VANCOUVER, BRITISH COLUMBIA — (Marketwired) — 11/18/14 — Hemisphere Energy Corporation (TSX VENTURE: HME) (“Hemisphere” or the “Company”) is pleased to announce its financial and operating results for the three and nine months ended September 30, 2014.
Q3 2014 Highlights
Financial and Operating Summary
Selected financial and operational highlights should be read in conjunction with Hemisphere–s interim condensed Financial Statements and related Management–s Discussion and Analysis for the three and nine months ended September 30, 2014. These reports are available on SEDAR at and on Hemisphere–s website at . All amounts are expressed in Canadian dollars.
Subsequent Achievements
Message to Shareholders
The third quarter of 2014 represented the most active quarter in Hemisphere–s corporate history. The Company made significant progress in developing its Atlee Buffalo property by successfully completing its five well summer drilling program on schedule and under budget. All five wells were on production by the end of August and contributed one month of production towards Hemisphere–s third quarter production record.
Based on the successful results of the summer drilling program, the Company accelerated its fall drilling program and commenced operations in September with an additional five well program which included four horizontal wells in Atlee Buffalo and one vertical well in Jenner. The new horizontal wells are expected to be on production by the end of November and the vertical well is anticipated to be completed and tested by year-end.
Hemisphere–s average combined realized price in the third quarter of 2014 was $70.52 per boe. During the fourth quarter, the Company has seen a decrease in WTI price; however, realized prices have been partially offset by the lower differential between WTI and WCS and a lower CDN$ exchange rate.
Operating netback for the third quarter was $42.79 per boe compared to $39.98 per boe in the second quarter of 2014 despite a 7% decrease in the combined realized price. The increased netback is attributed to lower operating costs from the previous quarter.
Operating and transportation costs improved significantly and decreased by 29% during the third quarter of 2014 to $14.33 per boe compared with the second quarter of 2014. The decrease is a result of reduced third party processing, as well as higher production levels in Atlee Buffalo which have lower operating costs per boe. Hemisphere will continue to identify efficiencies and focus on low cost production as a way to offset weaker commodity prices and maximize corporate netbacks.
Royalties for the third quarter of 2014 were $13.39 per boe, representing a decrease of 13% over the second quarter of 2014. This decrease can be attributed to the reduction in combined average realized price, as well as the lower royalty rate for new horizontal wells drilled in the third quarter.
In 2014, Hemisphere has made substantial progress in achieving record production and cash flow growth while reducing operating costs and maintaining a strong balance sheet. The Hemisphere team is committed to generating per share growth through focusing on the development of its low cost asset base and protecting the balance sheet during commodity price fluctuations.
About Hemisphere Energy Corporation
Hemisphere is a producing oil and gas company focused on developing core areas that provide low to medium risk drilling opportunities to increase production, reserves and cash flow. Hemisphere–s continued growth plan is through drilling existing prospects and executing strategic acquisitions and farm-ins. Hemisphere trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol “HME”.
Forward-looking Statements
This news release contains “forward-looking statements” that are based on Hemisphere–s current expectations, estimates, forecasts and projections. These forward-looking statements include statements regarding Hemisphere–s outlook for our future operations, plans and timing for the commencement or advancement of exploration and development activities on our properties, and other expectations, intention and plans that are not historical fact. The words “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, or their negatives or other comparable words and phrases are intended to identify forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Many of these factors are beyond the control of Hemisphere. Consequently, all forward-looking statements made in this news release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by Hemisphere will be realized. For the reasons set forth above, investors should not place undue reliance on such forward-looking statements. Hemisphere disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.
A barrel of oil equivalent (“boe”) may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 Bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.
Definitions and abbreviations
Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.
Contacts:
Hemisphere Energy Corporation
Don Simmons
President & Chief Executive Officer
(604) 685-9255
Scott Koyich
Investor Relations
(403) 619-2200