Hemisphere Energy Update - June 11
Posted: Tue Jun 11, 2019 11:41 am
These days I can produce a list of dozens of upstream companies trading at less than 4X operating cash flow per share. Our Sweet 16 is no trading (as a group) for less than 4X operating cash flow.
When I find a small-cap trading for less than 1X operating cash flow per share I definitely want to take a hard look. A multiple that low is usually an indication that the company has no remaining drilling inventory and is just depleting out its oil & gas assets or that it is heading for Chapter 11. Or... it is just off the radar screen of the investment community.
Hemisphere Energy (HME.V) is a micro-cap with a lot of running room. In 2018 they increased production by 68.5% year-over-year and this year's 16 well development drilling program is designed to increase production by another ~45%. This growth in production and proved reserves should draw more interest from investors and make the company a strong takeover target heading into 2020.
Last year a respected Houston based firm ( https://www.ciboloenergy.com/ ) committed $35 million to fund development of Hemisphere's low-risk projects. By the end of this year, Hemisphere should have ~2,350 Boepd of production (~97% crude oil) and more than enough cash flow from operations to fund all future growth programs.
I have posted an updated profile on Hemisphere to the EPG website, under the Small-Caps tab.
When I find a small-cap trading for less than 1X operating cash flow per share I definitely want to take a hard look. A multiple that low is usually an indication that the company has no remaining drilling inventory and is just depleting out its oil & gas assets or that it is heading for Chapter 11. Or... it is just off the radar screen of the investment community.
Hemisphere Energy (HME.V) is a micro-cap with a lot of running room. In 2018 they increased production by 68.5% year-over-year and this year's 16 well development drilling program is designed to increase production by another ~45%. This growth in production and proved reserves should draw more interest from investors and make the company a strong takeover target heading into 2020.
Last year a respected Houston based firm ( https://www.ciboloenergy.com/ ) committed $35 million to fund development of Hemisphere's low-risk projects. By the end of this year, Hemisphere should have ~2,350 Boepd of production (~97% crude oil) and more than enough cash flow from operations to fund all future growth programs.
I have posted an updated profile on Hemisphere to the EPG website, under the Small-Caps tab.