VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 26, 2012) - Hemisphere Energy Corporation ("Hemisphere" or the "Company") (TSX VENTURE:HME) is pleased to announce its financial and operating results for the fourth quarter and year ended February 29, 2012. Selected financial and operational highlights are shown below and should be read in conjunction with the Company's annual financial statements and related management's discussion and analysis.
Hemisphere has also filed its reports under section 2.1 of National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101") for the year ended February 29, 2012.
Reports are available on SEDAR at
www.sedar.com and on Hemisphere's website at
www.hemisphereenergy.ca. All amounts are expressed in Canadian dollars.
Fourth Quarter 2012 Achievements
-- Placed two horizontal oil wells on production in the Jenner property in
Alberta.
-- Increased average production by 97% over the previous quarter to 410
barrels of oil equivalent per day ("boe/d") with an 88% oil and natural
gas liquids ("NGL") weighting, representing the fifth consecutive
quarter of production growth.
-- Executed a farm-in agreement to earn lands in Jenner further expanding
Hemisphere's core area.
-- Completed a brokered private placement for aggregate subscription
proceeds of $8.6 million at a price of $0.70 per share.
-- Closed the Company's second strategic acquisition in Jenner for $6.0
million, which included 8.5 sections of land, 3D seismic, production
facilities and approximately 100 barrels of oil per day ("bopd") of
production and associated reserves.
-- Expanded the Company's financial flexibility by increasing its existing
credit facilities with Canadian Western Bank from $950,000 to
$5,000,000. The credit facilities remain undrawn to-date.
Fourth Quarter and Year-End 2012 Highlights
-- Increased petroleum and natural gas revenues to $4,590,608 for the year
from $289,426 for the prior year.
-- Increased funds flow from operating activities to $1,963,505 or $0.06
per share for the year as compared to a shortfall of $516,574 or $0.03
per share for the prior year.
-- Increased operating netbacks for the quarter to $48.13 per barrel of oil
equivalent ("boe") from $47.12 per boe in the third quarter.
-- Increased working capital for the year by 37% to $2,363,944 from
$1,729,423 for the prior year.
-- Increased Proved Plus Probable reserves by 206% to 790.9 thousand
barrels of oil equivalent ("Mboe") for the year from 258.5 Mboe for the
prior year.
-- Drilled and placed on production 3 successful horizontal oil wells
during the year.
Financial and Operating Summary
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Highlights - Financial Three months ended Year ended
February February February February
29, 2012 28, 2011 29, 2012 28, 2011
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Petroleum and natural
gas revenue $ 2,763,564 $ 80,467 $ 4,590,608 $ 289,426
Petroleum and natural
gas netback $ 1,796,188 $ 11,089 $ 2,942,544 $ 60,877
Funds flow from
operating activities $ 1,355,098 $ (187,104) $ 1,963,505 $ (516,574)
Per share, basic $ 0.03 $ (0.01) $ 0.06 $ (0.03)
Per share, diluted $ 0.03 $ (0.01) $ 0.06 $ (0.03)
Income / (loss) before
tax $ (664,041) $ (717,137) $ (451,879) $(1,486,455)
Per share, basic and
diluted $ (0.02) $ (0.03) $ (0.01) $ (0.07)
Net income / (loss)
after tax $ 730,504 $ (717,137) $ 942,665 $(1,486,455)
Per share, basic and
diluted $ 0.02 $ (0.03) $ 0.03 $ (0.07)
Capital expenditures -
Total $ 8,608,084 $ 48,836 $13,075,574 $ 527,522
Property development $ 2,477,103 $ 48,836 $ 5,671,501 $ 221,615
Acquisitions and
dispositions $ 6,130,981 $ - $ 7,404,073 $ 305,907
Working capital $ 2,363,844 $ 1,729,423 $ 2,363,944 $ 1,729,423
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Highlights - Operating Three months ended Year ended
February February February February
29, 2012 28, 2011 29, 2012 28, 2011
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Average daily production
Crude oil (bbl/d) 363 - 144 -
Natural gas (mcf/d) 261 234 246 198
NGL (bbl/d) 4 3 3 2
Barrels of oil
equivalent (boe/d,
6:1) 410 42 188 35
Crude oil production
(%) 88% 0% 77% 0%
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Average sales prices
Crude oil ($/bbl) $ 81.28 $ - $ 80.08 $ -
Natural gas ($/mcf) $ 2.49 $ 3.09 $ 3.28 $ 3.49
NGL ($/bbl) $ 62.42 $ 61.84 $ 67.49 $ 45.24
Barrels of oil
equivalent (boe/d,
6:1) $ 74.05 $ 21.47 $ 66.71 $ 22.66
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Operating netback
($/boe)
Petroleum and natural
gas revenue $ 74.05 $ 21.47 $ 66.71 $ 22.66
Royalties $ 11.99 $ 2.45 $ 10.21 $ 2.50
Production and
operating expenses $ 13.93 $ 16.06 $ 13.74 $ 15.39
Operating netback $ 48.13 $ 2.96 $ 42.76 $ 4.77
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Common shares
Common shares
outstanding, end of
period 50,374,701 26,071,682 50,374,701 26,071,682
Warrants outstanding,
end of period 9,351,976 5,337,950 9,351,976 5,337,950
Stock options
outstanding, end of
period 4,250,000 2,285,000 4,250,000 2,285,000
Weighted average basic
shares outstanding 42,378,560 25,427,793 34,211,904 20,067,162
Weighted average diluted
shares outstanding 43,863,784 26,137,425 34,947,858 20,067,162
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Year-End 2012 Reserves
Hemisphere also reports its 2012 year-end reserves as prepared by the independent reserves evaluation firm of Sproule Associates Limited ("Sproule") in accordance with NI 51-101 for the year ended February 29, 2012.
Summary of Reserves
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Reserves
---------------------------------------------
Heavy oil & NGL Natural Gas Combined Total
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Gross(1) Gross(1) Gross(1)
(Mbbl) (MMcf) (Mboe)
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Proved
Developed Producing 207.4 480 287.4
Developed Non-Producing 49.4 - 49.4
Undeveloped 90.0 - 90.0
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Total Proved 346.8 480 426.8
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Probable 301.5 375 364.0
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Total Proved Plus Probable 648.3 856 790.9
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Notes:
1. "Gross Reserves" are the Company's working interest share of remaining
reserves before deduction of royalties.
2. Numbers may not add due to rounding.
Before Tax Net Present Value Summary
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NET PRESENT VALUE (NPV) OF FUTURE NET REVENUE
(FNR)
---------------------------------------------
Before Income Taxes
Discounted at (%/Year)
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Reserve Category 0 5 10
(M$) (M$) (M$)
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Proved
Developed Producing 9,235 8,396 7,742
Developed Non-Producing 1,527 1,367 1,233
Undeveloped 2,655 2,255 1,935
Total Proved 13,416 12,019 10,910
Probable 11,956 9,507 7,787
Total Proved Plus Probable 25,372 21,526 18,697
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Notes: NPV of FNR include all resource Income Taxes:
income:
Sale of oil, gas, by-product reserves Includes all resource income
Processing third party reserves Apply appropriate income tax
calculations
Other income Include prior tax pools
Unit Values are based on net reserve volumes
Subsequent Achievements
-- Drilled, completed and placed on production a farm-in well in Jenner,
which had an initial production rate of 206 bopd over a three-day period
in April 2012. Hemisphere is currently evaluating its option to drill a
second well to earn additional lands.
-- Upgraded existing facilities at Jenner property by adding a new water
disposal pump and a heated free-water-knockout separator for greater
fluid handling capacity and reduction of operating costs.
-- Executed seismic option and farm-in agreement in Jenner with potential
to earn a maximum of 6.5 sections.
Annual General and Special Meeting of Shareholders
Hemisphere's Annual General and Special Meeting of Shareholders is being held at 10:00 am Pacific Daylight Time on August 17, 2012 in the third floor boardroom of Computershare Investor Services Inc., 510 Burrard Street, Vancouver, British Columbia.
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 ("boes") 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.