Hemisphere Energy : 2024 Information Circular

INFORMATION CIRCULAR

FOR THE ANNUAL GENERAL AND SPECIAL MEETING OF SHAREHOLDERS TO BE HELD MAY 30, 2024 AT 10:00 A.M. (PACIFIC DAYLIGHT TIME)

This Information Circular is furnished in connection with the solicitation of proxies by the management of Hemisphere Energy Corporation (the "Company" or "Hemisphere") for use at the Annual General and Special Meeting (the "Meeting") of the shareholders of the Company, to be held on May 30, 2024 for the purposes set forth in the accompanying Notice of Annual General and Special Meeting (the "Notice of Meeting") and at any adjournment thereof. The information contained in this Information Circular is given as at April 11, 2024 unless otherwise stated.

GENERAL PROXY INFORMATION

Solicitation of Proxies

This Information Circular is furnished in connection with the solicitation of proxies by the management of the Company for use at the Meeting, and any adjournment thereof, at the time and place and for the purposes set forth in the Notice of Meeting. While it is expected that the solicitation will be primarily by mail, proxies may be solicited personally, by telephone, facsimile or other electronic means, by directors, officers, employees and agents of the Company at nominal cost. The Company will bear all costs of this solicitation of proxies.

Notice and Access

The Company has elected to use the notice-and-access model provided under amendments to National Instrument 54-101 - Communication with Beneficial Owners of Securities of a Reporting Issuer ("Notice and Access") for the Meeting in respect of mailings to its registered shareholders and beneficial shareholders. Notice and Access is a cost savings initiative developed by the Canadian Securities Administrators that allows issuers to send shareholders a notice with information on how they can access an issuer's information circular electronically instead of receiving a printed copy, and how to receive a printed copy on request, resulting in the reduction of printing, distribution and mailing costs.

Registered and non-registered (beneficial) shareholders will be sent a notice package (the "Notice Package") which will include: (1) a Notice of Meeting outlining the matters to be voted upon and how to obtain a copy of the Information Circular; (2) a Form of Proxy or Voting Instruction Form ("VIF"); (3) the Company's Message to Shareholders from the Company's President and Chief Executive Officer; and (4) a National Instrument 51-102 Return Card to Opt-in to receiving the Company's interim and/or annual financial reports.

The Company has posted the Information Circular, the Company's financial statements for the year ended December 31, 2023 and the Company's management discussion and analysis for the year ended December 31, 2023 on SEDAR+ at www.sedarplus.caand on the Company's website at www.hemisphereenergy.ca/investors/shareholder- materials.

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Appointment and Revocation of Proxies

The purpose of a proxy is to designate persons who will vote the proxy on a Shareholder's behalf in accordance with the instructions given by the Shareholder in the proxy. The persons named in the enclosed proxy (the "Management Designees") have been selected by the directors of the Company.

A Shareholder has the right to designate a person (who need not be a Shareholder), other than the Management Designees to represent the Shareholder at the Meeting. Such right may be exercised by inserting in the space provided for that purpose on the proxy the name of the person to be designated, and by deleting from the proxy the names of the Management Designees, or by completing another proper form of proxy and delivering the same to the transfer agent of the Company. Such Shareholder should notify the nominee of the appointment, obtain the nominee's consent to act as proxyholder and attend the Meeting, and provide instructions on how the Shareholder's shares are to be voted. The nominee should bring personal identification with them to the Meeting.

To be valid, the proxy must be dated and executed by the Shareholder or an attorney authorized in writing, with proof of such authorization attached (where an attorney executed the proxy). The proxy must then be delivered to the Company's registrar and transfer agent, Computershare Investor Services Inc., Proxy Department, 100 University Avenue, 8th Floor, Toronto, Ontario, M5J 2Y1, or by fax within North America to 1-866-249-7775, and outside North America to [phone], at least 48 hours, excluding Saturdays, Sundays and holidays, before the time of the Meeting or any adjournment thereof. Proxies received after that time may be accepted by the Chairman of the Meeting in the Chairman's discretion, but the Chairman is under no obligation to accept late proxies.

Any registered Shareholder who has returned a proxy may revoke it at any time before it has been exercised. A proxy may be revoked by a registered Shareholder personally attending at the Meeting and voting their shares. A Shareholder may also revoke their proxy in respect of any matter upon which a vote has not already been cast by depositing an instrument in writing, including a proxy bearing a later date executed by the registered Shareholder or by their authorized attorney in writing, or, if the Shareholder is a corporation, under its corporate seal by an officer or attorney thereof duly authorized, either at the office of the Company's registrar and transfer agent at the foregoing address or the head office of the Company, at c/o Hemisphere Energy Corporation, Suite 501, 905 West Pender Street, Vancouver, British Columbia, V6C 1L6, Attention: Don Simmons, President and Chief Executive Officer, at any time up to and including the last business day preceding the date of the Meeting, or any adjournment thereof at which the proxy is to be used, or by depositing the instrument in writing with the Chairman of such Meeting, or any adjournment thereof. Only registered Shareholders have the right to revoke a proxy. Non-registered

Shareholders who wish to change their vote must, at least seven days before the Meeting, arrange for their respective nominees to revoke the proxy on their behalf.

Voting of Shares and Exercise of Discretion of Proxies

Voting at the Meeting will be by a show of hands, each registered Shareholder and each proxyholder (representing a registered or unregistered Shareholder) having one vote, unless a poll is required or requested, whereupon each such Shareholder and proxyholder is entitled to one vote for each Common Share held or represented, respectively. Each Shareholder may instruct their proxyholder how to vote their Common Shares by completing the blanks on the proxy. All Common Shares represented at the Meeting by properly executed proxies will be voted or withheld from voting when a poll is required or requested and, where a choice with respect to any matter to be acted upon has been specified in the form of proxy, the Common Shares represented by the proxy will be voted in accordance with such specification. In the absence of any such specification as to voting on the proxy, the Management Designees, if named as proxyholder, will vote in favour of the matters set out therein.

The enclosed proxy confers discretionary authority upon the Management Designees, or other person named as proxyholder, with respect to amendments to or variations of matters identified in the Notice of Meeting and any other matters which may properly come before the Meeting. As of the date hereof, the Company is not aware of any amendments to, variations of or other matters which may come before the Meeting. If other matters properly

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come before the Meeting, then the Management Designees intend to vote in a manner which in their judgment is in the best interests of the Company.

In order to approve a motion proposed at the Meeting, a majority of greater than 50% of the votes cast will be required (an "ordinary resolution"), unless the motion requires a "special resolution" in which case a majority of 66 2/3% of the votes cast will be required.

Advice to Beneficial Holders of Common Shares

Only registered holders of common shares of the Company or the persons they validly appoint as their proxies are permitted to vote at the Meeting. However, in many cases, common shares beneficially owned by a person (a "Non- Registered Holder") are registered either: (i) in the name of an intermediary (an "Intermediary") (including banks, trust companies, securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans) that the Non-Registered Holder deals with in respect of the shares, or (ii) in the name of a clearing agency (such as the Canadian Depository for Securities Limited) of which the Intermediary is a participant.

Distribution to NOBOs

In accordance with the requirements of the Canadian Securities Administrators and National Instrument 54-101Communication with Beneficial Owners of Securities of a Reporting Issuer ("NI 54-101"), the Company will have caused its agent to distribute copies of the Notice Package directly to those Non-Registered Holders who have provided instructions to an Intermediary that such Non-Registered Holder does not object to the Intermediary disclosing ownership information about the beneficial owner ("Non-Objecting Beneficial Owner" or "NOBO"). As a result, NOBOs can expect to receive a VIF, together with the Notice of Meeting and other documents in the Notice Package, from our transfer agent, Computershare. These VIFs are to be completed and returned to Computershare in the envelope provided or by facsimile. In addition, Computershare provides both telephone voting and internet voting services as described in the VIF. In that regard, Computershare is required to follow the voting instructions properly received from NOBOs. Computershare will tabulate the results of the VIFs received from NOBOs and will provide appropriate instructions at the Meeting with respect to the shares represented by the VIFs they receive.

NOBOs should carefully follow the instructions of Computershare, including those regarding when and where the completed VIFs are to be returned to Computershare.

Should a NOBO wish to attend and vote at the Meeting in person, the NOBO must insert the NOBO's name (or such other person as the NOBO wishes to attend and vote on the NOBO's behalf) in the blank space provided for that purpose on the VIF and return the completed VIF in line with the instructions provided or the NOBO must submit to the Company any other document in writing that requests that the NOBO or a nominee of the NOBO be appointed as proxyholder. In such circumstances with respect to proxies held by management in respect of securities owned by the NOBO so requesting, the Company must arrange, without expense to the NOBO, to appoint the NOBO or a nominee of the NOBO as a proxyholder in respect of those securities. Under NI 54-101, if the Company appoints a NOBO or a nominee of the NOBO as a proxyholder as aforesaid, the NOBO or nominee of the NOBO, as applicable, must be given the authority to attend, vote and otherwise act for and on behalf of management in respect of all matters that may come before the Meeting and any adjournment or continuance thereof, unless corporate law does not permit the giving of that authority. Pursuant to NI 54-101, if the Company appoints a NOBO or its nominee as proxyholder as aforesaid, the Company must deposit the proxy within the timeframe specified above for the deposit of proxies, if the Company obtains the instructions at least one (1) business day before the termination of that time.

Meeting materials are being sent to both registered and non-registered owners of the securities. If you are a non- registered owner, and the Company or its agent has sent these materials directly to you, your name and address and information about your shareholdings have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding on your behalf.

By choosing to send meeting materials to you directly, the Company (and not the intermediary holding on your behalf) has assumed responsibility for (i) delivering these materials to you, and (ii) executing your proper voting

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instructions. Please return your voting instructions as specified in the VIF enclosed with mailings to NOBOs. Please carefully review the instructions on the VIF for completion and deposit.

NOBOs that wish to change their vote must, in sufficient time in advance of the Meeting, contact Computershare to arrange to change their vote.

Distribution to OBOs

In addition, the Company will have caused its agent to deliver copies of the Notice Package to the clearing agencies and Intermediaries for onward distribution to those non‐registered shareholders who have provided instructions to an Intermediary that the beneficial owner objects to the Intermediary disclosing ownership information about the beneficial owner ("Objecting Beneficial Owner" or "OBO"). Management does not intend to pay for Intermediaries to forward proxy-related materials to OBOs and OBOs will not receive the materials unless the OBO's Intermediary assumes the cost of delivery.

Intermediaries are required to forward the Notice Package to each OBO unless such OBO has waived his or her right to receive them. Intermediaries often use service companies such as Broadridge Proxy Services to forward the Notice Packages to OBOs. With those Notice Packages, Intermediaries or their service companies should provide OBOs with a "request for voting instruction form" which, when properly completed and signed by such OBO and returned to the Intermediary or its service company, will constitute voting instructions which the Intermediary must follow. The purpose of this procedure is to permit OBOs to direct the voting of the shares that they beneficially own. In either case, the purpose of this procedure is to permit the OBO to direct the voting of the shares he or she beneficially owns.

Should an OBO wish to attend and vote at the Meeting in person, the OBO must insert the OBO's name (or such other person as the OBO wishes to attend and vote on the OBO's behalf) in the blank space provided for that purpose on the request for voting instruction form and return the completed request for voting instruction form to the Intermediary or its service provider or the OBO must submit, to their Intermediary, any other document in writing that requests that the OBO or a nominee of the OBO be appointed as proxyholder. In such circumstances, an Intermediary who is the registered holder of, or holds a proxy in respect of, securities owned by an OBO is required under NI 54-101 to arrange, without expense to the OBO, to appoint the OBO or a nominee of the OBO as a proxyholder in respect of those securities. Under NI 54-101, if an Intermediary appoints an OBO or the nominee of an OBO as a proxyholder as aforesaid, the OBO or nominee of the OBO, as applicable, must be given the authority to attend, vote and otherwise act for and on behalf of the Intermediary in respect of all matters that may come before the Meeting and any adjournment or continuance thereof, unless corporate law does not permit the giving of that authority. Pursuant to NI 54-101, an Intermediary who appoints an OBO or its nominee as proxyholder as aforesaid is required under NI 54-101 to deposit the proxy within the timeframe specified above for the deposit of proxies, if the Intermediary obtains the instructions at least one (1) business day before the termination of that time.

OBOs should carefully follow the instructions of their Intermediary, including those regarding when and where the completed request for voting instructions is to be delivered.

OBOs that wish to change their vote must, in sufficient time in advance of the Meeting, arrange with their respective Intermediaries to change their vote and if necessary revoke their proxy in accordance with the revocation procedures set out above.

VOTING SHARES AND PRINCIPAL HOLDERS THEREOF

Voting Securities

The Company is authorized to issue an unlimited number of common shares, without nominal or par value, of which as of the date hereof 97,951,239 common shares are issued and outstanding, each share carrying the right to one vote.

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Record Date

Only shareholders of record at the close of business on April 11, 2024 who either personally attend the Meeting or who complete and deliver a form of proxy in the manner and subject to the provisions set out under the heading "Appointment and Revocation of Proxies" will be entitled to have his or her shares voted at the Meeting or any adjournment thereof.

The Articles of the Company provide that a quorum for the transaction of business at the Meeting is two (2) Shareholders, or one or more proxyholders representing two Shareholders, or one Shareholder and a proxyholder representing another Shareholder.

Principal Holders

To the knowledge of the directors and executive officers of the Company, there are no shareholders who beneficially own, directly or indirectly, or exercise control or direction over, shares carrying more than 10% of the voting rights attached to all issued and outstanding shares of the Company.

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

Other than as disclosed elsewhere in this Information Circular, none of the directors or executive officers of the Company, no proposed nominee for election as a director of the Company, none of the persons who have been directors or executive officers of the Company since the commencement of the Company's last completed financial year and no associate or affiliate of any of the foregoing persons, has any material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

For the purposes of this Information Circular, "informed person" means:

1. a director or executive officer of the Company;
2. a director or executive officer of a person or company that is itself an informed person or subsidiary of the Company;
3. any person or company who beneficially owns, directly or indirectly, voting securities of the Company or who exercises control or direction over voting securities of the Company, or a combination of both, carrying more than 10% of the voting rights attached to all outstanding voting securities of the Company, other than voting securities held by the person or company as underwriter in the course of a distribution; and
4. the Company, if it has purchased, redeemed or otherwise acquired any of its own securities, for so long as it holds any of its securities.

The Company was not party to any material transactions with informed persons during the year ended December 31, 2023.

Other than as disclosed elsewhere in this Information Circular, no informed person, no proposed director of the Company and no associate or affiliate of any such informed person or proposed director, has any material interest, direct or indirect, in any material transaction since the commencement of the Company's last completed financial year or in any proposed transaction, which, in either case, has materially affected or will materially affect the Company or any of its subsidiaries.

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MATTERS TO BE ACTED UPON AT THE MEETING

To the knowledge of the Company's directors and executive officers, the only matters to be placed before the Meeting are those set forth in the Notice of Meeting and discussed below:

1. Presentation of Financial Statements

The audited annual financial statements of the Company for the year ended December 31, 2023 and the report of the auditor thereon will be placed before the Meeting.

2. Fix the Number of Directors

The Company proposes to fix the number of directors of the Company to be elected at the Meeting at six (6).

3. Election of Directors

Each director of the Company is elected annually and holds office until the next Annual General Meeting of the shareholders unless that person ceases to be a director before then. In the absence of instructions to the contrary, the shares represented by proxy will, on a poll, be voted for the nominees herein listed. Management does not contemplate that any of the nominees will be unable to serve as a director.

The following table sets out the names of the persons to be nominated for election as directors, their municipality of residence, the position(s) they presently hold with the Company, the number of shares of the Company which each beneficially owns, directly or indirectly, or over which control or direction is exercised, and their respective principal occupations for the past five (5) years, as of the date of this Information Circular:

	Number of Shares
Name, Province or State of	Beneficially
Residence and Present Position(s)	Owned or
within the Company	Controlled	Director Since	Principal Occupation During the Past Five Years
Don Simmons, P. Geol.(1)	3,125,000	May 2008	President and Chief Executive Officer of the
British Columbia, Canada			Company since February 2008.
Director, President and Chief
Executive Officer
Charles O'Sullivan, B.Sc.(2)	1,229,100	1978	Chairman of Hemisphere.
British Columbia, Canada
Chairman and Director
Frank Borowicz, KC, CPA (Hon)(2)(3)	370,500	July 2005	President of Pigasus Consulting Services Ltd.,
British Columbia, Canada			business consulting. President of FSBQC Law
Director			Corporation, legal consulting.
Bruce McIntyre, P.Geol.(1)(3)	825,000	July 2008	Retired Geologist.
Ontario, Canada
Director
Gregg Vernon, P. Eng.(2)	450,000	August 2006	Currently, President of Delaso Corporate Inc.
Cundinamarca, Colombia			Previously President of Pentanova Energy Corp.
Director			(TSX: GASX.V) from April 2017 to May 2018.

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Richard Wyman, B.Sc., MBA(1)(3)	1,042,700	October 2014	President and Director of Chance Oil & Gas
Alberta, Canada			Limited (formerly Northern Cross (Yukon) Ltd.)
Director			since October 2010 and a director since 1994.

Notes:

1. Member of the Reserves Committee. Richard Wyman is the Chairman of the Reserves Committee.
2. Member of the Compensation/Nominating and Corporate Governance Committee. Charles O'Sullivan is Chairman of the Compensation/Nominating and Corporte Governance Committee.
3. Member of the Audit Committee. Bruce McIntyre is Chairman of the Audit Committee.

The terms of office of those nominees who are presently directors will expire at the conclusion of the Meeting. All of the directors who are elected at the Meeting will have their term of office expire at the next Annual General Meeting of the Company.

Corporate Cease Trade Orders or Bankruptcies

No proposed director of the Company is, or within the 10 years before the date of this Information Circular has been, a director or executive officer of any company that, while that person was acting in that capacity:

1. was the subject of a cease trade or similar order or an order that denied the company access to any exemption under securities legislation, for a period of more than 30 consecutive days;
2. was subject to an event that resulted, after the director or executive officer ceased to be a director or executive officer, in the company being the subject of a cease trade or similar order or an order that denied the relevant company access to any exemption under securities legislation, for a period of more than 30 consecutive days; or
3. within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold its assets.

Individual Bankruptcies

To the knowledge of the Company, no director or proposed director of the Company has, within the ten years prior to the date of this Circular, become bankrupt or made a proposal under any legislation relating to bankruptcy or insolvency, or been subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of that individual.

Penalties or Sanctions

To the knowledge of the Company, no proposed director of the Company has been subject to any penalties or sanctions imposed by a court relating to securities legislation or by a securities regulatory authority or has entered into a settlement agreement with a securities regulatory authority, or has been subject to any other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder in deciding whether to vote for a proposed director.

4. Appointment of Auditor

At the recommendation of the Company's Audit Committee, management proposes that KPMG LLP, Chartered Accountants, of Calgary, Alberta, first appointed on September 15, 2015, be reappointed auditor of the Company (the "Auditor") for the ensuing year at a remuneration to be negotiated between the Auditor and the Board of Directors of the Company (the "Board of Directors").

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5. Annual Approval of Stock Option Plan

The Company currently maintains a rolling stock option plan (the "Stock Option Plan"), authorizing the issuance of incentive stock options to eligible persons for up to an aggregate of 10% of the issued shares of the Company from time to time. The policies of the TSX Venture Exchange (the "Exchange") require the approval of the Stock Option Plan by the Company's shareholders on an annual basis. There are currently 97,951,239 shares of the Company issued and outstanding, and therefore the current 10% threshold is 9,795,123 shares available for incentive stock option grants under the Stock Option Plan. Incentive stock options under the Stock Option Plan may be granted by the Board of Directors to eligible persons, who are directors, officers or consultants of the Company or its subsidiaries (if any), or who are employees of a company providing management services to the Company, or who are eligible charitable organizations. Stock options may be granted under the Stock Option Plan with a maximum exercise period of up to ten (10) years, as determined by the Board of Directors of the Company.

The Stock Option Plan will limit the number of stock options which may be granted to any one individual to not more than 5% of the total issued shares of the Company in any 12-month period (unless otherwise approved by the disinterested shareholders of the Company), and not more than 10% of the total issued shares to all insiders at any time or granted over any 12-month period. The number of options granted to any one consultant or person employed to provide investor relations activities in any 12-month period must not exceed 2% of the total issued shares of the Company. Any stock options granted under the Stock Option Plan will not be subject to any vesting schedule, unless otherwise determined by the Board of Directors or required by the policies of the Exchange.

Options under the Stock Option Plan may be granted at an exercise price which is at or above the current discounted market price (as defined under the policies of the Exchange) on the date of the grant. In the event of the death or permanent disability of an optionee, any option granted to such optionee will be exercisable upon the earlier of 365 days from the date of death or permanent disability, or the expiry date of the option. In the event of the resignation, or the termination or removal of an optionee without just cause, any option granted to such optionee will be exercisable for a period of 90 days thereafter. In the event of termination for cause, any option granted to such optionee will be cancelled as at the date of termination.

Shareholders are referred to the full text of the Stock Option Plan, a copy of which has been posted on SEDAR+ and is available for inspection under the Company's profile on SEDAR+ at www.sedarplus.cafor complete details.

In the event that annual shareholder approval is not obtained at the Meeting, the Company will implement a new fixed stock option plan for up to 10% of the Company's issued shares (which does not require shareholder approval), and any existing option grants under the Stock Option Plan as previously approved by the shareholders of the Company at the last Annual General Meeting will not be affected.

The text of the ordinary resolution approving the Stock Option Plan to be submitted to shareholders at the Meeting is set forth below, subject to such amendments, variations or additions as may be approved at the Meeting:

"BE IT RESOLVED by ordinary resolution that the Stock Option Plan is hereby ratified and approved."

The persons named in the form of proxy, if named as proxy, intend to vote such proxy in favour of the resolution to approve the Stock Option Plan, unless a shareholder has specified in its proxy that its common shares are to be voted against such resolution. If no choice is specified by the shareholder to vote for or against the resolution referred to above, the persons whose names are printed in the enclosed form of proxy intend to vote in favour of the resolution.

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STATEMENT OF EXECUTIVE COMPENSATION (For the financial year ended December 31, 2023)

General Provisions

For purposes of this Information Circular, "named executive officer" of the Company includes:

1. each individual who, in respect of the Company, during any part of the most recently completed financial year, served as a Chief Executive Officer ("CEO"), including an individual performing functions similar to a CEO;
2. each individual who, in respect of the Company, during any part of the most recently completed financial year, served as a Chief Financial Officer ("CFO"), including an individual performing functions similar to a CFO;
3. in respect of the Company and its subsidiaries, the most highly compensated executive officer, other than the individuals identified in paragraphs (a) and (b) above at the end of the most recently completed financial year whose total compensation was more than $150,000 for that financial year; and
4. each individual who would be a NEO under paragraph (c) above, but for the fact that the individual was not an executive officer of the Company, and was not acting in a similar capacity, at the end of that financial year;

(each a "Named Executive Officer" or "NEO").

Based on the foregoing definition, during the last completed financial year of the Company, there were five (5) Named Executive Officers, namely, its President and CEO, Don Simmons, its Chief Operating Officer ("COO"), Ian Duncan, its CFO, Dorlyn Evancic, its Chief Development Officer ("CDO"), Ashley Ramsden-Wood and its Vice President, Exploration, Andrew Arthur.

Compensation Discussion and Analysis

The Company's compensation programs are designed to be competitive with similar oil and gas companies and to recognize and reward executive performance consistent with the success of the Company. These programs are intended to attract and retain capable and experienced individuals. The Company's Compensation/Nominating and Corporate Governance Committee's role and philosophy is to ensure that the Company's goals and objectives, as applied to the actual compensation paid to the Company's President and CEO and other executive officers, are aligned with shareholders' interests, and the Company's corporate objectives, which include, but are not limited to, year-over-year growth of the Company on a per share basis in cash flow, production and reserves are subject to market conditions.

The companies that comprise Hemisphere's peer group at the time compensation information was compiled include Bonterra Energy Corproation, Cardinal Energy Ltd., Gear Energy Ltd., Headwater Exploration Inc., Inplay Oil Corp., Journey Energy Inc., Pine Cliff Energy Ltd., ROK Resources Inc., Saturn Oil & Gas Inc., Surge Energy Inc. and Yangarra Resources Ltd. These companies have been chosen by the management of the Company as the Company's peer group as they are based in Canada and have similar operational profiles.

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In addition to informal industry comparables from publicly available information, the Compensation/Nominating and Corporate Governance Committee considers a variety of factors when determining both compensation programs and individual compensation levels. These factors include the long-range interests of the Company and its shareholders, overall financial and operating performance of the Company, and the Compensation/Nominating and Corporate Governance Committee's assessment of each executive's individual performance and contribution toward meeting corporate objectives.

A majority of the Compensation/Nominating and Corporate Governance Committee members have direct experience that is relevant to their responsibilities in executive compensation, as they have each managed executives and/or business leaders in their current and/or past roles. In these roles, they have participated in compensation planning sessions, made compensation decisions and participated in compensation discussions with external consultants. For more information regarding the Compensation/Nominating and Corporate Governance Committee see "Corporate Governance Practices - Committees of the Board - Compensation/Nominating and Corporate Governance Committee" below.

Role of Executive Officers in Determining Compensation

The Compensation/Nominating and Corporate Governance Committee reviews and recommends compensation programs to the Company, as well as salary and benefit levels for the Company's executive officers. The Company's President and Chief Executive Officer recommends the compensation of other executive officers but may not be present during meetings of the Compensation/Nominating and Corporate Governance Committee at which his compensation is being discussed. The Board of Directors makes the final determination regarding the Company's compensation programs and practise.

Elements of the Compensation Program

The total compensation plan for the NEOs is comprised of three components: base salary, bonus and stock options. There is no policy or target regarding cash and non-cash elements of the Company's compensation program. The Compensation/Nominating and Corporate Governance Committee annually reviews the total compensation of the Company's executives against the backdrop of the compensation goals and objectives described above and makes recommendations to the Board of Directors concerning the individual components of the executives' compensation.

The Company does not provide the NEOs with any personal benefits, nor does the Company provide any additional cash compensation to its NEOs for serving as directors of the Company.

Base Salary

The base salary component is intended to provide a fixed level of competitive pay that reflects each executive's primary duties and responsibilities. The Company intends to pay base salaries to its executives that are competitive with those of comparable companies in the oil and gas industry. Such information is compiled in-house using information publicly available.

Bonus

At the recommendation of the Compensation/Nominating and Corporate Governance Committee, the Board of Directors approves bonus payments to reward executive officers for their contribution to the achievement of annual corporate goals and objectives. The payment of bonuses is consistent with the overall objective of the Company to reward performance. The Company does not have any specific formulas to determine individual bonus payments. The Board of Directors, except for the CEO, determines the bonus for the CEO. Recommended by the Compensation/Nominating and Corporate Governance Committee, the Board of Directors considers and, if thought appropriate, approves the bonuses recommended by the CEO for the other executive officers and employees of the Company. In 2022 and 2023, the Company awarded bonuses to the NEOs in the amounts denoted in the Summary Compensation Table below.

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