Hammerhead Energy Expands Credit Facility to C$450 Million, Repays Debt, and Plans Return of Capital Strategy

Hammerhead Energy Inc., a Calgary-based energy company, has announced the expansion of its credit facility to C$450 million, effective September 27, 2023. This increase, achieved through increased commitments by existing lenders and the addition of the Bank of Montreal to the lending syndicate, demonstrates the confidence and support of the financial institutions in Hammerhead’s growth prospects.

The expanded credit facility has allowed Hammerhead to repay the remaining US$63.7 million (C$86.0 million) of principal and accrued interest on its term debt prior to maturity. This early repayment will not only reduce interest expenses but also eliminate any restrictions on Hammerhead’s ability to implement a return of capital strategy for the benefit of its shareholders.

Hammerhead expects to communicate its formal return of capital policy, subject to approval by its Board of Directors, with the release of its third-quarter results on November 7, 2023. This move reflects the company’s commitment to creating value for its shareholders and rewarding their trust and support.

With strong operational results and favorable crude oil prices, Hammerhead has achieved a “free funds flow” status. In July and August 2023 alone, the company generated C$21.9 million of free funds flow and anticipates generating free funds flow each month for the remainder of 2023 and throughout 2024, based on current strip pricing. Additionally, net cash from operating activities for the same period reached C$57.7 million.

Scott Sobie, President and CEO of Hammerhead, expressed gratitude for the support of existing lenders and welcomed the Bank of Montreal to the syndicate. Sobie acknowledged the critical role these partners have played in enabling Hammerhead to deliver value for its shareholders. He also highlighted the upcoming completion of the new South Karr surface infrastructure, which is expected to support significant and consistent free cash flow, further de-risking the company for lenders and creating additional value for shareholders.

Hammerhead Energy Inc., with its assets and operations in Alberta targeting the Montney formation, continues to strengthen its position in the energy sector. The expansion of its credit facility, debt repayment, and planned return of capital strategy demonstrate the company’s commitment to financial stability, growth, and shareholder value.