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Hemisphere Energy Corporation (TSX VENTURE:HME) is
pleased to announce its financial and operating results for the three and
nine months ended November 30, 2012. All amounts are expressed in Canadian
dollars.
Achievements and Highlights
-- Increased third quarter revenue by 114% to $2.7 million compared to $1.3 million in the same quarter of the previous fiscal year. -- Increased revenue for the first nine months by 293% to $7.2 million compared to $1.8 million in the same period last year. -- Increased third quarter funds flow from operating activities by 107% to $1.5 million ($0.03/share) compared to $0.7 million ($0.02/share) during the same quarter of the previous fiscal year. -- Increased funds flow from operating activities for the first nine months of the fiscal year by 449% to $3.3 million ($0.07/share) compared to $0.6 million ($0.02/share) in the same period last year. -- Grew third quarter production by 107% to 430 barrels of oil equivalent per day ("boe/d") from 208 boe/d in the third quarter of the previous fiscal year. -- Increased third quarter's oil and natural gas liquids ("NGL") weighting to 95% from 79% in the previous year's third quarter. -- Increased third quarter operating netback by 35% to $45.62 per barrel of oil equivalent ("boe") from $33.76 per boe in the second quarter. -- Successfully drilled two horizontal wells and one vertical well targeting oil-bearing sandstones of Glauconitic formation in Jenner, Alberta. -- Completed and placed on production one horizontal oil well and one vertical oil well in Jenner. -- Acquired a new 3D seismic program over prospective farm-in lands in Jenner.
Selected financial and operational highlights should
be read in conjunction with the company's unaudited condensed interim
Financial Statements and related Management's Discussion and Analysis which
are available on SEDAR at www.sedar.com and on Hemisphere's website at http://www.hemisphereenergy.ca/investors/financial-reports.
Financial and Operating Highlights
---------------------------------------------------------------------------- Three months ended Nine months ended Financial November 30 November 30 2012 2011 2012 2011 ---------------------------------------------------------------------------- Petroleum and natural gas revenue $ 2,730,244 $ 1,273,655 $ 7,181,046 $ 1,827,044 Petroleum and natural gas netback $ 1,784,702 $ 890,541 $ 4,292,002 $ 1,146,357 Funds flow from operating activities $ 1,448,807 $ 699,535 $ 3,340,926 $ 608,407 Per share, basic and diluted $ 0.03 $ 0.02 $ 0.07 $ 0.02 Net income $ 695,833 $ 596,508 $ 865,183 $ 212,161 Per share, basic and diluted $ 0.01 $ 0.02 $ 0.02 $ 0.01 Capital expenditures $ 3,905,686 $ 2,471,998 $ 9,830,352 $ 5,356,735 Working capital at end of period $ (3,073,004) $ 1,538,869 $ (3,073,004) $ 1,538,869 Net debt at end of period $ 1,250,000 $ - $ 1,250,000 $ - ---------------------------------------------------------------------------- ---------------------------------------------------------------------------- Three months ended Nine months ended Operating November 30 November 30 2012 2011 2012 2011 ---------------------------------------------------------------------------- Average daily production Crude oil (bbl/d) 406 160 375 72 Natural gas (mcf/d) 132 264 163 240 NGL (bbl/d) 2 4 3 3 Total (boe/d) 430 208 405 115 Oil & NGL weighting 95% 79% 93% 65% ---------------------------------------------------------------------------- Average sales prices Crude oil ($/bbl) $ 72.91 $ 79.17 $ 68.34 $ 78.07 Natural gas ($/mcf) $ 2.23 $ 3.81 $ 1.94 $ 3.56 NGL ($/bbl) $ 57.84 $ 86.91 $ 60.59 $ 69.72 Combined ($/boe) $ 69.78 $ 67.39 $ 64.47 $ 58.02 ---------------------------------------------------------------------------- Operating netback ($/boe) Petroleum and natural gas revenue $ 69.78 $ 67.39 $ 64.47 $ 58.02 Royalties $ 9.33 $ 9.50 $ 11.15 $ 8.10 Operating costs $ 13.20 $ 8.49 $ 11.71 $ 11.84 Transportation costs $ 1.64 $ 2.28 $ 3.09 $ 1.68 Operating netback $ 45.62 $ 47.12 $ 38.52 $ 36.40 ----------------------------------------------------------------------------
Operations Update
Jenner, Alberta
In late September 2012, Hemisphere drilled one horizontal oil well and one
vertical oil well while initiating a new 3D seismic program.
The horizontal oil well targeted an existing pool that had been previously
discovered and produced from vertical wells. This well was completed, tied-in
and placed on production at a rate of approximately 140 barrels of oil per
day ("bopd") as previously announced in November 2012.
The vertical well was the first well drilled on the seismic option and
farm-in agreement announced in June 1012. This well was drilled to hold land
expiring in October 2012. The well was completed and equipped with a single
well battery and was placed on production on December 1, 2012.
The new 3D seismic survey was completed in October 2012 spanning the
prospective farm-in lands along one of the main Glauconitic trends in the
Jenner area. This survey has been interpreted and Hemisphere has identified a
number of potential drilling locations, some of which will be targeted in
2013.
In November and early December 2012, Hemisphere drilled an additional three
horizontal wells targeting three different Glauconitic formation oil pools,
all of which have been completed, equipped and placed on production. One
horizontal well came on with a production rate of approximately 100 bopd and
has been tied-in to Hemisphere's main Jenner battery. The second horizontal
well, which was an option well drilled to earn additional farm-in lands, was
brought on production at a rate of approximately 75 bopd and is producing to
a single well battery. The third horizontal well is tied-in to Hemisphere's
main Jenner battery and is flowing approximately 10 bopd with high initial
watercuts. The company has recently installed an artificial lift system to
move more fluid and increase oil rates.
With the addition of the three wells recently placed on production and based
on field estimates, Hemisphere's production for the first nine days of
January averaged 550 boe/d with a 94% oil and NGL weighting.
Hemisphere has expanded its Jenner landholdings through the successful
acquisition of 6.5 sections (4,100 acres) of land at recent crown land sales.
This additional land increases Hemisphere's position in Jenner by 33% to
approximately 16,000 net acres with an additional 6 sections (3,800 net
acres) to earn in farm-in lands.
Change in Year-End
Hemisphere previously announced its change in year-end from February 28 to
December 31. This transition will take place in the next reporting period at
which time the company plans to report its year-end audited financial
statements for the 10 months ended December 31, 2012.
About Hemisphere Energy Corporation
Hemisphere Energy Corporation is a junior exploration and production 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 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.
Barrels 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.
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