CoJax Oil & Gas Corp 10-K/A

ITEM 1. BUSINESS Corporate Background Cojax Oil and Gas Corporation (“CoJax, the “Company”, us or we) was incorporated on November 13, 2017 under the laws of the Commonwealth of Virginia. The Company was formed with the business purpose to acquire oil drilling and production rights to properties with oil reserve reports showing sufficient oil reserves to justify drilling and to produce crude oil for sale to any available domestic or international buyers. Since incorporation in 2017, CoJax has not had any revenue-generating operations. Since incorporation, we have been engaged in organization of the company, evaluating and pursuing possible acquisitions of oil leases and rights and exploring the availability of third-party funding for our business plan. We are an independent oil and gas company focused on commencing operations in the acquisition, development and production of crude oil from assets in the Gulf States Drill Region. The production and sale of natural gas is not part of our revenue generating business because of the perceived cost and lack of profit potential for a small producer of natural gas. We are focused on establishing profitable oil exploration and production operations by acquiring the right, by lease or assignment, to drill, extract, and sell oil. We may extract and sell gas from time to time, but any gas production would be secondary and not significant business line. Our long-term goal is to create shareholder value by identifying and assembling a portfolio of low-risk assets with attractive economic profiles, and our short-term goal is to identify and complete an equity acquisition of producing oil and gas assets in the Gulf States Drilling Region and then raise sufficient working capital to establish deep drilling rigs to fully exploit oil reserves. The acquisition of Barrister described below is our initial acquisition in the Gulf States Drilling Region. Our ability to implement our business plan is subject in part on our ability to timely raise adequate and affordable funding from investors or lenders for establishing deep drilling rigs in acquired oil and gas leases and rights. If we cannot acquire oil leases and rights for our securities, we will also have to fund the cost of acquisition from investors or lenders. The funding may be equity or debt. Our first acquisition, Barrister, lacks existing cash flow from production to fund establishing deep drilling rigs. The lack of existing cash flow from existing oil production may also be true for any future oil leases and rights due our focus being on what we deem to be underexploited oil leases and rights – like Barrister. We may be unable, due to lack of required funding and any enhanced oil production from acquired oil leases and rights, to acquire additional oil leases and rights. The Barrister acquisition is the first and only current acquisition of oil and gas exploration and production leases and rights as of the date of this Annual Report. Barrister has only minimal oil drilling and production operations. CoJax will have to raise funding to establish one or more deep drilling rigs exploiting the Barrister Oil Rights. Even with deep drilling rigs, Barrister Oil Rights may not produce oil on a profitable basis. We currently have no other potential acquisitions. We have explored third party debt and equity funding for acquiring and expanding oil exploration and production, but as of the date of this Annual Report have no firm commitments for funding. Our experience is that private funding for new drilling on oil leases and rights with limited production or operating history has been difficult to obtain on affordable terms in the past. Our goal is to raise sufficient funds pursuant to the registration statement described below to expand drilling from Barrister Oil Rights 9 and establish a more robust cash flow and production history from Barrister Oil Rights in order to attract future funding, either from lenders or through offering of our securities to investors, to fund further drilling on Barrister Oil Rights and possibly, subject to adequate funds, acquire new oil leases and rights in Gulf State Drilling Region. We focus on Gulf State Drilling Region because of the quality of the oil and the ability to typically access oil without fracking and its history of drilling resulting oil production without an inordinate percentage of dry wells or failed drilling. We filed a registration statement on a Form S-1 which was declared effective by the Commission on October 9, 2020 (and the post-effective amendment No. 1 to this registration statement was declared effective by the Commission on October 22, 2020) to offer and sell up to 6,000,000 shares of our common stock at a price of $2.00 per share. The proceeds of the offering is to raise working capital for our corporate operating overhead and to fund establishing at least one deep drilling rig for the Barrister Oil Rights. We do not intend to do exploratory drilling, which is expensive and typically can only be afforded by the larger oil production companies. Barrister has existing rigs that are producing oil. Exploratory drilling can verify the presence of oil and is used to reduce the risk of establishing deep drilling rigs. As an early stage development company and with limited oil production history of Barrister oil rights, the Company does not believe that it can raise funding for exploratory drilling rigs and deep drilling oil rigs. As of May 13, 2021, we have raised $53,000 pursuant to the offering covered by said registration statement. The Registration Statement closed on May 31, 2021. CoJax has a corporate website under development at URL: http://www.cojaxoilandgas.com. The website should be operational in July 2021. Acquisition of Barrister Energy On November 17, 2020, the Company consummated the transactions contemplated by the acquisition agreement dated June 16, 2020 with Barrister Energy, LLC, a Mississippi limited liability company, and all of the members of Barrister (the “Barrister Agreement”) or (the “Acquisition Agreement”). The Company issued 3,650,000 shares to the members of Barrister in exchange for 100% of the outstanding membership interests, resulting in Barrister becoming a wholly-owned subsidiary of Cojax (the “Exchange”). The Barrister Agreement also provided that we assume $2,700,000 debt obligations of Barrister (the “Assumed Debt”), which debt obligation evidences the purchase price for Barrister’s acquisition of its current oil drilling and production rights and leases in Alabama. The debt we assumed is secured by the Barrister Oil Rights, which were acquired by Barrister from Central Operating, LLC, or “COP” under the June 1, 2019 Purchase and Sale Agreement, and related secured promissory Note and Security Agreement, both dated June 1, 2019 (the “COP Agreements”). These acquired oil and gas exploration and production assets represent all of the Barrister Oil Rights. There is no interest owed under the promissory note, but the principal is due in a lump sum payment due on June 1, 2021. This lump sum payment represents a significant financial burden for us. The pay-off of the Assumed Debt will have to be financed or funded, or restructured, in order to avoid a possible default and legal action to seize or sell the Barrister Oil Rights, which are collateral for the Assumed Debt. Under the Purchase and Sale Agreement, COP retained financial benefit of oil produced prior to and on June 1, 2019, and Barrister owned all post-June 1, 2019 oil production. Barrister had until August 31, 2019 to challenge any title defects affecting acquired assets. Barrister asserted no title defects. COP conveyed by Special Warranty of Title in respect of acquired assets “as is and with all faults” on date of purchase, but the warranty does not cover fitness of acquired assets for any specific purpose, or future 10 productivity of acquired assets, or hazardous material liabilities. Barrister waived, released, held harmless and indemnified COP and its affiliates from all liabilities associated with or arising from the Barrister Oil Rights. Based on CoJax management’s knowledge and inquiries, the cost of establishing a deep drilling rig is estimated to be $2 million to $3 million and the cost of drilling is estimated to be between $300 to $600 per lateral foot. Drilling costs are affected by a number of factors, including having to penetrate hard rock strata, rig equipment failures and amount of required drilling fluids. CoJax does not have the funds, assets, or funding commitments as of the date of this Annual Report to pay off the Assumed Debt. There is no assurance, especially in light of the chaotic economic conditions imposed by COVID-19 pandemic on the U.S. and world economies and the oil production industry and the uncertainty about when that impact will end, that CoJax can timely pay off or restructure the Assumed Debt. CoJax lacks the assets typically required for debt financing, and the Barrister Oil Rights are already subject to a secured lien held by COP under the COP Agreements. As of the date of this Annual Report, Barrister Oil Rights are producing very limited crude oil production from limited oil drilling operations, which production is not sufficient to cover our operating expenses or to fund establishing new oil drilling rigs or increased drilling. Establishing new oil drilling rigs to exploit the crude oil reserves of Barrister commercially is essential to CoJax efforts to establish a viable business. Even with one or more deep drilling wells for Barrister Oil Rights, those wells may fail to produce any oil or sufficient oil to allow CoJax-Barrister to become profitable. Business Strategies . Our long-term objective is to create shareholder value by identifying and assembling a portfolio of low-risk crude oil production assets with attractive economic profiles, and our short-term objective is the leveraging of the technical and managerial expertise of our proposed contractor operations team to deliver consistently profitable results from existing oil wells. Our geographical focus is the Gulf States Region due to its light grade oil which is cheaper to process than other forms of crude oil and due to the ability to tap oil reserves without fracking. We seek to achieve these objectives by executing the following strategies: (1) Day-to-Day Operations – Use of Contractors. Barrister engages COP as a contractor to operate the limited oil and gas production drilling and storage operations for the Barrister Oil Rights as well as using Jeffrey Delancey, our former Chief Executive Officer, as a part-time manager. CoJax intends to use professional contractors to operate existing and future crude oil and gas drilling operations, including use of COP for Barrister Oil Rights. CoJax believes that the use of contractors will allow CoJax-Barrister to engage experienced personnel to manage day-to-day operations without incurring the additional overhead imposed by full-time employees and will provide flexibility in engaging operational personnel. Full-time employees of CoJax-Barrister will generally be limited to senior executive officers of CoJax and, possibly, addition of a full-time operations executive at Barrister when and if oil production and revenues increase from deep drilling rig or rigs. This model of operation has a significant risk of being unable to retain key personnel who are merely contractors and who do not have the incentive of a full-time employee to remain with an employer and can be lured away by more lucrative offers of employment or engagement from competitors. CoJax will use contracts to seek to secure contractors for required periods. CoJax believes that the contractor model of management is affordable and efficient and within the projected ability of CoJax to fund. CoJax lacks the funding to engage full time, experienced oil operations executives in anticipation of increased oil production. 11 (2) Focus on Underexploited Oil Leases and Rights . CoJax will target oil leases and rights similar to Barrister as possible future acquisitions. CoJax is seeking underexploited oil leases and rights in the Gulf States Drilling Region with reserve reports and one or more drilling rigs, even if exploratory or not deep drilling rigs, which taken together indicate that the oil leases and rights have potential, substantial oil production capability – substantial for a small independent oil production company. CoJax does not seek oil leases and rights with productive deep drilling rigs as those properties often require funding or working capital beyond CoJax’s current means and projected future funding and working capital. Generally, the oil fields in the southern part of the Gulf States Drilling Region are less expensive to drill due to nature of rock strata and depth of the oil reserves. Barrister is in the southern part of the Gulf States Drilling Region. CoJax will seek acquisitions that can be obtained for stock or other securities or under an earn out arrangement and prefers acquiring companies which hold oil leases and rights rather than acquiring individual oil leases and rights. CoJax’s preference is to acquire companies with several oil leases and rights as opposed to acquiring individual oil leases and rights. The acquisition of a company has the perceived advantages of acquiring several oil leases and rights and existing drilling operations with in-place management in a single transaction along with possibly reduced due diligence costs and more expeditious closing of the transaction. Implications of Being an Emerging Growth Company . CoJax is an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act, or the JOBS Act, enacted in April 2012, and we may remain an emerging company for up to five years. For so long as we remain an emerging growth company, we are permitted and intend to rely on certain exemptions from various public company reporting requirements, including not being required to have our internal control over financial reporting audited by our independent registered public accounting firm pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and any golden parachute payments not previously approved. In particular, in this Annual Report, we have provided only two years of audited financial statements for 2020 and 2019 and have not included all of the executive compensation-related information that would be required if we were not an emerging growth company. Accordingly, the information contained herein may be different than the information you receive from other public companies in which you hold stock. In addition, the JOBS Act provides that an emerging growth company can take advantage of an extended transition period for complying with new or revised accounting standards. This provision allows an emerging growth company to delay the adoption of some accounting standards until those standards would otherwise apply to private companies. For as long as we are an emerging growth company, unlike other public companies that are not emerging growth companies under the JOBS Act, we are not required to: · provide an auditor's attestation report on management's assessment of the effectiveness of our system of internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"); · provide more than two years of audited financial statements and related management's discussion and analysis of financial condition and results of operations nor more than two years of selected financial data; · comply with any new requirements adopted by the Public Company Accounting Oversight Board (the "PCAOB") requiring and in which the auditor would be required to provide additional information about the audit and the financial statements of the issuer; 12 · provide certain disclosure regarding executive compensation required of larger public companies or hold shareholder advisory votes on executive compensation required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"); or · obtain shareholder approval of any golden parachute payments not previously approved. We will cease to be an emerging growth company upon the earliest of: · the last day of the fiscal year in which we have $1.0 billion or more in annual revenues; · the date on which we become a "large accelerated filer" (the fiscal year-end on which the total market value of our common equity securities held by non-affiliates is $700 million or more as of June 30); · the date on which we issue more than $1.0 billion of non-convertible debt over a three-year period; or · the last day of the fiscal year following the fifth anniversary of our initial public offering of securities, which initial public offering of securities was declared effective on August 12, 2019, by the Commission. Barrister Barrister History . Barrister’s principal executive offices are located at 404 Short 7th Avenue, Laurel, Mississippi 39440. Barrister’s telephone number is (601) 426-0056. Barrister was organized under the laws of the State of Mississippi on June 13, 2014. Operations Management . Barrister engages independent contractors or vendors to provide any services or functions. Prior to its acquisition by Cojax, Barrister was managed by its members. Currently, Mr. Jeffrey Delancey is taking the lead on the part-time management of Barrister. Mr. Delancey has over twenty-nine years of direct oilfield operating experience. Mr. Delancey has extensive experience with operations and administration in an independent oil and gas production company. Mr. Delancey relies on contract operators to provide experienced personnel to handle all essential crude oil production on a day to day basis for Barrister. As of the date of this Annual Report, COP manages Barrister’s drilling operations. Due to the limited oil production, Barrister believes that the management of operations by a contractor is the most efficient approach to conduct of operations. With any future increase in oil production, Barrister will have to engage additional personnel for operations if COP cannot manage increased drilling operations. Marketing . Barrister markets its crude oil production, whether current or future, on a month to month basis, through established networks of contacts. Due to limited oil production, Barrister’s marketing effort is limited in scope. If production of oil increases from the Barrister Oil Rights, CoJax-Barrister will have to expand the marketing efforts of Barrister by engaging a person or firm to seek out new customers for the oil production in case the current customer base of Barrister is unable or unwilling to purchase increased oil production. The cost means and extent of any enhanced future marketing effort will depend on the amount of increased oil production, the then current market for oil and the potential customer base for the oil production. If the existing customer base will not purchase increased oil production, then the engagement of a dedicated marketing person who engages in direct marketing, by telephone and internet, of potential customers for oil production may be required for sale of any future increase of oil production. A dedicated marketing person would entail an estimated $60,000 to $100,000 a year in compensation and benefits costs plus a possible commission or incentive compensation based on performance and an additional $10,000 to $20,000 in related annual administrative and overhead costs (consisting of computer system, telecommunication costs, marketing materials and possible travel). 13 Description of Barrister Oil Properties and Oil Production Operations . The Company currently has a leased land package of approximately 700 acres in Southwest Alabama, in one contiguous land package. It also has two producing wells, a saltwater disposal well, a three-mile gas transmission line along with gathering systems, and storage tanks for approximately 1,500 barrels. Competition. Barrister Weaknesses . Barrister is undercapitalized to properly exploit its existing oil properties or acquire new oil and gas properties for exploitation. Barrister acquired its oil properties in June 2019 and has not expanded the production, acquired new oil properties, or improved operations. Barrister has insufficient cash flow or funding to grow its core business operations. As such, Barrister is not an active competitor or commercial presence even among local, small independent oil producers. Additional funding will be required to not only increase oil production but also to enhance distribution and marketing efforts. Barrister Strengths . Barrister has highly experienced principals who have significant prior experience in oil and gas production in the Gulf States Drilling Region. Through the owners’ relationships, Barrister also has access to many experienced oil and gas engineers, drilling personnel, and other professionals engaged in the oil and gas drilling and production business in the Gulf States Drilling Region – all of whom can be engaged as contractors, consultants or possibly employees, subject to increased oil production and working capital. The experience of the former owners of Barrister will be relied upon by CoJax management in the initial phases of implementing the business plan. If oil drilling and production substantially increases, and contractors like COP could not handle the additional work load from increased drilling and production, CoJax would engage one or more experienced oil and gas industry operations managers to supplement the operations contractors and the part time input and efforts from the Barrister principals. The additional personnel could be employees or contractors. If oil drilling and production increases substantially, CoJax would engage one or more full-time, experienced oil and gas operations executives to establish an in-house expertise and full-time oversight over operations, even if contractors performed the daily management of operations. Competitors of Barrister . There are many large, medium, and small-sized competitors in the Gulf States Drilling Region (including off-shore drilling in the Gulf of Mexico) and adjacent areas which have extensive operational histories, experienced oil and gas industry management, established market share, profitable operations, and extensive potential oil and gas fields or leases to exploit and the cash or funding resources to explore new oil and gas fields as well as fully exploit existing oil fields. There is also an established oil and gas production industry in northern Alaska and in North Dakota and western Canada (where fracking has made available significant oil and gas reserves in shale formations). Barrister cannot match the resources, whether financial, technical, manpower, size of proven crude oil reserves, and distribution channels, of its competition in the Gulf States Drilling Region or elsewhere. Barrister’s current oil production is not sufficient to concern or attract the attention of competitors, which allows Barrister to operate as a small provider of oil without competitive pressures. If Barrister significantly increases oil production, then Barrister will face increasing competition from other small independent oil producers selling limited amounts of oil. Any increase in competitive pressures will require investment in a full-time marketing effort by Barrister. Barrister Oil Rights Description of Barrister Oil Properties and Oil Production Operations. The Company currently leases a land package of approximately 700 acres in Southwest Alabama, in one contiguous land package. It also has 14 two producing wells, a saltwater disposal well, a three-mile gas transmission line along with gathering systems, and storage tanks for approximately 1,500 barrels. Energy Production in Alabama. The State of Alabama is located in the Southeastern United States alongside the Gulf of Mexico and has been producing petroleum since 1940s. While the peak of oil production in Alabama was in the 1980s, according to the U.S. Department of Energy’s Energy Information Administration. As of 2020, Alabama was ranked 20th among the states in production of oil and natural gas combined and is producing oil at an annual rate of 3.2 millions of barrels of oil (based on 9,000 barrels a day as of June 2020). Alabama's major oil and gas-producing regions are located in the western and southwestern part of the state. The Smackover Trend . The Smackover trend is a belt of carbonate, evaporite, and clastic rocks of Late Jurassic age that rims the Gulf Coast of the United States from Texas, up to Arkansas, throughout Louisiana, Mississippi, Southwest Alabama, and all the way to the Florida panhandle. Stratigraphic and geochemical data indicate that the oil and gas were generated from algal-rich lime mudstones. It was named after the Smackover oil field, which was discovered in Union County, Arkansas, in 1937. Current Drilling on Barrister Energy Drill Region. There are three wells in the Barrister Energy Drill Region, which have produced oil and gas since 1996. Currently, two of these three wells are in production, and one well is used as a saltwater disposal well. We own approximately 95% working interest with a 79% net revenue interest as of June 1, 2019, the acquisition date for Barrister. The two producers are Nall 16-3 #1 and the Nettles 9-12 #1. The historical 8/8 th production (gross production) of these oil wells for the fiscal years 1996 – 2015, 2016, 2017, 2018, 2019, and 2020 are summarized in the table below. Barrister DRILL REGION PRODUCTION Nall 16-3 #1 and Nettle 9-12 #1 Year 8/8 th Total Oil Produced (bbl) Total Gas Produced (mcf) 1996 – 2015 * 225,300 53,175 2016 * 1,335 - 2017 * 4,371 - 2018 * 2,919 - 2019 * 1,397 - 2020 ** 183 - Total 235,505 53,175 * Historical production prior to the acquisition of rights by CoJax. ** Current production and historical production prior to the acquisition of rights by CoJax and post acquisition. Oil and Gas Production, Production Prices and Production Costs Oil and Gas Production The table below summarizes production by final product sold and by geographic area for the last four years. 15 2020 2019 2018 2017 (8/8 th barrels of oil produced at year-end) Crude oil and natural gas liquids production Crude Oil NGL Crude Oil NGL Crude Oil NGL Crude Oil NGL Consolidated Subsidiaries United States 183 - 1,397 - 2,919 - 4,371 - Total Consolidated Subsidiaries 183 - 1,397 - 2,919 - 4,371 - Total crude oil & natural gas liquids production Bitumen production Consolidated Subsidiaries United States - - - - - - - - Synthetic oil production Consolidated Subsidiaries United States - - - - - - - - Total liquids production - - - - - - - - (8/8 th barrels of oil produced at year-end) Natural gas production available for sale Consolidated Subsidiaries United States - - - - - - - - Total Consolidated Subsidiaries - - - - - - - - Total natural gas production available for sale - - - - - - - - (thousands of oil-equivalent barrels at year-end) Oil-equivalent production - - - - - - - - Production Prices and Production Costs. The table below summarizes average production prices and average production costs by geographic area and by product type for the last three years. United States Total During 2020 Consolidated Subsidiaries Average production prices Crude oil, per barrel 45.66 45..66 NGL, per barrel - - Natural gas, per thousand cubic feet - - Bitumen, per barrel - - Synthetic oil, per barrel - - 16 Average production costs, per oil-equivalent barrel – total 32.13 32.13 Average production costs, per barrel – bitumen - - Average production costs, per barrel - synthetic oil - - During 2019 Consolidated Subsidiaries Average production prices Crude oil, per barrel 58.88 58.88 NGL, per barrel - - Natural gas, per thousand cubic feet - - Bitumen, per barrel - - Synthetic oil, per barrel - - Average production costs, per oil-equivalent barrel – total 32.13 32.13 Average production costs, per barrel – bitumen - - Average production costs, per barrel - synthetic oil - - During 2018 Consolidated Subsidiaries Average production prices Crude oil, per barrel 66.06 66.06 NGL, per barrel - - Natural gas, per thousand cubic feet - - Bitumen, per barrel - - Synthetic oil, per barrel - - Average production costs, per oil-equivalent barrel – total 33.45 33.45 Average production costs, per barrel – bitumen - - Average production costs, per barrel - synthetic oil - - Average production prices have been calculated by using sales quantities from Barrister’s production as the divisor. Average production costs have been computed by using net production quantities for the divisor. The volumes of crude oil and natural gas liquids (“NGL”) production used for this computation are shown in the oil and gas production table. The volumes of natural gas used in the calculation are the production volumes of natural gas available for sale and are also shown. Gas is converted to an oil-equivalent basis at six million cubic feet per one thousand barrels . 17 Oil and Gas Properties, Wells, Operations, and Acreage Gross and Net Productive Wells Year-End 2020 Year-End 2019 Year-End 2018 Oil Gas Oil Gas Oil Gas Gross Net Gross Net Gross Net Gross Net Gross Net Gross Net Gross and Net Productive Wells Consolidated Subsidiaries United States 3.0 1.8 - - 3.0 1.8 - - 3.0 1.8 - - Total Consolidated Subsidiaries 3.0 1.8 - - 3.0 1.8 - - 3.0 1.8 - - Total gross and net productive wells 3.0 1.8 - - 3.0 1.8 - - 3.0 1.8 - - There were 3 gross, and 1.8 net operated wells at December 31, 2020, December 31, 2019, and December 31, 2018. Gross and Net Developed Acreage Year-End 2020 Year-End 2019 Year-End 2018 Gross Net Gross Net Gross Net (acres) Gross and Net Developed Acreage Consolidated Subsidiaries United States 370 352 370 352 370 352 Total Consolidated Subsidiaries 370 352 370 352 370 352 Total gross and net developed acreage 370 352 370 352 370 352 Separate acreage data for oil and gas are not maintained because, in many instances, both are produced from the same acreage. Gross and Net Undeveloped Acreage Year-End 2020 Year-End 2019 Year-End 2018 Gross Net Gross Net Gross Net (acres) Gross and Net Undeveloped Acreage Consolidated Subsidiaries United States 700 700 2,992 2,244 2,992 2,244 Total Consolidated Subsidiaries 700 700 2.992 2,244 2,992 2,244 Total gross and net undeveloped acreage 700 700 2,992 2,244 2,992 2,244 18 Separate acreage data for oil and gas are not maintained because, in many instances, both are produced from the same acreage. Barrister’s investment in developed and undeveloped acreage is comprised of numerous leases. The List of Leases is included as Exhibit 99.2 to this Annual Report and is filed herewith. The terms and conditions under which Barrister maintains exploration and production rights to the acreage are property-specific, contractually defined, and vary significantly from property to property. Work programs are designed to ensure that the exploration potential of any property is thoroughly evaluated before expiration. In some instances, Barrister may elect to relinquish acreage in advance of the contractual expiration date if the evaluation process is complete, and there is not a business basis for the extension. In cases where additional time may be required to evaluate acreage fully, Barrister has generally been successful in obtaining extensions. The scheduled expiration of leases and concessions for undeveloped acreage over the next three years is not expected to have a material adverse impact on Barrister. Government Regulation Oil and natural gas operations such as ours are subject to various types of legislation, regulation and other legal requirements enacted by governmental authorities. This legislation and regulation affecting the oil and natural gas industry is under constant review for amendment or expansion. Some of these requirements carry substantial penalties for failure to comply. The regulatory burden on the oil and natural gas industry increases our cost of doing business and, consequently, can affect our profitability. Regulation of Drilling and Production The production of oil and natural gas is subject to regulation under a wide range of local, state and federal statutes, rules, orders and regulations. Federal, state and local statutes and regulations require permits for drilling operations, drilling bonds and reports concerning operations. The trend in oil and natural gas regulation has been to increase regulatory restrictions and limitations on such activities. Any changes in, or more stringent enforcement of, these laws and regulations may result in delays or restrictions in permitting or development of projects or more stringent or costly construction, drilling, water management or completion activities or waste handling, storage, transport, remediation, or disposal emission or discharge requirements which could have a material adverse effect on the Company. For example, on January 20, 2021, the Biden Administration placed a 60-day moratorium on new oil and gas leasing and drilling permits on federal land, and on January 27, 2021, the Department of Interior acting pursuant to a Presidential Executive Order suspended the federal oil and gas leasing program indefinitely. The Biden Administration has also announced that it intends to review the Trump Administration’s 2017 repeal of the 2015 rule regulating hydraulic fracturing activities in federal land under the Presidential Executive Order on Protecting Public Health and the Environment and Restoring Science to Tackle the Climate Crisis. While we do not have a significant federal lands acreage position at 240 net acres, these actions could have a material adverse effect on the Company and our industry. Currently, all of our properties and operations are in Alabama, which has regulations governing conservation matters, such as the unitization or pooling of oil and natural gas properties, the establishment of maximum allowable rates of production from oil and natural gas wells, the regulation of well spacing, and plugging and abandonment of wells. The effect of these regulations is to limit the amount of oil and natural gas that we can produce from our wells and to limit the number of wells or the locations at which we can drill, although we can apply for exceptions to such regulations or to have reductions in well spacing. Moreover, both Alabama imposes a production or severance tax with respect 19 to the production and sale of oil, natural gas and natural gas liquids within their jurisdictions. The failure to comply with these rules and regulations can result in substantial penalties. Our competitors in the oil and natural gas industry are subject to the same regulatory requirements and restrictions that affect our operations. Regulation of Transportation of Oil Sales of crude oil, condensate and natural gas liquids are not currently regulated and are made at negotiated prices, however, Congress could reenact price controls in the future. Our sales of crude oil are affected by the availability, terms and cost of transportation. The transportation of oil in common carrier pipelines is also subject to rate regulation. The Federal Energy Regulatory Commission, or the FERC, regulates interstate oil pipeline transportation rates under the Interstate Commerce Act. Intrastate oil pipeline transportation rates are subject to regulation by state regulatory commissions. The basis for intrastate oil pipeline regulation, and the degree of regulatory oversight and scrutiny given to intrastate oil pipeline rates, varies from state to state. Insofar as effective interstate and intrastate rates are equally applicable to all comparable shippers, we believe that the regulation of oil transportation rates will not affect our operations in any way that is of material difference from those of our competitors. Further, interstate and intrastate common carrier oil pipelines must provide service on a non-discriminatory basis. Under this open access standard, common carriers must offer service to all shippers requesting service on the same terms and under the same rates. When oil pipelines operate at full capacity, access is governed by pro-rationing provisions set forth in the pipelines’ published tariffs. Accordingly, we believe that access to oil pipeline transportation services generally will be available to us to the same extent as to our competitors. Regulation of Transportation and Sale of Natural Gas Historically, the transportation and sale for resale of natural gas in interstate commerce have been regulated pursuant to the Natural Gas Act of 1938, the Natural Gas Policy Act of 1978 and regulations issued under those Acts by the FERC. In the past, the federal government has regulated the prices at which natural gas could be sold. While sales by producers of natural gas can currently be made at uncontrolled market prices, Congress could reenact price controls in the future. Since 1985, the FERC has endeavored to make natural gas transportation more accessible to natural gas buyers and sellers on an open and non-discriminatory basis. The FERC has stated that open access policies are necessary to improve the competitive structure of the interstate natural gas pipeline industry and to create a regulatory framework that will put natural gas sellers into more direct contractual relations with natural gas buyers by, among other things, unbundling the sale of natural gas from the sale of transportation and storage services. Although the FERC’s orders do not directly regulate natural gas producers, they are intended to foster increased competition within all phases of the natural gas industry. We cannot accurately predict whether the FERC’s actions will achieve the goal of increasing competition in markets in which our natural gas is sold. Therefore, we cannot provide any assurance that the less stringent regulatory approach established by the FERC will continue. However, we do not believe that any action taken will affect us in a way that materially differs from the way it affects other natural gas producers. Intrastate natural gas transportation is subject to regulation by state regulatory agencies. The basis for intrastate regulation of natural gas transportation and the degree of regulatory oversight and scrutiny 20 given to intrastate natural gas pipeline rates and services varies from state to state. Insofar as such regulation within a particular state will generally affect all intrastate natural gas shippers within the state on a comparable basis, we believe that the regulation of similarly situated intrastate natural gas transportation in any states in which we operate and ship natural gas on an intrastate basis will not affect our operations in any way that is of material difference from those of our competitors. Market Opportunity We believe that we can establish a profitable niche in crude oil production due to the quality of the light sweet crude oil produced from the Gulf States Region, which is cheaper to refine than crude oil from other regions of the U.S. and Canada, especially the “dirty” crude oil extracted from North Dakota and Western Canada oil fields using shale fracking. This optimism is due in part to the increasing percentage of worldwide crude oil production from the U.S. According to a 2017 study by Louisiana State University: “During this past decade, not only did the U.S. experience historical increases in oil and gas production, but it was one of the only countries in the world experiencing large increases in production. This is because these horizontal drilling and hydraulic fracturing techniques used to extract resources from shale geological formations were discovered and perfected in the Gulf Coast region of the U.S. Our Key Competitive Strengths The day-to-day operations of the oil drilling and production from our lease assets in the Gulf States Drill Region will be handled by independent contract operators with experience in conducting oil drilling and operations in the Region. These contractors will handle all operational aspects of oil drilling, storage and production. The Company’s officers will provide executive oversight of its operation as well as handling corporate governance, legal compliance, financial affairs and funding efforts of our company. The use of operating independent contractors in oil and gas exploration and production is not an uncommon industry practice for smaller, independent oil and gas production companies. The Company will use an operating company contractor as it is deemed the most efficient and cost-effective means of operations for a small independent oil and gas production company like us. We do not currently have the financial resources to engage and retain qualified industry personnel as full-time employees for operation of our oil and gas exploration and production business. The use of contractors is designed to allow the Company to use experienced oil drilling and production personnel without the high overhead costs of hiring personnel as employees of the Company. With adequate funding, the Company intends to employ this teaming model strategy to help attract and retain experienced oil industry engineering and production personnel to identify drill sites and then efficiently operate those wells to produce oil at an above average industry rate of efficiency in the Gulf States region. Our Growth Strategy Our teaming approach is also designed to facilitate rapid growth by bringing necessary expertise into operations from available contractors. Our ability to realize profitability from oil production depends on success of deep drill wells, engaging necessary operations expertise and market price for crude oil remaining at attractive per-barrel levels, which we believe is $50 or more per barrel. If we have adequate funding and/or sufficient cash flow, then we may seek to drill for oil in other assignee or leasehold interests or, alternatively, in oil and gas assignee or leasehold interests or properties owned by our potential affiliates or teaming partners. 21 Principal Executive Offices Our principal executive offices is located at 3033 Wilson Boulevard, Suite E-605, Arlington, Virginia 22201, in Arlington County outside of Washington, D.C., and our telephone number is (703) 216-8606. We rent our principal executive offices under a month-to-month lease and for a monthly rental of $50. Barrister’s local office is located at 404 Short 7 th Avenue, Laurel, Mississippi 39440. Barrister has an agreement for use of office space on an as needed basis at no cost provided by Andrew Cardwell, a shareholder of CoJax. The premises are suitable and adequate for Barrister’s current operations. Barrister does not own any real property. Employees We have two full-time employees: Jeffrey J. Guzy, our Chief Executive Officer and our sole Director, and Wm. Barrett Wellman, our Chief Financial Officer. The officers devote the number of hours necessary to perform their duties, which each officer in his sole discretion determines extent of the time commitment.