Financial Overview - As of September 30, 2022, the company's pro forma combined cash was C$1,776 million, total liabilities were C$418,645 million, and total shareholders' equity was C$1,165,250 million[39]. - Hammerhead's net present value of future net revenue for proved plus probable reserves increased from approximately $2.6 billion to approximately $3.8 billion, representing a 46.2% increase due to higher commodity prices[46]. Production and Investment Plans - The company reported an average daily production of 40,308 boe per day in January 2023, consisting of 123,154 mcf/d of Shale Gas, 15,555 bbls/d of Tight Oil, and 4,227 bbls/d of NGLs[47]. - The company plans to invest over C$100 million in pipeline and facility expansions, including C$32 million for the North Karr facility and C$61 million for a new facility in South Karr[52]. Environmental Initiatives - The company's CCS program aims to reduce Scope 1 and Scope 2 emissions by approximately 79% on an absolute basis and 89% on a per boe basis by 2029 compared to 2021 levels[53]. - The anticipated total spend on the CCS project is $240 million, with initial construction planned for the first half of 2024[55]. - The company has not incurred costs or signed contractual commitments related to the CCS program as of September 30, 2022[55]. Corporate Governance and Management - The company appointed Richard Unsworth as Senior Vice President, Business and Organizational Effectiveness on February 13, 2023[32]. - The company is subject to the informational filing requirements of the Exchange Act as a foreign private issuer, which affects its reporting obligations[43]. Share Awards and Compensation Plans - The maximum number of Shares issuable pursuant to outstanding Share Awards is limited to 5,329,938, subject to adjustments for Dividend Equivalents[91]. - Each Share Award has an exercise price of C$0.16 per Share Award exercised[96]. - Share Awards issued under the Legacy Share Award Plan are fully vested and exercisable upon issuance[90]. - The Company may issue Shares from treasury or from the Hammerhead Employee Benefit Trust upon exercise of Share Awards[96]. - Participants' Accounts may be credited with a Dividend Equivalent in the form of additional Share Awards at the discretion of the New SPAC Board[89]. - The Legacy Share Award Plan aims to align the interests of Service Providers with those of the Company's shareholders and motivate long-term performance[85]. - In the event of a Change of Control, all issued and outstanding Share Awards will terminate 90 days after the occurrence of such Change of Control[102]. - The New SPAC Board has the authority to amend or discontinue the Legacy Share Award Plan without shareholder approval[103]. - Share Awards that are cancelled, surrendered, or terminated will not be available for subsequent grants under the Legacy Share Award Plan[91]. Legacy Options and New SPAC Plans - The maximum number of New SPAC Common Shares issuable on exercise of outstanding Legacy Options is limited to 671,539[127]. - No one Service Provider may be granted any Legacy Option that, together with all Legacy Options held, would exceed 5% of the outstanding New SPAC Common Shares[129]. - The number of New SPAC Common Shares issued to Insiders within any one year period under all security-based compensation arrangements shall not exceed 10% of the issued and outstanding New SPAC Common Shares[129]. - All Legacy Options issued pursuant to the Plan of Arrangement shall be fully vested and exercisable on issuance[130]. - The exercise price of Legacy Options granted under the Legacy Share Option Plan shall not be less than the minimum price required by the stock exchange at the time of grant[131]. - The period during which a Legacy Option is exercisable shall not exceed fifteen years, with a default of five years from the date of grant[132]. - Upon the death of the Optionee, the Legacy Option shall terminate no more than 12 months from the date of death[133]. - If the Optionee ceases to be an officer or employee, the Legacy Option shall terminate within a period not exceeding six months as prescribed by the Committee[133]. - The Legacy Share Award Plan may be amended or terminated without shareholder approval to comply with applicable law or regulation[106]. - The New SPAC Board may correct any defect or reconcile any inconsistency in the Legacy Share Award Plan as deemed necessary[107]. - The Company has adopted a New SPAC Equity Incentive Award Plan and a New SPAC Share Option Plan to facilitate equity incentive awards for directors, employees, and consultants, which is essential for long-term success[149]. - A total of 671,539 Legacy Options and 5,329,938 Legacy RSUs are outstanding under the Legacy Plans upon completion of the Business Combination[147]. - The exercise price for Legacy Options held by executive officers is C$7.83, with an expiration date of December 31, 2030[147]. - The New SPAC Incentive Plans became effective immediately following the SPAC Amalgamation Effective Time and are subject to shareholder ratification at the Company's annual general meeting in 2023[149]. - The Legacy Share Option Plan allows for adjustments to prevent dilution in the event of changes in New SPAC Common Shares due to various corporate actions[139]. - In the event of a Change of Control, all issued and outstanding Legacy Options will terminate 90 days after the occurrence of such Change[142]. - The Company may amend or discontinue the Legacy Share Option Plan without shareholder approval, provided it does not adversely affect any previously granted Legacy Options[145]. - The Legacy Options can be exercised through a cashless exercise option, allowing the Optionee to receive shares instead of cash[136]. - The Company may accept Surrender Offers from Optionees for the disposition of Legacy Options, subject to regulatory approval[137]. - The New SPAC Board has the discretion to make necessary adjustments to the Legacy Share Option Plan to ensure compliance with applicable laws and regulations[145]. New SPAC Equity Incentive Award Plan - The aggregate number of Shares reserved for issuance under the New SPAC Equity Incentive Award Plan shall not exceed 2,826,350 Shares[184]. - The number of Shares issuable to insiders at any time under all security-based compensation arrangements shall not exceed 10% of the issued and outstanding Shares[187]. - The payout multiplier for Performance Awards may not be less than 0% or more than 200%[188]. - Restricted Awards and Performance Awards shall vest at the end of their three-year terms[183]. - The Company may grant Awards that entitle the holder to receive either Shares or an amount equal to the value of the Award, settled in cash or Shares[188]. - The Fair Market Value of a Share is determined based on the volume weighted average of prices for the five trading days preceding the valuation date[160]. - The New SPAC Equity Incentive Award Plan aims to align the interests of Service Providers with those of the Company's shareholders[176]. - The maximum number of Shares that may be issued to any single Service Provider shall not exceed 5% of the issued and outstanding Shares[187]. - The Committee has the authority to approve the grant of Awards without requiring uniformity of treatment among Service Providers[180]. - The Company may adjust the number of Shares issued pursuant to Awards based on dividends paid on the Shares[182]. - The New SPAC Equity Incentive Award Plan allows for adjustments in the event of a change in shares or rights granted to shareholders, ensuring no dilution of participant rights[193]. - The Company reserves the right to revoke an Award if a Participant fails to acknowledge it within the specified time[194]. - Amendments to the New SPAC Equity Incentive Award Plan can be made by the Board without shareholder approval, including housekeeping amendments and compliance with applicable laws[195]. Definitions and Market Terms - The definition of "All or Substantially All of the Assets" is set at greater than 90% of the aggregate fair market value of the Company's assets[199]. - The "Current Market Price" is determined by the volume weighted average trading price per Common Share on the TSX for the last five trading days[206]. - The Fair Market Value of New SPAC Common Shares is based on the volume weighted average prices for the five trading days preceding the valuation date[209]. - A Change of Control is defined by specific criteria, including a successful takeover bid or a significant change in beneficial ownership[203]. - The New SPAC Share Option Plan is administered by a committee appointed by the New SPAC Board, which may delegate its powers as permitted by law[217]. - The Company may adjust the New SPAC Equity Incentive Award Plan to prevent dilution or enlargement of rights granted to participants in the event of share changes[193]. - The maximum number of New SPAC Common Shares that may be issued on exercise of New SPAC Options is limited to 250,000 shares[220]. - No Service Provider may be granted New SPAC Options that would entitle them to receive more than 5% of the outstanding New SPAC Common Shares on an undiluted basis[220]. - The total number of New SPAC Common Shares issued to Insiders within any one year period shall not exceed 10% of the total issued and outstanding New SPAC Common Shares[220]. - New SPAC Options will vest as to one-quarter (1/4) of the total number of shares on each of the first four anniversaries of the grant date, subject to continued employment[223]. - The exercise price of New SPAC Options shall not be less than the minimum price required by the Exchange at the time of grant[224]. - The period during which a New SPAC Option is exercisable shall not exceed fifteen years, with a default period of five years from the date of grant[225]. - Upon the death of the Optionee, all New SPAC Common Shares that may be acquired will vest and be accelerated on the Cessation Date[228]. - If any New SPAC Options cannot be exercised due to a Black-Out Period, the expiry date will be extended for seven business days following the end of the Black-Out Period[229]. - An Optionee may elect to exercise a vested New SPAC Option by surrendering it for the In-the-Money Value instead of purchasing shares[230].
Hammerhead Energy (HHRS) - 2023 Q4 - Annual Report