What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2021-03-31 compared with 2020-03-30 · 224 added, 194 removed, 383 unchanged (52% of the section changed)

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information

The Company’s Common Stock is traded on the

OTCQB under the symbol “EMPR”.

The Company's Common Stock is traded on the

OTCQB under the symbol "EMPR".

The following table sets forth the high and

low bid information for the Company’s common stock during the time periods indicated.

low bid information for the Company's common stock during the time periods indicated.

Year ended December 31, 2019:

Year ended December 31, 2020:

Quotations reflect inter-dealer prices, without

retail mark-up, markdown or commission and may not represent actual transactions.

At December 31, 2019, there were approximately

200 stockholders of record of the Company’s Common Stock.

The Company has never paid cash dividends

on its Common Stock.

The Company intends to retain future earnings for use in its business and, therefore, does not anticipate

paying cash dividends on its Common Stock in the foreseeable future.

reflect inter-dealer prices, without retail mark-up, markdown or commission and may not represent actual transactions.

December 31, 2020, there were approximately 270 stockholders of record of the Company's Common Stock.

Company has never paid cash dividends on its Common Stock.

The Company intends to retain future earnings for use in its business

and, therefore, does not anticipate paying cash dividends on its Common Stock in the foreseeable future.

SELECTED FINANCIAL DATA.

Not applicable.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Cautionary Note Regarding Forward-Looking

All statements, other than statements of historical

fact, contained in this report are forward-looking statements.

Forward-looking statements generally are accompanied by words such

as “anticipate,”

“believe,”

“estimate,”

“expect,”

“may,”

“might,”

“potential,”

“project”

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Note Regarding Forward-Looking Statements.

statements, other than statements of historical fact, contained in this report are forward-looking statements.

Forward-looking

statements generally are accompanied by words such as "anticipate,"

"believe,"

"estimate,"

"expect,"

"may,"

"might,"

"potential,"

"project"

or similar statements.

Although the Company believes that the expectations

reflected in such forward-looking statements are reasonable, no assurance can be given that such expectations will prove to be

Factors that could cause results to differ materially from the results discussed in such forward-looking statements include:

the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can be given

that such expectations will prove to be correct.

Factors that could cause results to differ materially from the results discussed

in such forward-looking statements include:

· the need for additional

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· general economic conditions

and other risks described in the Company’s filings with the Securities and Exchange Commission (the “SEC”).

and other risks described in the Company's filings with the Securities and Exchange Commission (the "SEC").

Information on these and other risk factors

are discussed under “Factors That May Affect Future Results”

are discussed under "Factors That May Affect Future Results"

Accordingly, the actual results of operations in

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Readers are cautioned not to place undue reliance

on these forward-looking statements, which reflect management’s analysis, judgment, belief and expectations only as of the date

on these forward-looking statements, which reflect management's analysis, judgment, belief and expectations only as of the date

The Company undertakes no obligation to publicly revise these forward-looking statements to reflect events or circumstances

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The Company has limited financial resources.

For the past three years, the Company has

financed its operations significantly from sales of its equity securities and convertible notes issued to individual investors.

For the past four years, the Company has financed

its operations significantly from sales of its equity securities and convertible notes issued to individual investors.

is no assurance that the Company will be able to continue to finance its operations through the sale of its equity securities,

or through loans or advances by third parties.

For the past two years, in addition to sales of equity securities and convertible

For the past three years, in addition to sales of equity securities and convertible

notes, the Company has utilized bank note payable financing to fund property acquisitions and operations.

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suspend its operations.

As a result of the foregoing, the audit report of the Company’s independent registered public accounting

firm relating to the Company’s financial statements has been modified because of a going concern uncertainty.

As a result of the foregoing, the audit report of the Company's independent registered public accounting

firm relating to the Company's financial statements has been modified because of a going concern uncertainty.

If the Company

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The failure of drilling activities to achieve sufficient quantities of economically attractive reserves and production

would have a material adverse effect on the Company’s liquidity, operations and financial results.

would have a material adverse effect on the Company's liquidity, operations and financial results.

Our management concluded that, as of December

31, 2020, our reporting and disclosure controls and procedures were not effective at a reasonable assurance level, and if we fail

to remediate material weakness identified by our management, we may not be able to accurately report our financial results, and

current and potential stockholders may lose confidence in our financial reporting.

Our management concluded that,

as of December 31, 2020, our reporting and disclosure controls and procedures were not effective at a reasonable assurance level.

Notwithstanding

the assessment that our internal control over financial reporting was not effective and that there is a material weakness as identified

by our management, we believe that our consolidated financial statements contained in this Annual Report on Form 10-K fairly present our

consolidated financial position, results of operations and cash flows for the periods covered thereby in all material respects.

to remediate material weakness identified by our management could adversely impact our ability to report our financial results on a timely

and accurate basis.

If our financial statements are not accurate, investors may not have a complete understanding of our operations.

if our financial statements are not filed on a timely basis as required by the SEC, we could face severe consequences from the SEC.

such event, there could result a material adverse effect on our business.

Ineffective internal controls could also cause investors to

lose confidence in our reported financial information, which could have a negative effect on the trading price of our stock.

A substantial or extended decline in oil and natural

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● changes in global supply and demand

for oil and natural gas, which has recently been negatively affected by concerns about the impact of COVID-19;

for oil and natural gas, which could be negatively affected by concerns about the ongoing impact of COVID-19;

● the price and quantity of imports of

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prices also negatively impact the value of our proved reserves.

The recent drop in the price of oil has forced the Company, as

well as other operators, to re-evaluate our current capital expenditure budget and make changes accordingly that we believe are

in the best interest of the Company and its stockholders.

A substantial or extended decline in oil or natural gas prices may materially

and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance planned capital

expenditures.

The recent volatility in the price of oil has forced the Company,

as well as other operators, to re-evaluate our current capital expenditure budget and make changes accordingly that we believe

are in the best interest of the Company and its stockholders.

A substantial or extended decline in oil or natural gas prices may

materially and adversely affect our future business, financial condition, results of operations, liquidity or ability to finance

planned capital expenditures.

The Company could be adversely affected

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the Company has relied and will rely on independent third-party service providers to provide most of the services necessary to

drill new wells, including drilling rigs and related equipment and services, horizontal drilling equipment and services, trucking

services, tubulars, fracking and completion services and production equipment.

The industry has experienced significant price fluctuations

for these services during the last year and this trend is expected to continue into the future.

These cost uncertainties

could, in the future, significantly increase the Company’s development costs and decrease the return possible from drilling and

development activities, and possibly render the development of certain proved undeveloped reserves uneconomical.

The industry has experienced significant price fluctuations for these services during the last year and this trend is

expected to continue into the future.

These cost uncertainties could, in the future, significantly increase the Company's

production costs.

Our producing properties and proved reserves

are concentrated in North Dakota, Montana and Louisiana, making us vulnerable to risks associated with operating in one major geographic

are concentrated in North Dakota, Montana, Texas and Louisiana, making us vulnerable to risks associated with operating in limited

major geographic areas.

Our producing properties are geographically

concentrated in North Dakota, Montana and Louisiana.

At December 31, 2019, all of our total estimated proved reserves were attributable

to properties located in these areas.

As a result of this concentration, we are exposed to the impact of regional supply and demand

factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing or transportation

capacity constraints, market limitations, severe weather events, water shortages or other drought related conditions or interruption

of the processing or transportation of oil or natural gas.

concentrated in North Dakota, Montana, Texas and Louisiana.

At December 31, 2020, all of our total estimated proved reserves were

attributable to properties located in these areas.

As a result of this concentration, we are exposed to the impact of regional

supply and demand factors, delays or interruptions of production from wells in this area caused by governmental regulation, processing

or transportation capacity constraints, market limitations, severe weather events, water shortages or other drought related conditions

or interruption of the processing or transportation of oil or natural gas.

This concentration of assets exposes us to

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that provides a common basis for comparing oil and natural gas companies subject to the rules and regulations of the SEC.

financial measure, PV-10, is a similar reporting convention that we have disclosed in this report.

Both measures require the use

of operating and development costs prevailing as of the date of computation.

Consequently, they will not reflect the prices ordinarily

received or that will be received for oil and natural gas production because of varying market conditions, nor may it reflect the

actual costs that will be required to produce or develop the oil and natural gas properties.

Accordingly, estimates included herein

of future net cash flows may be materially different from the future net cash flows that are ultimately received.

the 10 percent discount factor, which is required by the rules and regulations of the SEC to be used in calculating discounted

future net cash flows for reporting purposes, may not be the most appropriate discount factor based on interest rates in effect

from time to time and risks associated with our company or the oil and natural gas industry in general.

Therefore, Standardized Measure and

PV-10 included in this report should not be construed as accurate estimates of the current fair value of our proved reserves.

Our reserve estimates and our computation of future net cash flows at December 31, 2019 are based on SEC pricing of (i) $

53.27 per Bbl oil price and (ii) $ 2.58 per MMBtu natural gas price.

(Generally Accepted Accounting Principles) financial measure, PV-10, is a similar reporting convention that we have disclosed in

Both measures require the use of operating and development costs prevailing as of the date of computation.

Consequently,

they will not reflect the prices ordinarily received or that will be received for oil and natural gas production because of varying

market conditions, nor may it reflect the actual costs that will be required to produce or develop the oil and natural gas properties.

Accordingly, estimates included herein of future net cash flows may be materially different from the future net cash flows that

are ultimately received.

In addition, the 10 percent discount factor, which is required by the rules and regulations of the SEC

to be used in calculating discounted future net cash flows for reporting purposes, may not be the most appropriate discount factor

based on interest rates in effect from time to time and risks associated with our company or the oil and natural gas industry in

Therefore, Standardized Measure and PV-10

included in this report should not be construed as accurate estimates of the current fair value of our proved reserves.

estimates and our computation of future net cash flows at December 31, 2020 are based on SEC pricing of (i) $ 33.35 per Bbl oil

price and (ii) $ 1.41 per MMBtu natural gas price.

Climate change legislation, regulations

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from motor vehicles and preconstruction and operating permit requirements for certain large stationary sources.

also adopted rules requiring the reporting

of GHG emissions from specified large GHG emission sources in the United States, as well as certain onshore oil and natural gas

production facilities, on an annual basis, including GHG emissions resulting from the completion and workover operations of hydraulically

fractured oil wells.

The EPA has also

adopted rules requiring the reporting of GHG emissions from specified large GHG emission sources in the United States, as well

as certain onshore oil

and natural gas production facilities, on

an annual basis, including GHG emissions resulting from the completion and workover operations of hydraulically fractured oil wells.

Recent federal regulatory action with respect to climate change has focused on methane emissions.

in June 2016, the EPA finalized new air emission controls for emissions of methane from certain equipment and processes in the

oil and natural gas source category, including production, processing, transmission and storage activities.

The final rule package

includes first-time standards to address emissions of methane from equipment and processes across the source category, including

hydraulically fractured oil and natural gas well completions, and also imposes leak detection and repair requirements on operators.

However, in June 2017, the EPA proposed a two year stay of fugitive emissions monitoring requirements, pneumatic pump standards,

and closed vent system certification requirements in the 2016 rule while it reconsiders these aspects of the rule.

Additionally,

on September 11, 2018, the EPA proposed targeted improvements to the 2016 rule, including amendments to the rule’s fugitive

emissions monitoring requirements, and expects to “significantly reduce”

the regulatory burden of the rule in doing

The BLM finalized similar rules in November 2016 that limit methane emissions from new and existing oil and natural gas operations

on federal lands through limitations on the venting and flaring of gas, as well as enhanced leak detection and repair requirements

but then finalized a revised rule in 2018 which scaled back the waste prevention requirements of the 2016 rule.

Environmental groups

have sued in federal district court to challenge the legality of aspects of the revised rule, and the outcome of this litigation

is currently uncertain.

For example, in June 2016, the

EPA finalized new air emission controls for emissions of methane from certain equipment and processes in the oil and natural gas

source category, including production, processing, transmission and storage activities.

The final rule package includes first-time

standards to address emissions of methane from equipment and processes across the source category, including hydraulically fractured

oil and natural gas well completions, and also imposes leak detection and repair requirements on operators.

However, in June 2017,

the EPA proposed a two year stay of fugitive emissions monitoring requirements, pneumatic pump standards, and closed vent system

certification requirements in the 2016 rule while it reconsiders these aspects of the rule.

Additionally, on September 11, 2018,

the EPA proposed targeted improvements to the 2016 rule, including amendments to the rule’s fugitive emissions monitoring

requirements, and expects to “significantly reduce”

the regulatory burden of the rule in doing so.

The BLM finalized

similar rules in November 2016 that limit methane emissions from new and existing oil and natural gas operations on federal lands

through limitations on the venting and flaring of gas, as well as enhanced leak detection and repair requirements but then finalized

a revised rule in 2018 which scaled back the waste prevention requirements of the 2016 rule.

Environmental groups have sued in

federal district court to challenge the legality of aspects of the revised rule, and the outcome of this litigation is currently

These methane emission rules have the potential to increase our compliance costs.

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political decision-making processes and the variables and tradeoffs that inevitably occur in connection with such processes.

The Company’s insurance policies may not

The Company's insurance policies may not

adequately protect the Company against certain unforeseen risks.

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There can be no assurance that any insurance

will be adequate to cover the Company’s losses or liabilities.

will be adequate to cover the Company's losses or liabilities.

The Company cannot predict the continued availability of insurance,

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Although these laws and regulations have not had a material adverse effect on the

Company’s financial condition or results of operations, there can be no assurance that the Company will not be required to make

Company's financial condition or results of operations, there can be no assurance that the Company will not be required to make

material expenditures in the future.

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by the Company to obtain required permits for, control the use of, or adequately restrict the discharge of hazardous substances

under present or future regulations could subject the Company to substantial liability or could cause its operations

to be suspended.

Such liability or suspension of operations could have a material adverse effect on the Company’s business, financial

condition and results of operations.

The Company’s activities are subject to extensive

under present or future regulations could subject the Company to substantial liability or could cause its operations to be suspended.

Such liability or suspension of operations could have a material adverse effect on the Company's business, financial condition

and results of operations.

The Company's activities are subject to extensive

governmental regulation.

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of oil and natural gas reserves.

At December 31, 2019, we had approximately $7.8 million of debt outstanding under our Credit Facility,

and we had approximately $.7 million of unused commitments under our Credit Facility.

At December 31, 2020, we had approximately $8.1 million of debt outstanding under our Bank Credit

Facility, and we had approximately $.4 million of unused commitments under our Credit Facility.

Expenditures for acquisition, exploration

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We intend to finance our future

capital expenditures through borrowings under our Credit Facility.

However, our cash flow from operations and access to capital

are subject to a number of variables, including:

capital expenditures partially through borrowings under our Credit Facility.

However, our cash flow from operations and access

to capital are subject to a number of variables, including:

- the volume of oil and natural gas we are able to produce from existing

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We may not generate expected cash flows and

may have limited ability to obtain the capital necessary to sustain our operations at current or anticipated levels.

in cash flow from operations or our financing needs may require us to revise our capital program or alter or increase our capitalization

substantially through the issuance of debt or equity securities.

The issuance of additional equity securities could have a dilutive

effect on the value of our common stock.

Additional borrowings under our Credit Facility or the issuance of additional debt securities

will require that a greater portion of our cash flow from operations be used for the payment of interest and principal on our debt,

thereby reducing our ability to use cash flow to fund working capital, capital expenditures and acquisitions.

Additional financing

also may not be available on acceptable terms or at all.

In the event additional capital resources are unavailable, we may curtail

drilling, development and other activities or be forced to sell some of our assets on an untimely or unfavorable basis.

obtain the capital necessary to sustain our operations at current or anticipated levels.

A decline in cash flow from operations

or our financing needs may require us to revise our capital program or alter or increase our capitalization substantially through

the issuance of debt or equity securities.

The issuance of additional equity securities could have a dilutive effect on the value

of our common stock.

Additional borrowings under our Credit Facility or the issuance of additional debt securities will require

that a greater portion of our cash flow from operations be used for the payment of interest and principal on our debt, thereby

reducing our ability to use cash flow to fund working capital, capital expenditures and acquisitions.

Additional financing also

may not be available on acceptable terms or at all.

In the event additional capital resources are unavailable, we may curtail drilling,

development and other activities or be forced to sell some of our assets on an untimely or unfavorable basis.

The failure to obtain additional financing

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incur substantially more debt.

Higher levels of indebtedness makes us more vulnerable to economic downturn and adverse developments

Higher levels of indebtedness make us more vulnerable to economic downturn and adverse developments

in our business

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aggregate principal indebtedness at December 31, 2020.

At December 31, 2019, commitments from our bank group were $8.5 million,

of which approximately $ .7 million was unused commitments.

We continue to review our existing indebtedness, and we may seek to

repay, refinance, repurchase, redeem, exchange or otherwise terminate our indebtedness.

If we do seek to refinance our existing

indebtedness, there can be no guarantee that we would be able to execute the refinancing on favorable terms or at all.

At December 31, 2020, commitments from our bank group (as amended) were

$8.5 million, of which approximately $.4 million was unused commitments.

We continue to review our existing indebtedness, and we

may seek to repay, refinance, repurchase, redeem, exchange or otherwise terminate our indebtedness.

If we do seek to refinance

our existing indebtedness, there can be no guarantee that we would be able to execute the refinancing on favorable terms or at

As a result of our indebtedness, we use a

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We may incur substantially more debt in the

Our Credit Facility contain restrictions on our incurrence of additional indebtedness.

Our Credit Facility contains restrictions on our incurrence of additional indebtedness.

Any increase in our level of indebtedness

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If our operating performance declines, we

may in the future need to obtain waivers under our Senior Revolver Loan Agreement to avoid being in default.

If we breach our covenants

and cannot obtain a waiver from the required lenders, we would be in default and the lenders could exercise their rights, as described

above, and we could be forced into bankruptcy or liquidation.

may need to obtain waivers under our Senior Revolver Loan Agreement to avoid being in default.

If we breach our covenants and cannot

obtain a waiver from the required lenders, we would be in default and the lenders could exercise their rights, as described above,

and we could be forced into bankruptcy or liquidation.

Our ability to use our existing net operating

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and other resources substantially greater than those of the Company.

currently depends on the Company’s President and Chief Executive Officer.

is dependent on the experience, abilities and continued services of its current President, Michael R.

Morrisett, and its Chief

Executive Officer, Thomas Pritchard, who currently serve the Company without formal compensation plans.

The loss or reduction

of services of Mr.

Morrisett and/or Mr.

The Company currently depends on the Company's

President and Chief Executive Officer.

The Company is dependent on the experience,

abilities and continued services of its current President, Michael R.

Morrisett, and its Chief Executive Officer, Thomas Pritchard,

who currently serve the Company without formal compensation plans.

The loss or reduction of services of Mr.

Morrisett and/or

Pritchard could have a material adverse effect on the Company.

There has been a limited public trading

market for the Company’s common stock, and there can be no assurance that an active trading market will be sustained.

market for the Company's common stock, and there can be no assurance that an active trading market will be sustained.

There can be no assurance that the Common

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Company is performing according to its plan and there is no legitimate company-specific financial basis for this volatility, it

must still be expected that substantial percentage price swings will occur in the Company’s Common Stock for the foreseeable future

must still be expected that substantial percentage price swings will occur in the Company's Common Stock for the foreseeable future.

The Company does not expect to declare

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to the COVID pandemic.

In early March 2020, there was a global outbreak of COVID-19 that

has resulted in changes in global supply and demand of certain mineral and energy products.

These changes, including a potential

economic downturn and any potential resulting direct and indirect negative impact to the Company cannot be determined, but they

could have a prospective material impact to the Company’s acquisition and project development activities, and cash flows

and liquidity.

The Company’s common stock may be subject

In 2020, there was a global outbreak of COVID-19 which has resulted

in changes in global supply and demand of certain mineral and energy products.

Decreased transportation, manufacturing and general economic

activity levels prompted by COVID-19 and related governmental and societal actions reduced the demand for oil-based products such

as gasoline, jet fuel and other refined products, which prompted purchasers of oil and condensate to reduce purchase levels.

situations led to production greater than storage capacity at some points during the year.

To the extent that this decreased demand

for our commodities continues and our margins are not at acceptable levels or storage for our production is not available, we may

have to reduce production from or completely shut in portions of our currently producing wells.

The inability to sell our production

or the decision to potentially reduce or shut in our production could materially and adversely affect our operating results and

our ability to comply with the financial covenants under our Credit Facility.

There is uncertainty around the continuing extent and duration

of the disruption.

The degree to which the COVID-19 pandemic or any other public health crisis adversely impacts our results will

depend on future developments, which are highly uncertain and cannot be predicted, including, but not limited to, the duration

and spread of the outbreak, its severity, the actions to contain the virus or treat its impact, its impact on the economy and market

conditions, and how quickly and to what extent normal economic and operating conditions can resume.

Therefore, while we expect

this matter will likely continue to disrupt our operations, the degree of the adverse financial impact cannot be reasonably estimated

at this time.

The Company's common stock may be subject

to secondary trading restrictions related to penny stocks.

Certain transactions involving the purchase

or sale of Common Stock of the Company may be affected by a SEC rule for “penny stocks”

or sale of Common Stock of the Company may be affected by a SEC rule for "penny stocks"

that imposes additional sales

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Consequently, the penny stock

rule may impede the ability of broker-dealers to purchase or sell the Company’s securities for their customers and the ability

of persons now owning or subsequently acquiring the Company’s securities to resell such securities.

rule may impede the ability of broker-dealers to purchase or sell the Company's securities for their customers and the ability

of persons now owning or subsequently acquiring the Company's securities to resell such securities.

RESULTS OF OPERATIONS

GENERAL TO ALL PERIODS

The Company’s primary business is the exploration

The Company's primary business is the exploration

and development of oil and gas interests.

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that it will achieve profitability or obtain funds necessary to finance its future operations.

For all periods presented, the Company’s effective

For all periods presented, the Company's effective

tax rate is 0%.

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statement of operations and a deferred asset on the balance sheet.

However, because of the current uncertainty as to the Company’s

However, because of the current uncertainty as to the Company's

ability to achieve profitability, a valuation reserve has been established that offsets the amount of any tax benefit available

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For the twelve months ended December 31, 2020,

and 2018, revenues from oil and natural gas sales were $5,825,446 and $352,374 respectively.

The Company purchased additional

properties in North Dakota and Montana in 2019 and had production from Louisiana properties for the full year in 2019.

Operating expenses, production taxes, depreciation, depletion and

amortization and accretion increased to $8,375,197 cumulatively for the twelve months ended December 31, 2109 from $154,938 for

the same period in 2018.

The increase was due to the acquisition of additional producing oil and natural gas properties in 2019

and full year production from the Louisiana properties in 2019.

Unrealized gain on derivatives decreased to $33,643 for the twelve

months ended December 31, 2019 from $113,081 in the same period in 2018 due to changes in oil prices since the agreements were

entered into.

General and administrative expenses

increased by $2,408,422 to $3,634,887 for the twelve months ended December 31, 2019, from $1,226,465 for the same period in

The increase was primarily due to noncash stock options and warrants issued in the amount of $1,491,630 in 2019 and

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

and 2019, revenues from oil and natural gas sales were $5,988,963 and $5,825,446 respectively, an increase of $163,517 (3%).

The Company purchased additional properties in Texas and Montana in 2020 and had production from North Dakota properties for the

full year in 2020.

The additional production was offset by declines in oil and natural gas prices.

$ (3,396,301 )

Operating expenses, production taxes, depreciation, depletion, amortization and accretion increased $890,536 (11%) to $9,265,733 cumulatively for the twelve months ended December 31, 2020 from

$8,375,197 for the same period in 2019.

The increase was due to the acquisition of additional producing oil and natural gas properties

in 2020 and full year production from the North Dakota properties in 2020.

Realized and unrealized gain on derivatives increased $1,705,288

(5,069%) to $1,738,871 for the twelve months ended December 31, 2020 from $33,643 in the same period in 2019 due to decrease in

oil prices since the agreements were entered into.

Impairment of oil and natural gas properties increased to $8,671,303

for the twelve months ended December 31, 2020 compared to $-0- for the same period in 2019.

The increase was due to the decrease

in oil and natural gas prices at least partially attributable to COVID-19 in 2020 and management’s decision to focus on producing

properties rather than drill undeveloped properties.

General and administrative expenses increased

by $3,738,922 (103%) to $7,373,809 for the twelve months ended December 31, 2020, from $3,634,887 for the same period in 2019.

The increase was primarily due to stock options issued to management in 2020, travel and professional fees related to the acquisition

of oil and natural gas properties and capital raises in 2020, and higher administrative expenses due to the growth in properties

Interest expense was $521,187 and $503,607

for the twelve months ended December 31, 2019 and 2018, respectively.

The increase in interest expense of $402,424 resulted

primarily from the debt issued to acquire oil and natural gas properties in 2019.

for the twelve months ended December 31, 2020 and 2019, respectively, an increase of $17,580 (3%).

The increase in interest

expense resulted primarily from the full year of interest on debt issued to acquire oil and natural gas properties in 2019.

For the reasons discussed above, net loss

increased $5,637,471 to $(6,654,602) for the twelve months ended December 31, 2019 from $(1,017,131) for the twelve months ended

December 31, 2018.

increased $10,180,831 (153%) to $(16,835,433) for the twelve months ended December 31, 2020 from $(6,654,602) for the twelve months

ended December 31, 2019.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 2019, the Company had no

As of December 31, 2020, the Company had $157,695

cash on hand and approximately $400,000 available on its bank line of credit.

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of cash from oil and natural gas activities after deducting cash operating costs and production taxes.

lease operating costs incurred in 2019, a portion were nonrecurring relating to the acquired properties.

A significant amount

of the general and administrative cash costs of $2,143,257, after deducting the noncash stock option and warrant expenses,

were for locating and closing acquisitions.

A significant amount of

the general and administrative cash costs of $4,298,553, after deducting the noncash option and warrant expenses, were for locating

and closing acquisitions.

OFF-BALANCE SHEET ARRANGEMENTS

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require significant judgment, future actual results could differ from those estimates and could have a significant impact on the

Company’s results of operations, financial position and cash flows.

Company's results of operations, financial position and cash flows.

The Company re-evaluates its estimates and assumptions at least

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costs, are expensed as incurred.

The application of the successful efforts method of accounting requires management’s judgment

The application of the successful efforts method of accounting requires management's judgment

to determine the proper designation of wells as either developmental or exploratory, which will ultimately determine the proper

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The evaluation of oil and gas leasehold acquisition costs requires

management’s judgment to estimate the fair value of exploratory costs related to drilling activity in a given area.

management's judgment to estimate the fair value of exploratory costs related to drilling activity in a given area.

Impairment of unproved oil and gas properties

- Capitalized drilling costs are reviewed periodically for impairment.

Costs related to impaired prospects or unsuccessful exploratory

drilling are charged to expense.

Management’s assessment of the results of exploration activities, commodity price outlooks, planned

future sales or expiration of all or a portion of such leaseholds impact the amount and timing of impairment provisions.

An impairment

expense could result if oil and gas prices decline in the future as it may not be economic to develop some of these unproved properties.

- Management’s assessment of the results of exploration activities, commodity price outlooks, planned future sales or expiration

of all or a portion of such leaseholds impact the amount and timing of impairment provisions.

An impairment expense could result

if oil and gas prices decline in the future as it may not be economic to develop some of these unproved properties.

Asset retirement obligations - the Company

accounts for future abandonment costs of wells and related facilities in accordance with the provisions of Financial Accounting

Standards Board (“FASB”) Accounting for Asset Retirement Obligations.

Standards Board ("FASB") Accounting for Asset Retirement Obligations.

Under this method of accounting, the accrual

for future dismantlement and abandonment costs is based on estimates of these costs for each of the Company’s properties based

for future dismantlement and abandonment costs is based on estimates of these costs for each of the Company's properties based

upon the type of production structure, reservoir characteristics, depth of the reservoir, market demand for equipment, currently

9 unchanged sentences

set forth on pages 30 through 55 at the end of this Form 10-K.

CHANGES IN AND

DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

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-K

Item 5. Market for Registrant’s Common Equity