Mr. Don Simmons reports

HEMISPHERE ENERGY DECLARES QUARTERLY DIVIDEND, ANNOUNCES 2026 GUIDANCE, AND PROVIDES CORPORATE UPDATE

Hemisphere Energy Corp. has declared a quarterly dividend to shareholders, delivered guidance for 2026 and provided a corporate update.

Quarterly dividend

Hemisphere is pleased to announce that its board of directors has approved a quarterly cash dividend of 2.5 cents per common share in accordance with the company's dividend policy. The dividend will be paid on Feb. 26, 2026, to shareholders of record as of the close of business on Feb. 12, 2026. The dividend is designated as an eligible dividend for income tax purposes.

2026 corporate guidance

Hemisphere's board of directors has approved a 2026 capital program of approximately $12-million, which provides the company disciplined year-over-year growth, while protecting the balance sheet and maintaining shareholder returns. The budget will be entirely financed by Hemisphere's estimated 2026 adjusted funds flow (AFF) of $40-million.

After all capital expenditures, 2026 free funds flow (FFF) is expected to be $28-million, of which approximately 35 per cent will be allocated to quarterly base dividends. The balance of cash will be used for discretionary purposes, which may include potential acceleration of development or exploration projects, acquisitions, and additional return of capital to shareholders through Hemisphere's normal course issuer bid (NCIB) program and/or special dividends. In 2025, two special dividends totalling $5.8_million (six cents/share) were paid to shareholders in addition to Hemisphere's base quarterly dividends of $9.6-million (10 cents/share). Coupled with $6.4-million (four cents/share) spent on the company's NCIB, total shareholder returns for 2025 amounted to $21.8-million (23 cents/share).

Highlights and assumptions of Hemisphere's guidance at $60 (U.S.)/bbl WTI are as follows:

• Average annual production of 3,900 boe/d (barrels of oil equivalent per day) (99 per cent heavy oil);
• Average WTI (West Texas Intermediate) price of $60 (U.S.)/bbl, with sensitivities shown at $50 (U.S.)/bbl and $70 (U.S.)/bbl;
• WCS (Western Canadian Select) differential of $12.50 (U.S.)/bbl and quality adjustment of $4.00/bbl;
• Canadian dollar to United States dollar exchange rate of 0.72;
• Operating and transportation costs of $15.00/boe;
• Royalties of 16 per cent at $60 (U.S.)/bbl WTI, 14 per cent at $50 (U.S.)/bbl WTI, and 18 per cent at $70 (U.S.)/bbl WTI;
• Net G&A (general and administrative) of $3.47/boe;
• Tax costs of $5.54/boe at $60 (U.S.)/bbl WTI, $2.98/boe at $50 (U.S.)/bbl WTI, $7.88/boe at $70 (U.S.)/bbl WTI;
• Capital expenditures of $12.0-million includes $400,000 of asset retirement obligations (ARO).

Corporate outlook

Hemisphere's corporate production to date in January is trending over 3,800 boe/d (99 per cent heavy oil; field estimates from Jan. 1 to Jan. 25, 2026). Over 95 per cent of the company's production base is supported by enhanced oil recovery (EOR) polymer floods, with the effect of lower corporate decline rates, reduced capital requirements for production replacement and higher free cash flows for shareholder returns.

Hemisphere entered 2026 debt-free with a positive working capital position of more than $7-million. Together with its projected $40-million AFF ($60 (U.S.) WTI) for the year, the company has a great deal of room to flexibly expand or reduce its planned $12-million capital program as market conditions evolve, while still returning significant value to shareholders and advancing strategic growth initiatives.

About Hemisphere Energy Corp.

Hemisphere is a dividend-paying Canadian oil company focused on maximizing value-per-share growth with the sustainable development of its high-netback, low-decline conventional heavy oil assets through polymer flood EOR methods. Hemisphere trades on the TSX Venture Exchange as a Tier 1 issuer under the symbol HME and on the OTCQX Venture Marketplace under the symbol HMENF.

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