Hemisphere Energy – Solid 2024 results
Posted: Thu Apr 17, 2025 11:05 am
Hemisphere is a small Canadian oil company, producing heavy oil using a polymer flood at the Atlee Buffalo field in Alberta. Hemisphere since late 2024 is running a polymer pilot at Marsden where first results should come available in mid-2025.
Summary
Hemisphere reported solid 2024 results with no surprises. Reserves were announced earlier and are mediocre. Production and profits were as expected. Without a success at the Marsden pilot, production should start a slow decline after 2025. The balance sheet is extremely sound. Shareholder returns are very generous.
The share price of Hemisphere has stood up well in 2025, declining -3.8% versus the average stock decline of -16.7%. As a consequence of its share performance Hemisphere has dropped out of the top 10 of the oil and gas ranking. Hemisphere now ranks a good 16th out of 85. If the Marsden pilot is successful Hemisphere should bounce up back into the top 3.
Reserves
• 2024 proven reserves (10.4 M BoE) were down -5.4% on 2023 (11.1 M BoE).
• The proven reserves are equivalent to a mediocre 8.0 years of 2025 production (3.9 K BoE/d). Industry average is 9.5-10.0 years.
• The 2029-2024 Reserves Replacement Ratio (RRR) was a good 1.57 (industry average 0.89-0.95)
• The RRR has been trending down in recent years. The 2024 RRR was a lowish 0.56 (industry average 0.90).
• The reserves and RRR combined cannot sustain the production at current levels.
• Production can grow if the Marsden polymer pilot is successful. Only minimal reserves at Marsden (0.8 M BoE =8% of total) have been booked in 2024.
Production
• Q4 Production was 3,359 BoE/d, slightly below Q3 (3,621 BoE/d).
• Q4 production in the first half of the quarter was affected by planned maintenance activities at the G-pool facilities.
• 2024 production (3,463 BoE/d) was 10.8% above 2023 (3,125 BoE/d). Guidance was 3,400 BoE/d.
• The outlook for 2025 is 3.9 K BoE/d. Q1 production was running at 3.8 K BoE/d.
• Production should peak at 4.0 K BoE/d in Q3 2025 after which Atlee Buffalo will go into a steady decline. Due to the polymer flooding the production decline rate is very low.
• Without Marsden I expect production to decline to 3.7-3.8 K BoE/d in 2028/2029
Marsden
• A pilot polymer flood project commenced at Marsden after 5 wells were drilled in Q1 2024 (2 injectors and 3 producers) and polymer injection started in late Q3 2024. Pressure and production response is anticipated mid/late 2025.
• Marsden represents just 5% of the 2P NPV10 BT valuation of the 2024 reserves
• Hemisphere was very tightlipped about Marsden in the 2024 results and associated presentation. No details for Marsden were revealed.
• I had a stab at the Marsden production (if the trials is success full). For production of over time with and without Marsden see the chart below.
Balance sheet
• The balance sheet is very healthy.
• The 2024 equity ratio(=equity/balance sheet total) late 2024 was an excellent 66.8%
• The 2024 ratio (66.8%) was comparable with 2023 (67.5%).
• Hemisphere has no long term and as such a debt/EBITDA ration is without meaning
• The balance sheet allows generous shareholder returns.
Profitability
• Hemisphere is a very profitable company, also under low oil prices.
• 2024 eps (C$ 0.34) was well above 2024 (C$ 0.24).
• Royalties were 20%, typical for a Canadian heavy oil producer.
• Unit costs (inclusive depreciation, interest and overheads) were a low US$ 20.86/BoE
• With WTI =$ 60-65/bbl and incorporating an extra 5% discount ($ 3.00bbl) due to oil import tariffs, I expect a 2025 eps of C$ 0.26-0.35 (PE=5.0-6.7).
• Over time without Marsden the eps can fall to C$ 0.21-0.33 in 2028/2029 (PE=5.4-8.3).
Shareholder returns
• Hemisphere paid in 2024 regular and special dividends for a total C$ 0.16 and bought back in 3.4 million shares for a total of C$ 4.7 M.
• Total shareholder returns in 2024 are equivalent to a generous 11.8%.
• Shareholder returns in 2025 should see a continuation of the regular quarterly dividend of C$ 0.025.
• The special dividends are oil price dependent.
• Shareholder returns in 2025 can increase versus 2024 as the FCF can increase with a lower 2025 capex (C$ 17 M) than in 2024 (C$ 22 M).
• With WTI= $ 60-70/bbl I expect a total shareholder 2025 returns of 10.2-15.3%.
• After 2025 shareholder returns will fall with the falling production but can still be 8.5%-15.0% in 2029.
Conclusions
Hemisphere reported solid 2024 results with no surprises. Reserves were announced earlier and are mediocre. Production and profits were as expected. Without a success at the Marsden pilot, production should start a slow decline after 2025. The balance sheet is extremely sound. Shareholder returns are very generous.
The share price of Hemisphere has stood up well in 2025, declining -3.8% versus the average stock decline of -16.7%. As a consequence of its share performance Hemisphere has dropped out of the top 10 of the oil and gas ranking. Hemisphere now ranks a good 16th out of 85. If the Marsden pilot is successful Hemisphere should bounce up back into the top 3.
Summary
Hemisphere reported solid 2024 results with no surprises. Reserves were announced earlier and are mediocre. Production and profits were as expected. Without a success at the Marsden pilot, production should start a slow decline after 2025. The balance sheet is extremely sound. Shareholder returns are very generous.
The share price of Hemisphere has stood up well in 2025, declining -3.8% versus the average stock decline of -16.7%. As a consequence of its share performance Hemisphere has dropped out of the top 10 of the oil and gas ranking. Hemisphere now ranks a good 16th out of 85. If the Marsden pilot is successful Hemisphere should bounce up back into the top 3.
Reserves
• 2024 proven reserves (10.4 M BoE) were down -5.4% on 2023 (11.1 M BoE).
• The proven reserves are equivalent to a mediocre 8.0 years of 2025 production (3.9 K BoE/d). Industry average is 9.5-10.0 years.
• The 2029-2024 Reserves Replacement Ratio (RRR) was a good 1.57 (industry average 0.89-0.95)
• The RRR has been trending down in recent years. The 2024 RRR was a lowish 0.56 (industry average 0.90).
• The reserves and RRR combined cannot sustain the production at current levels.
• Production can grow if the Marsden polymer pilot is successful. Only minimal reserves at Marsden (0.8 M BoE =8% of total) have been booked in 2024.
Production
• Q4 Production was 3,359 BoE/d, slightly below Q3 (3,621 BoE/d).
• Q4 production in the first half of the quarter was affected by planned maintenance activities at the G-pool facilities.
• 2024 production (3,463 BoE/d) was 10.8% above 2023 (3,125 BoE/d). Guidance was 3,400 BoE/d.
• The outlook for 2025 is 3.9 K BoE/d. Q1 production was running at 3.8 K BoE/d.
• Production should peak at 4.0 K BoE/d in Q3 2025 after which Atlee Buffalo will go into a steady decline. Due to the polymer flooding the production decline rate is very low.
• Without Marsden I expect production to decline to 3.7-3.8 K BoE/d in 2028/2029
Marsden
• A pilot polymer flood project commenced at Marsden after 5 wells were drilled in Q1 2024 (2 injectors and 3 producers) and polymer injection started in late Q3 2024. Pressure and production response is anticipated mid/late 2025.
• Marsden represents just 5% of the 2P NPV10 BT valuation of the 2024 reserves
• Hemisphere was very tightlipped about Marsden in the 2024 results and associated presentation. No details for Marsden were revealed.
• I had a stab at the Marsden production (if the trials is success full). For production of over time with and without Marsden see the chart below.
- Hemisphre production chart - March 2025.jpg (38.45 KiB) Viewed 285 times
• The balance sheet is very healthy.
• The 2024 equity ratio(=equity/balance sheet total) late 2024 was an excellent 66.8%
• The 2024 ratio (66.8%) was comparable with 2023 (67.5%).
• Hemisphere has no long term and as such a debt/EBITDA ration is without meaning
• The balance sheet allows generous shareholder returns.
Profitability
• Hemisphere is a very profitable company, also under low oil prices.
• 2024 eps (C$ 0.34) was well above 2024 (C$ 0.24).
• Royalties were 20%, typical for a Canadian heavy oil producer.
• Unit costs (inclusive depreciation, interest and overheads) were a low US$ 20.86/BoE
• With WTI =$ 60-65/bbl and incorporating an extra 5% discount ($ 3.00bbl) due to oil import tariffs, I expect a 2025 eps of C$ 0.26-0.35 (PE=5.0-6.7).
• Over time without Marsden the eps can fall to C$ 0.21-0.33 in 2028/2029 (PE=5.4-8.3).
Shareholder returns
• Hemisphere paid in 2024 regular and special dividends for a total C$ 0.16 and bought back in 3.4 million shares for a total of C$ 4.7 M.
• Total shareholder returns in 2024 are equivalent to a generous 11.8%.
• Shareholder returns in 2025 should see a continuation of the regular quarterly dividend of C$ 0.025.
• The special dividends are oil price dependent.
• Shareholder returns in 2025 can increase versus 2024 as the FCF can increase with a lower 2025 capex (C$ 17 M) than in 2024 (C$ 22 M).
• With WTI= $ 60-70/bbl I expect a total shareholder 2025 returns of 10.2-15.3%.
• After 2025 shareholder returns will fall with the falling production but can still be 8.5%-15.0% in 2029.
Conclusions
Hemisphere reported solid 2024 results with no surprises. Reserves were announced earlier and are mediocre. Production and profits were as expected. Without a success at the Marsden pilot, production should start a slow decline after 2025. The balance sheet is extremely sound. Shareholder returns are very generous.
The share price of Hemisphere has stood up well in 2025, declining -3.8% versus the average stock decline of -16.7%. As a consequence of its share performance Hemisphere has dropped out of the top 10 of the oil and gas ranking. Hemisphere now ranks a good 16th out of 85. If the Marsden pilot is successful Hemisphere should bounce up back into the top 3.