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50 www.resourceworld.com o c t o b e r / n o v e m b e r 2 0 1 4 Don Simmons, President and CEO, reports Hemisphere Energy Corp. [HME- TSXV], which has core operations in the Jenner and Atlee Buffalo areas of south- east Alberta, achieved a Q2 2014 average production of 553 boe/d (barrels of oil equivalent per day - 82% oil and NGL), a 36% increase over Q2 2013. For Q2 2014, the company generated a record $3.8 mil- lion and recorded a net income of $830,322 or $0.01 per share. Hemisphere Energy also reported an increase in operating netback (oil and gas sales net of royalties, production and transportation expenses) to $39.98/boe for Q2 2014, an improvement of $5.55/boe over the same quarter last year and $3.15/ boe over Q1 2014. Meanwhile, in Q2 2014, there were decreased operating and trans- portation expenses by 10% to $20.08/boe over Q1 2014. On the financing front, Hemisphere recently closed a bought-deal equity financing for gross proceeds of $10 mil- lion at a price of $0.75 with net proceeds being used to accelerate development at Atlee Buffalo and Jenner. The company has also installed a solution gas compressor at its main production facility at Jenner to increase volume through-put. Hemisphere has added to its existing land base at Atlee Buffalo in southeast Alberta with the acquisition of an adja- cent 85% working interest in 1.75 sections (1,120 acres). Five horizontal wells were also completed in the Atlee Buffalo area. With two of the five wells from the drilling program on production for over 30 days, Hemisphere's average corporate production rate during the first three weeks of August increased to an average of 670 boe/d. The two new horizontal wells, drilled from the same location, are produc- ing approximately 100 boe/d (93%) and 65 boe/d (88%), respectively. Hemisphere has now successfully completed the five- well drilling program and, over 11 weeks, drilled, completed, equipped and brought on-stream the five horizontal wells at Atlee Buffalo. During the first two weeks of September, the last three drilled wells averaged over 100 bopd each for a combined rate of 340 bopd and resulted in record corporate production of 900 boepd (based on field estimates). Results from the first six Atlee Buffalo wells show initial flush production rates 60% higher than originally budgeted and drilling costs 10% below budget. Hemisphere management notes that the economics associated with the Atlee Buffalo Glauconitic horizontal wells are robust with an estimated ultimate recovery of 100,000 boe per well. In a September 22 news release, Don Simmons, stated, "Based on an aver- age drill, complete and tie-in cost of $1.15-million, the wells have nine-month payouts, $2.4-million net present value discounted at 10% before tax and 175% rates of return. Hemisphere's first Atlee Buffalo well, which went on production in February, 2014, has averaged netbacks of $60 per barrel of oil equivalent through 2014. Since Hemisphere purchased the Atlee Buffalo property in November, 2013, production has grown from 60 barrels of oil equivalent per day to current rates of over 520 barrels of oil equivalent per day, and Hemisphere has up to 65 additional locations identified." The summer drilling program followed up the first successful Atlee Buffalo well drilled in Q1 2014, which has already produced over 16,000 boe and is still pro- ducing some 66 boe/d. The next phase of drilling is under way with up to four more horizontal wells at Atlee Buffalo and one vertical test well at Jenner. Hemisphere is reviewing the recent introduction of the enhanced oil recovery program announced by Alberta Energy which encourages the use of enhanced oil recovery methods to assist in optimizing hydrocarbon resources. n hEMISPhERE ENERGY production up; costs down Checking tank levels at Hemisphere's Jenner battery in southeastern Alberta. Photo courtesy Hemisphere Energy Corp. OIL & g a s