Hemisphere Energy (HME) Q3 2024 earnings summary

Executive summary

• Q3 2024 production reached 3,621 boe/d (99% heavy oil), up 18% year-over-year, and revenue was $26.7 million, a 10% increase from Q3 2023.

• Adjusted funds flow from operations (AFF) was $11.7 million ($0.12/share), flat year-over-year.

• Net income for Q3 was $8.6 million ($0.09/share), up from $8.5 million in Q3 2023.

• Paid $5.4 million in dividends (base and special) and repurchased 756,400 shares under the NCIB during the quarter.

• Exited Q3 with positive working capital of $6.5 million and no bank debt drawn on a $35 million credit facility.

Financial highlights

• Q3 revenue rose 10% year-over-year to $26.7 million, driven by an 18% increase in production, offset by an 8% decrease in realized prices.

• Operating netback was $15.4 million ($46.24/boe), down 17% per boe from Q3 2023 due to lower prices and higher costs.

• AFF for Q3 was $11.7 million ($35.17/boe), essentially unchanged from Q3 2023.

• Free funds flow for Q3 was $1.8 million after $9.9 million in capital expenditures.

• Capital expenditures totaled $9.9 million in Q3, primarily for drilling and facility construction.

Outlook and guidance

• Management expects annual 2024 production to be in line with guidance, despite anticipated lower production in early Q4 due to maintenance.

• 2024 capital program of $21 million is fully funded by projected AFF of $40 million and free funds flow of $19 million.

• At least two new wells to be converted to injectors to support reservoir pressure.

• 2025 guidance details to be released in January.