F e b r u a r y 2 0 1 9 The Strategy Focus on creating long-term - PowerPoint PPT Presentation

F e b r u a r y 2 0 1 9

The Strategy Focus on creating long-term shareholder value by continually developing our early stage/low cost/high rate of return waterflood oil assets Maximize Oil Recovery Develop pools with horizontal wells drilled off pads to minimize surface impact  No hydraulic fracturing required due to high reservoir porosity and permeability  Use proven, highly effective waterflood enhanced oil recovery methods to maximize ultimate oil  recovery per well and minimize capital invested Control of Assets & Development 100% owner & operator of land, wells & facilities  Adjustable pace of development  Geographic Focus Production and landbase located in friendly jurisdiction of southeast Alberta  Strategic acquisitions of offsetting production and drilling opportunities  Drive Capital Efficiency Continue to lower development and operating costs as we increase the size of drilling programs  and improve well performance with increasing reservoir pressure 2

The Snapshot TSX Venture HME Share Price $0.13 February 4, 2019 52 Week Range $0.09 - $0.32 Basic Shares Outstanding 89.8 MM FD Shares Outstanding 112.0 MM Insider Ownership (Fully Diluted) ~26% Enterprise Value * $42.9 MM Q3 Revenue $5.9 MM Q3 Operating Field Netback $30.62/boe September 30, 2018 Net Debt $31.2 MM Term Loan Facility ** US$35.0 MM 5 years; Matures September 15, 2022 Current Production *** ~1600 boe/d Field-estimated; Jan 28 – Feb 4, 2019 (96% oil) Proved + Probable Reserves **** 7.2 MMboe NPV10 (before tax) **** $116.7 MM Liability Management Rating (Feb 2, 2019) 8.46 Ratio of Hemisphere’s deemed assets (production) to deemed (Top 10% of Alberta Companies) liabilities (abandonment & reclamation costs) * Based on an equity value of $0.13 as of Feb. 4, 2019 and a net debt of $31.2 million as of Sept. 30, 2018. ** The lender under Hemisphere’s Term Loan Facility has committed up to US$30.0 million to date. *** As disclosed in Hemisphere’s news release dated February 6, 2018. **** Reserve volumes and net present values are as attributed by McDaniel & Associates Consultants Ltd. ("McDaniel") in the reserve report of McDaniel dated March 9, 2018 and effective as of December 31, 2017 ("McDaniel Reserve Report"). See Advisory Statements – Oil and Gas Information – Net Present Values. 3

The Recent Production Growth September 2017 1800 20 Refinanced with 5- year term loan and 18 1600 started active 16 1400 development Boe/d per million shares 14 1200 12 1000 Boe/d 10 800 8 600 6 400 4 200 2 0 0 * Production Production per share * As disclosed in Hemisphere’s news release dated February 6, 2019. 4

The Foundation Assets Southeast Alberta Focus JENNER ATLEE BUFFALO Edmonton Atlee HME Land Buffalo Calgary Jenner 5

Jenner: The Stable Cash Flow o 100% average working interest o 100% operator of production o ~24,000 net acres of land o 8 oil pools defined by 3D seismic o 30 drilling locations identified* o 9 booked locations * S o Operated oil processing and water disposal facilities o Expansion capability for growth B in production S HME Land Battery B Satellite S Pipeline 3D Seismic * See Advisory Statements – Oil and Gas Information – Drilling Locations. 6

Atlee Buffalo: The Growth Opportunity o Upper Mannville F Pool G POOL o 28 MMbbl OOIP* o Only ~ 5% current oil recovery factor o Upper Mannville G Pool o 38 MMbbl OOIP* o Only ~ 4% current oil recovery factor F POOL o Working Interest – 100% in both pools o Opex < $10/boe – Total Q4 Operating and Transportation costs o Excellent Geological Control – Oil pools delineated by over 50 vertical wells Hz producer o 3D Seismic – Coverage over both pools Hz water injector o Waterflood – Expanding in both pools Vertical injector o Oil Recovery Factors ** – Local analogue oil pools have exceeded 40% recovery factors with enhanced recovery methods (waterfloods, polymer) o Hemisphere’s Dec. 31, 2017 Reserve Report reflects total 2P booked reserves of just 12% of McDaniel’s estimated oil in place* * Based on McDaniel’s reservoir mapping for the purposes of the McDaniel Reserve Report. See Advisory Statements – Oil and Gas Information – OOIP. ** See Advisory Statements – Oil and Gas Information – Analogous Information. 7

Atlee Buffalo: The Development Plan 2018 Accomplishments G POOL  Drilled 14 wells  Expanded both F and G pool facilities to enhance water separation and increase oil production 2019 Plans F POOL o H2 2019: Plans to drill up to 16 wells o Continue to expand field-wide reservoir simulation studies o Continue to optimize batteries and Hz producer existing waterflood operations Hz water injector Future producer**** Future injector**** Vertical injector WELL ECONOMICS – Internal Evaluation*** Capital Drill, Estimated Complete, Ultimate Initial Capital Atlee Buffalo Equip & Tie-in Recovery* Production* Payout** NPV10** ROR** Efficiency** Area $MM Mbbl bbl/d Years $MM % $/bbl/d F Pool 0.85 150 60 1.4 1.8 100 14,200 G Pool 0.85 200 80 0.9 3.0 190 10,600 * See Advisory Statements – Oil and Gas Information – Initial Production Rates and Estimated Ultimate Recoveries. ** Assumptions: US$54 Flat WTI Pricing with US$17 WCS Differential and 1.33 Fx; Average $4 quality differential from WCS; Average ~$13/boe lifetime operating and transportation expenses, and ~$5.10/boe royalties. *** Economics for both Atlee Buffalo F and G Pools have been generated as of Feb 5, 2019 and are based on internal estimations of reserves and production profiles prepared by a member of management who is a qualified reserves evaluator in accordance with National Instrument 51-101 for the 2019 development wells as shown on this slide **** See Advisory Statements – Oil and Gas Information – Drilling Locations. 8

The Long-Term Value Growth Reserves * NPV10 BT * 8.0 $140.0 $1.50 57% Growth in the last $1.30 69% Growth Per Share 7.0 year through drilling and $120.0 in the last year $1.25 waterflood 2.3 6.0 $1.02 2P $100.0 $36.3 $1.00 5.0 MMboe $80.0 Per share (basic) $0.77 4.0 $0.75 $MM $0.64 1.4 $60.0 2P 1.1 2P 3.0 $20.2 1.1 $22.2 $0.50 2P 1P 4.9 $40.0 $14.1 $80.4 2.0 3.1 1P 2.8 1P $0.25 1P $20.0 2.2 $45.7 1.0 $40.3 $34.3 0.0 $0.0 $0.00 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 Dec 31 2014 2015 2016 2017 Proved 2014 2015 2016 2017 Probable * Reserve volumes and net present values are attributed in each of the independent reserve reports prepared for Hemisphere effective as of the date noted above. 9

Atlee Buffalo: The Reserve Upside Potential 2P Booked Potential Additional Cumulative Reserves as at (Unbooked) Reserves Pool OOIP* Production to-date December 31, 2017 At Various RF*** (MMBbl) (MMBbl) (MMBbl) (MMBbl) 20% 30% 40% Upper Mann F 28 1.5 (5% Recovery Factor) 2.9 (15% Recovery Factor)** 1.4 4.2 7.0 Upper Mann G 38 1.4 (4% Recovery Factor) 2.7 (11% Recovery Factor)** 3.6 7.4 11.2 Atlee Buffalo Total 66 2.9 (4% Recovery Factor) 5.5 (12% Recovery Factor)** 5.1 11.7 18.3 Upper Mann G Upper Mann F At a Produced Produced 1.5 MMbbl 1.4 MMbbl 30% Booked Potential Potential Booked 2.7 MMbbl Additional Additional 2.9 MMbbl Recovery Factor 4.2 MMbbl 7.4 MMbbl * Based on McDaniel’s reservoir mapping for the purposes of the McDaniel Reserve Report. See Advisory Statements – Oil and Gas Information – OOIP. ** Represents the booked recovery factor attributed by McDaniel in the McDaniel Reserve Report. *** The recovery factors (and reserve volumes) as noted are potential recovery factors (and reserve volumes) only and are based on management's estimates (as prepared by a qualified reserves evaluator in accordance with National Instrument 51-101) and assumes the successful response to Hemisphere's proposed waterflood operations based on the results of analogous pools under waterflood (See Advisory Statements – Oil and Gas Information – Analogous Information). There is no guarantee that the potential recovery factors will be realized by Hemisphere or that the reserve volumes noted will be attributed by an independent qualified reserves evaluator to Hemisphere. 10

The Hemisphere Investment Assets for Growth  Early stage of development  High rate of return projects with production and reserve growth through strategic low- risk, low capital expenditure and fast payout projects  Multi-year, low-risk drilling inventory in Atlee Buffalo and Jenner oil pools  Stable, long-life, inclining production through waterflood Access to Capital  Well funded by strategic energy partner to execute growth of HME’s oil assets  Term Loan Facility of up to US $ 35 Million allows HME to organically develop its oil assets over the next 2-3 years Team to Deliver  Competent and experienced management team that has led Hemisphere through several years of marginal commodity prices during the downturn and has positioned the company for growth Time to Execute  Oil market has strengthened and development costs remain low 11