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Hemisphere Energy Details Q1 2019 Results

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   |    Tuesday,May 28,2019

Hemisphere Energy Corp. reported its Q1 2019 results.

Q1 2019 Highlights

  • Achieved record revenue of $6.4 million, an increase of 90% over the first quarter of 2018.
  • Realized record quarterly funds flow from operations of $2.6 million, a 30% increase over the entire annual funds flow from operations for 2018.
  • Increased quarterly production by 61% to 1,379 boe/d (97% oil), as compared to the first quarter of 2018.
  • Reduced operating and transportation expenses to $12.10/boe, a 31% reduction from the first quarter of 2018.
  • Improved operating netback by 149% to $30.89/boe, as compared to the first quarter of 2018.
  • Reduced general and administration costs to $2.26/boe, which is a 57% reduction over the same quarter in 2018.
  • Focused on improving Hemisphere’s balance sheet by reducing net debt by 8% during the first quarter of 2019 over net debt levels as at Dec. 31, 2018.
  • Increased corporate Liability Management Ratio (LMR) with the Alberta Energy Regulator to 9.1 at the end of the first quarter 2019.

Corporate Update

During the first quarter of 2019, Hemisphere recovered from the low oil prices and wide Canadian oil price differentials that the oil and gas sector experienced in the fourth quarter of 2018 which allowed Hemisphere to bring back on production that was shut-in during the latter part of 2018. However, during the first quarter, Hemisphere experienced some significant production downtime in the field associated with severe winter conditions.  Despite these obstacles, Hemisphere maintained record production levels and lowered operating and transportation expenses, resulting in record corporate revenue and funds flow from operations for the quarter.

Hemisphere’s average realized price of $51.85/boe in the first quarter of 2019 is 128% higher than the fourth quarter of 2018 and is an increase of 18% over the same period in 2018. The higher oil price environment along with a 61% increase in production year over year to 1,379 boe/d (97% oil) resulted in record revenues of over $6.4 million for the first quarter. Hemisphere’s low operating and transportation costs of $12.10/boe, decreased royalties to $5.30/boe, and lower general and administrative costs of $2.26/boe led to record funds flow from operations of $2.6 million.

With limited capital spending in the first quarter, Hemisphere focused on lowering net debt levels and planning for an active development program in the second half of 2019. Hemisphere is currently preparing for another significant drilling program scheduled to begin in June where up to 16 additional wells are planned to be drilled in the Atlee Buffalo area. Hemisphere will continue to monitor the oil price environment and will adjust capital spending if required. The Company’s corporate strategy through 2019 is to focus on strengthening its financial capacity by investing capital in growing production, reserves, and free cash flow to generate greater shareholder value in the coming year.

Financial and Operating Summary

 

Three Months Ended March 31

Operating

2019

2018

Average daily production

        

   Oil (bbl/d)

  

1,329

  

809

   Natural gas (Mcf/d)

  

287

  

281

   NGL (bbl/d)

  

2

  

2

   Combined (boe/d)

  

1,379

  

858

   Oil and NGL weighting

  

97%

  

95%

Average sales prices

        

   Oil ($/bbl)

$

52.18

$

45.76

   Natural gas ($/Mcf)

  

7.14

  

2.09

   NGL ($/bbl)

  

43.84

  

54.06

   Combined ($/boe)

$

51.85

$

43.96

Operating netback ($/boe)

        

   Petroleum and natural gas revenue

$

51.85

$

43.96

   Royalties

  

5.30

  

6.67

   Operating costs

  

9.65

  

15.04

   Transportation costs

  

2.45

  

2.59

   Operating field netback(1)

$

34.45

$

19.66

Realized commodity hedging gain (loss)

  

3.56

  

7.24

Operating Netback(2)

$

30.89

$

12.42

Financial

    

Petroleum and natural gas revenue

$

6,435,252

$

3,393,921

Operating field netback(1)

  

4,274,261

  

1,517,978

Operating netback(2)

  

3,832,225

  

959,096

Cash flow provided by (used in) operating activities

  

614,691

  

(607,823)

Funds flow from operations(3)

  

2,623,016

  

          99,720

   Per share, basic and diluted

  

0.03

  

              0.00

Net income (loss)

  

(889,224)

  

(2,389,393)

   Per share, basic and diluted

  

(0.01)

  

(0.03)

Capital expenditures, including  property acquisitions

  

611,795

  

2,870,066

Net debt(4)

  

32,771,889

  

22,024,394

Gross term loan(5)

  

34,707,400

  

23,209,200

Notes:

  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. Funds flow from operations is a non-IFRS measure that represents cash generated by operating activities, before changes in non-cash working capital 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 including gross term loan and excluding fair value of financial instruments and any flow-through share premium.
  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.




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