Fiddlehead Resources. Corp (V.FHR) recently announced that they are on their way to fully fund a strategic and accreted acquisition of a private Central Alberta producer, and have also let us know about their Q1 financial results. The company is based in Calgary, listed in September, and is now generating revenue and looking to drive further growth for the remainder of 2025 and beyond. CEO, Brent Osmond recently joined us to discuss Fiddlehead’s achievements and their prospects.
The following is a transcription of the above video, and The Market Online has edited it for clarity.
Lyndsay: A good starting point I think would be with your Q1 results and your year-end reserves. I mean, what are the standout highlights you want investors to know about those?
Brent: I think it shows that our production is really solid and hanging in, our decline rates are quite low, so we view our production as almost flat. And we’re really looking forward to getting into the field in the back half of this year to keep that production growing and moving forward, growing our revenue, growing our income and taking over operations. So, we’re quite excited about what the future holds.
Lyndsay: Back in April, you actually announced that you are in the process right now of the acquisition of that private Central Alberta producer. So maybe you can walk us through what those assets bring to the table and how that changes things for Fiddlehead.
Brent: Absolutely. When we started the company, we really focused on Central Alberta, we found that there were numerous opportunities to acquire companies and consolidate the play. And because of the lack of activity generally in the field, in the area, most of the acquisition targets that we were looking at were quite flat on the decline side of things. So, you knew what we were buying had a long reserve life and was very stable and a good position to build from.
This second acquisition now is right in line with that strategy. It’s in the Cynthia area of Alberta. It’s a little further north from our existing assets by about an hour’s drive north of that, but still in that Central Alberta fairway.
The production that we’re acquiring is approximately 2,200 – 2,300 boe per day. And that was the kind of the guaranteed number from the company that we’re acquiring. But the field reports that we’ve seen in the interim are actually higher than that. So, we’re pretty excited. We think on closing we’ll be really close to 4,000 boe per day. So, a pretty exciting time for us to go from zero boe a day a year ago to 4,000 and continuing to grow. So, we’re pretty excited.
Lyndsay: Brent, that is amazing news. Why don’t we turn to the recent changes to that balance sheet of yours and specifically the refinancing with your lender and the revised agreement with the vendor of Ferrier and South Strachan asset. How do these events help the company financially?
Brent: Well, for one, we now have no current liabilities. By refinancing our debt and working with our debt provider, it’s an interest only payment with a bullet at the end. So, it gives us lots of cash flow flexibility, again, to be able to go out and deploy that in the field and get growing. We’re really pleased with the lender and their willingness to work with us.
Furthermore, we also have the new cash flow coming from the new asset. And so, not having any deferred payments associated with our first acquisition now frees up again, more capital that we can redeploy into the field. So, we’re quite excited to have the resources available to us as the year rolls over here.
We see a lot of strength in commodity pricing in the back half of the year, and we’re looking forward to getting out and deploying the capital into the field.
Lyndsay: From your perspective with that, what makes Fiddlehead stock a compelling investment right now?
Brent: I think that baseline production of around 4,000 boe a day that we can grow from, there’s some real tailwinds on commodity prices that we see or expect to see as the year rolls over. I mean, we’ve seen first shipments of LNG now off the west coast, so gas is moving to someplace other than Canada or the US, which is great.
We see that that increase in demand for natural gas and the ability to look forward into the pricing curve and see $2.50, $3.00, $3.50 for those gas molecules. It just speaks for the potential for growth in our cash flow which again we can use in the field to grow from our existing asset base that we now have kind of under paper.
Lyndsay: Brent, you have given so much positive information. So, if we look ahead from here, how do you see the energy market shaping up for the rest of the year?
Brent: I think we’ve seen now with the oil markets, I mean there was that brief spike when there was a bit of a conflict breakdown in the Middle East, but when oil did come down off of that kind of conflict high we’re still seeing it around $67, $68, which it’s held in. And I think it shows a real solid floor in that kind of mid-sixties. And as it’s kind of crept up in spite of OPEC saying that they’re going to release more barrels into the market, I think it really shows for prolonged strength in oil prices.
If oil does come on from OPEC, I think it will. We’ve seen a willingness for the guys in the Permian and the US producers to hold restraint and to not drill and flood the market with crude.
So, I think the swing barrel now really is in the US and not with OPEC, and those guys have shown a willingness to keep the drill bit out of the ground and drill to hold production flat as opposed to growing their production and pushing prices down. So, I think medium to long term, we’re really aggressive on our oil price forecasts. We see certainly a $70 barrel through the winter. And depending on where production in the US comes in, we could see mid-seventies into 2026. That of course is really positive for any Canadian producer because we see oil prices denominated in US dollars, but of course, all our expenses are in Canadian dollars. And so, it’s really positive and it gives us the opportunity to get out and deploy capital in a restrained way in our own right.
And we’ll push barrels out and hold our production flat with some modest growth, we feel. And we’re really excited to get working through the colder months of the year by bringing our gas molecules into the market during that kind of October, November, December period. Those are the highest gas prices of the year.
It really does a real wonder with our payback periods. If we’re bringing on wells in July and August, which are the lower price months of the, we’d be getting a dollar in Mcf, whereas if we drill and bring our flush production on in November, December, we could get $3.00, $3.50, maybe even $4.00 on some cold weather. And so, it’s a really meaningful change in the netback that we get on that flush production, which is your peak production, highest pressure, highest volumes when you drill those new wells. And so that’s how we’ve structured our capital spending program, is to really work so that we bring our flush production on into those cold months with the highest price environment.
Lyndsay: If we continue that and we look at the coming quarters what is it that you would like investors to watch out for?
Brent: I think as we bring on more molecules and fill our own facilities, because all of our drilling program is designed to bring more gas and more oil into our own fully owned facilities. And so, when we have control over that production and bring in more volume, our fixed costs are spread out over a higher volume. And so, we’re targeting a reduced operating cost on a per boe or on a per Mcf basis and of course that leads to higher netbacks and more capital to deploy.
We are really working on pushing those operating costs down, becoming more efficient and filling our own facilities, which is a pretty novel concept for such a small company. It speaks to our strategic acquisition of that Ferrier sales track and asset in the first place.
Fiddlehead Resources is trading on the Venture under the ticker symbol V.FHR. Learn more about their story at fiddleheadresources.com.
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