Hemisphere Energy Update - Oct 9

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dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Hemisphere Energy Update - Oct 9

Post by dan_s »

Don Simmons made a good presentation at our luncheon today. The key bit of info that I picked up is that when HME's year-end reserve report comes out it will show a Net Asset Value of more than 12X the current share price.

Take a hard look at slide 3 of Don's presentation that will be on our website tomorrow.
Dan Steffens
Energy Prospectus Group
danroot
Posts: 5
Joined: Tue Feb 14, 2017 11:45 am

Re: Hemisphere Energy Update - Oct 9

Post by danroot »

Why do you think that there is such a disconnect between the share price and your perceived potential price?

D
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Hemisphere Energy Update - Oct 9

Post by dan_s »

1. The Canadian Juniors are all trading at a deep discount to Net Asset Value.
2. Hemisphere is a micro-cap that has very little coverage (i.e. - it is "off the radar screen").
3. Take a hard look at my forecast/valuation model and you will see that 1H 2019 is nothing to get real excited about. Q3 and Q4 results are going to be a big improvement.

Something that I pointed out at our Dallas luncheon: Hemisphere's entire 2019 capex program (less than $15Cdn million) will totally payout over the net three quarters.

BTW the company has already started their stock buyback program. They repurchased 500,000 shares and will likely repurchase over 5,000,000 shares if WTI averages $55/bbl. Free cash flow will be divided between debt repayment, stock buybacks and building up cash to fund their 2020 summer drilling program (10-12 new wells).

We will be publishing an updated profile on HME next week.
Based on my notes, HME's net asset value (Current Assets + PV10 of just Proven Reserves) / year-end share count should be over $2.00Cdn based on their 12-31-2019 3rd party (McDaniels) reserve report. This compares to the current share price of $0.155Cdn. < This is why I am super high on this micro-cap.

PLUS: Hemisphere believes that their two waterfloods at Atlee Buffalo are prime candidates for Polymer floods (Tertiary Recovery Projects) that could triple their proven reserves. They are going to include a pilot project in next year's capex program to assess the potential. McDaniel's 12/31/2018 2P reserves include only 17% of the estimated oil in place at Atlee Buffalo. Don Simmons thinks that by injecting polymers, they can recover up to 40% of the OIP (71 million barrels of oil).

Fun Fact: Don Simmons, Hemisphere's CEO, went to work for EnCana (one of our Sweet 16 companies) as a young geologist 20 years ago. While at EnCana he took a look at Atlee Buffalo. Back then, oil was under $20/bbl and the industry had not perfected horizontal drilling. EnCana still wanted to buy the two fields at Atlee Buffalo, but could not work out an acceptable deal.
Dan Steffens
Energy Prospectus Group
drewsgpa
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Joined: Tue Apr 27, 2010 7:15 am

Re: Hemisphere Energy Update - Oct 9

Post by drewsgpa »

Updated profile on Hemisphere Energy was due to be published week of October 14.
Will we see it soon or are you waiting for Q3 results?
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Hemisphere Energy Update - Oct 9

Post by dan_s »

We published an updated profile on Hemisphere on October 15.

I will repost it to the EPG website.

For some reason the profile is not showing up when you click on the link. Just scroll down and click on "Download" to view it.

I went back and check to see what happened. We use a service called Mail Chimp to send out all of our Flash Alerts and company profiles to EPG members. My trusted assistant Sabrina either missed the email that I sent her, forgot to send it to Mail Chimp or it was lost in the Internet Universe. "My Bad" for not double checking to make sure it went out. We are going to send it out again today.

Thanks for bring this to my attention.
Dan Steffens
Energy Prospectus Group
dan_s
Posts: 34465
Joined: Fri Apr 23, 2010 8:22 am

Re: Hemisphere Energy Update - Oct 9

Post by dan_s »

Sabrina checked with Mail Chimp and the Hemisphere Profile did go out on October 15. Mail Chimp shows that most of the members that got the profile via email opened the attachment.

Check you "Spam" file. Sometimes emails with an attachment will automatically go to Spam.
Dan Steffens
Energy Prospectus Group
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