Mr. Don Simmons reports

HEMISPHERE ENERGY DECLARES SPECIAL DIVIDEND AND ANNOUNCES 2025 YEAR-END RESERVES

Hemisphere Energy Corp.'s board of directors has approved the declaration of a special dividend to shareholders, as well as highlights from its independent reserves evaluation, prepared by McDaniel & Associates Consultants Ltd., and effective as at Dec. 31, 2025.

Special dividend

In light of the recent rise in crude oil prices, and the company's strong financial position and performance outlook, Hemisphere's board of directors has approved the declaration of a special dividend of three cents per common share, in accordance with its dividend policy. The special dividend will be paid on April 28, 2026, to shareholders of record on April 15, 2026, and is designated as an eligible dividend for Canadian income tax purposes. This is in addition to the company's quarterly base dividend of 2.5 cents per common share.

2025 reserve highlights

Hemisphere executed a measured capital expenditures program of $16-million in 2025 that resulted in annual production growth of 6 per cent. The company also exited the year with over $8.5-million of working capital after providing shareholders with $21.8-million of returns through base quarterly dividends, two special dividends and its NCIB share buyback program.

Hemisphere's conventional oil asset base has low production decline rates, long-life and high-value reserves as a result of successful development using polymer flooding, which is an enhanced oil recovery technique used to maximize oil recovery from heavy oil reservoirs. Current corporate production is approximately 3,800 barrels of oil equivalent per day (boe/d) (99 per cent heavy oil, field estimates from Jan. 1, 2026, to Feb. 28, 2026).

With volatile oil markets in 2025 contributing to significant shifts in commodity outlooks, the Jan. 1, 2026, three-consultant average price forecast reflects materially lower WCS (Western Canadian Select) pricing -- down approximately 23 per cent in 2026, 16 per cent in 2027 and 10 per cent over the subsequent 15-year period from the prior year. The 2026 three-consultant average price forecast uses a five-year 2026-to-2030 WTI (West Texas Intermediate) price of $68.12 (U.S.) per barrel (bbl) and WCS price of $74.29 (Canadian) per bbl.

Proved developed producing (PDP) reserves

• NPV10 BT (net present value before tax, discount at 10 per cent) of $212-million, equivalent to $2.24 per basic share;
• Replaced 101 per cent of 2025 production through organic development;
• Recognized reserve volumes of 9.3 million barrels of oil equivalent (mmboe) (99.7 per cent heavy crude oil);
• RLI (reserve life index) of 7.0 years based on 2025 production;
• NAV (net asset value) of $2.31 per fully diluted share based on reserve report pricing assumptions.

Proved (1P) reserves:

• NPV10 BT of $252-million, equivalent to $2.67 per basic share;
• Replaced 128 per cent of 2025 production through organic development;
• Recognized reserve volumes of 11.8 mmboe (99.7 per cent heavy crude oil);
• RLI of 8.9 years based on 2025 production;
• NAV of $2.71 per fully diluted share based on reserve report pricing assumptions.

Proved plus probable (2P) reserves:

• NPV10 BT of $316-million, equivalent to $3.35 per basic share;
• Replaced 149 per cent of 2025 production through organic development;
• Recognized reserve volumes of 15.2 mmboe (99.7 per cent heavy crude oil);
• RLI of 11.4 years based on 2025 production;
• NAV of $3.35 per fully diluted share based on reserve report pricing assumptions.

Consistent with previous McDaniel's year-end evaluations, the reserve report incorporates full corporate abandonment, decommissioning and reclamation costs (ADR) in the PDP category. Hemisphere has always been cautious of acquiring additional wellbore and facility liabilities. A direct result of this strategy is that Hemisphere's reserves retain more comparative value per barrel than companies with additional ADR liabilities that must be deducted from their reserve base valuations. Management estimates that total undiscounted and uninflated existing ADR is $7.9-million ($2.1-million NPV10 BT, with costs inflated at 2 per cent per year), which includes all ADR associated with both active and inactive wells, pipelines, and facilities regardless of whether such wells, pipelines and facilities had any attributed reserves.

2025 independent qualified reserve evaluation

The reserves data set forth in this news release are based upon an independent reserves evaluation prepared by McDaniel dated March 10, 2026, with an effective date of Dec. 31, 2025, and is in accordance with definitions, standards and procedures contained within COGEH and National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities. Additional reserve information as required under NI 51-101 will be included in Hemisphere's annual information form, which will be filed on SEDAR+ on or before April 30, 2026. Total values may not add due to rounding. All dollar values are in Canadian dollars, unless otherwise noted.

Pricing assumptions

McDaniel's independent evaluation was based on the average of the published price forecasts for McDaniel, GLJ Petroleum Consultants Ltd. and Sproule Associates Ltd. (the three-consultant average price forecast) at Jan. 1, 2026, with an attached table detailing pricing and foreign exchange rate assumptions. Hemisphere's corporate production historically averages a discount of approximately $4.40 to WCS pricing. When compared with last year's three-consultant average price forecast dated Jan. 1, 2025, the current WCS pricing outlook is down approximately 23 per cent in 2026, 16 per cent in 2027 and 10 per cent thereafter over the next 15-year period. The 2026 three-consultant average price forecast uses a five-year 2026-to-2030 WTI price of $68.12 (U.S.)_ per bbl and WCS price of $74.29 (Canadian) per bbl.

Future development costs (FDC)

An attached table summarizes the development costs deducted in the estimation of the net present value of the future net revenue attributable to 1P and 2P reserves.

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 enhanced recovery 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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