Vancouver, British Columbia-Hemisphere Energy Corporation (TSXV: HME) (“Hemisphere” or the “Company”) announces its financial and operating results for the three months and nine months ended September 30, 2019.
Q3 2019 HIGHLIGHTS
- Achieved record revenue of $8.2 million, a 40% increase over the third quarter of 2018.
- Realized record quarterly funds flow from operations of $3.6 million, a 157% increase over the third quarter of 2018.
- Increased average quarterly production to a record 1,738 boe/d (96% oil), a 51% increase as compared to the third quarter of 2018.
- Increased operating netback by 31% to $30.64/boe, as compared to the third quarter of 2018.
- Reduced operating and transportation costs by 13% to $11.82/boe, as compared to the third quarter of 2018.
- Reduced net general and administration costs by 18% to $3.02/boe, as compared to the third quarter of 2018.
- Completed an 11 well drilling program and facility upgrades with $6.4 million in capital expenditures.
- Repurchased and canceled 475,000 shares under the Company’s Normal Course Issuer Bid (“NCIB”).
- Increased Hemisphere’s corporate Liability Management Ratio (LMR) with the Alberta Energy Regulator to 9.77 as of September 2019.
Hemisphere delivered both financial and operational success during the third quarter of 2019 as the Company completed its summer development program with $6.4 million in capital expenditures. The drilling program included 11 new wells in the Atlee Buffalo G pool that were placed on production through the third quarter with results exceeding internal expectations. Corporate production in October 2019 averaged approximately 2,200 boe/d, an increase of more than 25% over Hemisphere’s third quarter average production rate. The Company also invested in facilities, infrastructure, and pipelines to handle additional production from the drilling program.
Hemisphere achieved a solid financial quarter with record revenue of $8.2 million and record funds flow from operations of $3.6 million. Despite a lower oil price environment the Company’s operating netback was $30.64/boe, which is largely due to low operating and transportation costs of $11.82/boe. Through the quarter, Hemisphere continued to decrease its per barrel corporate costs and brought its general and administration costs down to $3.02/boe.
Over the past two years Hemisphere has executed a low risk growth plan through development of its oil assets in the Atlee Buffalo area of southeast Alberta. Management has consistently delivered production and reserve growth with efficient operations through times of significant volatility in commodity prices. This has positioned Hemisphere to focus on deleveraging while continuing to develop its asset base.
Hemisphere intends to keep its capital expenditures within corporate cash flow with additional funds anticipated to be used to pay down debt and purchase shares under Hemisphere’s previously announced NCIB. The Company has acquired and canceled 729,500 shares to date under the NCIB and is now in a position to focus on improving its debt metrics, while continuing to optimize new production, further reduce per barrel operating and corporate costs, and move forward its 2020 development program.
Q3 2019 FINANCIAL AND OPERATING HIGHLIGHTS
|Three Months Ended September 30||Nine Months Ended September 30|
|Average daily production|
|Natural gas (Mcf/d)||404||255||329||257|
|Oil and NGL weighting||96%||96%||96%||96%|
|Average sales prices|
|Natural gas ($/Mcf)||0.80||1.31||1.74||1.55|
|Operating netback ($/boe)|
|Petroleum and natural gas revenue||$||51.34||$||55.36||$||53.96||$||53.33|
|Operating field netback(1)||32.57||30.62||33.88||28.83|
|Realized commodity hedging loss||1.93||7.19||3.03||8.15|
|Petroleum and natural gas revenue||$||8,207,658||$||5,856,762||$||22,039,005||$||14,869,598|
|Operating field netback(1)||5,206,704||3,239,216||13,838,732||8,037,033|
|Cash flow provided by (used in) operating activities||3,803,907||2,192,827||6,966,814||1,998,995|
|Funds flow from operations(3)||3,558,673||1,387,469||8,753,556||2,738,280|
|Per share, basic and diluted||0.04||0.02||0.10||0.03|
|Net income (loss)||2,854,615||(236,344||)||4,777,972||(4,878,900||)|
|Per share, basic and diluted||0.03||(0.00||)||0.05||(0.05||)|
|Gross term Loan(5)||$||34,426,600||$||28,241,400||$||34,426,600||$||28,241,400|
(1) Operating field netback 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.
(5) Gross term loan is calculated as the total USD draws on the term loan translated to Canadian Dollars at the period end exchange rate.
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”.
For further information, please visit our website at www.hemisphereenergy.ca to see our presentation or contact:
Don Simmons, President & Chief Executive Officer
Telephone: (604) 685-9255