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TSX-V: HME
VANCOUVER, Sept. 15, 2017 /CNW/ - Hemisphere Energy
Corporation (TSX-V: HME) ("Hemisphere" or the "Company") is pleased
to announce that it has entered into a new and significantly
increased credit facility (the "New Credit Facility") with Cibolo
Energy Partners, LP and certain of its affiliates (collectively,
"Cibolo"), a Houston-based firm
focused on energy investment opportunities. The New Credit Facility
is a strategic and transformational transaction for Hemisphere that
will allow the Company to accelerate the development of its
southern Alberta Atlee Buffalo
waterflood oil assets. Consequently, the Company has repaid
and terminated its existing credit facility with its Canadian bank
(the "Former Credit Facility").
All amounts are expressed in Canadian dollars, unless otherwise
stated.
New Credit Facility
Hemisphere has entered into a first lien senior secured credit
agreement with Cibolo providing
for a multi-draw, non-revolving term loan facility of a maximum
aggregate principal amount of up to US$35.0
million, with an initial commitment amount of US$15.0 million. This represents an approximate
50% increase in currently available credit to Hemisphere as
compared to its Former Credit Facility. Hemisphere has made
an initial draw of US$10.0 million of
the initial US$15.0 million
commitment under the New Credit Facility. Additional commitments
are subject to further approval by Cibolo. The interest rate
for the New Credit Facility is the three-month United States dollar London Interbank Offered
Rate ("LIBOR") with a LIBOR floor of 1%, plus 7.50% payable
quarterly, for a five-year term with a maturity date of
September 15, 2022.
Use of Proceeds and Development Plan
The New Credit Facility has been used to fully repay the
outstanding indebtedness under the Former Credit Facility and will
also be used to greatly expand the Company's development in the
Atlee Buffalo area. Hemisphere's Board of Directors and
Cibolo have approved a development
plan under which Hemisphere intends to make capital expenditures of
up to $7.6 million in the remainder
of 2017. These expenditures include plans to drill seven
additional wells in Atlee Buffalo, expand its F pool facility, and
construct a new water separation and re-injection facility in the G
pool. This will allow the Company to drill in an area of
unattributed reserves in the F pool, optimize and increase
production capability in the G pool, expand its field-wide
reservoir simulation, and set up for an aggressive 2018 drilling
program.
Warrants
In conjunction with the New Credit Facility, the Company has
issued 13,750,000 warrants (the "Warrants") to Cibolo. Each
Warrant entitles Cibolo to
purchase one common share of Hemisphere at an exercise price of
$0.28 prior to September 15, 2022. The exercise price of
the Warrants represents a 40% premium to the 30-day volume weighted
average price ("VWAP") of Hemisphere's common shares at market
close on September 14, 2017. The
Warrants are subject to a forced exercise clause which applies upon
a 30-day VWAP equaling or exceeding $1.40 per share. The Warrants are
non-transferable and are subject to a four-month hold period from
the date of issuance.
Prior to the provision of the New Credit Facility, Cibolo did not own any securities of the
Company. Assuming the exercise of all of the Warrants issued in
conjunction with the New Credit Facility, Cibolo would own approximately 15% of the
outstanding common shares of the Company. Except for the potential
exercise of the Warrants and the related acquisition of common
shares of the Company, Cibolo does
not presently have any future intention to acquire ownership of, or
control over, additional securities of the Company.
Cibolo will file an early warning
report, pursuant to National Instrument 62-103, in respect of its
acquisition of the Warrants, which report will be available on the
Company's SEDAR profile at www.sedar.com or by contacting
Dorlyn Evancic, Hemisphere's Chief
Financial Officer, at (604) 685-9255.
The Company will pay a cash finder's fee to Integral Wealth
Securities Limited of up to 2% on drawn funds under the initially
committed US$15.0 million.
A copy of the credit agreement for the New Credit Facility will
be filed on the Company's SEDAR profile at www.sedar.com in due
course.
About Hemisphere Energy Corporation
Hemisphere Energy Corporation is a producing oil and gas company
focused on developing conventional oil assets with low risk
drilling opportunities. Hemisphere plans continual growth in
production, reserves, and cash flow by drilling existing projects
and executing strategic acquisitions. Hemisphere trades on
the TSX Venture Exchange as a Tier 1 issuer under the symbol
"HME".
Forward-looking Statements
This news
release contains "forward-looking statements" that are based on
Hemisphere's current expectations, estimates, forecasts and
projections. The words "estimates", "projects", "expects",
"intends", "believes", "plans", or their negatives or other
comparable words and phrases are intended to identify
forward-looking statements and include statements regarding
Hemisphere's planned used of proceeds for the New Credit Facility
and the timing thereof and the Company's development plans for the
Atlee Buffalo property area; and other expectations, intentions,
and plans that are not historical fact.
Forward-looking statements are based on a number of material
factors, expectations, or assumptions of Hemisphere which have been
used to develop such statements and information but which may prove
to be incorrect. Although Hemisphere believes that the expectations
reflected in such forward-looking statements or information are
reasonable, undue reliance should not be placed on forward-looking
statements because Hemisphere can give no assurance that such
expectations will prove to be correct. In addition to other factors
and assumptions which may be identified herein, assumptions have
been made regarding, among other things: that Hemisphere will
continue to conduct its operations in a manner consistent with past
operations; results from drilling and development activities are
consistent with past operations; the quality of the reservoirs in
which Hemisphere operates and continued performance from existing
wells; the continued and timely development of infrastructure in
areas of new production; the accuracy of the estimates of
Hemisphere's reserve volumes; certain commodity price and other
cost assumptions; continued availability of debt and equity
financing and cash flow to fund Hemisphere's current and future
plans and expenditures; the impact of increasing competition; the
general stability of the economic and political environment in
which Hemisphere operates; the general continuance of current
industry conditions; the timely receipt of any required regulatory
approvals; the ability of Hemisphere to obtain qualified staff,
equipment and services in a timely and cost efficient manner;
drilling results; the ability of the operator of the projects in
which Hemisphere has an interest in to operate the field in a safe,
efficient and effective manner; field production rates and decline
rates; the ability to replace and expand oil and natural gas
reserves through acquisition, development and exploration; the
timing and cost of pipeline, storage and facility construction and
expansion and the ability of Hemisphere to secure adequate product
transportation; future commodity prices; currency, exchange and
interest rates; regulatory framework regarding royalties, taxes and
environmental matters in the jurisdictions in which Hemisphere
operates; and the ability of Hemisphere to successfully market its
oil and natural gas products.
The forward-looking information and statements included in
this news release are not guarantees of future performance and
should not be unduly relied upon. Such information and statements,
including the assumptions made in respect thereof, involve known
and unknown risks, uncertainties and other factors that may cause
actual results or events to defer materially from those anticipated
in such forward-looking information or statements including,
without limitation: changes in commodity prices; changes in the
demand for or supply of Hemisphere's products, the early stage of
development of some of the evaluated areas and zones; unanticipated
operating results or production declines; changes in tax or
environmental laws, royalty rates or other regulatory matters;
changes in development plans of Hemisphere or by third party
operators of Hemisphere's properties, increased debt levels or debt
service requirements; inaccurate estimation of Hemisphere's oil and
gas reserve volumes; limited, unfavourable or a lack of access to
capital markets; increased costs; a lack of adequate
insurance coverage; the impact of competitors; and certain other
risks detailed from time-to-time in Hemisphere's public disclosure
documents, (including, without limitation, those risks identified
in this news release and in Hemisphere's Annual Information
Form).
The forward-looking information and statements contained in
this news release speak only as of the date of this news release,
and Hemisphere does not assume any obligation to publicly update or
revise any of the included forward-looking statements or
information, whether as a result of new information, future events
or otherwise, except as may be required by applicable securities
laws.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in the policies of the
TSX Venture Exchange) accepts responsibility for the adequacy or
accuracy of this news release.
SOURCE Hemisphere Energy Corporation