Vancouver, British Columbia – Hemisphere Energy Corporation (TSXV: HME) (OTCQX: HMENF) (“Hemisphere” or the “Company”) is pleased to provide its financial and operating results for the fourth quarter and year ended December 31, 2020.
For Hemisphere, 2020 was a year of strengthening the balance sheet by cutting capital, reducing costs, maintaining year over year production rates, and paying down nearly 25% of its previously outstanding year-end debt.
Despite spending only $1.7 million in capital during the year, the Company grew its Proved and Proved plus Probable reserves by 18% and 22%, respectively. While oil prices were down substantially through much of 2020 due to COVID-19, Hemisphere achieved adjusted funds flow from operations of $9.3 million, or $0.11 per basic share. This allowed the Company to improve its leverage metrics, strategically execute its Normal Course Issuer Bid (NCIB) program, and prepare for an exciting year of development in 2021.
The first quarter of 2021 has been positive for Hemisphere. Oil prices have rebounded significantly from 2020 and initial production response from water injector conversions done in the fourth quarter has been encouraging. Since completing a facility turnaround in early April, corporate production is currently averaging over 1,900 boe/d (99% heavy crude oil, based on field estimates between April 10th to 26th, 2021). This correlates to an increase of 25% as compared to production from the fourth quarter.
- Attained annual average production of 1,706 boe/d (99% heavy oil and 1% natural gas), a 2% increase over 2019.
- Generated annual revenue of $18.7 million.
- Recorded operating netback of $14.5 million.
- Achieved $9.3 million of adjusted funds flow from operations, or $0.11/basic share.
- Reduced operating and transportation costs to $9.94/boe, a 20% decrease over 2019.
- Increased Proved (1P) reserve volumes by 18% to 11.7 MMboe (99% heavy oil and 1% natural gas), with NPV10 BT of future net revenue valued at $170 million.
- Increased Proved plus Probable (2P) reserve volumes by 22% to 14.9 MMboe (98% heavy oil and 2% natural gas), with NPV10 BT of future net revenue valued at $211 million.
- Purchased 2,120,000 shares at an average price of $0.125 under the Company’s NCIB program.
- Realized hedging gains of $3.7 million.
Selected financial and operational highlights should be read in conjunction with Hemisphere’s audited annual financial statements and related Management’s Discussion and Analysis for the year ended December 31, 2020. These reports, including the Company’s Annual Information Form for the year ended December 31, 2020, are available on SEDAR at www.sedar.com and on Hemisphere’s website at www.hemisphereenergy.ca. All amounts are expressed in Canadian dollars unless otherwise noted.
Financial and Operating Summary
|Three Months Ended
|Petroleum and natural gas revenue||$||5,354,596||$||9,472,078||$||18,660,257||$||31,511,084|
|Operating field netback(1)||2,931,465||6,284,329||10,745,098||20,123,062|
|Cash flow provided by operating activities||2,127,640||3,519,506||9,389,702||10,451,804|
|Adjusted funds flow from operations(3)||2,380,051||4,324,443||9,294,933||13,043,481|
|Per share, basic and diluted(3)||0.03||0.05||0.11||0.15|
|Net income (loss)||(1,501,079||)||(2,888,075||)||(415,908||)||1,577,810|
|Per share, basic and diluted||(0.02||)||(0.03||)||(0.00||)||0.02|
|Gross Term loan(5)||$||26,096,500||$||34,418,200||26,096,500||$||34,418,200|
|Average daily production|
|Heavy Oil (bbl/d)||1,507||2,101||1,692||1,607|
|Natural gas (Mcf/d)||88||381||88||342|
|Oil and NGL weighting||99%||97%||99%||97%|
|Average sales prices|
|Heavy Oil ($/bbl)||$||38.47||$||48.57||$||30.03||$||53.30|
|Natural gas ($/Mcf)||2.51||2.21||2.14||1.87|
|Operating netback ($/boe)|
|Petroleum and natural gas revenue||$||38.24||$||47.53||$||29.88||$||51.85|
|Operating field netback(1)||20.94||31.53||17.21||33.11|
|Realized commodity hedging loss||4.49||(0.83||)||5.95||(2.31||)|
(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. See “Non-IFRS Measures” below.
(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. See “Non-IFRS Measures” below.
(3) Adjusted funds flow from operations is a non-IFRS measure that represents cash generated by operating activities, before changes in non-cash working capital and adjusted for any decommissioning expenditures, and may not be comparable to measures used by other companies. See “Non-IFRS Measures” below.
(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 lease and warrant liabilities. See “Non-IFRS Measures” below.
(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.
|As at December 31|
|Proved plus Probable (Mboe) (1)||14,921.2||12,195.7|
|Common shares outstanding||86,782,302||88,902,302|
|Stock options outstanding||8,429,000||8,184,000|
|Fully diluted shares outstanding||108,961,302||110,836,302|
|Weighted-average shares outstanding – basic||88,161,583||89,662,316|
|Weighted-average shares outstanding – diluted||88,161,583||90,362,590|
(1) Reserves as attributed by the Company’s independent reserves evaluator, McDaniel & Associates Consultants Ltd., in its report dated March 5, 2021 and effective as of December 31, 2020, prepared in accordance with the COGE Handbook and National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities.
About Hemisphere Energy Corporation
Hemisphere is a Canadian oil company focused on sustainable growth of its high netback, low decline conventional heavy oil assets through water and polymer flood enhanced recovery methods. Hemisphere trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol “HME” and on the OTCQX Venture Marketplace under the symbol “HMENF”.
For further information, please visit the Company’s website at www.hemisphereenergy.ca to view its corporate presentation or contact: