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EXECUTIVE EMPLOYMENT AGREEMENT

THIS AGREEMENT is made effective as of the
1stday of September, 2014.

|BETWEEN: |                                                                                                                   
|-------- | ------------------------------------------------------------------------------------------------------------------
|         | Hemisphere Energy Corporation,having an
      address at 2000  1055 West Hastings Street, Vancouver, B.C. V6E 2E9
|         |                                                                                                                   
|         | (the Corporation)                                                                                               
|         |                                                                                                                   
|AND:     | Andrew Arthur,having an address at 1059
      Walalee Drive, Delta, BC, V4M 2L9                                   
|         |                                                                                                                   
|         | (the Executive)                                                                                                 

WHEREAS:

|A. | The Corporation is in the business of producing oil and
      gas;                                                                                                                                                                                 
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                    
|B. | The Executive has the skills and abilities needed to
      provide services to the Corporation; and the Corporation wishes to
      continue to engage the Executive to provide those services;                                                    
|   |                                                                                                                                                                                                                                                    
|C. | The Corporation and the Executive agree that the
      employment terms contained in this Agreement are valuable and sufficient
      consideration for the Executives voluntarily entering into this
      Agreement; and                        
|   |                                                                                                                                                                                                                                                    
|D. | The Corporation believes it is fair and reasonable to the
      Corporation that the Executive receive fair treatment in the event of a
      termination of employment or in the event of a Change of Control in
      respect of the Corporation;

NOW THEREFORE in consideration of the mutual promises of
the parties hereinafter set forth and for other good and valuable consideration
given to the Executive by the Corporation, the receipt and sufficiency of which
are hereby acknowledged by each of the parties hereto, the parties hereby
covenant and agree as follows:

|1.  | DEFINITIONS                                                                                   
|--- | ----------------------------------------------------------------------------------------------
|    |                                                                                               
|1.1 | For the purpose of this Agreement the following terms
      shall have the following meanings:

| | (a) | "Affiliate" shall have the meaning ascribed
      thereto, in the Canada Business Corporations Actas at the date of
      this Agreement.                                                                                                                                                                                                                                                                                                                
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (b) | "Agreement" means this agreement and all schedules
      attached hereto, and in each case as they may be amended or supplemented
      from time to time, and the expressions "hereof", "herein", "hereto",
      "hereunder", "hereby" and similar expressions refer to this agreement and,
      unless otherwise indicated, references to articles, sections and
      subsections are to articles, sections and subsections in this
      agreement.

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| | (c) | "Associate" shall have the meaning ascribed
      thereto in the Canada Business Corporations Act, as at the date of
      this Agreement.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                           
| | (d) | "Average Annual Bonus" means an amount equal to
      either:                                                                             

| | (a) | the average of the annual performance bonus paid to the
      Executive over the two (2) years immediately prior to the Termination of
      Employment; or                                                                             
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                         
| | (b) | if the Executive has not been continuously employed by
      the Corporation for a period of two years prior to termination, the last
      annual performance bonus paid to the Executive prior to the Termination of
      Employment.

| | (e) | "Board of Directors" means the Board of Directors
      of the Corporation.                                                                                                                                                       
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                   
| | (f) | "Change of Control" means the occurrence of a
      transaction or a series of transactions following the effective date of
      this Agreement, other than as agreed to in writing by the Executive, as a
      result of which:

| | (a) | any Person acquires or becomes the beneficial owner of,
      or a combination of Persons acting jointly or in concert or pursuant to a
      voting trust acquire or become the beneficial owner of, directly or
      indirectly, such number of Voting Securities of the Corporation which,
      together with such Person's or Persons' then owned Voting Securities of
      the Corporation, if any, represent 50% or more of the Voting Securities of
      the Corporation, whether such 50% threshold percentage is achieved through
      the acquisition of previously issued and outstanding Voting Securities, or
      of Voting Securities that have not been previously issued, or any
      combination thereof, or any other transaction having a similar effect;
      PROVIDED, HOWEVER, that the provisions of this subsection (a) shall be
      deemed not to apply to:
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (i) | the acquisition of 40% or more of the Voting Securities
      of the Corporation by the Executive or any Associate(s) of the Executive
      or by any voting trust in which either the Executive or any Associate(s)
      of the Executive participate(s); and
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (b) | a majority of the directors of the Corporation is removed
      from office at any annual or special meeting of shareholders or in any
      other manner whatsoever;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | (c) | the Corporation merges or is consolidated with, completes
      a successful take-over of or is successfully taken over by or concludes an
      arrangement for the disposition of the Corporation to or for the
      acquisition of any other corporation(s) or legal entity(ies) (other than
      with, of, by or to a wholly-owned Subsidiary or Subsidiaries of the
      Corporation) and such transaction or series of transactions results in a
      Person (other than the shareholders of the Corporation, taken as a whole,
      immediately before the transaction in question) acquiring or becoming the
      beneficial owner of, or a combination of Persons (other than the
      shareholders of the Corporation, taken as a whole, immediately before the
      transaction in question) acting jointly or in concert or pursuant to a
      voting trust acquiring or becoming the beneficial owner of, directly or
      indirectly, such number of Voting Securities of the resulting
      Corporation(s) or legal entity(ies), so as to gain effective control of
      the resulting Corporation(s) or the legal entity(ies), PROVIDED, HOWEVER,
      that the provisions of this subsection (c) shall be deemed not to apply to
      any transaction in which the majority of the directors of the Corporation
      (as it was constituted prior to the transaction) remain as a majority of
      the directors of the Corporation following such transaction(s);
  or

2

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| | (d) | the Corporation sells all or substantially all of its
      assets, over the reasonable objection of the Executive, to any other
      corporation(s) or legal entity(ies) (other than to a wholly-owned
      Subsidiary or Subsidiaries of the Corporation), and for the purpose of
      this subsection (d), "substantially all" shall mean 75% or more in value
      of the "proved reserves" of the Corporation from time to
  time.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (g) | "Corporation" means Hemisphere Energy Corporation
      and its Affiliates and Subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (h) | "Just Cause" includes, but is not limited to: (i)
      the commission of a criminal offence or commission of any unlawful act by
      the Executive which would be detrimental to the reputation, character or
      standing of the Corporation, or a material act of dishonesty, fraud,
      embezzlement, misappropriation or financial dishonesty against the
      Corporation; (ii) the material breach of this Agreement by the Executive,
      or any other written agreement between the Executive and the Corporation;
      (iii) the Executives material breach or violation of any lawful
      employment policy of the Corporation, including those prohibiting
      harassment of another employee; (iv) breach of fiduciary duty as an
      officer to the Corporation or persistent neglect, gross negligence or
      wilful misconduct in the performance of duties in accordance with the
      lawful direction of the Board; or (v) any conduct that at common law or
      under the British Columbia Employment Standards Actwould
      constitute just cause for termination of employment without notice or pay
      in lieu of notice.
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | (i) | "Person" includes an individual, partnership,
      association, body corporate, trustee, executor, administrator, legal
      representative and any national, provincial, state or municipal
      government.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

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| | (j) | Termination of Employment means the Executives
      last day actively at work for the Corporation, regardless of the reason
      for employment ceasing, whether for cause or not for cause, whether lawful
      or unlawful, whether the cessation of employment was initiated by the
      Executive or by the Corporation.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

|2.  | EMPLOYMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.1 | The Corporation shall employ the Executive in the
      position of Vice President Exploration, commencing on the date of
      execution of this Agreement (the Commencement Date).                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.2 | This Agreement shall be for an indefinite term unless
      terminated earlier in accordance with Section 7 below.                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.3 | The Executive shall perform the duties as are consistent
      with such position of Vice President Exploration and any other duties as
      determined by the Corporation. The Executive acknowledges and agrees that
      the requirement to fulfil other duties as determined by the Corporation
      does not constitute a fundamental alteration to this Agreement and does
      not entitle the Executive to remuneration in addition to that set out
      below in Section 3.                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.4 | The Corporation may change the Executive's duties,
      responsibilities and status, provided that such change or series of
      changes does not constitute Good Reason (as defined below).                                                                                                                                                                                                                                                                                                                                                                                                  
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.5 | The Executive agrees that his hours of work shall vary
      and may be irregular and shall be those hours required to meet the
      objectives of his employment. The Executive agrees that the compensation
      described in Section 3 of this Agreement compensates him for all hours
      worked and that no overtime shall be paid with respect to any hours worked
      by the Executive outside normal business hours.                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.6 | The Executive acknowledges and agrees that the employment
      relationship shall be governed by the standards and terms established by
      the Corporations policies as they are established from time to time and
      agrees to comply with the terms of such policies so long as they are not
      inconsistent with any provisions of the Agreement. The Executive shall
      inform himself of the details of such policies and amendments thereto
      established from time to time. The Corporation reserves the right to
      unilaterally revise the Corporations policies.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.7 | The Executive acknowledges that the position of Vice
      President Exploration of the Corporation places the Executive in a
      fiduciary relationship with the Corporation and that the Executive owes a
      duty to the Corporation to act with the utmost good faith. The Executive
      shall faithfully serve the Corporation and make best efforts to promote
      the interests of the Corporation at all times.                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|2.8 | The Executive agrees to devote his full time and
      attention to the business of the Corporation and shall not, without the
      written consent of the Corporation, undertake during the course of his
      employment any other business or occupation or become a director, officer,
      Executive, consultant or agent of another company, firm or
      proprietorship.                                                                                                                                                                                                             

4

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|2.9  | The Executive shall, in the course of carrying out his
      duties and responsibilities, comply with all applicable laws, regulations,
      bylaws, ordinances and any other applicable legal requirements.                                                                                                                                                                                                                                                                                                                                                                                    
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|2.10 | The Executive shall disclose actual or potential business
      conflicts of interest to the Corporation. Any uncertainty as to whether
      such a conflict exists shall be raised by the Executive for determination
      by the Corporation, acting reasonably. The Executive shall conduct himself
      so as to avoid any actual or potential conflict of interest.                                                                                                                                                                                                                      
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.   | COMPENSATION AND BENEFITS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.1  | The Corporation shall pay the Executive an annual base
      salary of CAD$140,000 payable in semi-monthly installments, according to
      its normal payroll practices, subject to the normal statutory deductions
      (the Annual Base Salary).                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.2  | In addition to the annual salary payable to the
      Executive, the Executive shall be entitled to receive a performance bonus
      as and when determined by, and at the discretion of, the Board of
      Directors.                                                                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.3  | The Executive shall be entitled to five (5) weeksof paid vacation of per annum, prorated for partial years of
      employment, to be taken at times mutually agreeable to the Executive and
      the Corporation.                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.4  | The Corporation shall, subject to eligibility, allow the
      Executive to participate in the Corporations benefits plan(s) in effect
      for employees of the Corporation, as amended from time to time. Benefits
      shall be provided in accordance with the formal plan documents or policies
      and any issues with respect to entitlement or payment of benefits under
      the insurance benefits package shall be governed by the terms of such
      documents or policies. The Corporation reserves the right to unilaterally
      revise the terms of the benefits plan(s).
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.5  | The Corporation shall pay or reimburse the Executive for
      all reasonable out of pocket business expenses including, without
      limitation, all travel and promotional expenses payable or incurred by the
      Executive in connection with the proper discharge of his duties and
      responsibilities under this Agreement. For all such expenses, the
      Executive shall provide to the Corporation proper receipts validating such
      expenses, and any other information or materials as the Corporation may
      from time to time reasonably require.                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|3.6  | Unless otherwise agreed by the parties, upon cessation of
      employment with the Corporation for any reason, regardless of whether the
      cessation is voluntary or involuntary or constitutes termination with or
      without cause or adequate notice the Executive shall cease to participate
      in the Corporations benefits plans under Section 3.4 of this Agreement
      and shall not be entitled to any further benefits under this
    Agreement.                                                                                                                         

5

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|3.7 | The Executive shall be entitled to participate in the
      Corporation's profit sharing and stock option plans as may be amended or
      constituted from time to time, provided that participation shall be in
      accordance with and subject to all applicable terms and conditions of such
      plans. The Corporation reserves the right to unilaterally revise the terms
      of the Corporation's profit sharing and stock option plans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.8 | Any stock options granted under Section 3.7 of this
      Agreement or at any time during this Agreement shall vest, terminate and
      be exercisable on the terms set out in the form of stock option agreement
      in use by the Corporation at the time of such grant and in accordance with
      the terms of the Corporations Stock Option Plan for employees as it
      exists from time to time, and subject to necessary regulatory and Board
      approval.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|3.9 | All compensation payable under Section 3 of this
      Agreement shall be subject to applicable federal, provincial and local tax
      and other withholding obligations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.  | RESTRICTIONS ON EMPLOYMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|4.1 | The Executive represents and warrants to the Corporation
      that the Executive does not owe and shall not, during the Executives
      employment with the Corporation, undertake or agree to, any contractual or
      other duties or obligations to any other person or entity which may
      conflict or interfere with this Agreement or any of the Executives duties
      and obligations under this Agreement, or which may prevent the Executive
      from entering into this Agreement or performing any of the Executives
      duties and obligations under this Agreement. The Executive represents and
      warrants that the Executive shall not use in the performance of the
      Executives duties for the Corporation any documents or materials or
      intangibles of a former employer or third party that are not generally
      available to the public or have not been legally transferred to the
      Corporation.                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5.  | NON-SOLICITATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5.1 | The Executive recognizes and understands that in
      performing the duties and responsibilities of his employment as outlined
      in this Agreement, the Executive has been and shall be a key employee of
      the Corporation and shall occupy a position of high fiduciary trust and
      confidence, pursuant to which the Executive has developed and shall
      develop and acquire wide experience and knowledge with respect to all
      aspect of the business carried on by the Corporation and the manner in
      which such business is conducted. It is the expressed intent and agreement
      of the Executive and the Corporation that such knowledge and experience
      shall be used solely and exclusively in the furtherance of the business
      interest of the Corporation and its Affiliates and not in any manner
      detrimental to them. The Executive therefore agrees that so long as he is
      employed by the Corporation pursuant to this Agreement he shall not engage
      in any practice or business in competition with the business of the
      Corporation or any of its Affiliates, nor shall the Executive take any act
      that would result in a conflict of interest with respect to the
      Executive's duties under this Agreement.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|5.2 | The Executive covenants that he shall not without the
      prior written consent of the Corporation at any time during employment
      with the Corporation and a period of 12 months following the Termination
      of Employment, either alone or in partnership or jointly or in conjunction
      with any Person, whether as principal, agent, partner, co-venturer,
      shareholder, investor, creditor, director, officer, employee, advisor,
      consultant or in any other capacity whatsoever, directly or indirectly:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

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| | (a) | employ, engage, offer employment or engagement to or
      solicit the employment or engagement of or entice away from or solicit,
      induce or encourage to leave the employment or engagement by the
      Corporation, any individual who is employed or engaged by the Corporation
      whether or not such individual would commit any breach of the Executives
      contract or terms of employment or engagement by leaving the employ or the
      engagement by the Corporation; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | (b) | procure or assist any person, company, partnership, trust
      or other entity to employ, engage, offer employment or engagement or
      solicit the employment or engagement of any individual who is employed or
      engaged by the Corporation or otherwise entice away from the employment or
      engagement of the Corporation any such
individual.                                                                                                                                     

|5.3 | The parties recognize that a breach by the Executive of
      any of the covenants contained in this Section 5 would result in damages
      to the Corporation and that the Corporation could not adequately be
      compensated for such damages by monetary award. Accordingly, the Executive
      agrees that in the event of any such breach, in addition to all other
      remedies available to the Corporation at law or in equity and the
      Corporation shall be entitled as a matter of right to apply to a court of
      competent jurisdiction for such relief by way of restraining order,
      injunction, decree or otherwise, as may be appropriate to ensure
      compliance with the provisions of this Agreement.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5.4 | The parties further agree that a breach by the Executive
      of any of the covenants contained in Sections 5.2 and 6 of this Agreement
      constitute Just Cause for the Corporation to terminate the Executives
      employment and shall nullify and make void the obligation of the
      Corporation to make the payments referred to in Section 7.5 of this
      Agreement and where such payments have already been made, the Executive
      agrees to reimburse the Corporation the amount paid. Where the Executive
      fails to reimburse the Corporation, the amount paid to the Executive shall
      be a debt due and owing from the Executive to the Corporation.                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|5.5 | The parties agree that all restrictions in this Agreement
      are necessary and fundamental to the protection of the business of the
      Corporation and are reasonable and valid, and all defences to the strict
      enforcement thereof by the Corporation are hereby waived by the Executive.
      The restrictions contained in this Section 5 are in addition to and do not
      derogate from any other duties and obligations (including fiduciary
      obligations) the Executive may have to the Corporation under any
      applicable laws.                                                                                                                                                                               
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6.  | CONFIDENTIAL INFORMATION                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|6.1 | The Executive acknowledges that in the performance of the
      Executives duties and responsibilities the Executive shall acquire
      knowledge of a wide variety of confidential information concerning the
      operations, opportunities, assets, finances, business and affairs of the
      Corporation and its employees, customers, joint venture parties,
      contractors, suppliers parents, and related companies (the
      Confidential Information). The Confidential Information is and
      shall remain the sole and exclusive property of the Corporation regardless
      of whether such information was generated by the Executive or by
      others.                                                          

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|6.2 | Throughout the term of this Agreement and at all times
      after the termination of this Agreement for any reason whatsoever, the
      Executive agrees to refrain from directly or indirectly using, revealing
      or disclosing, in any manner whatsoever, any information that is
      Confidential Information or not known to the general public that is
      disclosed, entrusted to or revealed to the Executive by the Corporation or
      of which the Executive has become aware in the course of the Executives
      employment with the Corporation.                                                                                                                                                                                                                                                                                                                                      
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.  | TERMINATION OF AGREEMENT AND
    EMPLOYMENT                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.1 | This Agreement shall terminate as of the date of the
      Executives death.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.2 | If the Executive becomes Disabled (as defined below), so
      that the Executive is unable to perform his essential job functions
      hereunder for a period aggregating 180 days during any 12 month period, or
      it is determined by a physician reasonably selected by the Corporation
      that, by reason of Disability, the Executive shall be unable to perform
      the essential job functions required of him hereunder, where the
      Disability cannot be accommodated without the Executive incurring undue
      hardship, the Corporation may, by written notice to the Executive,
      terminate this Agreement and the Executives employment the Corporation.
      For purposes of this Agreement, Disabled or Disability
      means, as determined by the Executive, disability as it would be
      interpreted under the applicable human rights legislation in
  Canada.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.3 | The Corporation may terminate the Executives employment
      pursuant to this Agreement at any time, for Just Cause, without notice or
      pay in lieu of notice.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.4 | The Corporation may terminate the Executive during the
      Probation Period for lack of suitability, without notice or pay in lieu of
      notice to the Executive.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|7.5 | The Corporation may terminate the Executives employment
      not for cause by providing the Executive with 12 months working notice or,
      in the alternative, without notice by paying to the Executive the
      following compensation:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

| | (a) | any accrued amounts earned by or otherwise owing to the
      Executive by the Corporation as of the Termination of
Employment;                                                                                                                                                                                                   
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                   
| | (b) | the full amount of any expenses incurred by the Executive
      pursuant Section 3.5 of this Agreement up to the Termination of
      Employment, provided the Executive provides proper receipts validating
      such expenses to the Corporation no later than fifteen (15) days following
      the Termination of Employment;
| |     |                                                                                                                                                                                                                                                                                                                                   
| | (c) | the Annual Base Salary; and                                                                                                                                                                                                                                                                                                       
| |     |                                                                                                                                                                                                                                                                                                                                   
| | (d) | the Average Annual Bonus,                                                                                                                                                                                                                                                                                                         

8

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|    | less any applicable federal, provincial and local tax and
      other withholding obligations.                                                                                                                                                                                                                                      
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                     
|7.6 | Anything to the contrary notwithstanding, the Executive
      may terminate this Agreement for Good Reason by written notice to Employer
      at any time not more than ninety (90) days after Good Reason shall first
      exist. For purposes of this Agreement, Good Reason shall mean any
      one of the following events:

| | (a) | a Change of Control;                                                                                                                                                                                                                                                                                                
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                     
| | (b) | any material diminution in the aggregate of Employees
      Annual Base Salary (as defined below) and benefits under Employers
      health, welfare and retirement plans and programs in which Employee
      participates (excluding any changes to Employees bonus and other
      incentive compensation); or
| |     |                                                                                                                                                                                                                                                                                                                     
| | (c) | any material breach by Employer of this
  Agreement;                                                                                                                                                                                                                                                                

provided, however, that, upon the
occurrence of an event described in Sections 7.6(b) through 7.6(c) above, the
Executive shall have, within ninety (90) days of such occurrence, given written
notice thereof to the Corporation specifying in reasonable detail the facts and
circumstances of such event, and the Corporation shall have failed to remedy or
otherwise cure the circumstances within fifteen (15) business days following the
receipt by the Corporation of such notice; provided further, however, that, if
such action, failure or breach cannot reasonably be cured within such period of
time, then such period of time shall be extended to the appropriate period of
time in which such action, failure or breach can reasonably be cured so long as
the Corporation takes those measures that can reasonably be taken during such
period of time and thereafter as are reasonably necessary to cure such action,
failure or breach. If the Executive terminates the Agreement pursuant to this
Section 7.6, the Executive shall be entitled to receive the compensation set out
in Section 7.5.

|7.7 | The Executive may terminate the Executives employment
      without Good Reason by providing at least thirty (30) days notice in
      writing to the Corporation, which notice may be waived in whole or in part
      by the Corporation at its sole discretion, in which case the Executives
      entitlement to any forms of compensation will, subject to any statutory
      requirements to the contrary, cease on the day that the Corporation waived
      that notice. The Corporation shall have no further obligations to the
      Executive with respect to the termination of the Executives employment or
      this Agreement, including without limitation any further compensation,
      severance pay or damages.                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|7.8 | The Corporation and the Executive agree that the
      consideration provided in Section 7.5 constitutes a complete and final
      remedy, and upon the Corporations compliance with its obligations to the
      Executive upon Termination of Employment, and the Executive hereby
      releases the Corporation from any and all covenants, warranties,
      representations, debts, dues, accounts, claims, demands, actions and
      rights of action, including, but not limited to, all claims at common law
      and/or under the British Columbia Employment Standards Actand
      Human Rights Codeand any other applicable legislation and under
      any applicable insurance benefits coverage which the Executive has or
      hereafter can, shall or may have arising or resulting directly or
      indirectly from his employment with the Corporation, or the cessation
      thereof, and that the Executive shall execute a release in favour of the
      Corporation.

9

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|7.9  | The Executive shall at any time upon request by the
      Corporation, and immediately upon the Termination of Employment, promptly
      return to the Corporation all originals and copies of Confidential
      Information and all paper and electronic documents and other records
      containing Confidential Information, and any other property belonging to,
      or relating to the business of, the Corporation or its parents and related
      companies, including any records, data, notes, reports, proposals, client
      lists, correspondence, materials, marketing or sales information, computer
      programs, equipment, or any other property belonging to the Corporation
      without retaining copies thereof.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|7.10 | The Executive agrees that the Executive shall not engage
      in any pattern of conduct, whether through written or oral statements,
      which are disparaging or damaging to the integrity, reputation, or good
      shall of the Corporation either during or after the Executives
      employment.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8.   | CHANGE OF CONTROL                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8.1  | Notwithstanding the terms of this Agreement and upon
      request of the Corporation, the Executive agrees to remain in the employ
      of the Corporation during the period commencing with any act taken by any
      Person, or the announcement of an intention to take such act, which may
      result in a Change of Control of the Corporation and ending with the final
      conclusion of all matters associated with such act or
  announcement.                                                                                                                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|9.   | LEGAL PROCEEDINGS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|9.1  | To the extent that it is lawfully able to do so, the
      Corporation shall indemnify the Executive and his heirs, and legal
      representatives against all costs, charges and expenses (including any
      amounts paid to settle any actions or satisfy any judgment) reasonably
      incurred by the Executive in respect of any civil, criminal or
      administrative action or proceeding to which the Executive has been made a
      party by reason of being or having been an employee, director, or officer
      of the Corporation if:                                                                                                                                                                                     

| | (a) | the Executive acted honestly and in good faith with a
      view to the best interests of the Corporation; and                                                                                        
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                       
| | (b) | in the case of a criminal or administrative action or
      proceeding that is enforced by a monetary penalty, the Executive had
      reasonable grounds for believing that his conduct was
  lawful.

|9.2 | To the extent that it is lawfully able to do so, the
      Corporation shall indemnify the Executive and his heirs, and legal
      representatives against all costs, charges and expenses reasonably
      incurred by the Executive in respect of an action by or on behalf of the
      Corporation to procure a judgment in the Corporation's favour to which the
      Executive is made a party by reason of having been an employee, director,
      or officer of the Corporation, if:
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10

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| | (a) | the Executive acted honestly and in good faith with a
      view to the best interests of the Corporation; and                                                                                        
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                       
| | (b) | in the case of a criminal or administrative action or
      proceeding that is enforced by a monetary penalty, the Executive had
      reasonable grounds for believing that his conduct was
  lawful.

|10.  | MISCELLANEOUS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.1 | This Agreement shall enure to the benefit of and be
      enforceable by the Executive's successors or legal representatives but
      otherwise it is not assignable.                                                                                                                                                                                                                                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.2 | This Agreement and the documents specifically referred to
      herein constitute the entire agreement between the Executive and the
      Corporation regarding the matters described herein and therein. Any and
      all previous agreements or representations, written or oral, express or
      implied, relating to such matters are terminated, cancelled or
      withdrawn.                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.3 | Notwithstanding any termination of this Agreement for any
      reason whatsoever and with or without cause, the provisions of Articles 6,
      7.8, 7.10, 9, and 10.4 and any of the provisions of this Agreement
      necessary to give efficacy thereto, shall continue in full force and
      effect following such termination.                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.4 | If any provision contained herein is determined to be
      void or unenforceable in whole or in part, it shall be and be deemed to be
      severed from this Agreement without effecting or impairing the validity of
      any other provision herein.                                                                                                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.5 | The Corporation shall have the right to assign this
      Agreement to another party as a successor employer, provided that any such
      successor or assignee expressly assumes in writing the Corporations
      obligations under this Agreement. The Executive shall not assign the
      Executives rights under this Agreement or delegate to others any of the
      Executives functions and duties under this Agreement without the express
      written consent of the Corporation, which may be withheld in its sole
      discretion.                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.6 | The headings of the articles, sections and subsections
      herein are inserted for convenience of cross reference only and shall not
      affect the meaning or construction hereof.                                                                                                                                                                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.7 | This Agreement shall be governed by and construed in
      accordance with the laws of the Province of British Columbia. Any dispute
      arising from, connected with, or relating to this Agreement or any related
      matters shall be resolved by the courts of British Columbia sitting in the
      city of Vancouver, and the parties hereby irrevocably submit and attorn to
      the original and exclusive jurisdiction of these courts.                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|10.8 | If there is a conflict between the provisions of this
      Agreement and the provisions of any incentive compensation plans, benefit
      plans, pension plans, any other perquisites payable, or any basis of
      compensation or the payment of benefits to the Executive generally, the
      parties acknowledge and agree that it is the intent of this Agreement that
      the Executive shall receive the maximum of the amounts owing to him
      hereunder or thereunder and in no event shall the Executive be
      disadvantaged as a result of such a conflict.

11

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|10.9 | Any notice or other communication required or permitted
      to be given hereunder shall be in writing and shall be prepaid first-class
      mail, by facsimile or other means of electronic communication or by
      hand-delivery as hereinafter provided. Any such notice or other
      communication, if mailed by prepaid first-class mail at any time other
      than during a general discontinuance of postal service due to strike,
      lockout or otherwise, shall be deemed to have been received on the fourth
      business day after the post-marked date thereof, or if sent by facsimile
      or other means of electronic communication, shall be deemed to have been
      received at the time it is delivered to the applicable address noted below
      either to the individual designated below or to an individual at such
      address having apparent authority to accept deliveries on behalf of the
      addressee. Notice of change of address shall also be governed by this
      section. In the event of a general discontinuance of postal service due to
      strike, lock-out or otherwise, notices or other communications shall be
      delivered by hand or sent by facsimile or other means of electronic
      communication and shall be deemed to have been received in accordance with
      this section. Notices and other communications shall be addressed as
      follows:
|---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| | (a) | if to the Executive:                   
| | --- | ---------------------------------------
| |     |                                        
| |     | Andrew Arthur                          
| |     | 1059 Walalee Drive                     
| |     | Delta, BC, V4M 2L9                     
| |     | Phone: 604-569-5699                    
| |     |                                        
| | (b) | if to the Corporation:                 
| |     |                                        
| |     | Hemisphere Energy Corporation          
| |     | Suite 2000, 1055 West Hastings Street  
| |     | Vancouver, BC V6E 2E9                  
| |     | Attention: Chairman, Board of Directors
| |     | Facsimile: (604) 685-9676              

|10.10 | The Executive agrees that the contents, terms and effect
      of this Agreement have been explained to the Executive by a lawyer and are
      fully understood or that the Executive has waived the Executives right to
      seek legal advice but fully understand and accept the contents, terms and
      effect of this Agreement. The Executive further agrees that the Executive
      voluntarily accepts the terms and conditions of employment with the
      Corporation as set out herein.
|----- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.11 | The Executive hereby acknowledges receipt of a copy of
      this Agreement duly signed by the Corporation.                                                                                                                                                                                                                                                                                                                                                                                              
|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|10.12 | Words importing the masculine gender shall include the
      feminine and neuter genders and vice versa and the words importing persons
      shall include individuals, partnerships, trusts, corporations, governments
      and governmental authorities and vice versa.                                                                                                                                                                                                                              

12

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IN WITNESS WHEREOF the parties hereunto have executed
this agreement as of the date first written above.

HEMISPHERE ENERGY CORPORATION

|Per: | (Signed) Don Simmons     | 
|---- | -------------------------- | 
|     | Authorized
      Signatory | 

|SIGNED, SEALED AND DELIVERED by              | ) |                          | 
|-------------------------------------------- | - | ------------------------ | 
|Andrew Arthur                                | ) |                          | 
|                                             | ) |                          | 
|in the presence of:                          | ) |                          | 
|(Signed)
      Annalisa Whittle            |   | (Signed) Andrew Arthur | 
|Witness                                      | ) | Andrew Arthur            | 
|                                             | ) |                          | 
|Address                                      | ) |                          | 
|                                             | ) |                          | 
|                                             | ) |                          | 
|Communications and
      Corporate Secretary | ) |                          | 
|Occupation                                   | ) |                          | 

13

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