Mr. Don Simmons reports

HEMISPHERE ENERGY PROVIDES OPERATIONS UPDATE AND DECLARES A SPECIAL DIVIDEND

Hemisphere Energy Corp. has provided an operations update and has declared a special dividend to shareholders.

Operations update

Hemisphere recently completed its 2023 summer drilling program in the Atlee Buffalo area. Eight wells were drilled with six wells planned as producers, one well designated as an injector and one well to be produced for several months before being converted into an injector. All producing wells are now on production, with the final two wells having just been tied in during the last week of September. Including the new wells, September corporate production to date has averaged over 3,200 barrels of oil equivalent/day (99 per cent heavy oil, based on field estimates between Sept. 1 and 26, 2023).

With the completion of the 2023 drilling program, Hemisphere's capital expenditures are expected to be minimal for the remainder of the year, with focus on optimization of production and injector start-up, as well as preparation of the company's 2024 development program.

Special dividend

Hemisphere is pleased to announce the declaration of a special dividend of three cents per common share, given the strong financial position and performance outlook of the company. The special dividend is part of Hemisphere's comprehensive shareholder return model, and will be paid on Nov. 1, 2023, to shareholders of record on Oct. 20, 2023. This special dividend is designated as an eligible dividend for Canadian income tax purposes, and is in addition to the company's quarterly base dividend of 2.5 cents per common share in accordance with the company's dividend policy.

With this special dividend, the three quarterly dividends paid earlier in the year, and shares purchased and cancelled under the company's normal course issuer bid, Hemisphere has returned over $12.7-million to shareholders thus far in 2023. This return of capital is financed entirely by the company's free cash flow and is made possible by Hemisphere's ultralow-decline, high-margin enhanced oil recovery assets in combination with the company's strong balance sheet.

Corporate update

It has been approximately two years since Hemisphere commenced its first enhanced oil recovery project (polymer flood) to maximize recovery from its conventional oil pools in the Atlee Buffalo area. The use of polymer flood has helped to arrest the decline of Hemisphere's base production, and at times has provided actual growth in base production levels from wells that were drilled up to almost 10 years ago. The company's total production comes from less than 50 producing wells, giving an average of approximately 65 barrels/day per well, with approximately 40 of those producing wells under enhanced oil recovery polymer flood.

Hemisphere's operations deliver excellent free cash flow due to ultralow-decline rates provided by polymer flood operations, low operating expenses, low capital-intensive assets, long-life reserves, and minimal decommissioning liabilities and inactive assets.

About Hemisphere Energy Corp.

Hemisphere Energy is a Canadian oil producing company using polymer floods to enhance oil recovery. Supported by its ultralow-decline conventional heavy oil assets, strong balance sheet and high cash flow yield, Hemisphere strives to create shareholder value through a sustainable dividend, a share buyback program, disciplined capital allocation and new growth area acquisitions.

We seek Safe Harbor.