Hemisphere Energy Announces Positive Third Quarter Results and Operations Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Jan. 17, 2013) - Hemisphere Energy Corporation (TSX VENTURE:HME) is pleased to announce its financial and operating results for the three and nine months ended November 30, 2012. All amounts are expressed in Canadian dollars.

Achievements and Highlights


-- Increased third quarter revenue by 114% to $2.7 million compared to $1.3

million in the same quarter of the previous fiscal year.

-- Increased revenue for the first nine months by 293% to $7.2 million

compared to $1.8 million in the same period last year.

-- Increased third quarter funds flow from operating activities by 107% to

$1.5 million ($0.03/share) compared to $0.7 million ($0.02/share) during

the same quarter of the previous fiscal year.

-- Increased funds flow from operating activities for the first nine months

of the fiscal year by 449% to $3.3 million ($0.07/share) compared to

$0.6 million ($0.02/share) in the same period last year.

-- Grew third quarter production by 107% to 430 barrels of oil equivalent

per day ("boe/d") from 208 boe/d in the third quarter of the previous

fiscal year.

-- Increased third quarter's oil and natural gas liquids ("NGL") weighting

to 95% from 79% in the previous year's third quarter.

-- Increased third quarter operating netback by 35% to $45.62 per barrel of

oil equivalent ("boe") from $33.76 per boe in the second quarter.

-- Successfully drilled two horizontal wells and one vertical well

targeting oil-bearing sandstones of Glauconitic formation in Jenner,


-- Completed and placed on production one horizontal oil well and one

vertical oil well in Jenner.

-- Acquired a new 3D seismic program over prospective farm-in lands in



Selected financial and operational highlights should be read in conjunction with the company's unaudited condensed interim Financial Statements and related Management's Discussion and Analysis which are available on SEDAR at www.sedar.com and on Hemisphere's website at http://www.hemisphereenergy.ca/investors/financial-reports.

Financial and Operating Highlights



Three months ended Nine months ended

Financial November 30 November 30

2012 2011 2012 2011


Petroleum and

natural gas revenue $ 2,730,244 $ 1,273,655 $ 7,181,046 $ 1,827,044

Petroleum and

natural gas netback $ 1,784,702 $ 890,541 $ 4,292,002 $ 1,146,357

Funds flow from


activities $ 1,448,807 $ 699,535 $ 3,340,926 $ 608,407

Per share, basic

and diluted $ 0.03 $ 0.02 $ 0.07 $ 0.02

Net income $ 695,833 $ 596,508 $ 865,183 $ 212,161

Per share, basic

and diluted $ 0.01 $ 0.02 $ 0.02 $ 0.01

Capital expenditures $ 3,905,686 $ 2,471,998 $ 9,830,352 $ 5,356,735

Working capital at

end of period $ (3,073,004) $ 1,538,869 $ (3,073,004) $ 1,538,869

Net debt at end of

period $ 1,250,000 $ - $ 1,250,000 $ -



Three months ended Nine months ended

Operating November 30 November 30

2012 2011 2012 2011


Average daily


Crude oil (bbl/d) 406 160 375 72

Natural gas (mcf/d) 132 264 163 240

NGL (bbl/d) 2 4 3 3

Total (boe/d) 430 208 405 115

Oil & NGL weighting 95% 79% 93% 65%


Average sales prices

Crude oil ($/bbl) $ 72.91 $ 79.17 $ 68.34 $ 78.07

Natural gas ($/mcf) $ 2.23 $ 3.81 $ 1.94 $ 3.56

NGL ($/bbl) $ 57.84 $ 86.91 $ 60.59 $ 69.72

Combined ($/boe) $ 69.78 $ 67.39 $ 64.47 $ 58.02


Operating netback


Petroleum and

natural gas

revenue $ 69.78 $ 67.39 $ 64.47 $ 58.02

Royalties $ 9.33 $ 9.50 $ 11.15 $ 8.10

Operating costs $ 13.20 $ 8.49 $ 11.71 $ 11.84


costs $ 1.64 $ 2.28 $ 3.09 $ 1.68

Operating netback $ 45.62 $ 47.12 $ 38.52 $ 36.40



Operations Update

Jenner, Alberta

In late September 2012, Hemisphere drilled one horizontal oil well and one vertical oil well while initiating a new 3D seismic program.

The horizontal oil well targeted an existing pool that had been previously discovered and produced from vertical wells. This well was completed, tied-in and placed on production at a rate of approximately 140 barrels of oil per day ("bopd") as previously announced in November 2012.

The vertical well was the first well drilled on the seismic option and farm-in agreement announced in June 1012. This well was drilled to hold land expiring in October 2012. The well was completed and equipped with a single well battery and was placed on production on December 1, 2012.

The new 3D seismic survey was completed in October 2012 spanning the prospective farm-in lands along one of the main Glauconitic trends in the Jenner area. This survey has been interpreted and Hemisphere has identified a number of potential drilling locations, some of which will be targeted in 2013.

In November and early December 2012, Hemisphere drilled an additional three horizontal wells targeting three different Glauconitic formation oil pools, all of which have been completed, equipped and placed on production. One horizontal well came on with a production rate of approximately 100 bopd and has been tied-in to Hemisphere's main Jenner battery. The second horizontal well, which was an option well drilled to earn additional farm-in lands, was brought on production at a rate of approximately 75 bopd and is producing to a single well battery. The third horizontal well is tied-in to Hemisphere's main Jenner battery and is flowing approximately 10 bopd with high initial watercuts. The company has recently installed an artificial lift system to move more fluid and increase oil rates.

With the addition of the three wells recently placed on production and based on field estimates, Hemisphere's production for the first nine days of January averaged 550 boe/d with a 94% oil and NGL weighting.

Hemisphere has expanded its Jenner landholdings through the successful acquisition of 6.5 sections (4,100 acres) of land at recent crown land sales. This additional land increases Hemisphere's position in Jenner by 33% to approximately 16,000 net acres with an additional 6 sections (3,800 net acres) to earn in farm-in lands.

Change in Year-End

Hemisphere previously announced its change in year-end from February 28 to December 31. This transition will take place in the next reporting period at which time the company plans to report its year-end audited financial statements for the 10 months ended December 31, 2012.

About Hemisphere Energy Corporation

Hemisphere Energy Corporation is a junior exploration and production company focused on developing core areas that provide low to medium risk drilling opportunities to increase production, reserves and cash flow. Hemisphere's continued growth plan is through drilling existing prospects and executing strategic acquisitions and farm-ins. Hemisphere trades on the TSX Venture Exchange under the symbol "HME".

Forward-looking Statements

This news release contains "forward-looking statements" that are based on Hemisphere's current expectations, estimates, forecasts and projections. These forward-looking statements include statements regarding Hemisphere's outlook for our future operations, plans and timing for the commencement or advancement of exploration and development activities on our properties, and other expectations, intention and plans that are not historical fact. The words "estimates", "projects", "expects", "intends", "believes", "plans", or their negatives or other comparable words and phrases are intended to identify forward-looking statements. Such forward-looking statements are subject to risks, uncertainties and other factors that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. Many of these factors are beyond the control of Hemisphere. Consequently, all forward-looking statements made in this news release are qualified by this cautionary statement and there can be no assurance that actual results or developments anticipated by Hemisphere will be realized. For the reasons set forth above, investors should not place undue reliance on such forward-looking statements. Hemisphere disclaims any intention or obligation to update or revise forward-looking information, whether as a result of new information, future events or otherwise.

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.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this news release.


Hemisphere Energy Corporation

Don Simmons

President & Chief Executive Officer

(604) 685-9255



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