Hemisphere Energy : 2022 Annual Information Form

ANNUAL INFORMATION FORM

For the year ended December 31, 2022

April 19, 2023

TABLE OF CONTENTS
ABBREVIATIONS	3
CONVERSIONS	3
BARREL OF OIL EQUIVALENCY	4
CURRENCY	4
FORWARD-LOOKING STATEMENTS	4
NON-IFRS MEASURES	5
CORPORATE STRUCTURE	6
GENERAL DEVELOPMENT OF THE BUSINESS	6
DESCRIPTION OF THE BUSINESS	7
RISK FACTORS	9
INDUSTRY CONDITIONS	33
STATEMENT OF RESERVES AND OTHER OIL AND NATURAL GAS INFORMATION	48
ADDITIONAL INFORMATION RELATING TO RESERVES DATA	56
OTHER OIL AND GAS INFORMATION	59
DIVIDENDS AND SHARE REPURCHASES	65
SHARE CAPITAL	66
MARKET FOR SECURITIES	67
PRIOR SALES	68
ESCROWED SECURITIES AND SECURITIES SUBJECT TO CONTRACTUAL RESTRICTION ON TRANSFER	68
DIRECTORS AND OFFICERS	68
LEGAL PROCEEDINGS AND REGULATORY ACTIONS	71
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS	71
TRANSFER AGENT AND REGISTRAR	71
INTEREST OF EXPERTS	71
MATERIAL CONTRACTS	72
AUDIT COMMITTEE INFORMATION	72
ADDITIONAL INFORMATION	74
APPENDICES
"A" - NI 51-101F2 REPORT ON RESERVES DATA BY INDEPENDENT QUALIFIED RESERVES EVALUATOR
"B" - NI 51-101F3 REPORT OF MANAGEMENT AND DIRECTORS ON OIL AND GAS DISCLOSURE
"C" - AUDIT COMMITTEE CHARTER

Hemisphere Energy Corporation		2022 Annual Information Form
		ABBREVIATIONS
	Oil and Natural Gas Liquids	Natural Gas
	bbl	barrels	Mcf	thousand cubic feet
	bbl/d	barrels per day	Mcf/d	thousand cubic feet per day
	bopd	barrels of oil per day	MMcf	million cubic feet
	boe	barrels of oil equivalent	MMbtu	million British thermal units
	boe/d	boe per day	Bcf	billion cubic feet
	Mboe	thousand barrels of oil equivalent	GJ	gigajoule
	Mbbl	thousand barrels
	NGL	natural gas liquids
	Other
	M$	thousands of dollars
	$/boe	dollar per barrel of oil equivalent
	$/bbl	dollar per barrel
	$/MMbtu	dollar per million British thermal units
	ha	Hectare
	3D	three dimensional
	API	American Petroleum Institute
	⁰API	an indication of the specific gravity of crude oil measured on the API gravity scale
	AECO	the natural gas storage facility located at Suffield, Alberta, connected to TransCanada's Alberta
		System
	m3	Cubic metres
	WTI	West Texas Intermediate, the reference price paid in U.S. dollars at Cushing, Oklahoma for crude oil
		of standard grade

CONVERSIONS

The following table sets forth certain conversions between Standard Imperial Units and the International System of Units (or metric units):

	To Convert From	To	Multiply By
	Mcf	cubic metres	28.174
	cubic metres	cubic feet	35.494
	bbl	cubic metres	0.159
	cubic metres	Bbl	6.289
	feet	Metres	0.305
	metres	Feet	3.281
	miles	Kilometres	1.609
	kilometres	Miles	0.621
	acres	Hectares	0.405
	hectares	Acres	2.471
	gigajoules	MMbtu	0.950
	MMbtu	Gigajoules	1.0526

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Hemisphere Energy Corporation

2022 Annual Information Form

BARREL OF OIL EQUIVALENCY

Barrels of oil equivalent ("boe") may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf:1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead. Given that the value ratio based on the current price of crude oil as compared to natural gas is significantly different from the energy equivalency conversion ratio of 6:1, utilizing a conversion on a 6:1 basis is misleading as an indication of value.

CURRENCY

All amounts are expressed in Canadian dollars unless otherwise stated.

FORWARD-LOOKING STATEMENTS

Certain of the statements contained herein including, without limitation, payment of dividends and share repurchases, the Company's tax pools and when the Company expects it may pay income taxes, financial and business prospects and financial outlook, reserve and production estimates, drilling plans, activities to be undertaken in various areas, timing of drilling, recompletion and tie-in of wells, tax horizon, timing of development of undeveloped reserves, commodity prices and foreign exchange rates, planned capital expenditures, the timing thereof and the method of funding may be forward-looking statements which reflect management's expectations regarding future plans and intentions, growth, results of operations, performance and business prospects and opportunities. Words such as "may", "will", "should", "could", "anticipate", "believe", "expect", "intend", "plan", "potential", "continue" and similar expressions may be used to identify these forward-looking statements. These statements reflect management's current beliefs and are based on information currently available to management. Forward-looking statements involve significant risk and uncertainties. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements including, but not limited to, risks associated with oil and gas exploration, development, exploitation, production, marketing and transportation, loss of markets, changes in environmental or other legislation, reliance on key management personnel, changes in general economic and business conditions, volatility of commodity prices, currency fluctuations, imprecision of reserve estimates, environmental risks, competition from other producers, inability to retain drilling rigs and other services, incorrect assessment of the value of acquisitions, failure to realize the anticipated benefits of acquisitions, delays resulting from or inability to obtain required regulatory approvals and ability to access sufficient capital from internal and external sources and the risk factors outlined under "Risk Factors" and elsewhere herein. The recovery and reserve estimates of Hemisphere Energy Corporation's ("Hemisphere" or the "Company") reserves provided herein are estimates only and there is no guarantee that the estimated reserves will be recovered. As a consequence, actual results may differ materially from those anticipated in the forward-looking statements. In addition, forward- looking statements may include statements attributable to third party industry sources. There can be no assurances that the plans, intentions, or expectations upon which such forward-looking statements are based will occur.

Forward-looking statements and information are based on a number of factors and assumptions which have been used to develop such statements and information, but which may prove to be incorrect. Although Hemisphere believes that the expectations reflected in such forward-looking statements and information are reasonable, undue reliance should not be placed on forward-looking statements because Hemisphere can give no assurance that such expectations will prove to be correct. In addition to other factors and assumptions which may be identified in this document, assumptions have been made regarding, among other things: the impact of increasing competition; the general stability of the economic and political environment in which Hemisphere operates; the timely receipt of any required regulatory approvals; the ability of Hemisphere to obtain qualified staff, equipment and services in a timely

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Hemisphere Energy Corporation

2022 Annual Information Form

and cost efficient manner; drilling results, the ability of the operator of the projects which Hemisphere has an interest in to operate the project in a safe, efficient and effective manner; the ability of Hemisphere to obtain financing on acceptable terms; well production rates and decline rates; the ability to replace and expand the oil and natural gas reserves through acquisition, development of exploration; the timing and costs of pipeline, storage and facility construction and expansion and the ability of Hemisphere to secure adequate product transportation; future oil and natural gas prices; currency, exchange and interest rates; the regulatory framework regarding royalties, taxes and environmental matters in the jurisdictions in which Hemisphere operates; and the ability of Hemisphere to successfully market its oil and natural gas products.

Readers are cautioned that the foregoing list of factors is not exhaustive. Additional information on these and other factors that could affect Hemisphere's operations and financial results are included in reports on file with Canadian securities regulatory authorities and may be accessed through the System for Electronic Document Analysis and Retrieval ("SEDAR") at www.sedar.comand Hemisphere's website at www.hemisphereenergy.ca. Although the forward-looking statements and information contained herein are based upon what management believes to be reasonable assumptions, management cannot give assurance that actual results will be consistent with such forward-looking statements and information. Investors should not place undue reliance on forward-looking statements and information. These forward-looking statements and information are made as of the date of this annual information form ("AIF") and Hemisphere assumes no obligation to update or review them to reflect new events or circumstances except as required by applicable securities laws.

Forward-looking statements and information contained herein concerning the oil and gas industry and Hemisphere's general expectations concerning this industry is based on estimates prepared by management using data from publicly available industry sources as well as from reserve reports, market research and industry analysis and on assumptions based on data and knowledge of this industry, which Hemisphere believes to be reasonable. However, this data is inherently imprecise. While Hemisphere is not aware of any misstatements regarding any industry data presented herein, the industry involves risks and uncertainties and is subject to change based on various factors.

NON-IFRS MEASURES

Within this AIF, references are made to terms commonly used in the oil and natural gas industry which do not have standardized measures prescribed by generally accepted accounting principles in Canada, including "operating field netback" and "operating netback". Operating field netback is a benchmark used in the oil and natural gas industry and a key indicator of profitability relative to current commodity prices. Operating field netback is calculated by the Company as oil and gas sales, less royalties, operating expenses and transportation costs on an absolute and per boe basis. Operating netback is calculated by the Company as the operating field netback plus the Company's realized commodity hedging gain (loss) on an absolute and per barrel of oil equivalent basis. These terms should not be considered an alternative to, or more meaningful than, cash flow from operating activities or net income or loss as determined in accordance with International Financial Reporting Standards ("IFRS") as an indicator of the Company's performance. The Company uses operating field netback and operating netback as key performance indicators and for operational and capital allocation decisions. Readers are cautioned, however, that operating field netback and operating netback do not have standardized measures prescribed by generally accepted accounting principles in Canada and as a result, the Company may calculate these measures differently than other companies, including its industry peers. Refer to the section entitled "Non-IFRS and Other Financial Measures" contained within the Company's MD&A for the year ended December 31, 2022, available on SEDAR at www.sedar.com, for additional disclosures relating to these non-IFRS measures.

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