Hemisphere Energy Corp V.HME

Ink Research

[retiredcf]

Morning Report: Hemisphere Energy continues to buy back shares

May 8, 2025

We continue our look at the Canadian oil patch in the context of potential peak US onshore oil production. Yesterday, we highlighted Cardinal Energy (Mostly Sunny; CJ) which was #4 in the April INK Edge Top 30 Energy Report. Today, we revisit heavy oil focused Hemisphere Energy (HME) which took the #5 spot in the April Top 30. Since we last featured HME here on February 11, the stock set a year-to-date low of $1.64 on April 9th. Notably, HME has not taken out its 52-week low of $1.60 set on June 13, 2024. On April 28th, the company paid a special dividend of $0.03 per share which is in addition to the prospective base quarterly dividend of $0.025 per share.

HME expects to produce 3,900 barrels of oil equivalent (BOE) per day (99% oil) in 2025, up from 3,436 boe/d in 2024. In Q4, HME realized $75.59/boe in revenue. In Q4 key costs (per boe) were operating ($13.89), royalties ($13.54), transportation ($3.78), and general and administration expenses ($4.74) totaling $35.95/boe. Interest or FX and tax expenses added another $0.41/boe and $5.25/boe respectively in Q4. In 2025 at US$65/bbl WTI and a WCS differential of US$14/bbl plus other assumptions, HME expects $24 million in free funds flow (a non-IFRS term). Capex is expected to total $17 million, heavily weighted towards Q3 which offers flexibility during a volatile pricing environment. In 2024, HME allocated $9.8 million to base quarterly dividends. As of 2024 year-end, HME reported a proved plus probable reserve life index of 11.6 years. Meanwhile, HME has been buying back shares and insiders have continued to be small net acquirers of stock.