Hemisphere Energy Corp · TSXV:HME
Hemisphere Energy — Investor Presentation (December 2023)
23 slides from Hemisphere Energy's investor presentation, Dec 1, 2023
Slide 1: Resource Recovery Return
Resource Recovery Return December 2023 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 Straightforward Strong Profitable Unique › Applying proven › Debt free and minimal › High Free funds flow › Ultra-low production enhanced oil decommissioning yield with an 8% decline rate results in recovery technology liabilities leaves
Slide 3: Canadian Oil Company: Concentrated Core Atlee Buffalo Oil Asset
Canadian Oil Company: Concentrated Core Atlee Buffalo Oil Asset TSX Venture (Canada) HME OTCQX (USA) HMENF Share Price (TSX-V) (November 20, 2023) $1.28 Basic Shares Outstanding 99.7 million Fully Diluted Shares Outstanding 105.3 million ALBERTA Insider Ownership (Basic / Fully Diluted) 14.5% / 17%
Slide 4: The Bottom Line: Financial Highlights
The Bottom Line: Financial Highlights Q3 2023 Average Production 3,056 boe/d (99% heavy oil) Revenue $24.3 million / $86.57/boe Operating Field Netback(1) $15.9 million / $56.40/boe Adjusted Funds Flow (AFF) (1) $11.7 million / $41.65/boe Capital Expenditures(1) $8.7 million Free funds flow (FFF)(1)
Slide 5: Free Funds Flow Yields and Liabilities
Let’s Talk About: Free Funds Flow Yields and Liabilities(1,2) 30% 4 Net Debt + NPV Decom : Funds Flow 15% 2 FFF Yield as % of EV 0% 0 HME Hemisphere has the best combination of HIGHEST free funds flow yield of its peers and MINIMAL debt + decommissioning liabilities … meaning in the end we have MORE
Slide 6: Heart of the Company: Atlee Buffalo Polymer Flood Oil Pools
Heart of the Company: Atlee Buffalo Polymer Flood Oil Pools It doesn’t get more straightforward, profitable, or unique … › Exceptionally high-quality reservoirs (Upper Mannville F & G pools) › Reservoirs under polymer floods (implemented 2021 and 2022) providing maximum resource recovery at minimal
Slide 7: How Does Polymer Work? Polymer Flooding Reduces Oil Declines
How Does Polymer Work? Polymer Flooding Reduces Oil Declines Polymer flooding is successfully used in hundreds of oil pools by companies around the world › Proven method of enhanced oil recovery (EOR) › Comparable to waterflood, but polymer is added to injection water to increase its viscosity (simi
Slide 8: Compare HME Declines to Industry Averages
Now That You Know a Little Something About Decline Rates: Compare HME Declines to Industry Averages(1) Typical Oil & Gas Co – ‘Treadmill’ style drilling Well Count Boe/d with severe ~30% decline Average of estimated 2024 Canadian corporate decline rates(2): Large – 16% Intermediate – 29% Junior – 30
Slide 9: Atlee Buffalo Base Decline Rate
Atlee Buffalo Base Decline Rate: How Have HME’s Polymer Floods Helped Arrest ‘Decline’? 2500 100 90 2000 80 F pool 70 Oil Production bbl/d Polymer flood Number of Wells 1500 42 total wells drilled in start-up 60 Atlee Buffalo between G pool 2014-2019 Polymer flood 50 start-up 1000 40 30 Waterflood s
Slide 10: The Polymer Advantage: Ultra-low Corporate Decline Rate
The Polymer Advantage: Hemisphere’s Ultra-low Corporate Decline Rate 10000 100 90 80 Oil Production bbl/d 1000 70 Number of Wells 60 50 100 A company with a 5% decline rate will 40 generate as much cash flow in 4 years as could be generated in 9 years with a 30 25% decline rate 10 20 Jan 2014 Jan 20
Slide 11: Third-Party Audited Estimate of Future Cash Flow
The Underlying Value is in our Ultra-Low Decline Reserves: Third-Party Audited Estimate of Future Cash Flow 2022 Year End Reserves(1) Proved Developed Producing (PDP) Reserves / NPV10 BT 8.2 Mmboe / $228 million Proved (1P) Reserves / NPV10 BT 12.2 Mmboe / $309 million Proved + Probable (2P) Reserve
Slide 12: Enterprise Value vs Reserve Value
Exceptional Opportunity in the Market: Enterprise Value vs Reserve Value (1) 3.5 3.0 2.5 Most peers trade above PDP values, while HME still trades at a significant discount to the 2.0 value of its producing assets, despite its ultra-low decline rates 1.5 At a ratio of 1, a company is trading at its
Slide 13: Share Buybacks & Dividends: Returning to Shareholders
Share Buybacks & Dividends: Returning to Shareholders Quarterly Variable Dividend › Next dividend of $0.025/share to be paid on December 28, 2023 to shareholders of record on December 15, 2023 › Paid out $17.8 million in quarterly dividends ($0.175/share) since inception in June 2022 over 7 quarters
Slide 14: Why Invest in Hemisphere: 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 15: The Hemisphere Story: $mall Cap, Huge Value
The Hemisphere Story: $mall Cap, Huge Value RESOURCE RECOVERY RETURN Think Ultra-low Declines Think Long Life Reserves Think Dividends and NCIB Independent Analyst Coverage Amir Arif, ATB Capital Markets (403) 809-2334 aarif@atb.co Josef Schachter, Schachter Energy Report (403) 264-4413 josef@schach
Slide 16: Contact
TSX-V: HME OTCQX: HMENF www.hemisphereenergy.ca Don Simmons, President & CEO (604) 638-6213 simmons@hemisphereenergy.ca Scott Koyich, Investor Relations (403) 619-2200 scott@briscocapital.com TSX-V: HME OTCQX: HMENF 16
Slide 17: Appendix: 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 18: 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 TSX-V: HME oilsands produc
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: 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 21: 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 22: Advisory Statements
Advisory Statements Supplementary financial measures This corporate presentation may contain certain supplementary financial measures. NI 52-112 defines a supplementary financial measure as a financial measure that: (i) is intended to be disclosed on a periodic basis to depict the historical or expe
Slide 23: Contact
TSX-V: HME OTCQX: HMENF www.hemisphereenergy.ca Don Simmons, President & CEO (604) 638-6213 simmons@hemisphereenergy.ca Scott Koyich, Investor Relations (403) 619-2200 scott@briscocapital.com TSX-V: HME OTCQX: HMENF 23
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