TSX-V: HME – VANCOUVER, April 19, 2017 /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, 2016.
During 2016 Hemisphere focused on strategic investments to build long term shareholder value by maximizing reserve additions with minimal capital. The Company concentrated on its Atlee Buffalo property in southeastern Alberta where it expanded its waterfloods, built a processing facility in its Upper Mannville F Pool, and drilled a key development oil well in its Upper Mannville G Pool. These projects yielded significant proved plus probable reserve additions, and have positioned the Company for low risk full scale future development of the property.
2016 Annual Highlights
- Achieved 527 boe/d (86% oil) production during the year.
- Generated $6.2 million in annual revenue.
- Realized an operating netback of $2.3 million or $12.16/boe for the year during a challenging commodity price environment.
- Increased Proved plus Probable reserves by 16% to 4.6 million boe (96% oil), with a net present value of $65.9 million (NPV10 BT).
- Added 823 Mboe of Proved plus Probable reserves, replacing 427% of 2016 production.
- Increased Proved reserves by 13% to 3.1 million boe (96% oil), with a net present value of $45.7 million (NPV10 BT).
- Added 549 Mboe of Proved reserves, replacing 285% of 2016 production.
- Initiated the third enhanced oil recovery waterflood pilot project in the Atlee Buffalo Upper Mannville F Pool.
- Drilled and placed on production Hemisphere’s first producing well in the Atlee Buffalo Upper Mannville G Pool.
Fourth Quarter 2016 Highlights
- Achieved average production rate of 590 boe/d (91% oil), representing a 14% increase over the third quarter of 2016.
- Generated $2.2 million in revenue, a 48% increase over the same quarter in 2015.
- Realized an operating netback of $0.9 million or $15.85/boe, representing an 87% increase on a per barrel basis over the fourth quarter of 2015.
- Completed the construction of a new oil processing and water handling facility in the Upper Mannville F Pool.
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, 2016. These reports, including the Company’s Annual Information Form for the year ended December 31, 2016, 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
Three Months Ended December 31 |
Year Ended December 31 |
||||||||
2016 |
2015 |
2016 |
2015 |
||||||
FINANCIAL |
|||||||||
Petroleum and natural gas revenue |
$ |
2,206,835 |
$ |
1,493,313 |
$ |
6,221,497 |
$ |
9,749,377 |
|
Petroleum and natural gas netback |
860,849 |
458,240 |
2,347,747 |
5,335,096 |
|||||
Funds flow from operations(1) |
273,181 |
(103,531) |
530,567 |
3,188,485 |
|||||
Per share, basic and diluted |
0.00 |
0.00 |
0.01 |
0.04 |
|||||
Net loss |
(620,027) |
(2,333,468) |
(2,680,647) |
(8,310,831) |
|||||
Per share, basic and diluted |
(0.01) |
(0.03) |
(0.03) |
(0.11) |
|||||
Capital expenditures, including property acquisitions |
715,762 |
739,141 |
2,722,376 |
3,086,147 |
|||||
Net debt(2) |
11,827,170 |
11,446,110 |
11,827,170 |
11,446,110 |
|||||
Bank indebtedness |
$ |
11,247,537 |
$ |
10,828,040 |
$ |
11,247,537 |
$ |
10,828,040 |
|
Operating |
|||||||||
Average daily production |
|||||||||
Oil (bbl/d) |
534 |
440 |
450 |
607 |
|||||
Natural gas (Mcf/d) |
330 |
879 |
452 |
1,003 |
|||||
NGL (bbl/d) |
1 |
2 |
2 |
2 |
|||||
Combined (boe/d) |
590 |
588 |
527 |
776 |
|||||
Oil and NGL weighting |
91% |
75% |
86% |
78% |
|||||
Average sales prices |
|||||||||
Oil ($/bbl) |
$ |
42.91 |
$ |
31.99 |
$ |
35.67 |
$ |
39.61 |
|
Natural gas ($/Mcf) |
3.05 |
2.41 |
1.96 |
2.61 |
|||||
NGL ($/bbl) |
46.32 |
20.81 |
29.08 |
21.28 |
|||||
Combined ($/boe) |
$ |
40.63 |
$ |
27.59 |
$ |
32.23 |
$ |
34.41 |
|
Operating netback ($/boe) |
|||||||||
Petroleum and natural gas revenue |
$ |
40.63 |
$ |
27.59 |
$ |
32.23 |
$ |
34.41 |
|
Royalties |
4.64 |
3.00 |
3.57 |
2.73 |
|||||
Operating costs |
17.52 |
13.50 |
12.46 |
10.06 |
|||||
Transportation costs |
2.61 |
2.62 |
4.04 |
2.79 |
|||||
Operating netback(3) |
$ |
15.85 |
$ |
8.47 |
$ |
12.16 |
$ |
18.83 |
Notes: |
|
(1) |
Funds flow from operations is an additional IFRS measure that represents cash generated by operating activities, before changes in non-cash working capital and decommissioning expenditures and may not be comparable to measures used by other companies. |
(2) |
Net debt is a non-IFRS measure calculated as current assets minus current liabilities including bank indebtedness and excluding flow-through share premium. |
(3) |
Operating netback is a non-IFRS measure calculated as the Company’s oil and gas sales, less royalties, operating expenses and transportation costs per barrel of oil equivalent. |
As at |
|||||
Share Information |
December 31, 2016 |
December 31, 2015 |
|||
Common shares outstanding |
85,745,102 |
75,803,498 |
|||
Stock options outstanding |
4,385,000 |
5,995,000 |
|||
Weighted-average shares outstanding |
|||||
Basic and diluted |
80,672,032 |
75,758,868 |
Outlook
Hemisphere has built a high quality, oil weighted asset base with low cost, low risk, fast payout, and high growth attributes. The depressed oil price over the past two years has made it a challenge to grow production and cashflow so Hemisphere instead focused on delivering long term shareholder value by strategically investing in asset consolidation, implementing enhanced oil recovery projects, and prioritizing drilling to maximize reserve growth per dollar spent.
To date in 2017 oil prices have improved and as such, Hemisphere is shifting its focus back to value-creating growth through low risk expansion of proven projects. The Company has a number of development drilling opportunities in its southeast Alberta asset base in both the Atlee Buffalo and Jenner properties that have enticing economics even in the current price environment. Through the remainder of 2017 and into 2018 Hemisphere plans to expand development of these exciting assets.
In the first quarter of 2017 Hemisphere’s production averaged approximately 570 boe/d (92% oil) and it ended the quarter with an estimated $11.5 million in net debt. Additionally, the Company executed two oil hedge contracts. The first was for 100 bbl/d from January 1, 2017 to June 30, 2017 at a price of $72.15 CAD, and the second was for 100 bbl/d from February 1, 2017 to July 31, 2017 at a price of $69.50 CAD.
The management and directors of Hemisphere Energy would like to thank shareholders for their continued support and commitment over the past year, and look forward to building value in the year ahead.
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 Wednesday, June 14, 2017 at 9:30 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”.