Hemisphere Energy releases guidance for 2026

Executive Summary

• Hemisphere Energy Corp. declared a quarterly cash dividend of 2.5 cents per common share, payable on Feb. 26, 2026, to shareholders of record as of Feb. 12, 2026.
• The company announced its 2026 capital program of approximately $12 million, entirely financed by estimated 2026 adjusted funds flow (AFF) of $40 million (based on $60 U.S./bbl WTI).
• 2026 free funds flow (FFF) is expected to be $28 million, with approximately 35% allocated to base dividends and the remainder for discretionary uses including potential acquisitions, NCIB, or special dividends.

Key Details

• Dividend Details:
  • Amount: 2.5 cents per common share.
  • Payment Date: Feb. 26, 2026.
  • Record Date: Feb. 12, 2026.
  • Tax Designation: Eligible dividend for income tax purposes.
• 2026 Financial Guidance (Assumptions: $60 U.S./bbl WTI):
  • Production: Average annual production of 3,900 boe/d (99% heavy oil).
  • Adjusted Funds Flow (AFF): $40 million.
  • Capital Expenditures: $12 million (includes $400,000 for asset retirement obligations).
  • Free Funds Flow (FFF): $28 million.
  • Shareholder Returns: ~35% of FFF allocated to base dividends; balance for discretionary purposes (development, exploration, acquisitions, NCIB, special dividends).
• 2025 Shareholder Return Context:
  • Total returns amounted to $21.8 million (23 cents/share).
  • Base quarterly dividends: $9.6 million (10 cents/share).
  • Special dividends: $5.8 million (6 cents/share).
  • Normal Course Issuer Bid (NCIB): $6.4 million (4 cents/share).
• Operational Highlights & Assumptions:
  • Price Sensitivities: WTI at $50, $60, and $70 U.S./bbl.
  • WCS Differential: $12.50 U.S./bbl.
  • Quality Adjustment: $4.00/bbl.
  • Exchange Rate: CAD to USD at 0.72.
  • Operating & Transportation Costs: $15.00/boe.
  • Royalties: 16% at $60 WTI, 14% at $50 WTI, 18% at $70 WTI.
  • Net G&A: $3.47/boe.
  • Tax Costs: $5.54/boe at $60 WTI, $2.98/boe at $50 WTI, $7.88/boe at $70 WTI.
• Corporate Outlook:
  • January 2026 production trending over 3,800 boe/d (99% heavy oil).
  • Over 95% of production base supported by enhanced oil recovery (EOR) polymer floods, resulting in lower decline rates and reduced capital requirements.
  • Company entered 2026 debt-free with a positive working capital position of more than $7 million.

Notable Quotes

• "Hemisphere's board of directors has approved a 2026 capital program of approximately $12-million, which provides the company disciplined year-over-year growth, while protecting the balance sheet and maintaining shareholder returns."
• "Hemisphere entered 2026 debt-free with a positive working capital position of more than $7-million. Together with its projected $40-million AFF ($60 (U.S.) WTI) for the year, the company has a great deal of room to flexibly expand or reduce its planned $12-million capital program as market conditions evolve, while still returning significant value to shareholders and advancing strategic growth initiatives."