VANCOUVER, April 26, 2016 /CNW/ – Hemisphere Energy Corporation (TSX-V: HME) (“Hemisphere” or the “Company”) is pleased to announce its financial and operating results for the year ended December 31, 2015.
Through 2015 Hemisphere focused on reducing administration and operating costs while at the same time developing its assets to maximize reserve additions with minimal capital. The Company successfully concentrated on its core properties in southeastern Alberta where three enhanced oil recovery pilot projects were implemented in Atlee Buffalo and additional fluid handling capacity was installed in Jenner. These projects yielded significant proved reserve additions at a low finding and development cost of $0.24/boe including changes in future development costs.
2015 Highlights
- Achieved 776 boe/d (78% oil) production during the year, a record annual production rate for the Company.
- Generated $3.2 million ($0.04/share) in funds flow from operations, a 54% decrease from 2014 due to significantly lower realized oil prices.
- Realized an $18.83/boe operating netback for the year during a challenging commodity price environment.
- Reduced annual:
- G&A costs to $6.00/boe, a 32% decrease from 2014.
- Operating costs to $10.06/boe, a 29% decrease from 2014.
- Transportation costs to $2.79/boe, a 16% decrease from 2014.
- Increased proved developed producing reserves by 49% to 1.6 million boe (91% oil), with a net present value of $24.9 million (NPV10 BT).
- Increased proved reserves by 27% to 2.8 million boe (95% oil), with a net present value of $34.3 million (NPV10 BT).
- Increased proved plus probable reserves by 18% to 3.9 million boe (95% oil), with a net present value of $48.4 million (NPV10 BT).
- Initiated three enhanced oil recovery waterflood pilot projects in Atlee Buffalo.
- Completed the construction of a new pipeline in Jenner to increase water disposal capacity at an existing disposal well.
- Completed a strategic tuck-in acquisition of the remaining 15% working interest in 1.75 sections (1,120 acres) of land in Atlee Buffalo for $250,000 to bring the Company’s total working interest to 100%.
- Purchased 4.5 sections of land in southeast Alberta, including 2.0 sections in Jenner and 2.5 sections of key lands in Atlee Buffalo to bring the Company’s ownership to 100% over its Upper Mannville F and G pools.
Selected financial and operational highlights should be read in conjunction with Hemisphere’s audited annual financial statements and related Management’s Discussion and Analysis for the year ended December 31, 2015. These reports, including the Company’s Annual Information Form for the year ended December 31, 2015, are available on SEDAR at www.sedar.com and on Hemisphere’s website at www.hemisphereenergy.ca. All amounts are expressed in Canadian dollars.
Financial and Operating Summary
Year Ended December 31 |
|||||
Financial |
2015 |
2014 |
|||
Petroleum and natural gas revenue |
$ |
9,749,377 |
$ |
16,635,279 |
|
Petroleum and natural gas netback |
5,335,096 |
9,275,653 |
|||
Funds flow from operations(1) |
3,188,485 |
6,863,919 |
|||
Per share, basic and diluted |
0.04 |
0.10 |
|||
Loss before tax(2) |
(6,668,915) |
(1,907,495) |
|||
Net loss |
(8,310,831) |
(1,667,807) |
|||
Per share, basic and diluted |
(0.11) |
(0.02) |
|||
Capital expenditures, including property acquisitions |
3,086,147 |
21,316,366 |
|||
Net debt(1) |
11,446,110 |
11,644,609 |
|||
Bank indebtedness |
10,828,040 |
7,184,147 |
|||
Operating |
|||||
Average daily production |
|||||
Oil (bbl/d) |
607 |
583 |
|||
Natural gas (Mcf/d) |
1,003 |
593 |
|||
NGL (bbl/d) |
2 |
2 |
|||
Combined (boe/d) |
776 |
683 |
|||
Oil and NGL weighting |
78% |
86% |
|||
Average sales prices |
|||||
Oil ($/bbl) |
$ |
39.61 |
$ |
73.87 |
|
Natural gas ($/Mcf) |
2.61 |
4.08 |
|||
NGL ($/bbl) |
21.28 |
54.85 |
|||
Combined ($/boe) |
$ |
34.41 |
$ |
66.68 |
|
Operating netback ($/boe) |
|||||
Petroleum and natural gas revenue |
$ |
34.41 |
$ |
66.68 |
|
Royalties |
2.73 |
12.05 |
|||
Operating costs |
10.06 |
14.10 |
|||
Transportation costs |
2.79 |
3.34 |
|||
Operating netback(1) |
$ |
18.83 |
$ |
37.19 |
Notes: |
|
(1) |
See Non-IFRS and Additional IFRS Measures. |
(2) |
The Company does not anticipate its deferred tax asset will be realized in the near future; as a result the Company has provided for it in the amount of $1,641,916 for the year ended December 31, 2015. |
As at |
|||||
Share Information |
December 31, 2015 |
December 31, 2014 |
|||
Common shares outstanding |
75,803,498 |
75,368,498 |
|||
Stock options outstanding |
5,995,000 |
5,970,000 |
|||
Weighted-average shares outstanding |
|||||
Basic and diluted |
75,758,868 |
70,075,412 |
2016 Outlook
In the first quarter of 2016, Hemisphere converted a third producing well in the Upper Mannville F Pool to an injector well and has now commenced water injection. A response has now been observed in three Hemisphere producers offsetting the first two injectors in the pool and oil rates are increasing at those wells.
Hemisphere has plans to drill at least one well into the Atlee Buffalo Upper Mannville G pool in order to prove the productivity of the oil pool. Historical oil production has resulted in less than a 3% recovery factor to date. The pool has been undergoing injection since November 2015 in order to re-energize the reservoir prior to production.
Hemisphere’s corporate strategy is to continue to achieve organic reserve growth year-over-year while managing its balance sheet by limiting capital expenditures to within its cash flow during this time of commodity price weakness. The Company expects to see growth in production and reserves through the year with the continued success of its waterfloods and planned capital expenditures of less than $1.5 million. Should oil prices substantially recover and stabilize, the Company intends to accelerate development activity accordingly.
Annual General and Special Meeting of Shareholders
Hemisphere’s Annual General and Special Meeting of Shareholders is being held in the Pender Room of Oceanic Plaza, 1035 West Pender Street, Vancouver, British Columbia on Friday, June 10, 2016 at 9:00 a.m. (Pacific Daylight Time).
About Hemisphere Energy Corporation
Hemisphere Energy Corporation is a producing oil and gas company focused on developing conventional oil assets with low risk drilling opportunities. Hemisphere plans continual growth in production, reserves and cash flow by drilling existing projects and executing strategic acquisitions. Hemisphere trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol “HME”.