Hemisphere Energy Corp · TSXV:HME
Hemisphere Energy — Investor Presentation (October 2024)
25 slides from Hemisphere Energy's investor presentation, Oct 11, 2024
Slide 1: Resource Recovery Return
Resource Recovery Return October 2024 Corporate Presentation TSX-V: HME 1 OTCQX: HMENF www.hemisphereenergy.ca
Slide 2: The Hemisphere Strategy: Focus on shareholder value and return
The Hemisphere Strategy: Focus on shareholder value and return Simple Strong Profitable Unique › Long life, high value › Debt free with minimal › High netback barrel with › 97% of production under Canadian oil assets abandonment liabilities low capital requirements Enhanced Oil Recovery = Years of s
Slide 3: Canadian oil company: Focused on High Value Oil Assets
Canadian oil company: Focused on High Value Oil Assets › Current production rate of ~3,700 boe/d(3) comes from 46 total producing wells (average rate of 80 boe/d per well), with 97% of HME’s production coming from 2 oil pools under EOR polymer flood in the Atlee Buffalo field › Hemisphere’s operatio
Slide 4: Hemisphere's Track Record and CAGR
The timeline: Hemisphere’s Track Record and CAGR (1) 2013/14 Production boe/d / million FD(3) shares › Purchased oil asset in Atlee Buffalo, Alberta 35 31% CAGR over 6 years 2017 30 › Secured US$35MM loan to develop reserves 25 20 2022 15 › Paid down loan and initiated quarterly dividend 10 2023/24
Slide 5: Q2 2024 Financial Highlights
The Bottom Line – Where do we rank? Q2 2024 Financial Highlights Q2’24 H1’24 Average Production 3,628 boe/d (99% heavy oil) 3,380 boe/d (99% heavy oil) Revenue $28.9 million / $87.65/boe $49.9 million / $81.11/boe Operating Netback(1) $17.7 million / $53.58/boe $30.8 million / $50.08/boe Adjusted Fu
Slide 6: Balancing Growth with Return to Shareholders
2024 Guidance(1-5) : Balancing Growth with Return to Shareholders Price Sensitivity $US / bbl $65 WTI $75 WTI $85 WTI Average Annual Production boe/d 3,400 3,400 3,400 Adjusted Funds Flow (AFF) $ million 31 40 49 AFF per Basic Share $/share 0.32 0.41 0.49 Capital Expenditures & ARO(6) $ million 21 2
Slide 7: The underlying value is in our ultra-low decline reserves
The underlying value is in our ultra-low decline reserves: Third-Party Audited Estimate of Future Cash Flow 2023 Year End Reserves(1) Proved Developed Producing (PDP) Reserves / NPV10 BT 8.2 MMboe / $248 million Proved (1P) Reserves / NPV10 BT 12.1 MMboe / $325 million Proved + Probable (2P) Reserve
Slide 8: Best per Barrel Value of Reserves
Top-Tier Oil Resource: Best per Barrel Value of Reserves (1) 35 HME’s value of reserves in all categories is the highest of all its oil-weighted peers 30 due to: • Ultra-low decline rates • Low operating and capital costs 25 • Minimal decommissioning liabilities NPV10 BT $ / boe 20 15 10 5 0 HME HWX
Slide 9: Enterprise Value vs Reserve Value
Exceptional Opportunity in the Market: Enterprise Value vs Reserve Value (1) 3.0 Most peers trade near or above PDP values, while HME still trades at a Enterprise Value / NPV10 BT per Reserve Category significant discount to the value of its 2.5 producing assets, despite having: • Ultra-low decline
Slide 10: Atlee Buffalo, Alberta - EOR Polymer Flood Oil Pools
Heart of the company: Atlee Buffalo, Alberta - EOR Polymer Flood Oil Pools It doesn’t get much more simple than this … › 97% of corporate production is from the Atlee Buffalo Mannville F & G pools › Pure 100% owned and operated play › Exceptionally high-quality reservoirs › Both pools are under poly
Slide 11: Polymer Flooding Reduces Oil Declines
How does polymer work? Polymer Flooding Reduces Oil Declines Polymer flooding has been around since the 1950’s and is successfully used by companies all around the world › Proven method of enhanced oil recovery (EOR) › Comparable to waterflood, but polymer is added to injection water to increase its
Slide 12: Compare HME Declines to Industry Averages
What REALLY makes us unique? Compare HME Declines to Industry Averages (1) Typical Oil & Gas Co: Well Count Boe/d ‘Treadmill’ style drilling with severe 20-30% decline Average of estimated 2024 Canadian corporate decline rates(2): Large – 16% Intermediate – 29% Junior – 30% A company with a 5% decli
Slide 13: Atlee Buffalo Base Decline Rate
Atlee Buffalo Base Decline Rate: How Have HME’s Polymer Floods Helped Arrest ‘Decline’? 100 2500 90 80 2000 70 F pool Oil Production bbl/d Number of Wells 42 total wells drilled in 60 1500 Atlee Buffalo between Polymer flood 2014-2019 start-up G pool 50 Polymer flood start-up 1000 40 30 Waterflood s
Slide 14: Marsden, Saskatchewan
We now have a new area: Marsden, Saskatchewan Recall that not all ‘inventory’ is equal › HME has been searching for a play with polymer flood potential and low recovery factor analogous to Atlee Buffalo for years Well delineated large oil-in-place development resource › Where better to find oil than
Slide 15: Returning Free Funds Flow to Shareholders
Share buybacks & dividends: Returning Free Funds Flow to Shareholders Base Dividends › Quarterly dividend of $0.025/share is fully funded by free cash flow › Paid out $25 million ($0.25/share) over 10 quarters since inception in June 2022 › Implied annual yield of ~5.5% at current market cap › Last
Slide 16: A Truly Niche Story in the Oil Space
Why invest in Hemisphere? A Truly Niche Story in the Oil Space Dividend paying company with active NCIB › HME returns a portion of its free funds flow back to shareholders through dividends and share buybacks › Additional free funds flow is targeted towards growth (acquisitions or accelerated capita
Slide 17: Think 'small, but MIGHTY'
The Hemisphere Story: Think ‘small, but MIGHTY’ RESOURCE RECOVERY RETURN Think Ultra-low Declines Think Long Life Reserves Think Dividends and NCIB Independent Analyst Coverage Amir Arif, ATB Capital Markets Mark Reichman, Noble Capital Markets TSX-V: HME Disclaimer: Opinions, estimates, or forecast
Slide 18: Leadership
Appendix: Leadership MANAGEMENT BOARD OF DIRECTORS Don Simmons, P.Geol. Charlie O’Sullivan, B.Sc. Chairman President & Chief Executive Officer Over 20 years of experience technical, operational and management experience (Alberta Energy Company, Encana (Ovintiv), Sebring) Don Simmons, P.Geol. Ian Dun
Slide 19: Risk Management and Protecting Cash Flow
Appendix: Risk Management and Protecting Cash Flow Hedging Considerations › Continually monitor WTI Oil and WCS Differential hedge pricing › Layer in protection for up to 12 months › Look for near-term wellhead price protection and longer-term floor protection Product Type Volume Price Index Term Cr
Slide 20: Peters & Co. Limited - Overview Table Corporate Declines
Appendix: Peters & Co. Limited - Overview Table Corporate Declines (1) Source: Peters & Co. Limited September 2023. Overview table with each of their coverage company’s estimated 2024 corporate decline rates. Note integrated companies and Canadian large producers assume an oilsands production TSX-V:
Slide 21: Advisory Statements
Advisory Statements Forward-Looking Information and Statements This presentation contains certain forward–looking information and statements within the meaning of applicable securities laws. The use of any of the words "expect", "anticipate", "continue", "estimate", "may", "will", "project", "should
Slide 22: Advisory Statements
Advisory Statements Non-IFRS and Other Financial Measures Throughout this presentation and in other materials disclosed by the Company, Hemisphere employs certain measures to analyze financial performance, financial position, and cash flow. These non-IFRS and other financial measures do not have any
Slide 23: Advisory Statements
Advisory Statements “Free funds flow” (”FFF”) is calculated by taking AFF and subtracting capital expenditures, excluding acquisitions and dispositions. Management believes that free funds flow provides a useful measure to determine Hemisphere’s ability to improve returns and to manage the long-term
Slide 24: Our Playground
Our Playground TSX-V: HME OTCQX: HMENF 24
Slide 25: TSX-V: HME OTCQX: HMENF www.hemisphereenergy.ca
TSX-V: HME OTCQX: HMENF www.hemisphereenergy.ca Don Simmons, President & Chief Executive Officer (604) 638-6213 simmons@hemisphereenergy.ca Scott Koyich, Investor Relations (403) 619-2200 scott@briscocapital.com TSX-V: HME OTCQX: HMENF 25
Hemisphere Energy — Investor Presentation (October 2024) on 6ix