Hemisphere Energy Corporation: Exhibit 4.1 - Filed by newsfilecorp.com








October 2, 2014 

Hemisphere Energy Corporation 
570, 789 West Pender
St. 
Vancouver, British Columbia 
V6C 1H2 

	Attention: 	
      Reserves Review Committee of the Board of Directors of
      

	  	
      Hemisphere Energy Corporation 

	  	
      

	Re: 	
      McDaniel & Associates – Report of Third Party for
      the Evaluation of Oil and Gas Reserves attributed to selected
      Hemisphere Energy Corporation’s interests in Western Canada
    



Ladies and Gentlemen: 

Pursuant to your request, McDaniel & Associates Consultants
Ltd. (“McDaniel”) has conducted an evaluation of Hemisphere Energy Corporation
(“Hemisphere” or the “Company”) proved  crude oil, natural gas and
natural gas products reserves for selected Hemisphere interests in Western
Canada. The properties evaluated were indicated to include 100% of
the Company’s total proved interests in Canada. Reserve estimates provided herein were
prepared in support of the Company’s year-end reserve reporting requirements
under the US Securities Regulation S-K and for other internal business and
financial needs of the Company. Reserve volumes are estimated as at December 31,
2013. The completion date of our report is May 27, 2014. 

The following table sets forth the proved reserve
estimates using constant prices and costs. 

	  	Table 1: Company Net Reserves
    (1)
	  	  	  	  	  	  
	  	Light/Medium 	  	Natural 	Natural Gas 	Oil 
	  	Oil 	Heavy Oil 	Gas 	Liquids 	Equivalent (2)
	Canada 	Mbbl 	Mbbl 	MMcf 	Mbbl 	Mboe
	Proved Developed Reserves 	0 	448	406	1 	517
	Proved Non-Producing Reserves 	0 	21	2	0 	21
	Proved Undeveloped Reserves	0	523	145	0	547
	Total Proved  Reserves 	0 	992	554	1 	1,085


Notes: 

1) Net reserves include working interest after royalty deductions plus royalty
interest reserves

2) Natural gas is converted to oil equivalent
using a factor of 6,000 cubic feet of gas per one barrel of oil equivalent


 

2200, Bow Valley Square 3, 255 - 5 Avenue SW, Calgary AB T2P 3G6
Tel: (403) 262-5506 Fax: (403) 233-2744 www.mcdan.com 





	Hemisphere Energy Corporation 	October 2, 2014 
	Report of Third
      Party for Canadian Properties 	Page 2 


Our evaluation was carried out in accordance with standards set
out in the Canadian Oil and Gas Evaluation Handbook (the "COGE Handbook") with
the necessary modifications to reflect definitions and standards under the U.S.
Financial Accounting Standards Board policies (the “FASB Standards”) and the
legal requirements under the U.S. Securities and Exchange Commission (“SEC
requirements”). 

Estimates of crude oil, natural gas and natural gas products
should be regarded only as estimates that may change as further production
history and additional information become available. Moreover, the methods and
data used in estimating reserves are often necessarily indirect or analogical in
character rather than direct or deductive. Furthermore, the persons involved in
the preparation of reserves estimates and associated information are required,
in applying geosciences, petroleum engineering and evaluation principles, to
make numerous unbiased judgments based upon their educational background,
professional training, and professional experience. The extent and significance
of the judgments to be made are, in themselves, sufficient to render reserves
estimates inherently imprecise. Reserves estimates may change substantially as
additional data becomes available and as economic conditions impacting oil and
gas prices and costs change. Reserves estimates will also change over time due
to other factors such as knowledge and technology, fiscal and economic
conditions, contractual, statutory and regulatory provisions. 

Data used in this evaluation was obtained from reviews with
Hemisphere personnel, reviews of Hemisphere files, from records on file with the
appropriate regulatory agencies, and from public sources. In the preparation of
this report we have relied, without independent verification, upon such
information furnished by Hemisphere with respect to property interests,
production from such properties, current costs of operation and development,
prices for production, agreements relating to current and future operations and
sale of production, and various other information and data that were accepted as
represented. Furthermore, if in the course of our examination something came to
our attention, which brought into question the validity or sufficiency of any of
such information or data, we did not rely on such information or data until we
had satisfactorily resolved our questions relating thereto or had independently
verified such information or data. A field examination of the properties was not
considered necessary for the purposes of this report. 

Hemisphere has warranted in a representation letter to us that,
to the best of the Hemisphere’s knowledge and belief, all data furnished to us
was accurate in all material respects, and no material data relevant to our
evaluation was omitted. 

In our opinion, estimates provided in our report have, in all
material respects, been determined in accordance with the applicable industry
standards, and results provided in our report and summarized herein are
appropriate for inclusion in filings under Regulation S-K.







	Hemisphere Energy Corporation 	October 2, 2014 
	Report of Third
      Party for Canadian Properties 	Page 3 


Methodology and Procedures 

The process of estimating reserves requires complex judgments
and decision-making based on available geological, geophysical, engineering and
economic data. To estimate the economically recoverable crude oil, natural gas
and natural gas products reserves and related future net cash flows, we consider
many factors and make assumptions including: 

	
  expected reservoir characteristics based on geological, geophysical and
  engineering assessments;
  

	
  future production rates based on historical performance and expected
  future operating and investment activities;
  

	
  future product prices adjusted for quality and transportation
  differentials based on historical data;
  

	
  future operating costs based on historical data;
  

	
  assumed effects of regulation by governmental agencies; and
  

	
  future development capital costs. 



Our estimates are prepared using standard geological and
engineering methods generally accepted by the petroleum industry, and the
reserves definitions and standards required by the United States SEC. Generally
accepted methods for estimating reserves include volumetric calculations,
material balance techniques, production and pressure decline curve analysis,
analogy with similar reservoirs, and reservoir simulation. The methods used for
the evaluation of Hemisphere's reserves were production decline curve analysis
and analogy with similar reservoirs. The assumptions, data, methods and
procedures used are appropriate for the purpose served by this report. Estimates may change substantially as additional data from ongoing
development activities and production performance becomes available and as
economic conditions impacting oil and gas prices and costs change. McDaniel used
all procedures and methods we consider necessary under the circumstances to
prepare this report.

As required under SEC Regulation S-K, reserves are those
quantities of oil and gas that are estimated to be economically producible under
existing economic conditions. As specified, in determining economic production,
constant product reference prices have been based on a 12-month average price,
calculated as the unweighted arithmetic average of the first-day-of-the-month
price for each month within the 12-month period prior to the effective date of
our report. 








	Hemisphere Energy Corporation 	October 2, 2014 
	Report of Third
      Party for Canadian Properties 	Page 4 


A summary of the product and reference prices are outlined below:

	 	Table 2: Twelve month average SEC compliant
      constant pricing 	  
	 	Exchange Rate ($Cdn/$US) 	0.97 
	 	WTI ($US/bbl) 	96.94 
	 	Edmonton Light Crude ($Cdn/bbl) 	93.19 
	 	Propane Edmonton ($Cdn/bbl) 	32.97 
	 	Butane Edmonton ($Cdn/bbl) 	66.58 
	 	Natural Gas Price at Henry Hub ($US/MMBtu) 	3.67 
	 	AECO Spot Natural Gas Price ($Cdn/MMBtu) 	3.16 
	 	Average Realized Price by Hemisphere after location
    and quality differentials Oil ($Cdn/bbl)	71.00
	 	Average Realized Price by Hemisphere after location
    and quality differentials Gas ($Cdn/bbl)	2.97
	 	Average Realized Price by Hemisphere after location
    and quality differentials NGL ($Cdn/bbl)	66.58


The Average Realized Prices were calculated after removing location and
quality adjustments from the benchmark oil and gas prices.

Generally, operations are subject to various levels of
government controls and regulations. These laws and regulations may include
matters relating to land tenure, drilling, production practices, environmental
protection, marketing and pricing policies, royalties, various taxes and levies
including income tax, and foreign trade and investment, that are subject to
change from time to time. Current legislation is generally a matter of public
record, and additional legislation or amendments that will affect reserves or
when any such proposals, if enacted, might become effective generally cannot be
predicted. Changes in government regulations could affect reserves or related
economics. In the regions that are currently being evaluated we believe we have
applied existing regulations appropriately. 

The results of our third party study, presented in report form
herein, were prepared in accordance with the disclosure requirements set forth
in the SEC regulations and intended for public disclosure as an exhibit in
filings made with the SEC by Hemisphere. We hereby consent to the references to
our name and our third party report as well as the filing of our third party
report as an exhibit to Hemisphere’s registration statement on Form 20-F.

McDaniel is an independent petroleum engineering consulting
firm that has been providing petroleum consulting services throughout the world
for over 50 years. McDaniel is registered with the Association of Professional
Engineers and Geoscientists of Alberta (APEGA). All of the professionals
involved in the preparation of this report have in excess of 5 years of
experience in the evaluation of oil and gas properties. Mr. Chris Kowalski, Vice
President, supervised the preperation of this report. Mr. Kowalski is a
professional engineer registered with APEGA and has over 20 years of experience
in the evaluation of oil and gas properties.







	Hemisphere Energy Corporation 	October 2, 2014 
	Report of Third
      Party for Canadian Properties 	Page 5 


McDaniel does not have any financial interest, including stock
ownership, in Hemisphere. Our fees were not contingent on the results of our
evaluation. This letter report has been prepared at the request of Hemisphere
and should not be used for purposes other than those for which it is intended.
We reserve the right to revise any of the estimates provided herein if any
relevant data existing prior to preparation of this report was not made
available or if any data provided was found to be erroneous. 

If there are any questions, please contact the writer directly
at (403) 218-1383. 

Sincerely, 

McDANIEL & ASSOCIATES CONSULTANTS LTD. 
APEGA PERMIT
NUMBER: P3145 

/s/ C. B.
Kowalski                                       
 
C. B. Kowalski, P. Eng.