Hemisphere Energy Corporation is pleased to announce an update on its operations and provide corporate guidance for 2021 and 2022.
Operations Update and Development Plans
During the first quarter of 2021 Hemisphere has seen an overall increase in production from its fourth quarter injector conversions. Month-to-date production has averaged 1,850 boe/d (99% heavy oil, based on field estimates between March 1-28, 2021).
Hemisphere is excited to announce that its G pool polymer flood is anticipated to commence by the end of the second quarter with site preparation underway and additional equipment delivery and installation ongoing over the next few months. The Hemisphere team has also started polymer flood evaluation work on the Atlee Buffalo F pool to assess its economic viability for conversion in 2022.
Polymer flood is an Enhanced Oil Recovery technique that is used by companies worldwide to increase overall recovery factors from oil pools. Reservoir modelling indicates the potential for an incremental 10% recovery from the G pool on polymer flood as compared to recovery from water flood, as well as a considerable increase in oil rates from the pool. As such, Hemisphere intends to upsize its treating facilities at the G pool battery later this summer. Should oil prices stay at current levels, Hemisphere is also planning a three well development drilling program in the fall from a previously built and tied-in pad.
While 2020 was full of trials and tribulations, Hemisphere was able to act nimbly through the year by cutting capital, reducing costs, and paying down almost a quarter of its previously outstanding year-end debt. This has helped position the Company to take advantage of the improved pricing environment in 2021.
Management believes that over the next two years it can significantly lower or eliminate debt while growing production and funds flow, which should allow the Company to accelerate internal projects, make strategic acquisitions, and increase return of capital to shareholders through share buybacks and/or dividends.
In 2021, Hemisphere plans to execute a capital program of approximately $6 million on polymer flood implementation, facilities upgrades, and a small drilling program. In 2022, Hemisphere has allowed for a capital drilling program of $7 million. With the execution of its $13 million 2-year capital program and a successful G pool polymer flood conversion, the Company anticipates being debt-free by the end of 2022 in the following pricing and production scenario.