TSX-V: HME – VANCOUVER, May 23, 2018 /CNW/ – Hemisphere Energy Corporation (TSX-V: HME) (“Hemisphere” or the “Company”) announces its financial and operating results for the three months ended March 31, 2018.
Q1 2018 Highlights
- Achieved quarterly production average of 858 boe/d (95% oil), a 47% increase over the first quarter of 2017.
- Increased revenue by 48% to $3.4 million compared to the first quarter of 2017.
- Drilled three additional development wells for total capital expenditures of $2.9 million.
- Corporate Liability Management Ratio (LMR) with the Alberta Energy Regulator was 5.6 at the end of the first quarter 2018.
Corporate Update
During the first quarter of 2018, Hemisphere experienced significant downtime and higher than average operating costs associated with severe winter conditions. Widened differentials between WTI and WCS oil prices also impacted oil revenues substantially which carved into gains from overall oil market improvements.
The WTI/WCS differential market appears to have stabilized during the second quarter with differentials narrowing dramatically for May and June 2018. Corporate production has continued to grow through the second quarter reaching rates in excess of 1000 boe/d (~97% oil).
In the first quarter, the Company drilled three wells into its Atlee Buffalo G pool. Two of these wells will be converted to injectors to help re-energize new areas of the reservoir in advance of a significant summer drilling program. Hemisphere now produces over 300 bbl/d of oil from this pool, up from 30 bbl/d of oil a year ago. The Company is also planning further development in its Atlee Buffalo F pool, where oil production has grown to almost 500 bbl/d from 300 bbl/d a year ago.
Hemisphere’s mangement anticipates significant growth and considerable upside as additional producer and injector wells are drilled through 2018 while pressure continues to build in both Atlee Buffalo pools. Hemisphere’s corporate strategy is to substantially increase cash flow through organic production and reserve growth of its existing assets that are still in very early stages of development.
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 22, 2018 at 9:30 a.m. (Pacific Daylight Time).
Financial and Operating Summary
Three Months Ended March 31 |
|||||
Operating |
2018 |
2017 |
|||
Average daily production |
|||||
Oil (bbl/d) |
809 |
530 |
|||
Natural gas (Mcf/d) |
281 |
309 |
|||
NGL (bbl/d) |
2 |
2 |
|||
Combined (boe/d) |
858 |
583 |
|||
Oil and NGL weighting |
95% |
91% |
|||
Average sales prices |
|||||
Oil ($/bbl) |
$ |
45.76 |
$ |
46.29 |
|
Natural gas ($/Mcf) |
2.09 |
2.80 |
|||
NGL ($/bbl) |
54.06 |
46.97 |
|||
Combined ($/boe) |
$ |
43.96 |
$ |
43.68 |
|
Operating netback ($/boe) |
|||||
Petroleum and natural gas revenue |
$ |
43.96 |
$ |
43.68 |
|
Royalties |
6.67 |
5.70 |
|||
Operating costs |
15.04 |
17.41 |
|||
Transportation costs |
2.59 |
3.07 |
|||
Operating field netback(1) |
$ |
19.66 |
$ |
17.51 |
|
Realized commodity hedging gain (loss) |
7.24 |
(0.75) |
|||
Operating Netback(2) |
$ |
12.42 |
$ |
18.26 |
|
Financial |
|||||
Petroleum and natural gas revenue |
$ |
3,393,921 |
$ |
2,292,746 |
|
Operating netback(2) |
959,096 |
958,276 |
|||
Funds flow from operations(3) |
99,720 |
505,330 |
|||
Per share, basic and diluted |
0.00 |
0.01 |
|||
Net income (loss) |
(2,389,393) |
(138,678) |
|||
Per share, basic and diluted |
(0.03) |
(0.00) |
|||
Capital expenditures, including property acquisitions |
2,870,066 |
256,513 |
|||
Net debt(4) |
22,024,394 |
11,578,352 |
|||
Bank indebtedness |
$ |
– |
$ |
11,622,930 |
|
Term Loan(5) |
23,209,200 |
– |
Notes: |
|
(1) |
Operating field netback per boe is a non-IFRS measure calculated as the Company’s oil and gas sales, less royalties, operating expenses and transportation costs on an absolute and per barrel of oil equivalent basis. |
(2) |
Operating netback is a non-IFRS measure calculated as the operating field netback plus the Company’s realized commodity hedging gain (loss) on an absolute and per barrel of oil equivalent basis. |
(3) |
Funds flow from operations is a non-IFRS measure that represents cash generated by operating activities, before changes in non-cash working capital and may not be comparable to measures used by other companies. |
(4) |
Net debt is a non-IFRS measure calculated as current assets minus current liabilities including term loan or bank indebtedness and excluding fair value of financial instruments and any flow-through share premium. |
(5) |
Gross term loan amount including foreign exchange |
About Hemisphere Energy Corporation
Hemisphere Energy Corporation is a producing oil and gas company focused on developing low risk conventional oil assets for minimal capital exposure through developing known pools of oil and optimizing waterflood projects. 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”.