F E B R U A R Y 2 0 1 8
The State of the Crude Oil Market o Prices continue to strengthen o Declining inventories, tighter supplies, stronger demand o OPEC/NON OPEC compliance o Increasing US & Canadian production Canadian Oil I ndustry o Increased price spread to WTI (WCS Differential) o Supply > Pipeline capacity o Short term solution – more oil by rail o Long term solution – more pipelines (Trans Mountain, Keystone XL, Line 3 etc) HEMI SPHERE’S KEY TO SUCCESS = BE A LOW COST OPERATOR To support the Canadian Energy Industry and learn more about our vital role in the Canadian economy, please visit www.energycitizens.ca 2
The Hemisphere Strategy Focused on creating long-term shareholder value by continually developing our low cost / high rate of return oil assets Geographic Focus Production and landbase located in friendly jurisdiction of southeast Alberta Strategic acquisitions of offsetting production and drilling opportunities Control of Assets & Development 100% owner & operator of land, wells & facilities Adjustable pace of development Maximize Oil Recovery Develop pools with horizontal wells drilled off pads to minimize surface impact No hydraulic fracturing required due to high reservoir porosity and permeability Use proven, highly effective waterflood enhanced oil recovery methods to maximize ultimate oil recovery per well and minimize capital invested Drive Capital Efficiency Continue to lower development and operating costs as we increase the size of drilling programs and improve well performance with increasing reservoir pressure 3
The Hemisphere Snapshot TSX Venture HME Share Price $0.24 January 30, 2017 52 Week Range $0.18 - $0.36 Basic Shares Outstanding 89.8 MM FD Shares Outstanding 111.8 MM Insider Ownership ~ 13% Enterprise Value $36.0 MM Q3 2017 Net Debt $14.4 MM Term Loan Facility * US$35.0 MM 5 years; Matures September 15, 2022 Current Production * * ~ 950 boe/ d Field-estimated; November 25 - December 9, 2017 94% oil Q3 2017 Production 681 boe/ d 95% oil Proved + Probable Reserves * * * 4.5 MMboe NPV10 (before tax) * * * $65.9 MM Liability Management Rating 5.03 as at January 6, 2018 * The lender under Hemisphere’s Term Loan Facility has commitment of up to US$20.0 million. * * As disclosed in Hemisphere’s news release dated December 13, 2017. * * * Reserve volumes and net present values are as attributed by McDaniel & Associates Consultants Ltd. ("McDaniel") in the reserve report of McDaniel dated February 10, 2017 and effective as of December 31, 2016 ("McDaniel Reserve Report"). See Advisory Statements – Oil and Gas Information – Net Present Values. 4
The Long-Term Value Growth Reserves * 5.0 Drilled 6 wells 4.0 1.4 Added facilities 1.1 3.0 1.1 MMboe Expanded waterfloods 2.0 Acquired 0.8 land 3.1 2.8 2.2 1.0 Grew production 1.3 0.0 2017* * Dec 31 2013 Dec 31 2014 Dec 31 2015 Dec 31 2016 Proved Probable * Reserve volumes are as attributed in each of the independent reserve reports prepared for Hemisphere effective as of the date noted above. * * 2017 outlines the activity Hemisphere completed during the year and is not to be construed as reserves data. 5
The Southern Alberta Focus SASKATCHEWAN Journey HEMI SPHERE Energy ALBERTA ENERGY CNRL Cor4 Oil Lundin Group Torxen I PC SASKATCHEWAN ALBERTA Energy Cardinal Energy Harvest Calgary HME Land HME Wells 6
The Foundation Assets SOUTHERN ALBERTA 100% Working I nterest ~ 35,000 undeveloped net acres Mannville & Pekisko oil 900 - 1,000 m deep Conventional horizontal wells JENNER No fracs required ATLEE BUFFALO HME Land Suffield Military Base 7
Jenner: The Stable Cash Flow o 100% average working interest o 100% operator of production o ~ 24,000 net acres of land o 8 oil pools defined by 3D seismic o 30 drilling locations identified* o 9 booked locations * S o Operated oil processing and water disposal facilities B o Expansion capability for growth in production S HME Land Battery B Satellite S Pipeline 3D Seismic * See Advisory Statements – Oil and Gas Information – Drilling Locations. 8
Atlee Buffalo: The Growth Opportunity G POOL o Upper Mannville F Pool 28 MMbbl OOIP* o Only 5% current oil recovery factor o o Upper Mannville G Pool 38 MMbbl OOIP* o Only 3% current oil recovery factor o F POOL o Working I nterest – 100% in both pools o Excellent Geological Control – Oil pools delineated by over 50 vertical wells o 3D Seismic – Coverage over both pools Hz producer Hz water injector o Waterflood – Expanding in both pools Vertical injector o Oil Recovery Factors* * – Analogue pools have reached up to 40% with water and chemical floods. HME’s Dec.31/16 Reserve Report reflects total 2P booked reserves of just 8% of the estimated oil in place * Based on McDaniel’s reservoir mapping for the purposes of the McDaniel Reserve Report. See Advisory Statements – Oil and Gas Information – OOIP. * * See Advisory Statements – Oil and Gas Information – Analogous Information. 9
Atlee Buffalo: The Development Plan 2017 Accomplishments G POOL Drilled 4 producers and 2 injectors Expanded F pool facility to enhance water separation and increase oil production Constructed and initiated a new water separation and re-injection facility at G pool Acquired 7,433 acres of new land F POOL 2018 Plans Q1 2018: Drill 1 producer and 2 o injectors in Upper Mannville G Pool Prepare follow-up program with intentions o to fully develop the pools through 2018-19 Hz producer Hz water injector Continue to expand field-wide reservoir o Q1 2018 producer simulation study as more production Q1 2018 injector information is obtained from 2017 program Future Hz wells* * * * Vertical injector WELL ECONOMI CS – Reservoir Simulation Model* * * Capital Drill, Estimated Complete, Ultimate I nitial Capital Atlee Buffalo Equip & Tie-in Recovery* Production* Payout* * NPV10* * ROR* * Efficiency* * Area $MM Mbbl bbl/d Years $MM % $/bbl/d F Pool 0.9 305 115 0.8 3.5 200 8,000 G Pool 0.85 320 130 0.7 6.3 320 6,500 * See Advisory Statements – Oil and Gas Information – Initial Production Rates. * * Assumptions: McDaniel Q1 2018 Commodity Price Deck; $3 quality differential from WCS; Average ~ $15.40/boe and $14.50/boe operating and transportation expenses, and ~ $10.80/boe and ~ $8.80/boe royalties for F pool and G pool, respectively. * * * Reservoir Simulation Models for both Atlee Buffalo F and G Pools have been internally generated as of January 31, 2018 by a qualified reserves evaluator in accordance with National Instrument 51-101 assuming the development shown on this slide and represents the economics of an average producing well. * * * * See Advisory Statements – Oil and Gas Information – Drilling Locations. 10
Atlee Buffalo: The Waterflood Analogues Oil Recovery Current Producing Mannville Pools OOI P* API Waterflood to-date Rate Wells Name MMbbl Degree MMbbl RF Type Start Date Boe/d # 13 o Analogue - Upper Mann YYY 15.8* 3.7 23% Water-ASP 1998 445 (Nov ‘17) 11 12 o Analogue - Upper Mann N2N 28.3* 4.1 14% Water 1999 830 (Nov ‘17) 28 14 o Analogue - Upper Mann UU 3.3* 1.3 39% Water-ASP 1998 140 (Nov ‘17) 3 13 o Hemisphere - Upper Mann F 28* * 1.3 5% Water Q315 455 (Dec ’17) 9 14 o Hemisphere - Upper Mann G 38* * 1.3 3% Water Q415 202 (Dec ’17) 2 UPPER MANN G Alberta UPPER MANN F UPPER MANN YYY Calgary UPPER MANN N2N HME Land UPPER MANN UU * Based on Alberta Energy ‘s reservoir mapping as of February 10, 2017. * * Based on McDaniel’s mapping for the purposes of the McDaniel Reserve Report. See Advisory Statements – Oil and Gas Information – OOIP. 11
Atlee Buffalo: The Reserve Upside Potential 2P Booked Potential Additional Cumulative Reserves as at (Unbooked) Reserves Pool OOI P* Production to-date December 31, 2016 At Various RF* * * (MMBbl) (MMBbl) (MMBbl) (MMBbl) 20% 30% 40% Upper Mann F 28 1.3 (5% Recovery Factor) 2.1 (12% Recovery Factor)* * 2.2 5.0 7.8 Upper Mann G 38 1.3 (3% Recovery Factor) 0.7 (5% Recovery Factor)* * 5.6 9.4 13.2 Atlee Buffalo Total 66 2.6 (4% Recovery Factor) 2.8 (8% Recovery Factor)* * 7.8 14.4 21.0 Upper Mann G Upper Mann F Produced At just a Produced 1.3 MMbbl Booked 1.3 MMbbl Potential 20% 0.7 MMbbl Additional Potential 2.2 MMbbl Booked Additional Recovery Factor 2.1 MMbbl 5.6 MMbbl * Based on McDaniel’s reservoir mapping for the purposes of the McDaniel Reserve Report. See Advisory Statements – Oil and Gas Information – OOIP. * * Represents the booked recovery factor attributed by McDaniel in the McDaniel Reserve Report. * * * The recovery factors (and reserve volumes) as noted are potential recovery factors (and reserve volumes) only and are based on management's estimates (as prepared by a qualified reserves evaluator in accordance with National Instrument 51-101) and assume the successful response to Hemisphere's proposed waterflood operations based on the results of analogous pools under waterflood (See Advisory Statements – Oil and Gas Information – Analogous Information). There is no guarantee that the potential recovery factors will be realized by Hemisphere or that the reserve volumes noted will be attributed by an independent qualified reserves evaluator to Hemisphere. 12
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