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Hemisphere Energy Announces 2017 Fourth Quarter and Year-End Financial and Operating Results

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Hemisphere Energy Announces 2017 Fourth Quarter and Year-End Financial and Operating Results

Canada NewsWire

TSX-V: HME

VANCOUVER, April 26, 2018 /CNW/ - Hemisphere Energy Corporation (TSX-V: HME) ("Hemisphere" or the "Company") is pleased to announce its financial and operating results for the fourth quarter and year ended December 31, 2017. 

Last year was a transformational year as Hemisphere transitioned from strategic investment to aggressive growth. In September 2017 Hemisphere entered into a five-year term loan that allows the Company to draw up to US$35 million to fund the development of its low-risk oil assets in the Atlee Buffalo and Jenner properties in southeast Alberta. Prior to last fall, the Company had been limited by access to capital and was focused on optimizing existing production and proving waterflood reserves with minimal capital outlay. Subsequent to this financing however, Hemisphere drilled six wells, built a key processing facility, and expanded an existing facility in the fourth quarter. This activity led to a 57% reserves increase year over year in both the Proved (1P) and Proved plus Probable (2P) categories, created significant growth in corporate production, and has set the Company up for a substantial drilling program in 2018.

2017 Highlights

  • Achieved annual average production rate of 659 boe/d (93% oil), a 25% increase over 2016.
  • Realized December 2017 average exit rate of approximately 850 boe/d (94% oil).
  • Generated $11.0 million in annual revenue, a 76% increase from the previous year.
  • Increased operating netback by 109% to $4.9 million.
  • Generated $2.5 million of funds flow from operations, a 367% increase from 2016.
  • Executed a strategic five-year term loan agreement with a borrowing base of up to US$35 million.
  • Increased 2P net present value before tax of future net revenue (discounted at 10%) by 77% to $116.6 million.
  • Increased 2P reserve volumes by 57% to 7.2 MMboe (97% oil).
  • Increased net asset value by 68% to $1.12 per basic share.

Fourth Quarter 2017 Highlights

  • Achieved average production rate of 770 boe/d (94% oil), a 31% increase over the fourth quarter of 2016.
  • Generated $3.5 million in revenue, a 60% increase over the same quarter in 2016.
  • Increased operating netback by 92% to $1.7 million.
  • Generated $0.7 million of funds flow from operations, a 162% increase over the fourth quarter of 2016.
  • Drilled six development wells in Atlee Buffalo area, of which two are designated water injectors.
  • Expanded the Atlee Buffalo F pool facility with a SKUD (inclined free water knockout).
  • Constructed the Atlee Buffalo G pool facility to separate and reinject produced water.
  • Acquired 7,433 acres of new land in the immediate vicinity of its Atlee Buffalo operations.

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, 2017. These reports, including the Company's Annual Information Form for the year ended December 31, 2017, 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 December 31

   Year Ended December 31



2017


2016


2017


2016

FINANCIAL









Petroleum and natural gas revenue

$

3,528,565

$

2,206,835

$

10,974,634

$

6,221,497

Operating netback(1)


1,650,446


860,849


4,913,240


2,347,747

Funds flow from operations(2)


714,801


273,181


2,476,049


530,567


Per share, basic and diluted


0.01


0.00


0.03


0.01

Net loss


(3,308,520)


(620,027)


(3,796,175)


(2,680,647)


 Per share, basic and diluted


(0.04)


(0.01)


(0.04)


(0.03)

Capital expenditures


4,663,442


715,762


8,689,240


2,722,376

Net debt(3)


18,558,361


11,827,170


18,558,361


11,827,170

Bank indebtedness


-


11,247,537


-


11,247,537

Term loan

$

18,868,500

$

-

$

18,868,500

$

-

Operating









Average daily production










Oil (bbl/d)


725


534


612


450


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