The proliferation of artificial intelligence (AI) technology, while ushering in an era of unprecedented efficiency, is also rapidly increasing global energy demand to power the data centers at the heart of large language model development.
According to the International Energy Agency, data centre electricity consumption represented 1.5 per cent of global consumption in 2024 – growing at 12 per cent year-over-year since 2019 – and is expected to double by the end of the decade, with renewable energy capable of meeting only half of this demand, setting the stage for oil demand to deliver steady growth through 2050.
Electricity’s upward trend is, in turn, directing investors towards energy companies with vast, untapped reserves that have proven themselves capable of production growth without losing sight of profitability, making them attractive partners to power our increasingly AI-reliant lives.
A small-cap stock that fits this bill is Hemisphere Energy (TSXV:HME), market capitalization C$196 million, a dividend-paying oil explorer and producer advancing high-netback, long-life assets in Alberta.
The company’s 99 per cent heavy oil assets, complemented by nominal natural gas output, yielded a 2025 reserve estimate of 14.5 MMboe proved and probable valued at US$393 million before tax – more than twice Hemisphere’s market cap – representing 11.6 years of production at development costs of only US$37 million.
While heavy oil is only a minor direct input for electricity generation, it is essential for petrochemicals used to build AI hardware, the gasoline, shipping fuel and jet fuel required to transport it, as well as for large-scale industrial heating needs – think boilers, furnaces and steam turbines – making it a key contributor to the overall AI supply chain.
In recent years, Hemisphere has consistently capitalized on its robust reserves, compounding production at 22 per cent since 2018, while compounding adjusted funds flow by 71 per cent over the period, almost quintupling annual net income from 2021 to 2024 and becoming debt free in 2023, demonstrating leadership’s ability to translate top-line growth into profitability.
Hemisphere’s efficient operations most recently shined in Q3 2025, generating net income of C$6.9 million from C$23.1 million in revenue, at average production of 3,571 boe/d, all while cancelling C$1.9 million in shares and paying a C$0.025 quarterly dividend, typifying why the oil stock has added more than 670 per cent over the past five years.
Hemisphere envisions uninterrupted growth in 2026, marked by average annual production of 3,900 boe/d, fully funded by estimated adjusted funds flow of C$40 million and working capital of more than C$7 million, granting the company ample flexibility to modulate its planned C$12 million capital program based on market conditions.
While renewable energy infrastructure is becoming an increasingly prevalent part of our lives, as top energy companies read the writing on the wall and make major investments in emission-free fuel, the green energy transition will undoubtedly be a multi-generational affair.
This gradual shift will require fossil fuels to pick up the slack in the long, drawn-out interim, granting producers with solid fundamentals, like Hemisphere Energy, a high-conviction growth runway to create meaningful shareholder value, while making sure the world remains productive on its journey to environmental sustainability.
Join the discussion: Find out what investors are saying about AI energy demand and this Canadian oil stock on the Hemisphere Energy Corp. Bullboard and make sure to explore the rest of Stockhouse’s stock forums and message boards.
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