Hemisphere Energy Announces 2022 Fourth Quarter And Record Year-End Financial And Operating Results

Hemisphere Energy Corporation ('Hemisphere' or the 'Company') is pleased to provide its financial and operating results for the fourth quarter and year ended December 31, 2022.

2022 Highlights

Increased annual production to 2,828 boe/d (99% heavy oil), a 55% increase over 2021.

Achieved record annual revenue of $96.7 million, a 124% increase over 2021.

Realized record annual adjusted funds flow from operations ('AFF') of $46.7 million(1), a 152% increase over 2021.

Executed a successful $18.3 million capital expenditure(1) program that included implementing a new polymer flood at the F pool, expanding and upgrading facilities, purchasing land and seismic, and drilling eight development, two (one net) exploration, and three re-entry wells.

Generated $28.4 million of free funds flow ('FFF')(1) after all capital expenditures, a 337% increase over the previous year.

Decreased year-end net debt( 1 ) by 95% to just under $1.0 million.

Implemented Hemisphere's first ever quarterly dividend in June, and dispersed total returns of $7.7 million to shareholders during the year at $0.025/share.

Re-purchased and cancelled 2.3 million shares, returning $3.4 million to shareholders.

Increased Proved Developed Producing (PDP) NPV10 BT reserve value to $228 million and volumes to 8.2 MMboe (99.7% heavy crude oil).

Increased Proved (1P) NPV10 BT reserve value to $309 million and volumes to 12.1 MMboe (99.7% heavy crude oil).

Increased Proved plus Probable (2P) NPV10 BT reserve value to $395 million and volumes to 16.0 MMboe (99.3% heavy oil).

Non-IFRS financial measure that is not a standardized financial measure under International Financial Reporting Standards ('IFRS') and may not be comparable to similar financial measures disclosed by other issuers. Refer to 'Non-IFRS and Other Financial Measures' section below.

2022 was a highly successful year for Hemisphere with record revenue of $97 million generating nearly 50% returns of $47 million in adjusted funds flow. Hemisphere reinvested $18 million to grow production by 55% to record levels, reduced net debt to $1 million, and returned $11 million to shareholders through a newly initiated high-yield quarterly dividend program and its existing Normal Course Issuer Bid ('NCIB').

Hemisphere's robust balance sheet, significant base of free funds flow, high value reserves, and low decline production positions the Company to continue to return substantial value to shareholders through dividends and share buybacks in the coming years, while also aggressively exploring for new growth areas through acquisitions and organic development of new assets.

Financial and Operating Summary

Selected financial and operational highlights should be read in conjunction with Hemisphere's audited annual financial statements and related Management's Discussion and Analysis for the year ended December 31, 2022. These reports, including the Company's Annual Information Form for the year ended December 31, 2022, are available on SEDAR at www.sedar.com and on Hemisphere's website at www.hemisphereenergy.ca. All amounts are expressed in Canadian dollars unless otherwise noted.

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