What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-11-16 compared with 2020-08-14 · 79 added, 79 removed, 109 unchanged (59% of the section changed)

15 unchanged sentences

The following table sets forth a summary of

our production and operating data for the three and six month periods ended June 30, 2020.

Because of normal production declines,

increased or decreased drilling activities, fluctuations in commodity prices and the effects of acquisitions or divestitures,

our production and operating data for the three and nine month periods ended September 30, 2020.

Because of normal production

declines, increased or decreased drilling activities, fluctuations in commodity prices and the effects of acquisitions or divestitures,

the historical information presented below should not be interpreted as being indicative of future results.

Three months ended June 30,

months ended June 30,

Three months ended

September 30,

Production and operating data:

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(a) Bbl - One stock tank barrel, of 42 U.S.

liquid volume, used herein in reference to oil, condensate or natural gas liquids.

(b) Mcf –

One thousand cubic feet of natural gas.

convention used to express oil and natural gas volumes on a comparable oil equivalent basis.

Natural gas equivalents are determined

under the relative energy content method by using the ratio of 6.0 Mcf of natural gas to 1.0 Bbl of oil or condensate.

Three months ended June 30,

Six months ended June 30,

gallons liquid volume, used

herein in reference to oil, condensate or natural gas liquids.

(b) Mcf - One thousand cubic feet of natural gas.

oil and natural gas volumes on a comparable oil equivalent basis.

Natural gas equivalents are determined under the relative energy

content method by using the ratio of 6.0 Mcf of natural gas to 1.0 Bbl of oil or condensate.

Three months ended

September 30,

Nine months ended

September 30,

Operating costs and expenses per Boe:

4 unchanged sentences

General and administrative

THREE-MONTH PERIOD ENDED JUNE 30, 2020 COMPARED

TO THREE-MONTH PERIOD ENDED JUNE 30, 2019.

For the three months ended June 30, 2020 and

2019, revenues from oil and natural gas sales were $ 994,529 and $1,996,758 respectively.

In 2020, due to COVID and other

economic factors, prices of oil and natural gas declined, resulting in the Company reducing volumes produced.

THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2020

COMPARED TO THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2019.

For the three months ended September 30, 2020

and 2019, revenues from oil and natural gas sales were $ 1,645,403 and $1,695,264 respectively.

In 2020, due to COVID and

other economic factors, prices of oil and natural gas declined, resulting in the Company reducing volumes produced.

Operating expenses, production taxes, depreciation

and depletion and amortization and accretion decreased to $1,527,715 cumulatively for the three months ended June 30, 2020 from

$2,296,556 for the same period in 2019.

and depletion and amortization and accretion decreased to $1,905,055 cumulatively for the three months ended September 30, 2020

from $2,519,942 for the same period in 2019.

The decrease was due to a decrease in costs associated with oil and natural gas production,

1 unchanged sentence

Net realized and unrealized gain (loss) on

derivatives decreased to $(402,374) for the three months ended June 30, 2020, from $500,728 in the same period 2019 due primarily

to increases in oil prices since March 31,2020 and increases in oil prices during the same period in 2019, respectively, for those

derivatives decreased to $(103,166) for the three months ended September 30, 2020, from $492,862 in the same period 2019 due primarily

to decreases in oil prices since June 30, 2020 and increases in oil prices during the same period in 2019, respectively, for those

contracts in existence at that date.

General and administrative expenses decreased

by $129,616 to $1,914,406 for the three months ended June 30, 2020, from $2,044,022 for the same period in 2019.

The decrease was

primarily due to options and warrants granted in 2019 as well as professional fees and travel related to the acquisition of oil

and natural gas properties in 2019.

In 2020, expenses included the $725,000 allowance for the acquisition deposit on the Ovintiv

General and administrative expenses increased

by $808,875 to $1,278,667 for the three months ended September 30, 2020, from $469,792 for the same period in 2019.

was primarily due to an increased number of employees and professional fees related to the Pardus acquisition.

For the three month

period in 2020, expenses included the $75,000 loss for the acquisition deposit on the Ovintiv properties.

Interest expense was $124,887 and $145,345

for the three months ended June 30, 2020 and 2019, respectively.

for the three months ended September 30, 2020 and 2019, respectively.

The decrease in interest expense of $20,458 resulted primarily

1 unchanged sentence

For the reasons discussed above, the previous

period net loss increased by $967,125 from $(2,006,060) for the three months ended June 30, 2019 to net loss of $(2,973,185) for

the three months ended June 30, 2020.

SIX-MONTH PERIOD ENDED JUNE 30, 2020 COMPARED

TO SIX-MONTH PERIOD ENDED JUNE 30, 2019

For the six months ended June 30, 2020 and

2019, revenues from oil and natural gas sales were $ 2,308,929 and $2,320,968 respectively.

period net loss increased by $694,419 from $(946,953) for the three months ended September 30, 2019 to net loss of $(1,641,372)

for the three months ended September 30, 2020.

NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020

COMPARED TO NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2019

For the nine months ended September 30, 2020

and 2019, revenues from oil and natural gas sales were $ 3,954,332 and $4,016,232 respectively.

The Company purchased significant

oil and natural gas properties in the second quarter of 2019 which were not included in 2019 revenues.

In the second quarter of

2020, due to COVID and other economic factors, prices of oil and natural gas declined, resulting in the Company reducing volumes

In the second and third

quarter of 2020, due to COVID and other economic factors, prices of oil and natural gas declined, resulting in the Company reducing

volumes produced.

Operating expenses, production taxes, depreciation

and depletion and amortization and accretion increased to $3,444,600 cumulatively for the six months ended June 30, 2020 from $2,493,377

for the same period in 2019.

The increase was due primarily to only a partial period of production in 2019 because of the EnergyQuest

acquisition March 2019.

and depletion and amortization and accretion, excluding impairment, increased to $5,349,655 cumulatively for the nine months ended

September 30, 2020 from $5,013,319 for the same period in 2019.

The increase was due primarily to only a partial period of production

in 2019 because of the EnergyQuest acquisition March 2019 and lower production volumes in 2020.

Impairment of oil and natural gas properties

expense increased to $800,452 for the six months ended June 30, 2020 from $0 for the same period in 2019.

The increase was due

to the change in market prices for oil and natural gas in 2020.

Gain on derivatives, net increased to $2,106,671

for the six months ended June 30, 2020, from $432,369 in the same period 2019 due to decrease in oil prices since the agreements

were entered into or since December 31, 2020 and 2019 respectively, for those contracts in existence at that date, to the date

of maturity or the balance sheet date.

General and administrative expenses decreased

by $213,221 to $2,443,390 for the six months ended June 30, 2020, from $2,656,611 for the same period in 2019.

The decrease was

primarily due to options and warrants issued in 2019 and professional fees and travel related to the acquisition of oil and natural

gas properties in 2019.

In 2020, expenses included the $725,000 allowance for the acquisition deposit on the Ovintiv properties.

expense increased to $800,452 for the nine months ended September 30, 2020 from $0 for the same period in 2019.

The increase was

due to the change in market prices for oil and natural gas in 2020.

Net realized and unrealized gain on derivatives

increased to $2,003,505 for the nine months ended September 30, 2020, from $925,231 in the same period 2019 due to decrease in

oil prices since the agreements were entered into or since December 31, 2020 and 2019 respectively, for those contracts in existence

at that date, to the date of maturity or the balance sheet date.

General and administrative expenses increased

by $595,654 to $3,722,057 for the nine months ended September 30, 2020, from $3,126,403 for the same period in 2019.

was primarily due to $800,000 allowance for the acquisition deposit on the Ovintiv properties in 2020 offset by options and warrants

issued and professional fees and travel related to the acquisition of oil and natural gas properties in 2019.

Interest expense was $380,975 and $342.256

for the six months ended June 30, 2020 and 2019, respectively.

The increase in interest expense of $59,177 resulted primarily from

the debt issued to acquire oil and natural gas properties in the second quarter of 2019.

for the nine months ended September 30, 2020 and 2019, respectively.

The increase in interest expense of $38,719 resulted primarily

from the debt issued to acquire oil and natural gas properties in the second quarter of 2019 and lower interest rates in 2020.

For the reasons discussed above, the previous

period net loss decreased by $1,208,392 from $(2,593,562) for the six months ended June 30, 2019 to net loss of $(1,385,170) for

the six months ended June 30, 2020

period net loss decreased by $513,973 from $(3,540,515) for the nine months ended September 30, 2019 to net loss of $(3,026,542)

for the nine months ended September 30, 2020.

LIQUIDITY AND CAPITAL RESOURCES

As of June 30, 2020, the Company had $285,813

As of September 30, 2020, the Company had $134,374

The Company expects to incur costs related to future oil and natural gas acquisitions for the foreseeable future.

1 unchanged sentence

See Notes 3 through 8 to the financial statements

for information regarding the purchase agreements the Company entered into in 2019 and 2020 to purchase existing oil and natural

gas properties and mineral interests.

The Company is also actively pursuing the acquisition of other operated and non-operated

oil and natural gas properties.

It is anticipated that such acquisitions will be financed through equity or debt transactions.

for information regarding the purchase and development agreements the Company entered into in 2019 and 2020 to purchase and develop

existing oil and natural gas properties and mineral interests.

The Company is also actively pursuing the acquisition of other operated

and non-operated oil and natural gas properties.

It is anticipated that such acquisitions will be financed through equity or debt

transactions.

Lower oil and natural gas prices present challenges

to our industry and our Company.

During the first and second quarters of 2020, the economic impact of the COVID-19 pandemic have

caused oil price volatility in 2020.

In the first two quarters of 2020, gains on settled derivatives offset a large portion of

the impact of the recent decline in prices and slower production, and we currently have derivative positions in place for a substantial

amount of our expected remaining 2020 production.

There can be no assurance that we will be able to add derivative positions to

cover the remainder of our expected production at favorable prices.

The economic impact of the COVID-19 pandemic have caused oil price volatility in 2020.

first three quarters of 2020, gains on settled derivatives offset a large portion of the impact of the recent decline in prices

and slower production, and we currently have derivative positions in place for a substantial amount of our expected remaining 2020

There can be no assurance that we will be able to add derivative positions to cover the remainder of our expected production

at favorable prices.

The Impact of COVID-19 on Our Business

During the first two quarters of 2020, we did

not experience any material impact to our ability to operate or market our production due to the direct or indirect impacts of

the COVID-19 pandemic.

During the first three quarters of 2020, we

did not experience any material impact to our ability to operate or market our production due to the direct or indirect impacts

of the COVID-19 pandemic.

The Cybersecurity and Infrastructure Security Agency in the U.S.

51 unchanged sentences

For other material risks, see the Company's Form 10-K for the year ended December 31, 2019, which was filed on March

QUANTITATIVE AND QUALITATIVE DISCLOSURES

ABOUT MARKET RISK

QUANTITATIVE AND QUALITATIVE

DISCLOSURES ABOUT MARKET RISK

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis