Hemisphere Energy 2023 capital program of $14 million

2023 Corporate Guidance

Hemisphere’s Board of Directors has approved a 2023 capital expenditure2 program of $14 million, which is planned to be entirely funded by Hemisphere’s estimated 2023 Adjusted Funds Flow2 (AFF) of $45 million, and is expected to grow annual production by 17%. The majority of capital will be allocated to 9 drilling locations and additional facility upgrades at the Company’s Atlee F and G oil batteries. Hemisphere will also tie-in a single well battery that was used to test production capability from one of its fall drilling locations, which stepped out into a reservoir extension to the southwest of its Atlee F pool.

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Hemisphere Energy Corporation Wells Drilled

After capital expenditures, free funds flow2 is budgeted to be $31 million, of which approximately 30% is planned to be paid in quarterly dividends as shown in the table below. The balance of cash will be used for discretionary purposes, which may include potential acceleration of other 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.

Hemisphere Energy Operations Map

Highlights and assumptions of Hemisphere’s guidance are as follows:

Hemisphere Energy Corporation ranks #78 in wells drilled in 2022 with 11 wells drilled in Western Canada.

Annual average production of 3,300 boe/d (99% heavy crude oil), a 17% increase over 2022
WTI average price of US$85/bbl WTI, with sensitivities shown at US$70/bbl and US$100/bbl
WCS differential of US$20.00/bbl and quality adjustment of $5.50/bbl
CAD/US FX of 1.35
Operating and transportation costs of $15.00/boe
Royalties and GORRs of 20% of gross revenue
Net G&A of $3.40/boe and Interest & other fees of $0.40/boe

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