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Hemisphere Energy Announces Q2 2018 Financial and Operating Results

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Hemisphere Energy Announces Q2 2018 Financial and Operating Results

Canada NewsWire

TSX-V: HME

VANCOUVER, Aug. 22, 2018 /CNW/ - Hemisphere Energy Corporation (TSX-V: HME) ("Hemisphere" or the  "Company") announces its financial and operating results for the three and six months ended June 30, 2018.

Q2 2018 HIGHLIGHTS

  • Achieved record quarterly average production of 1053 boe/d (96% oil), a 76% increase over the second quarter of 2017.
  • Increased revenue by 132% to $5.6 million compared to $2.4 million for the second quarter of 2017.
  • Increased operating netbacks, including losses on commodity contracts, to $24.27/boe, an increase of 21% from the second quarter of 2017.
  • Generated funds flow from operations of $1.3 million ($0.01/share), an increase of 109% over the second quarter of 2017.
  • Drilled the first two wells of an 11-well summer program.
  • Amended credit agreement to reflect an increased commitment of US$15.0 million to the term loan, bringing the aggregate amount committed by the lender to US$30 million.
  • Achieved a Corporate Liability Management Ratio ("LMR") with the Alberta Energy Regulator of 6.17 at the end of the second quarter 2018, which is within the top 13% of all licensees evaluated.

CORPORATE UPDATE

Since securing a five year term loan in September, 2017, Hemisphere has drilled 18 new wells including 12 drilled to-date in 2018. Current production of approximately 1250 boe/d (based on field estimates for the week of Aug 13-19) includes new production from three of the recent drills and is more than double that from the second quarter of 2017. Ongoing operations include drilling two more wells in Atlee Buffalo through August and early September, completing and putting on production the remainder of the summer drilling program wells by the end of the third quarter of 2018, expanding both of the Atlee F and G pool batteries to handle significantly increasing production, and preparing for further drilling operations through the winter.

Hemisphere has spent the last three years implementing its enhanced oil recovery projects in Atlee Buffalo and currently only 10% of the total original-oil-in-place from the Atlee Buffalo Upper Mannville F and G pools, as mapped by McDaniel and Associates Consultants Ltd. ("McDaniel") for the purposes of its independent reserve report dated effective as of December 31, 2017 (the "Reserve Report"), is captured on a proved reserve basis in the Reserve Report, with 12% captured on a proved plus probable basis.  Analogue waterflood pools within two townships of the Company's Atlee Buffalo property have recovered up to 40% of original-oil-in-place through secondary and tertiary recovery schemes. Management anticipates significant reserve additions through 2018 with the level of activity achieved this year to enhance the development and establish the productivity of these pools.

Hemisphere expects to complete its capital program in 2018 with debt levels within its term loan commitment level of US$30 million, which allows for room to continue a capital program through the first quarter of 2019. Currently up to eight wells are being planned for the first quarter of 2019.

Hemisphere's corporate strategy is to achieve organic production and reserve growth in order to improve profitability and financial flexibility. With continued success of its waterflood projects, the Company expects to see sustained increases in production and reserves through the year. Management believes the Company has considerable growth upside through development of its exceptional assets.

Q2 2018 FINANCIAL AND OPERATING HIGHLIGHTS


Three Months Ended June 30

Six Months Ended June 30


2018

2017

2018

2017

OPERATING







Average daily production










Oil (bbl/d)


1,012


549


911


539


Natural gas (Mcf/d)


235


296


258


303


NGL (bbl/d)


2


2


2


2


Combined (boe/d)


1,053


600


956


591


Oil and NGL weighting


96%


92%


96%


91%

Average sales prices










Oil ($/bbl)

$

60.64

$

46.85

$

54.07

$

46.57


Natural gas ($/Mcf)


1.17


2.73


1.67


2.77


NGL ($/bbl)


61.48


46.30


58.02


46.64


Combined ($/boe)

$

58.64

$

44.34

$

52.09

$

44.02

Operating netback ($/boe)










Petroleum and natural gas revenue

$

58.64

$

44.34

$

52.09

$

44.02


Royalties


10.39


7.19


8.73


6.46


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