Hemisphere Energy (HMENF) Valuation Update - Apr 15

[dan_s]

At the time of this post HME.V was trading at $2.735Cdn per share.

Hemisphere's 2025 production was 3,645 Boepd despite several unplanned shut-ins. The company's 2026 production guidance is 3,900 Boepd, primarily due to the two successful polymer floods within their Atlee Buffalo core area. They are testing some additional zones this year, which could add production in 2H 2026.

My updated valuation is $3.00Cdn, which compares to First Call's price target of $2.90Cdn that has not been update for the solid Q4 results.
Based on Hemisphere's year-end reserve report, the PV10 Net Asset Value of just the company's proved reserves was $2.70Cdn/share based on oil prices that are much lower than we have today. < My valuation is based on 5X annualized operating cash flow per share, which I believe is conservative for a company of this quality.

Another "Special Dividend" was a nice surprise.

Based on my forecast model, which is based on WTI averaging $81US/bbl in 2026 and $75US/bbl in 2026, Hemisphere should generate approximately $50Cdn million of free cash flow this year. Increased stock buybacks will increase the stock value AND we should get two more $0.03/share "Special Dividends" this year, in addition to the two being paid in April and May. Hemisphere has a "pristine balance sheet".

My updated forecast has been posted to the EPG website.