
Headwater Exploration specializes in the exploration, development, and production of oil and natural gas in the Western Canadian Sedimentary Basin and onshore New Brunswick. The company holds high-quality oil assets, reserves, and production in the Clearwater Play in Alberta, as well as low-decline natural gas assets in the McCully Field in New Brunswick. Focused on sustainability, asset quality, and balance sheet strength, Headwater aims to deliver superior corporate-level returns.
In Q3 2024, Headwater Exploration reported a record-high production of 20,342 barrels of oil equivalent per day (boe/d), a 13% year-over-year increase, including heavy oil, natural gas, and natural gas liquids. However, due to declining prices, total revenue increased by only 5% year-over-year, reaching CAD 151.7 million.
The company raised its 2024 production guidance from 20,000 boe/d to 20,250 boe/d. It plans to invest CAD 135 million in development drilling, targeting a 12% growth in production per share.
For 2024:
Headwater’s board also approved a CAD 20 million increase in capital expenditures to accelerate the Marten Hills West project.
At the same time, the company provided updates on developments in areas such as Marten Hills West, Marten Hills Core, Greater Nipisi, Handel Saskatchewan, and Clearwater exploration lands.
Headwater announced a quarterly cash dividend of CAD 0.10 per share, maintaining this level since initiating dividends in late 2022. The annualized dividend yield is currently 5.7%, representing a total payout of CAD 23.8 million per quarter and approximately CAD 95 million annually.
Investment firm BMO Capital Markets recently increased its target price for Headwater stock from CAD 9 to CAD 10 while maintaining an “outperform” rating. Analysts attribute future growth potential to the company’s strategic positioning in the Clearwater Play, one of Canada’s most cost-effective oil fields.
Valuation Metrics:
Given these growth prospects, Headwater is considered undervalued. Based on analysts’ average price targets, the stock currently trades at a 40% discount, offering significant upside potential.
