Hemisphere Energy (HME-V) March 11, '15 is pleased to announce highlights from its independent reserves evaluation as at December 31, 2014 in accordance with National Instrument 51-101 Standards of Disclosure for Oil and Gas Activities ("NI 51-101").
In 2014 Hemisphere completed its busiest development year to-date, drilling and placing on production 10 horizontal oil wells in Atlee Buffalo and 2 horizontal oil wells in Jenner. This activity resulted in a 61% growth in Proved plus Probable reserves and a 74% increase in Proved Developed Producing reserves. Despite the decrease in oil prices, Hemisphere achieved a substantial increase in the net present value of its reserves through its successful drilling programs. Atlee Buffalo, which was acquired in late 2013, contributed significant production and reserve growth during its first phase of development, setting up future growth opportunities in the area.
2014 Reserve Highlights
Increased Proved plus Probable reserves by 61% to 3,337.5 Mboe (88% oil & NGL).
Increased the value of Proved plus Probable reserves by 64% to $62.5 MM (NPV10 BT).
Increased Proved reserves by 72% to 2,193.1 Mboe (88% oil & NGL).
Increased the value of Proved reserves by 64% to $40.3 MM (NPV10 BT).
Increased Proved Developed Producing reserves by 74% to 1,095.2 Mboe.
Increased the value of Proved Developed Producing reserves by 84% to $25.6 MM (NPV10 BT).
Proved Developed Producing reserves represent 50% of total Proved reserves on a reserve basis and 63% on a value basis (NPV10 BT).
Proved reserves represent 66% of the total Proved plus Probable reserves on a reserve basis and 65% on a value basis (NPV10 BT).
Achieved finding, development and acquisition costs, including the change in future development capital, of $24.72 per boe on Proved reserve additions, and $18.56 per boe on Proved plus Probable reserve additions.
On a per share basis (basic), increased Proved plus Probable reserves by 31% and Proved reserves by 40%.
The reserves data set forth below is based upon an independent reserves evaluation prepared by McDaniel & Associates Consultants Ltd. ("McDaniel") with an effective date of December 31, 2014 (the "McDaniel Report"). The following presentation summarizes Hemisphere's crude oil, natural gas liquids and natural gas reserves and the net present values before income tax of future net revenue for Hemisphere's reserves using forecast prices and costs based on the McDaniel Report. The McDaniel Report has been prepared in accordance with definitions, standards, and procedures contained in the Canadian Oil and Gas Evaluation Handbook and NI 51-101.
All evaluations and reviews of future net cash flows are stated prior to any provisions for interest costs or general and administrative costs and after the deduction of estimated future capital expenditures for wells to which reserves have been assigned. It should not be assumed that the estimates of future net revenues presented in the tables below represent the fair market value of the reserves. There is no assurance that the forecast prices and cost assumptions will be attained and variances could be material. The recovery and reserve estimates of our crude oil, natural gas liquids and natural gas reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. Actual crude oil, natural gas and natural gas liquids reserves may be greater than or less than the estimates provided herein. Reserves included herein are stated on a gross basis (working interest reserves before royalty deductions) unless otherwise noted. McDaniel pricing assumptions from their January 1, 2015 internal forecast are summarized below. All amounts are expressed in Canadian dollars unless otherwise noted. Due to rounding, certain columns may not add exactly.
Summary of Reserves(1)
| | Heavy Oil | Natural Gas | NGL | Total | | Reserves Category | (Mbbl) | (MMcf) | (Mbbl) | (Mboe) | | Proved | | | | | | | Developed Producing | 930.0 | 969.0 | 3.8 | 1,095.2 | | | Developed Non-Producing | 185.3 | 148.7 | - | 210.1 | | | Undeveloped | 820.2 | 405.6 | - | 887.8 | | Total Proved | 1,935.5 | 1,523.4 | 3.8 | 2,193.1 | | Probable | 1,007.9 | 812.1 | 1.1 | 1,144.3 | | Total Proved Plus Probable | 2,943.3 | 2,335.4 | 4.9 | 3,337.5 |
| Note: | | (1) | Gross reserves are working interest reserves before royalty deductions. |
Summary of Net Present Value(1)
| | Net Present Value of Future Net Revenue, Before Tax | | Reserves Category | Discounted at (% per Year) | | (M$, except per share amount) | 0% | 5% | 10% | | Proved | | | | | | Developed Producing | 32,245.1 | 28,546.5 | 25,571.7 | | | Developed Non-Producing | 4,844.9 | 4,295.3 | 3,822.6 | | | Undeveloped | 17,609.3 | 13,883.2 | 10,930.9 | | Total Proved | 54,699.2 | 46,725.0 | 40,325.2 | | Probable | 38,429.2 | 28,747.6 | 22,153.6 | | Total Proved Plus Probable | 93,128.4 | 75,472.6 | 62,478.8 | | Per basic share | $1.24 | $1.00 | $0.83 |
| Note: | | (1) | Based on McDaniel December 31, 2014 forecast prices. |
Future Development Costs ("FDC")
The following summarizes the development costs deducted in the estimation of future net revenue attributable to Proved reserves and Proved plus Probable reserves (using forecast prices and costs only).
| | Forecast Prices and Costs |
(M$) |
Proved
Reserves | Proved Plus
Probable
Reserves | | 2015 | 8,065 | 8,221 | | 2016 | 10,765 | 13,764 | | 2017 | - | 1,098 | | Total Undiscounted | 18,831 | 23,083 |
2014 Finding, Development and Acquisition ("FD&A") Costs(1)
| | 2014 | | |
Proved
Reserves | Proved Plus
Probable Reserves | | FD&A Costs, including FDC | | | | | Exploration and development capital expenditures (M$)(2)(3) | 20,212 | 20,212 | | | Acquisitions (M$) | 635 | 635 | | | Total change in FDC (M$) | 8,179 | 7,306 | | Total FD&A capital, including change in FDC (M$) | 29,026 | 28,153 | | Reserve additions, including revisions (Mboe) | 1,157 | 1,496 | | Acquisitions (Mboe) | 17 | 21 | | FD&A costs, including FDC ($/boe) | 24.72 | 18.56 |
| Notes: | | (1) | Financial information is per Hemisphere's preliminary unaudited financial statements for the year ended December 31, 2014 and is therefore subject to audit and may be revised. | | (2) | The aggregate of the exploration and development costs incurred in the financial year and change during that year in estimated future development costs generally will not reflect total finding and development costs related to reserve additions for that year. | | (3) | The capital expenditures also exclude capitalized administration costs. |
Summary of McDaniel Pricing as of January 1, 2015
| | Oil | Natural
Gas | NGL | | | |
Year |
WTI
Crude
Oil |
Edmonton
Light
Crude
Oil | Western
Canadian
Select
Crude
Oil |
Alberta
AECO
Spot
Price | Edmonton
Condensate
and
Natural
Gasolines |
Edmonton
Butanes |
Edmonton
Propane |
Inflation |
US/Cdn
Exchange
Rate | | | ($US/bbl) | ($Cdn/bbl) | ($Cdn/bbl) | ($Cdn/MMBtu) | ($Cdn/bbl) | ($Cdn/bbl) | ($Cdn/bbl) | (%) | ($US/$Cdn) | | 2015 | 65.00 | 68.60 | 57.60 | 3.50 | 72.60 | 52.80 | 26.10 | 2.0 | 0.86 | | 2016 | 75.00 | 83.20 | 69.90 | 4.00 | 87.30 | 67.00 | 36.50 | 2.0 | 0.86 | | 2017 | 80.00 | 88.90 | 74.70 | 4.25 | 93.10 | 71.60 | 44.50 | 2.0 | 0.86 | | 2018 | 84.90 | 94.60 | 79.50 | 4.50 | 98.80 | 76.20 | 49.30 | 2.0 | 0.86 | | 2019 | 89.30 | 99.60 | 83.70 | 4.70 | 103.90 | 80.30 | 51.80 | 2.0 | 0.86 | | 2020 | 93.80 | 104.70 | 87.90 | 5.00 | 109.10 | 84.40 | 54.70 | 2.0 | 0.86 | | 2021 | 95.70 | 106.90 | 89.80 | 5.30 | 111.40 | 86.10 | 56.20 | 2.0 | 0.86 | | 2022 | 97.60 | 109.00 | 91.60 | 5.50 | 113.60 | 87.80 | 57.50 | 2.0 | 0.86 | | 2023 | 99.60 | 111.20 | 93.40 | 5.70 | 115.90 | 89.60 | 58.90 | 2.0 | 0.86 | | 2024 | 101.60 | 113.50 | 95.30 | 5.90 | 118.30 | 91.50 | 60.30 | 2.0 | 0.86 | | 2025 | 103.60 | 115.70 | 97.20 | 6.00 | 120.60 | 93.20 | 61.50 | 2.0 | 0.86 | | 2026 | 105.70 | 118.00 | 99.10 | 6.10 | 123.00 | 95.10 | 62.70 | 2.0 | 0.86 | | 2027 | 107.80 | 120.40 | 101.10 | 6.25 | 125.50 | 97.00 | 64.00 | 2.0 | 0.86 | | 2028 | 110.00 | 122.80 | 103.20 | 6.35 | 128.00 | 99.00 | 65.20 | 2.0 | 0.86 | | 2029 | 112.20 | 125.30 | 105.30 | 6.50 | 130.60 | 101.00 | 66.60 | 2.0 | 0.86 | | Thereafter | Escalation Rate of 2%/year | 2.0 | 0.86 |
In addition to the information disclosed in this news release, more detailed information will be included in Hemisphere's 2014 Annual Information Form which will be available on SEDAR at www.sedar.com and Hemisphere's website at www.hemisphereenergy.ca by April 30, 2015.
About Hemisphere Energy Corporation
Hemisphere Energy Corporation is a producing oil and gas company focused on developing conventional oil assets with low risk drilling opportunities. Hemisphere plans continual growth in production, reserves and cash flow by drilling existing projects and executing strategic acquisitions. Hemisphere trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol "HME".
Hemisphere Energy Corporation
Don Simmons
President & Chief Executive Officer
(604) 685-9255
info@hemisphereenergy.ca
Website: www.hemisphereenergy.ca
Scott Koyich
Investor Relations
(403) 619-2200
scott@briscocapital.com |
