Issue link: http://resourceworld.uberflip.com/i/807573
A P R I L / M A Y 2 0 1 7 www.resourceworld.com 65 Analogues to Hemisphere's Atlee Buffalo pools include the nearby Upper Mannville N2N and YYY pools. These pools have been producing under water- flood since the late 1990s and have already recovered 13% and 23%, respectively, of Alberta Energy mapped oil in place. Both pools are still producing and management expects recovery factors will continue to increase with further production. Based on analysis of analogue per- formance in combination with internal reservoir simulation models, management anticipates there is significant potential for Hemisphere to achieve greater ulti- mate recovery factors than those currently booked in both Atlee Buffalo pools. Based on McDaniel January 1, 2017 forecast pricing, Hemisphere's net asset value as of December 31, 2016 was esti- mated to be $0.67 per share. Its share price is currently around $0.30. "Our most recent significant develop- ment is our reserve increases in 2016 based on success of our waterfloods and our latest development well," said Simmons, "which was our first producing well into our 38-million-barrel original oil-in-place Upper Mannville G Pool." Future plans include fully developing their Atlee Buffalo oil pools. "We have identified over 50 additional producing locations as well as associated facilities and water injectors to expand our waterflood," said Simmons. "We believe our Atlee Buffalo assets have the potential to grow Hemisphere to over 3,000 boe/d and over $40 million annual cash flow over the next few years. This growth will be funded by cash flow, debt and equity." Because of their lean approach, Simmons says it costs just about $700,000 to drill a well producing 60 bbl/d, thus giving a rate of return of 160% and earning the cost back in a year, based on operation costs of $15-$16 per barrel of $48-$50 oil and $25 of the net-back going to cash flow. And with 54 locations ready in Atlee Buffalo – the "best bang for the buck" – and another 30 that are "stable" in Jenner, the future is looking bright. "We may be small and may have risks but we offer high returns and a quick pay- back," he said. That's not to say the downturn was without challenges. Simmons said it has been the toughest period in his career. The key has been strong management of assets and costs, and knowing where to invest, then being positioned to move forward when the downturn ends. "The impact of the downturn was sig- nificant but we survived and now we are positioned for growth," said Simmons. "The two-and-a-half-year downturn delayed our 'grow and sell' exit strategy, but now that prices are back in the $50- $55 range, we are back on our original path. "We're looking at a fun 2017-18." n Sales oil pick up at the HME 11-25 Jenner battery about100 km northwest of Medicine Hat, Alberta. Photo courtesy Hemisphere Energy Corp.