Hemisphere Energy Announces Proved Reserves Of $317 Million With Proved Net Asset Value Of $3.21 Per Fully Diluted Share

(MENAFN- Newsfile Corp) Vancouver, British Columbia--(Newsfile Corp. - March 19, 2025) - Hemisphere Energy Corporation (TSXV: HME) ( OTCQX: HMENF) ("Hemisphere" or the "Company") is pleased to announce highlights from its independent reserves evaluation (the "Reserve Report"), prepared by McDaniel & Associates Consultants Ltd. ("McDaniel") and effective as at December 31, 2024.

Hemisphere's estimated 2024 capital expenditures¹ of approximately $22 million grew year-end Proved Developed Producing ("PDP") reserves by 13%, increased annual production by 10%, added required infrastructure, and commenced testing a new resource play in Saskatchewan with an enhanced oil recovery ("EOR") polymer pilot project. These investments were funded entirely by cash flow from the Company's long-life reserve base and ultra-low production decline rates in the Atlee Buffalo oil assets. Hemisphere's current quarterly production is trending at 3,800 boe/d (99% heavy oil and based on field estimates between January 1 - March 15, 2025).

During the year, Hemisphere also distributed over $21 million in shareholder returns, made up of $15.7 million in base and special dividends and $5.5 million of share purchases under its normal course issuer bid ("NCIB"). The Company exited the year in a cash position with estimated working capital¹ of over $5 million.

The Company's continued success in the development of its EOR projects was recognized again by McDaniel in the Reserve Report. In the PDP category, Hemisphere replaced 186% of 2024 production and increased reserve value by 10% to $273 million NPV10 BT. In addition, Hemisphere's Proved ("1P") reserve value at year-end was $317 million NPV10 BT and Proved plus Probable ("2P") reserve value was $393 million NPV10 BT.

The Company's new Saskatchewan lands currently account for only 3% of 1P and 6% of 2P reserves, while making up only 3% of 1P and 5% of 2P NPV10 BT valuations of Hemisphere's reserves. Significant potential reserve upside remains on Hemisphere lands if the play proves successful over the course of 2025 and beyond.

Consistent with McDaniel's 2023 year-end evaluation, 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 base valuations. Management estimates that total undiscounted and uninflated existing ADR is $8.1 million ($2.1 million NPV10 BT, with costs inflated at 2%/yr), 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.

Hemisphere's low decline, long life, and high value reserves are indicative of the unique resource the Company has been developing over the past number of years. These valuable assets are the backbone of Hemisphere and are expected to generate significant free cash flow as they continue to grow with planned additional development and optimization of EOR techniques.

2024 Reserve Highlights

Proved Developed Producing ("PDP") Reserves

• NPV10 BT of $273 million, an increase of approximately 10% over year-end 2023 and equivalent to $2.80 per basic share.
• Replaced 186% of 2024 production through organic development.
• Recognized reserve volumes of 9.3 MMboe (99.7% heavy crude oil), an increase of 13% year-over-year.
• RLI of 7.4 years based on 2024 production.
• NAV of $2.79 per fully diluted share based on reserve report pricing assumptions.

Proved ("1P") Reserves

• NPV10 BT of $317 million, equivalent to $3.26 per basic share.
• Recognized reserve volumes of 11.4 MMboe (99.7% heavy crude oil).
• RLI of 9.1 years based on 2024 production.
• NAV of $3.21 per fully diluted share based on reserve report pricing assumptions.

Proved plus Probable ("2P") Reserves

• NPV10 BT of $393 million, equivalent to $4.03 per basic share.
• Recognized reserve volumes of 14.5 MMboe (99.7% heavy crude oil).
• RLI of 11.6 years based on 2024 production.
• NAV of $3.95 per fully diluted share based on reserve report pricing assumptions.

2024 Independent Qualified Reserve Evaluation

The reserves data set forth below is based upon an independent reserves evaluation prepared by McDaniel dated March 18, 2025 with an effective date of December 31, 2024, 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 ("NI 51-101"). 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, 2025. Due to rounding, certain totals in the columns may not add in the following tables. 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 "3-Consultant Average Price Forecast") at January 1, 2025, with the following table detailing pricing and foreign exchange rate assumptions. Hemisphere's corporate production historically averages a discount of approximately $4.10 to WCS pricing. When compared to last year's 3-Consultant Average Price Forecast dated January 1, 2024, the current WCS pricing outlook is up approximately 4% in 2025, and up 1% thereafter over the next 15-year period. The 2025 3-Consultant Average Price Forecast uses a 5-year 2025-2029 WTI price of US$75.75/bbl and WCS price of Cdn$84.78/bbl.

3-Consultant Average Price Forecast January 1, 2024		3-Consultant Average Price Forecast January 1, 2025
Year	WTI Crude Oil ($US/bbl)	Edmonton Light Crude Oil ($Cdn/bbl)	Western Canadian Select WCS Crude Oil ($Cdn/bbl)	AECO Spot Price ($Cdn/ MMBtu)	Inflation (%)	US/Cdn Exchange Rate ($US/$Cdn)		Year	WTI Crude Oil ($US/bbl)	Edmonton Light Crude Oil ($Cdn/bbl)	Western Canadian Select WCS Crude Oil ($Cdn/bbl)	AECO Spot Price ($Cdn/ MMBtu)	Inflation (%)	US/Cdn Exchange Rate ($US/$Cdn)
2025	74.98	95.04	79.77	3.37	2	0.765		2025	71.58	94.79	82.69	2.36	0	0.71
2026	76.14	96.07	81.12	4.05	2	0.768		2026	74.48	97.04	84.27	3.33	2	0.72
2027	77.66	97.99	82.88	4.13	2	0.772		2027	75.81	97.37	83.81	3.48	2	0.74
2028	79.22	99.95	85.04	4.21	2	0.775		2028	77.66	99.80	85.70	3.69	2	0.74
2029	80.80	101.94	86.74	4.30	2	0.775		2029	79.22	101.79	87.45	3.76	2	0.74
2030	82.42	103.98	88.47	4.38	2	0.775		2030	80.80	103.83	89.25	3.83	2	0.74
2031	84.06	106.06	90.24	4.47	2	0.775		2031	82.42	105.91	91.04	3.91	2	0.74
2032	85.74	108.18	92.04	4.56	2	0.775		2032	84.06	108.03	92.85	3.99	2	0.74
2033	87.46	110.35	93.89	4.65	2	0.775		2033	85.74	110.19	94.71	4.07	2	0.74
2034	89.21	112.56	95.77	4.74	2	0.775		2034	87.46	112.39	96.61	4.15	2	0.74
2035	90.99	114.81	97.68	4.84	2	0.775		2035	89.21	114.64	98.54	4.23	2	0.74
2036	92.81	117.10	99.64	4.94	2	0.775		2036	90.99	116.93	100.51	4.32	2	0.74
2037	94.67	119.45	101.63	5.03	2	0.775		2037	92.81	119.27	102.52	4.40	2	0.74
2038	96.56	121.83	103.66	5.14	2	0.775		2038	94.67	121.65	104.57	4.49	2	0.74
2039	98.50	124.27	105.74	5.24	2	0.78		2039	96.56	124.09	106.66	4.58	2	0.74

Summary of Reserves ⁽¹⁾

Reserves Category	Heavy Oil (Mbbl)	Conventional Natural Gas (MMcf)	Total (Mboe)
Proved
Developed Producing	9,275.6	159.1	9,302.2
Developed Non-Producing	31.9	5.5	32.8
Undeveloped	2,068.4	22.0	2,072.0
Total Proved	11,375.9	186.6	11,407.0
Probable	3,109.0	84.3	3,123.0
Total Proved plus Probable	14,484.9	270.9	14,530.0

Note:
(1) Reserves are presented as "gross reserves" which are the Company's working interest reserves before royalty deductions and without including any royalty interests.

Summary of Net Present Value of Future Net Revenue, Before Tax ("NPV BT") ⁽¹⁾⁽²⁾

	NPV BT (M$, except per share amount) Discounted at (% per Year)
Reserves Category	0%	5%	10%
Proved
Developed Producing	402,007.4	324,108.6	272,946.8
Developed Non-Producing	416.3	358.1	310.9
Undeveloped	73,688.1	56,258.8	43,960.4
Total Proved	476,111.8	380,725.5	317,218.1
Probable	150,766.0	102,937.6	75664.0
Total Proved plus Probable	626,877.8	483,663.1	392,882.1
Per basic share (3)
Proved Developed Producing	4.14	3.33	2.80
Proved	4.89	3.91	3.26
Proved plus Probable	6.44	4.97	4.03

Notes:
(1) Based on the average of the published price forecasts for McDaniel, GLJ Petroleum Consultants Ltd., and Sproule Associates Ltd. at January 1, 2025, as outlined in the table herein entitled "Pricing Assumptions".
(2) It should not be assumed that the estimates of net present value of future net revenues presented in this table represent the fair market value of Hemisphere's reserves.
(3) Based on there being 97,389,735 issued and outstanding shares of the Company as of December 31, 2024.

Future Development Costs ("FDC")

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

	Forecast Costs (M$)
	1P	2P
2025	8,500	12,300
2026	11,491	16,430
2027	7,940	9,452
2028	2,046	2,046
Subsequent years	-	-
Total Undiscounted	29,978	40,229
Total Discounted at 10%	25,607	34,705

Reserve Life Index ("RLI")

	As of December 31, 2024 (1)
PDP	7.4
1P	9.1
2P	11.6

Note:
(1) Calculated as the applicable reserves volume divided by Hemisphere's average 2024 production of 3,436 boe/d.

Net Asset Value ("NAV") ⁽¹⁾

(MM$, except share amounts)	PDP	1P	2P
NPV10 BT (1)	273.0	317.2	392.9
Undeveloped Land and Seismic(2)	2.6
Proceeds from Stock Options	7.0
Working Capital(3)	5.5
Million Shares Outstanding (fully diluted)	103.4
NAV per share (fully diluted)	2.79	3.21	3.95

Notes:
(1) 100% of existing and future corporate ADR has been included in the McDaniel Reserve Report. Total corporate ADR accounted for in the 2024 reserve report, including that for future development, amounts to $2.5 million NPV10 BT in the 1P category and $2.6 million NPV10 BT in the 2P category.
(2) Based on an internal evaluation by management of Hemisphere as of December 31, 2024, with an average value of $75 per acre for 26,864 undeveloped net acres, and $0.55 million for seismic.
(3) Working Capital is a non-IFRS measure that does not have any standardized meaning under IFRS and therefore may not be comparable to similar measures presented by other entities. Refer to the section "Non-IFRS and Other Specified Financial Measures". All financial information as at December 31, 2024 is per Hemisphere's preliminary unaudited financial statements for the year ended December 31, 2024, which has not yet been approved by the Company's Audit Committee or Board of Directors and therefore represents management's estimates. Readers are advised that these financial estimates may be subject to changes as a result of the completion of the independent audit on Hemisphere's financial statements for the year ended December 31, 2024, and the review and approval of same with the Company's Audit Committee and Board of Directors.

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 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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