Highwood Strikes Big With New Wells, Eyes 20% Production Jump

CALGARY, AB – March 17, 2026 – Highwood Asset Management Ltd. (TSXV: HAM) has unveiled a robust set of year-end results for 2025, signaling a period of significant operational success and strategic growth. The Calgary-based energy firm capped the year with impressive reserve growth and strong financials, but the headline story is the performance of two new wells that are set to drive a substantial increase in production and deliver a rapid return on investment.

In its latest announcement, Highwood reported a projected 20% surge in production for the first quarter of 2026, expecting to reach approximately 6,000 barrels of oil equivalent per day (boe/d). This jump from the 5,040 boe/d averaged in the fourth quarter of 2025 is largely credited to the exceptional output from its newest assets, reinforcing the company's confidence in its drilling inventory and operational strategy.

Gusher Wells Drive Production Surge

The driving force behind Highwood's bullish forecast is the remarkable performance of two Belly River wells in the Wilson Creek area. The 13-02 and 11-33 wells, brought onstream in mid-December 2025, have quickly become star performers. By January 2026, both were recognized by multiple third-party evaluators as among the top net oil wells in Alberta based on production volumes.

Together, the wells produced a combined average of approximately 2,500 boe/d, with a high concentration of valuable light oil and liquids (80%). Their strong performance has continued, and Highwood projects the wells will achieve payout—recovering their initial capital cost—in less than three months at current market pricing. This rapid return is a testament to the high quality of the reservoir and the efficiency of the company's operations. While such high initial production rates are characteristic of successful modern wells in tight formations, industry observers note that they are typically followed by a period of rapid decline before stabilizing. Highwood's ability to manage this production curve will be key to maximizing long-term value from these assets.

For the fourth quarter of 2025, the company delivered an Adjusted EBITDA of $10.9 million, or $0.72 per share, and an adjusted funds flow of $10.6 million. These solid financial metrics, underpinned by the new production, provide a strong foundation for the company's ambitious plans.

Fortifying the Balance Sheet Amid Growth

While pursuing aggressive production growth, Highwood's management has emphasized a parallel focus on financial discipline. A key part of this strategy is a robust hedging program designed to insulate the company from commodity price volatility. Highwood has secured contracts for approximately 2,400 barrels per day of its 2026 oil production at an average price of $94.00 CAD per barrel, with further hedges extending into 2027. This strategy already paid dividends in Q4 2025, contributing to a realized gain of $3.1 million on commodity contracts.

The company is also prioritizing debt reduction, aiming to lower its Net Debt to EBITDA ratio to enhance financial flexibility for future organic growth or strategic acquisitions. This prudent approach is further supported by a substantial tax shield. Highwood holds approximately $325 million in tax pools, including over $100 million in non-capital losses, which it anticipates will defer any cash tax payments for three years or more. This provides a significant competitive advantage, allowing more cash to be reinvested into the business.

Unlocking the Belly River Potential

The recent drilling success has validated Highwood’s focus on the Belly River formation, a geological play where it holds a significant inventory of future opportunities. The company's year-end reserves report, independently audited by GLJ Ltd., shows growth across all key categories. Proved Developed Producing (PDP) reserves grew by 7% to 19,594 thousand barrels of oil equivalent (Mboe), while Total Proved plus Probable (2P) reserves increased by 9% to 66,441 Mboe.

This growth translates directly into shareholder value, with the company's 2P Net Asset Value (NAV) climbing to an impressive $41.23 per share. The strong recycle ratios—a measure of capital efficiency—further underscore the profitability of Highwood’s drilling program, with the 2P recycle ratio hitting 3.3, indicating that for every dollar invested, the company is generating $3.30 in value from its reserves.

Looking ahead, Highwood plans to build on this momentum. The company has already drilled two new wells in the first quarter of 2026 and plans to drill another 4-7 wells in the Belly River horizon throughout the remainder of the year. To support this expanded development, Highwood is also planning critical infrastructure upgrades in the Wilson Creek area during the summer of 2026. These upgrades are designed to alleviate production constraints and unlock the full potential of its growing asset base in the region, where it holds 16.5 net booked and 13 net unbooked future drilling locations.