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  • Headwater Exploration (TSX:HWX) has announced their 2019 results and fourth quarter results
  • The company has $60.9 million in cash and cash equivalents
  • During 2019, Headwater’s production dipped by 100 barrels a day
  • The company wants to take advantage of this “generational opportunity”, to acquire Canadian oil and gas assets
  • Headwater Exploration (TSX:HWK) is down 3 per cent, and trading for $1.04 per share with a $172 million market cap

Headwater Exploration (TSX:HWK) has announced its 2019 results and fourth quarter results.

The company’s production dipped significantly from 2018 to 2019, dropping by roughly 100 barrels of oil a day.

However, lowered production costs overall led to better net income for the year.

Net income for the year amounted to C$2.8 million. While this is a slim margin, the company’s large cash pool leaves them in a good position.

Headwater also announced cash and cash equivalents of $60.9 million, and net working capital of $64.6 million with no outstanding debt.

Total proved reserves stayed at 3.7 million barrels, due to positive technical revisions which offset a 2019 production dip.

Sales for the year were down nearly half on what they were in 2018, owing to that dip in production for the year.

The company believes that COVID-19 has provided a golden opportunity to make some acquisitions in 2020.

In the annual report, Headwater stated that “the rapid deterioration in crude oil prices from supply and demand shocks provides a generational opportunity for well-capitalised companies in the Canadian energy sector.”

The company believes that “one or more strategic acquisitions in the Canadian sedimentary basin will be combined with organic development to obtain superior corporate level returns.”

Looking ahead to 2020, Headwater is cutting production costs at the McCully gas field in New Brunswick.

The company anticipates a shut-in at the field from approximately May 1 to November 1, to optimise production levels, revenue, cash flow and returns. This will be achieved by taking advantage of premium gas pricing during the peak demand months.

Headwater has not revised its guidance, despite COVID-19 wreaking havoc in the oil and gas industry.

Headwater Exploration (TSX:HWK) is down 3 per cent, and trading for $1.04 per share at 1:35pm EST.

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