In short: Merger partner in the Tamarack deal: Headwater "is probably a bit ahead of the curve versus Tamarack on waterflooding," showing Clearwater decline rates coming down; the combined company will push more waterflooding.
Headwater is the other half of the Tamarack merger, also a Clearwater oil producer. Schachter thinks Headwater was a step ahead in proving that waterflooding works there — its wells' decline rates are falling, meaning production holds up longer. The combined company is expected to apply that approach more aggressively across a much bigger land base.
34:52There's a lot of bargains in those areas. — Very helpful. And one more followup on the oil stocks. You mentioned the Tamarack Headwater deal. I wonder if I can get your thoughts on that. Is that a matchup that you like? And looking forward into the end of the year, are you expecting to see more M&A in the oil and gas sector? — Well, Headwater is probably a bit ahead of the curve versus Tamarack on waterflooding and showing that the waterflood is working very well in the Clearwater, decline rates are coming down, and more oil
In short: One of his "two top picks" — a Clearwater multilateral operator; grew from ~2,000 to ~25,000 boe/d over ~4 years with zero equity raises, all internally funded.
Headwater is a small Canadian oil producer focused on the "Clearwater" — a shallow, oil-rich rock layer in Alberta. It's one of McCrea's two favourite names.
The reason it stands out: it grew production more than tenfold (from ~2,000 to ~25,000 barrels a day) in about four years without ever selling new shares — funding all that growth from its own cash flow. That's rare; most companies dilute their owners to grow. It's his showcase for how profitable the new drilling technology (multilateral wells — see Tamarack) has made these plays.
48:30— Yeah. The one thing I've noticed from the podcast and my perspective is that sentiment may be changing but also the business has become good businesses like Headwater like we were saying they've done everything the last 5 years with zero equity raises which is — it tells you something like they've gone from 2,000 to 25,000 without any equity all internally funded all within — 3 4 year period here like you don't typically see that type of level of growth anywhere it's a showcase of just the
In short: Not owned. The "most overweighted marriage" — the merger partner Tamarack needs for Clearwater scale. Trades a higher EV/EBITDA than Tamarack; a merger would lop off Tamarack SG&A and trim the dividend but improve unit economics for both.
11:09— Yeah, exactly. — Okay? So, there are unique things that come out. But let's use the Clearwater. How big of a basin it is? It's not that big. Does it need to get more scale? It does. That's called when is Headwater and Tamarack just going to finally merge? It's like the most overweighted marriage in the You think MEG was overweighted? It's like this is going to become like a new like when are they going to merge? When are they going to merge? So, that needs to happen. Those
In short: Not owned. Named again as the M&A that "should" happen — "Tamarack and Headwater should be dancing and mating." An example of the consolidation the tumult should catalyze.
45:19You know, now that these prices are under pressure again, you think we're going to see a resurgence um of M& of M&A? — I we should we should there's no question about that. And I I say we should because you know, as an example, Tamarak and and Headwater should be dancing and mating and doing all the fun stuff that you come together on a on a great marriage. Okay.
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