Vancouver, British Columbia, August 20, 2024 – Hemisphere Energy Corporation (“Hemisphere” or the “Company”) is pleased to provide its financial and operating results for the three and six months ended June 30, 2024, declare a quarterly dividend payment to shareholders, and provide an operations update.
Q2 2024 Highlights
- Achieved record quarterly production of 3,628 boe/d (99% heavy oil), a 26% increase over the same quarter last year.
- Attained quarterly revenue of $28.9 million, a 52% increase from the second quarter of 2023.
- Delivered operating netback1 of $17.7 million or $53.58/boe for the quarter.
- Realized quarterly adjusted funds flow from operations (“AFF”)1 of $13.6 million or $41.13/boe.
- Invested $3.0 million of capital expenditures in the Company’s Marsden and Atlee Buffalo properties.
- Achieved quarterly free funds flow1 of $10.6 million or $0.11/share.
- Exited the second quarter with a positive working capital1 position of $11.6 million.
- Distributed $2.5 million or $0.025/share in dividends to shareholders during the quarter.
- Announced a special dividend of $0.03/share to shareholders that was paid subsequent to the quarter on July 26, 2024.
- Purchased and cancelled 1,054,200 shares under the Company’s Normal Course Issuer Bid (“NCIB”).
- Renewed the Company’s $35 million two-year extendible credit facility.
(1) Operating netback, adjusted funds flow from operations (AFF), free funds flow, capital expenditures, and working capital are non-IFRS measures, or when expressed on a per share or boe basis, non-IFRS ratio, that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Non-IFRS financial measures and ratios are not standardized financial measures under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Refer to the section “Non-IFRS and Other Specified Financial Measures”.
Selected financial and operational highlights should be read in conjunction with Hemisphere’s unaudited consolidated interim financial statements and related notes, and the Management’s Discussion and Analysis for the three and six months ended June 30, 2024 which are available on SEDAR+ at www.sedarplus.ca and on Hemisphere’s website at www.hemisphereenergy.ca. All amounts are expressed in Canadian dollars unless otherwise noted.
| Three Months Ended June 30 | Six Months Ended June 30 | |||||||||||
| ($000s except per unit and share amounts) | 2024 | 2023 | 2024 | 2023 | ||||||||
| FINANCIAL | ||||||||||||
| Petroleum and natural gas revenue | $ | 28,938 | $ | 19,013 | $ | 49,899 | $ | 37,707 | ||||
| Operating field netback(1) | 17,851 | 11,124 | 30,809 | 22,466 | ||||||||
| Operating netback(1) | 17,687 | 10,944 | 30,812 | 22,058 | ||||||||
| Cash flow provided by operating activities | 14,795 | 9,371 | 17,479 | 18,405 | ||||||||
| Adjusted funds flow from operations (“AFF”)(1) | 13,578 | 8,123 | 23,664 | 16,403 | ||||||||
| Per share, basic and diluted(1) ($/share) | 0.14 | 0.08 | 0.24 | 0.16 | ||||||||
| Free funds flow(1) | 10,599 | 3,591 | 15,037 | 10,406 | ||||||||
| Net income | 10,387 | 5,790 | 17,165 | 11,748 | ||||||||
| Per share, basic ($/share) | 0.11 | 0.06 | 0.17 | 0.12 | ||||||||
| Per share, diluted ($/share) | 0.10 | 0.06 | 0.17 | 0.11 | ||||||||
| Dividends | 2,467 | 2,523 | 4,938 | 5,068 | ||||||||
| Per share, basic ($/share) | 0.025 | 0.025 | 0.050 | 0.050 | ||||||||
| NCIB share repurchases | 1,730 | 1,107 | 2,897 | 1,371 | ||||||||
| Capital expenditures(1) | 2,979 | 4,532 | 8,627 | 5,997 | ||||||||
| Working capital (1) | 11,582 | 2,599 | 11,582 | 2,599 | ||||||||
| OPERATING | ||||||||||||
| Average daily production | ||||||||||||
| Heavy oil (bbl/d) | 3,609 | 2,859 | 3,360 | 3,000 | ||||||||
| Natural gas (Mcf/d) | 111 | 141 | 123 | 155 | ||||||||
| Combined (boe/d) | 3,628 | 2,883 | 3,380 | 3,026 | ||||||||
| Oil weighting | 99% | 99% | 99% | 99% | ||||||||
| Average sales prices | ||||||||||||
| Heavy oil ($/bbl) | $ | 88.07 | $ | 72.96 | $ | 81.54 | $ | 69.30 | ||||
| Natural gas ($/Mcf) | 1.13 | 2.36 | 1.75 | 2.75 | ||||||||
| Combined ($/boe) | $ | 87.65 | $ | 72.48 | $ | 81.11 | $ | 68.85 | ||||
| Operating netback ($/boe) | ||||||||||||
| Petroleum and natural gas revenue | $ | 87.65 | $ | 72.48 | $ | 81.11 | $ | 68.85 | ||||
| Royalties | (18.95) | (15.42) | (16.58) | (13.36) | ||||||||
| Operating costs | (9.63) | (11.72) | (10.33) | (11.39) | ||||||||
| Transportation costs | (5.00) | (2.93) | (4.12) | (3.08) | ||||||||
| Operating field netback(1) | 54.07 | 42.41 | 50.08 | 41.02 | ||||||||
| Realized commodity hedging loss | (0.49) | (0.69) | 0.00 | (0.75) | ||||||||
| Operating netback(1) | $ | 53.58 | $ | 41.72 | $ | 50.08 | $ | 40.27 | ||||
| General and administrative expense | (3.50) | (3.32) | (3.53) | (3.09) | ||||||||
| Interest expense and foreign exchange gain (loss) | (0.53) | (0.68) | (0.49) | (0.67) | ||||||||
| Tax expense provision | (8.42) | (6.75) | (7.59) | (6.56) | ||||||||
| Adjusted funds flow from operations(1) ($/boe) | $ | 41.13 | $ | 30.97 | $ | 38.47 | $ | 29.95 | ||||
Note: (1) Non-IFRS and other financial measure. Refer to “Non-IFRS and Other Financial Measures” section below.
| SHARE CAPITAL | As at August 19, 2024 | As at June 30, 2024 | As at December 31, 2023 |
| Common shares outstanding | 98,256,839 | 98,673,439 | 99,340,339 |
| Stock options outstanding | 6,306,600 | 6,306,600 | 7,563,000 |
| Total fully diluted shares outstanding | 104,563,439 | 104,980,039 | 106,903,339 |
Quarterly Dividend
Hemisphere is pleased to announce that its Board of Directors has approved a quarterly cash dividend of $0.025 per common share in accordance with the Company’s dividend policy. The dividend will be paid on September 13, 2024 to shareholders of record as of the close of business on August 30, 2024. The dividend is designated as an eligible dividend for income tax purposes.
Operations Update
Hemisphere’s current corporate production is approximately 3,700 boe/d (99% heavy oil, based on field estimates between July 1 – August 12, 2024), with 97% of this production coming from the Company’s enhanced oil recovery (“EOR”) projects in Atlee Buffalo. Despite not having brought any new wells online in Atlee Buffalo since September 2023, Hemisphere’s production from the area has grown by almost 10% since the fourth quarter of 2023 due to continued success of the Company’s polymer floods. Average corporate production of 3,380 boe/d (99% heavy oil) over the first half of the year includes significant downtime due to weather during the first quarter of 2024 and is on target with the Company’s corporate annual guidance of 3,400 boe/d.
Atlee Buffalo, Alberta
Hemisphere’s 2024 summer drilling program was kicked off in early August, with one of eight planned horizontal wells having been drilled to date. These wells will be brought on production in stages as they are tied-in between the end of August and October. Up to three of the new wells are planned to be converted to injectors within a year.
Marsden, Saskatchewan
The majority of capital spent year-to-date included drilling five wells and constructing a multi-well battery with a pilot polymer skid in the Company’s new Saskatchewan property. Battery production and polymer injection start-up in Marsden is now anticipated by the end of August. The Company has budgeted minimal production from the area for the year and expects that several months of injection could be required before polymer flood response is seen. At present, only one of the three wells brought on production in May for EOR data gathering purposes is still producing on primary recovery. The other two producers are anticipated to be turned back online in the coming months once polymer injection is underway.
EnerCom Denver Conference
Ms. Ashley Ramsden-Wood, Chief Development Officer of Hemisphere, will be presenting at the EnerCom Denver Conference on Tuesday, August 20 at 1:55 pm Mountain Daylight Time (12:55 pm Pacific Daylight Time). Her presentation will be livestreamed on EnerCom’s website at www.enercomdenver.com/webcast (Confluence A) and archived on Hemisphere’s website at www.hemisphereenergy.ca.
About Hemisphere Energy Corporation
Hemisphere is a dividend-paying Canadian oil company focused on maximizing value-per-share growth with the sustainable development of its high netback, low decline conventional heavy oil assets through 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:
Don Simmons, President & Chief Executive Officer
Telephone: (604) 685-9255
Email: info@hemisphereenergy.ca
Website: www.hemisphereenergy.ca
