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Hemisphere Energy Announces Financial and Operating Results for Q1 2020
Vancouver, British Columbia--(Newsfile Corp. - May 27, 2020) - Hemisphere Energy Corporation (...
About this update from Hemisphere Energy Corp
[{"type":"text","content":"Hemisphere Energy Announces Financial and Operating Results for Q1 2020Vancouver, British Columbia--(Newsfile Corp. - May 27, 2020) - Hemisphere Energy Corporation (TSXV: HME) (\"Hemisphere\" or the \"Company\") announces its financial and operating results for the three months ended March 31, 2020.Q1 2020 Highlights Achieved revenue of $5.0 million. Realized an operating netback of $3.5 million. Attained quarterly adjusted funds flow from operations of $2.2 million. Increased quarterly production by 43% to 1,973 boe/d (99% heavy crude oil and 1% conventional natural gas), as compared to the first quarter of 2019. Reduced operating and transportation expenses to $10.00/boe, a 17% decrease from the first quarter of 2019. Increased corporate Liability Management Ratio (LMR) with the Alberta Energy Regulator to 11.54 as of the end of the first quarter of 2020. Corporate UpdateDuring the first quarter of 2020, the world began to respond to the COVID-19 pandemic with economic lockdowns and severe travel restrictions. In March 2020, oil prices collapsed due to a price war between Russia and Saudi Arabia. The combined effect of these two events has brought oil prices to levels never seen before, including into negative territory.Hemisphere responded to these market challenges by layering in additional hedges at the start of April that allowed the Company to continue to produce at approximately 85% of its capacity through the second quarter, while avoiding potential reservoir and equipment damage that could have arisen from temporary shut-ins during winter operating conditions.As countries attempt to reopen their economies, demand for oil is returning and pricing is slowly recovering back to economic levels for producers. Significant volatility remains in the pricing of both the WTI benchmark and WCS differential as demand, supply, storage, government policies, and behaviours change in unpredicted ways.Given the commodity outlook and in order to maintain operational flexibility, Hemisphere proactively entered an agreement with its lender in April to temporarily waive the application of and compliance with its two financial covenants (being the interest coverage ratio and total leverage ratio covenants), two reserve-based covenants (being the PDP coverage ratio and total proved reserve coverage ratio covenants), and its production covena...