Today I got some additional information from Hemisphere.
In the 3rd quarter their realized oil price, net of differentials and settlements on their hedges was $86.33Cdn/bbl, up from $72.96/bbl in Q2.
All of Hemisphere's production is "Heavy Oil", so it always sells at a discount to Light Oil.
Don Simmons told me today that their realized oil prices were"
> ~$87.50/bbl in October.
> ~$74.00/bbl in November
> s/b ~$70/bbl in December
-------------------------
~ $77/bbl for the quarter
If their realized oil prices average $77.00/bbl in Q4 they will still generate over $11Cdn million of operating cash flow and over $7Cdn million of free cash flow in Q4. Free cash flow for the year should be ~$20Cdn million (~$0.20/share), which is more than enough to cover their dividends of $0.13Cdn/share in 2023.
Questions for Friday's luncheon:
> What is the upside production potential for the two polymer floods at Atlee Buffalo?
> Without giving us the specific location what is the upside for the new polymer flood where you are doing the polymer flood pilot project next summer? What is the cost of the pilot project? and What happens if the pilot project is successful?
Hemisphere Energy (HME.V and HMENF) Update - Dec 6
Hemisphere Energy (HME.V and HMENF) Update - Dec 6
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Hemisphere Energy (HME.V and HMENF) Update - Dec 6
Don Simmons made a good presentation at the EPG luncheon in Houston on Friday.
My Notes:
> Q4 production should be close to my forecast of 3,300 Boepd.
> Realized oil price in Q4 will be down to ~$77Cdn/bbl, but operating cash flow will be just slightly lower than what it was in Q3 ($11.6Cdn million) due to higher oil sales volumes. Lease operating expenses are ~$12.50/Boe.
> Outstanding shares down from Q3 to Q4 because they are aggressively buying back and retiring stock.
> Zero interest bearing debt.
> A lot more free cash flow in Q4 because the drilling program ended in Q3. They did complete several wells late in Q3 and early in Q4.
> Annual drilling program will be concentrated in June to September each year to reduce capex. Atlee Buffalo is almost fully developed, so very little capex required to maintain production going forward.
> Per Don: "Atlee Buffalo will be producing oil for 20 - 25 more years."
> If WTI averages $75US/bbl in 2024 they should generate about $50Cdn million of operating cash flow next year (compared to $39Cdn million in 2023), with close to $30 FCF.
> All D&C Capex and dividends should be fully funded by operating cash flow going forward. Excess FCF will be used for new projects, acquisitions or paid out as Special Dividends at year-end.
> New polymer flood will be a five horizontal well pilot next summer in an old oilfield where there is a lot of oil still in place. If successful, it has the potential to double Hemisphere's production within 3 to 4 years. Hemisphere already controls most of the acreage, but they are still trying to close two more land deals. A lot more details on this coming out in a few months.
HMENF = Solid dividend yield + lots of share price upside on this one.
My Notes:
> Q4 production should be close to my forecast of 3,300 Boepd.
> Realized oil price in Q4 will be down to ~$77Cdn/bbl, but operating cash flow will be just slightly lower than what it was in Q3 ($11.6Cdn million) due to higher oil sales volumes. Lease operating expenses are ~$12.50/Boe.
> Outstanding shares down from Q3 to Q4 because they are aggressively buying back and retiring stock.
> Zero interest bearing debt.
> A lot more free cash flow in Q4 because the drilling program ended in Q3. They did complete several wells late in Q3 and early in Q4.
> Annual drilling program will be concentrated in June to September each year to reduce capex. Atlee Buffalo is almost fully developed, so very little capex required to maintain production going forward.
> Per Don: "Atlee Buffalo will be producing oil for 20 - 25 more years."
> If WTI averages $75US/bbl in 2024 they should generate about $50Cdn million of operating cash flow next year (compared to $39Cdn million in 2023), with close to $30 FCF.
> All D&C Capex and dividends should be fully funded by operating cash flow going forward. Excess FCF will be used for new projects, acquisitions or paid out as Special Dividends at year-end.
> New polymer flood will be a five horizontal well pilot next summer in an old oilfield where there is a lot of oil still in place. If successful, it has the potential to double Hemisphere's production within 3 to 4 years. Hemisphere already controls most of the acreage, but they are still trying to close two more land deals. A lot more details on this coming out in a few months.
HMENF = Solid dividend yield + lots of share price upside on this one.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Hemisphere Energy (HME.V and HMENF) Update - Dec 6
We will publish an updated profile on Hemisphere next week.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Hemisphere Energy (HME.V and HMENF) Update - Dec 6
I thought Don Simmons presentation was very good. Great small company with upside. I will be adding opportunistically.