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 second quarter ended June 30, 2021.
During the second quarter, Hemisphere achieved record revenue of $10.1 million, generated adjusted funds flow from operations (AFF) of $4.2 million ($26.03/boe), and increased average production by 8% when compared to the previous quarter. Hemisphere’s capital expenditures during the quarter were $1.9 million, including the construction, installation, and start-up of the Atlee Buffalo G pool polymer skid.
Subsequent to quarter-end, Hemisphere announced that it had established a new $35 million extendible two-year committed term facility with ATB Financial and completed early payout of its 5-year US Dollar term loan with Cibolo Energy Partners. The new Credit Facility is anticipated to result in a significant reduction in corporate interest costs, provide additional flexibility to the Company, and reduce foreign exchange risk.
- Generated record revenue of $10.1 million, a 311% improvement over the second quarter of 2020.
- Recorded production of 1,786 boe/d (98% heavy crude oil and 2% conventional natural gas), an 8% increase over the previous quarter and 9% increase over the second quarter of last year.
- Achieved operating and transportation costs of $12.11/boe, including a turn-around at one of its batteries.
- Increased operating netback by 107% to $5.6 million ($34.32/boe, or $0.06/basic share), including hedging losses of $4.90/boe, when compared to the second quarter of 2020.
- Increased AFF by 213% to $4.2 million ($26.03/boe, or $0.05/basic share), when compared to the second quarter of 2020.
- Lowered net debt to $18.5 million, a 40% reduction as compared to the second quarter of 2020.
- Lowered leverage ratio of net debt to Q2 annualized AFF to 1.1, an 81% reduction as compared to the second quarter of 2020.
Hemisphere is currently in the process of upgrading the size of its treating facilities at the Atlee G pool battery in anticipation of increased oil production with ongoing polymer flood optimization work. The Company is also planning to start a three-well drilling program by mid-September, into what is believed to be a highly productive area of the pool.
Selected financial and operational highlights should be read in conjunction with Hemisphere’s audited annual financial statements and related Management’s Discussion and Analysis for the year ended December 31, 2020. These reports, including the Company’s Annual Information Form for the year ended December 31, 2020, are available on SEDAR at www.sedar.com and on Hemisphere’s website at www.hemisphereenergy.ca. All amounts are expressed in Canadian dollars unless otherwise noted.
2021 FINANCIAL AND OPERATING HIGHLIGHTS
|Three Months Ended June 30||Six Months Ended June 30|
|Petroleum and natural gas revenue||$||10,087,225||$||2,452,793||$||17,976,241||$||7,415,993|
|Operating field netback(1)||6,374,868||1,259,856||11,772,819||3,950,664|
|Cash flow provided by operating activities||4,741,720||816,755||7,944,220||4,174,118|
|Adjusted funds flow from operations (AFF)(3)||4,230,423||1,353,680||8,271,986||3,508,274|
|Per share, basic and diluted(3)||0.05||0.02||0.09||0.04|
|Per share, basic and diluted||(0.04||)||(0.03||)||(0.02||)||(0.02||)|
|Net debt to annualized AFF(3)(4)||1.1||5.7||1.1||4.4|
|Gross term loan(5)||$||21,999,350||$||33,940,000||$||21,999,350||$||33,940,000|
|Average daily production|
|Heavy oil (bbl/d)||1,758||1,645||1,698||1,793|
|Natural gas (Mcf/d)||169||–||131||96|
|Average sales prices|
|Heavy oil ($/bbl)||$||62.78||$||16.38||$||58.25||$||22.62|
|Natural gas ($/Mcf)||2.93||–||2.90||1.97|
|Operating netback ($/boe)|
|Petroleum and natural gas revenue||$||62.06||$||16.38||$||57.73||$||22.52|
|Operating field netback(1)||39.22||8.41||37.81||12.00|
|Realized commodity hedging gain (loss)||(4.90||)||9.33||(2.88||)||(6.77||)|
|Adjusted funds flow from operations(3) ($/boe)||$||26.03||$||9.04||$||26.57||$||10.65|
(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) 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.
(4) Net debt is a non-IFRS measure calculated as current assets minus current liabilities, excluding fair value of financial instruments, lease and warrant liabilities, plus gross term loan.
(5) Gross term loan is calculated as the total USD draws, less any payments, on the term loan translated to Canadian Dollars at the period end exchange rate.