N o v e m b e r 2 0 1 9
The Hemisphere Strategy Creating shareholder value with increasing cash flow... Grow Production and Reserves >250% production growth since accessing capital with a term loan debt deal in Sep 2017 Doubled PDP valuation and grew 1P and 2P reserve valuations by over 70% year over year* Organic growth through the drill bit and strategic acquisitions Strengthen the Balance Sheet Lower net debt to increase financial flexibility Deploy capital efficiently and keep production costs low Share Buyback Take advantage of historically low industry multiples to increase per share value for shareholders Unlock Additional Value Optimize wells and facilities, expand waterfloods, and evaluate existing oil assets for tertiary EOR Adds up to a buying opportunity * In comparison of the reserve volumes and net present values for such reserve volumes attributed by McDaniel & Associates Consultants Ltd. ("McDaniel") in the independent reserve report prepared for Hemisphere in accordance with National Instrument 51-101 – Standards of Disclosure for Oil and Gas Activities ("NI 51-101") effective as of December 31, 2017 and December 31, 2018. 2
The Snapshot TSX Venture HME Share Price (Nov. 13, 2019) $0.16 52 Week Range $0.09 - $0.20 Basic Shares Outstanding 89.2 MM FD Shares Outstanding 111.1 MM Insider Ownership (Fully Diluted) ~26% Enterprise Value * $50.2 MM Q3 Revenue $8.2 MM Q3 Operating Field Netback $32.57/boe Q3 Funds Flow from Operations $3.6 MM September 30, 2019 Net Debt $35.9 MM Term Loan Facility (5 years; Matures September 15, 2022) ** US$35.0 MM Production (October 2019) *** ~2200 boe/d (96% oil) 2018 Proved + Probable Reserves & NPV10 (before tax) **** 10.6 MMboe $197.9 MM 2018 Proved Reserves & NPV10 (before tax) **** 7.6 MMboe $142.4 MM 2018 Proved Developed Producing & NPV10 (before tax) **** 3.2 MMboe $68.4 MM Liability Management Rating November 2019 9.66 Ratio of Hemisphere’s deemed assets (production) to deemed liabilities (abandonment & reclamation costs) (Top 10% of Alberta Companies) * Based on an equity value of $0.16 as of Nov 13, 2019 and a net debt of $35.9 million as of Sept. 30, 2019. ** The lender under Hemisphere’s Term Loan Facility has committed to lend up to US$30.0 million to date. *** As disclosed in Hemisphere’s news release dated Nov. 13, 2019. **** Reserve volumes and net present values are as attributed by McDaniel in the independent reserve report prepared for Hemisphere in accordance with NI 51-101 effective as of December 31, 2018 9 (the "McDaniel Reserve Report"). 3
The Long-Term Value Growth $2.21 12.0 Reserves * $200.0 NPV10 BT * $2.25 11.0 $180.0 70% Growth per share $2.00 48% Growth 2P through drilling and in the last year 10.0 $55.6 $160.0 waterflood in the $1.75 3.0 9.0 last year $140.0 8.0 $1.50 $1.30 $120.0 Per share (basic) 7.0 MMboe $1.25 2P $MM 6.0 2.3 $100.0 $36.3 $1.00 5.0 $80.0 $0.77 1P 4.0 $142.4 $0.75 $0.64 1.4 7.6 $60.0 2P 1.1 $20.2 3.0 2P 1P $0.50 $40.0 4.9 $14.1 $80.4 2.0 1P 3.1 2.8 $0.25 1P $20.0 $45.7 1.0 $34.3 $0.0 0.0 $0.00 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Proved 2015 2016 2017 2018 2015 2016 2017 2018 Probable * Reserve volumes and net present values are attributed in each of the independent reserve reports prepared for Hemisphere effective as of the date noted above. 4
The Recent Production Growth Sep 2017: Refinanced with 5-year term loan and started active development 2500 30 25 2000 Boe/d per million shares 20 1500 Boe/d 15 1000 10 500 5 0 0 Production Production per share 5
The Changing Debt Story 40,000 2,500 35,000 Annualized Funds Flow, Net Debt (M$) 2,000 30,000 Production (boe/d) 25,000 1,500 20,000 15,000 1,000 10,000 5,000 500 0 Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 est -5,000 0 Annualized Funds Flow Net Debt Debt to Funds Flow Production o HME signed 5- year term loan in Sep 2017 with the intention of ‘digging deeper’ to convert high value assets into cash flow o Production has more than tripled since entering into this loan * o Metrics have shifted away from high debt / lagging cash flow through successful waterflood development * Q3 2017 Production was 681 boe/d. ** Assumptions include a WTI commodity price of US$55.00 per barrel, a WCS differential of US$13.00 per barrel and a foreign exchange rate of $1.32 CAD/US. 6
The Bottom Line 70.0 60.0 Revenue, Costs, and Resulting Funds Flow ($/boe) 50.0 Production Sales Revenue 40.0 Opex/trans Royalties 30.0 Hedging / FX loss Net G&A Loan Interest 20.0 Funds Flow 10.0 0.0 Q118 Q218 Q318 Q418 Q119 Q219 Q319 est Q419 est -10.0 o Q4 Funds Flow estimate is ~$27/boe * , representing >50% of production sales revenue o Loan Interest, G&A, and Hedging losses make up 12% of production sales revenue with opportunity for reduction • Lower cost of capital debt • Continued production growth with minimal opex additions * Assumptions include a WTI commodity price of US$55.00 per barrel, a WCS differential of US$13.00 per barrel and a foreign exchange rate of $1.32 CAD/US. 7
The Foundation Assets Southeast Alberta Focus JENNER ATLEE BUFFALO Edmonton Atlee HME Land Buffalo Calgary Jenner 8
Atlee Buffalo: The Growth Opportunity G POOL o F Pool • 31 MMbbl OOIP * • Only ~ 5% current oil recovery factor o G Pool • 40 MMbbl OOIP * • Only ~ 4% current oil recovery factor o Working Interest – 100% in both pools F POOL o Excellent Geological Control – Oil pools delineated by over 50 vertical wells o 3D Seismic – Coverage over both pools Hz producer o Waterflood – Expanding in both pools Hz water injector o Polymer – Assessing Pilot Project Vertical injector o Oil Recovery Factors ** – Local analogous oil pools have already achieved up to 40% recovery factors with enhanced recovery methods (waterfloods, polymer) and are still producing! o Hemisphere’s Dec. 31, 2018 Reserve Report reflects total 2P booked reserves of just 17% of McDaniel’s estimated oil in place *** * See Advisory Statements – Oil and Gas Information – OOIP. ** See Advisory Statements – Oil and Gas Information – Analogous Information. *** Based on McDaniel's reservoir mapping for the purposes of the McDaniel Reserve Report. 9
Atlee Buffalo: The Development Plan G POOL 2019 Accomplishments Drilled 11 wells Expanded G pool facilities to handle increased oil production F POOL New wells onstream with current production ~75% higher than Q4 2018 Continue to optimize new wells, Hz producer Hz water injector batteries, and existing waterflood Future producer**** operations Future injector**** Vertical injector CONVENTIONAL HORIZONTAL WELL ECONOMICS – Hemisphere Atlee Buffalo Development with McDaniel 2P Reserve Bookings @ Flat $55 WTI Pricing * Capital Drill, Estimated Glauconitic Fm Complete, Ultimate Initial BT Payout * BT NPV10 * BT ROR * 1000m TVD /1800 MD Equip & Tie-in Recovery ** Production ** HME Atlee Buffalo Well $0.8 MM 140 Mbbl 60 bbl/d 0.9 Yrs $2.3 MM 182% * Economics for HME wells have been internally generated based on Proved plus Probable bookings in the McDaniel Reserve Report for Hemisphere’s average Atlee Buffalo well, run at US$55 Flat WTI Pricing with US$13 WCS Differential and 1.32 Fx, average ~$5 quality differential from WCS, $10K/w.mo fixed and $4.40/bbl variable operating and transportation expenses, and ~$5.30 /boe royalties with ultra heavy royalty par price $7/bbl less than WCS pricing. ** See Advisory Statements – Oil and Gas Information – Initial Production Rates and Estimated Ultimate Recoveries. 10
Atlee Buffalo: The Reserve Upside Potential 2P Booked Potential Additional Cumulative Reserves as at (Unbooked) Reserves Pool OOIP * Production to-date December 31, 2018 At Various RF *** (MMBbl) (MMBbl) (MMBbl) (MMBbl) 25% 35% 45% Upper Mann F 31 1.6 (5% Recovery Factor) 4.5 (19% Recovery Factor) ** 1.7 4.8 7.9 Upper Mann G 40 1.5 (4% Recovery Factor) 4.7 (15% Recovery Factor) ** 3.9 7.9 11.9 Atlee Buffalo Total 71 3.1 (4% Recovery Factor) 9.2 (17% Recovery Factor) ** 5.6 12.7 19.8 Upper Mann G Upper Mann F At a 1.5 MMbbl 1.6 MMbbl Produced Produced 35% 4.8 MMbbl 7.9 MMbbl 4.5 MMbbl Potential 4.7 MMbbl Potential Booked Booked Additional Additional Recovery Factor * 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 assumes 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. 11
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