Quarterly / Earnings Reports | Second Quarter (2Q) Update

Hemisphere Reports Q2 2019 Ops, Financial Results

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Hemisphere Energy has reported its Q2 2019 results.

Highlights:

• Achieved record revenue of $7.4 million, an increase of 32% over the second quarter of 2018.
• Realized quarterly funds flow from operations of $2.6 million, a 105% increase over the same respective quarter of 2018.
• Increased average quarterly production by 30% to 1,367 boe/d (96% oil), as compared to the second quarter of 2018.
• Improved operating netback by 28% to $31.10/boe, over the same quarter in 2018.
• Reduced net general and administration costs to $3.43/boe, which represents a 33% reduction from the second quarter of 2018.
• Increased corporate Liability Management Ratio (LMR) with the Alberta Energy Regulator to 9.65 as of August 2019.

Corporate Update

Hemisphere’s recent growth can be shown year over year when comparing the first half of 2019 to that of 2018. The Company has increased its production by 44% to 1,373 boe/d, revenue by 53% to over $13.8 million, operating netback by 63% to $30.99/boe, and funds flow from operations by 285% to $5.2 million. During the first six months of the year, Hemisphere focused on operating and corporate efficiencies attained from adding new stable production in the latter half of 2018. These combined achievements have helped Hemisphere to reduce its net debt from year-end 2018 by 8% while still funding the start of Hemisphere’s summer drilling program.

In the second quarter of 2019 the Company commenced an 11 well drilling program in the Atlee Buffalo area of southeast Alberta. This development drilling program was completed successfully in August and was executed ahead of schedule and on budget. Hemisphere anticipates that all new production from these wells will be on-stream by the end of September 2019. Facility upgrades at the Atlee Buffalo G pool battery are finished and already in operation in anticipation of the new well start-up dates.

Hemisphere’s corporate strategy through the remainder of 2019 is to focus on strengthening its balance sheet while optimizing new production and reducing per barrel operating and corporate costs. Hemisphere plans to keep its 2019 capital expenditures within corporate cash flow, and any additional funds are anticipated to be used to purchase shares under Hemisphere’s previously announced normal course issuer bid, fund the next phase of development drilling, or pay down debt. The Company will continue to move forward its development plans of the Atlee Buffalo oil pools as more information is gathered on the productivity levels of the recent drill program. Hemisphere has drawn US$26 million on its US$35 million multi-draw, non-revolving, 5-year term loan facility with an expiry date of September 2022, and continues to satisfy all financial and performance covenants set forth in the credit agreement.

The Company would like to thank its employees, contractors, and consultants for the smooth execution of this recent drilling campaign. With the commitment, hard work, and dedication of everyone involved, Hemisphere has achieved excellent technical success in the field and management looks forward to sharing the operational results of this program as they become available.