Hemisphere Energy Announces 2023 Third Quarter Results, Declares Quarterly Dividend, and Provides Operations Update

Vancouver, British Columbia, November 21, 2023 – Hemisphere Energy Corporation ("Hemisphere" or the "Company") is pleased to provide its financial and operating results for the three and nine months ended September 30, 2023, announce the declaration of a quarterly dividend payment to shareholders, and provide an operations update.

Q3 2023 Highlights

  • Second best quarter in corporate history for production, revenue, operating field netback, and adjusted funds flow from operations ("AFF")1.

  • Produced an average of 3,056 boe/d for the third quarter of 2023, a 6% increase over the same quarter last year.

  • Attained third quarter revenue of $24.3 million, a 3% increase over the third quarter last year.

  • Delivered an operating field netback1 of $15.9 million or $56.40/boe for the quarter.

  • Realized quarterly adjusted funds flow from operations (AFF) of $11.7 million or $41.70/boe.

  • Announced Hemisphere’s first ever special dividend to shareholders of $0.03 per common share ($3.0 million), paid on November 1, 2023.

  • Distributed $0.025 per common share ($2.5 million) in quarterly dividends to shareholders in accordance with the Company’s dividend policy.

  • Exited the third quarter of 2023 with a positive working capital1 position of $2.2 million, compare to net debt1 of $0.7 million at September 30, 2022.

  • Renewed the Company’s Normal Course Issuer Bid ("NCIB").

  • Purchased and cancelled 519,400 shares under the Company’s NCIB during the third quarter (at an average price of $1.23 per common share).

    (1) Operating field netback, adjusted funds flow from operations (AFF), free funds flow, working capital, and net debt are non-IFRS measures that do not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Non-IFRS financial ratios are not standardized financial measures under IFRS and may not be comparable to similar financial measures disclosed by other issuers. Refer to the section “Non-IFRS and Other Specified Financial Measures”.

Quarterly Dividend and Shareholder Return

Hemisphere is pleased to announce that its Board of Directors has approved a quarterly cash dividend of $0.025 per common share in accordance with the Company’s dividend policy. The dividend will be paid on December 28, 2023 to shareholders of record as of the close of business on December 15, 2023. The dividend is designated as an eligible dividend for income tax purposes.

With $13.1 million distributed through quarterly and special dividends by year-end and $3.7 million spent on NCIB year-to-date, a minimum of $16.8 million is anticipated to have been returned to shareholders in 2023. Based on the Company’s current market capitalization of $128 million (99.7 million shares issued and outstanding at market close price of $1.28 per share on November 20, 2023), this represents an annualized yield of 13% to Hemisphere’s shareholders.

Operations Update

During the third quarter, Hemisphere completed the majority of its planned 2023 capital expenditure program. By the end of September, the Company had brought on 7 new wells and completed one new well as an injector in the Atlee Buffalo area. Subsequent to quarter-end, the Company also shut one producing well in to convert it to an injector.

Current corporate production sits at approximately 3,350 boe/d (99% heavy oil, based on field estimates between October 1 - November 15, 2023). The Company’s assets continue to perform well under Enhanced Oil Recovery ("EOR") with current corporate production almost 20% higher than full-year 2022 production, which was just over 2,800 boe/d. Operating and transportation costs during the first nine months of 2023 total just $13.68/boe, and are fully reflective of the chemical costs required for the Company’s two EOR projects. This makes Hemisphere one of the lowest cost operators of heavy oil in the Canadian oil industry.

Looking ahead into 2024, Hemisphere is actively preparing for a new pilot polymer flood on its recently acquired land base. Management anticipates that a test pad could be drilled and on production with a polymer skid installed by as early as July 2024. The Company expects to release more details on its 2024 guidance in January.

About Hemisphere Energy Corporation

Hemisphere is a dividend-paying Canadian oil company focused on maximizing value per share growth with the sustainable development of its high netback, ultra-low decline conventional heavy oil assets using EOR techniques. 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".

For further information, please visit the Company’s website at www.hemisphereenergy.ca to view its corporate presentation or contact:

Don Simmons, President & Chief Executive Officer Telephone: (604) 685-9255
Email: info@hemisphereenergy.ca
Website: www.hemisphereenergy.ca