Hemisphere Energy Corporation is pleased to provide an update on corporate activities and its Southern Alberta oil assets.
Although 2020 had considerable challenges, Hemisphere made several important achievements throughout the year. Focus remained on debt reduction through limiting capital expenditures, minimizing costs, and maximizing profitability even when that included shutting in production.
Capital spending for 2020 was minimal at approximately $1.5 million, with the remainder of funds flow allocated to debt repayment. Hemisphere paid down US$6 million on its credit facility over the year, lowering its term loan debt by 23% to US$20.5 million at December 31, 2020.
Average oil production for 2020 was approximately 1,690 bbl/d, representing modest growth of 5% over 2019. This was achieved in a year of extremely volatile oil prices, despite voluntarily shutting in a number of wells through the second quarter and deferring operational workovers on certain wells throughout the year.
In the fourth quarter of 2020, Hemisphere converted three Atlee Buffalo G pool oil producers to water injection wells to expand the waterflood into new areas of the oil pool requiring pressure support.
Although production loss occurred when these wells were converted, reservoir modelling indicates that positive response at offset producers will more than make up for this lost production. Over the past few weeks Hemisphere has already started to see a response from the waterflood expansion with some initial production increases. Based on field estimates, oil production was approximately 1,565 bbl/d for the period between February 1st to February 8th 2021.
Hemisphere was also active in its Normal Course Issuer Bid (NCIB) program over the year, having purchased over 2,300,000 shares at an average share price of $0.13.
Extensive evaluation has been completed on the conversion of the Company’s Atlee Buffalo G pool water flood to polymer flood. With success, the potential long-term value of this project is substantial in terms of incremental and accelerated oil recovery. Management is hopeful that polymer injection could begin by the third quarter of 2021. More updates will follow as further details become available.
With vaccinations well underway and global markets recovering, the outlook for 2021 is much brighter than 2020. The Company is very excited about the future of its assets and plans to concentrate on low cost growth using enhanced recovery projects within its 100% owned and operated pools.
