Hemisphere Energy (HMENF) Q4 Results - Apr 18
Posted: Thu Apr 18, 2024 10:01 am
2023 Highlights
Increased fourth quarter production by 16% to a record of 3,386 boe/d (99% heavy oil), and annual production by 11% to 3,125 boe/d (99% heavy oil), as compared to 2022. < Slightly higher than my forecast of 3,375 Boe per day.
Achieved annual revenue of $84.5 million, with adjusted funds flow from operations ("AFF") of $39.4 million. < Beat my forecast of $38.1 million
Invested $16.9 million to drill eight successful Atlee Buffalo wells, one unsuccessful exploration well, upgrade facilities, purchase land and seismic, and pre-purchase materials for the 2024 development program.
Generated $22.5 million of free funds flow ("FFF"). < Outstanding!
> Distributed $10.1 million in quarterly dividends to shareholders.
> Distributed $3.0 million in special dividends to shareholders.
> Purchased and cancelled 3.2 million shares at an average price of $1.28 per share under the Company's normal course issuer bid ("NCIB"), returning $4.1 million to shareholders.
Exited the year with a positive working capital position of $3.6 million compared to a net debt position of $0.8 million at December 31, 2022. < Hemisphere now has no interest-bearing debt. When current assets exceeds total debt, I consider a company debt free. Hemisphere now generates more than enough operating cash flow to fund all D&C capex, pay dividends (including a big Special Dividend near year-end) and fund accretive bolt-on acquisitions. I think they will focus on the new area being developed in Saskatchewan this year, so I don't expect any significant acquisitions to be made in 2024.
Increased Proved Developed Producing (PDP) NPV10 BT reserve value by 9% to $248 million and maintained reserve volumes at 8.2 MMboe (99.6% heavy oil).
Increased Proved (1P) NPV10 BT reserve value by 5% to $325 million and maintained reserve volumes at 12.1 MMboe (99.4% heavy oil).
Increased Proved plus Probable (2P) NPV10 BT reserve value by 5% to $416 million and maintained reserve volumes at 16.3 MMboe (99.4% heavy oil).
Bottomline: Hemisphere's PV10 Net Asset Value as of December 31, 2023 is much higher than its current share price of $1.69Cdn.
From Slide 7 of today's presentation:
1P PV10 Net Asset Value at 21-31-2023 = $3.18Cdn
2P PV10 Net Asset Value at 12-31-2023 = $4.04Cdn
Increased fourth quarter production by 16% to a record of 3,386 boe/d (99% heavy oil), and annual production by 11% to 3,125 boe/d (99% heavy oil), as compared to 2022. < Slightly higher than my forecast of 3,375 Boe per day.
Achieved annual revenue of $84.5 million, with adjusted funds flow from operations ("AFF") of $39.4 million. < Beat my forecast of $38.1 million
Invested $16.9 million to drill eight successful Atlee Buffalo wells, one unsuccessful exploration well, upgrade facilities, purchase land and seismic, and pre-purchase materials for the 2024 development program.
Generated $22.5 million of free funds flow ("FFF"). < Outstanding!
> Distributed $10.1 million in quarterly dividends to shareholders.
> Distributed $3.0 million in special dividends to shareholders.
> Purchased and cancelled 3.2 million shares at an average price of $1.28 per share under the Company's normal course issuer bid ("NCIB"), returning $4.1 million to shareholders.
Exited the year with a positive working capital position of $3.6 million compared to a net debt position of $0.8 million at December 31, 2022. < Hemisphere now has no interest-bearing debt. When current assets exceeds total debt, I consider a company debt free. Hemisphere now generates more than enough operating cash flow to fund all D&C capex, pay dividends (including a big Special Dividend near year-end) and fund accretive bolt-on acquisitions. I think they will focus on the new area being developed in Saskatchewan this year, so I don't expect any significant acquisitions to be made in 2024.
Increased Proved Developed Producing (PDP) NPV10 BT reserve value by 9% to $248 million and maintained reserve volumes at 8.2 MMboe (99.6% heavy oil).
Increased Proved (1P) NPV10 BT reserve value by 5% to $325 million and maintained reserve volumes at 12.1 MMboe (99.4% heavy oil).
Increased Proved plus Probable (2P) NPV10 BT reserve value by 5% to $416 million and maintained reserve volumes at 16.3 MMboe (99.4% heavy oil).
Bottomline: Hemisphere's PV10 Net Asset Value as of December 31, 2023 is much higher than its current share price of $1.69Cdn.
From Slide 7 of today's presentation:
1P PV10 Net Asset Value at 21-31-2023 = $3.18Cdn
2P PV10 Net Asset Value at 12-31-2023 = $4.04Cdn