What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-11-15 compared with 2021-08-23 · 98 added, 78 removed, 77 unchanged (70% of the section changed)

12 unchanged sentences

of operations.

following table sets forth a summary of our production and operating data for the three month periods ended June 30, 2021 and 2020.

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.

following table sets forth a summary of our production and operating data for the three-and nine-month periods ended September 30, 2021

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

September 30,

Production and operating data:

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Total (Boe) (d)

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

gallons liquid volume, used herein in

reference to oil, condensate or natural gas liquids.

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

Boe - One barrel of oil equivalent, a standard 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.

(a) Bbl - One

stock tank barrel, of 42 U.S.

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

One thousand cubic feet of natural gas

One gallon of natural gas liquid

One barrel of oil equivalent, a standard 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

Six months ended

September 30,

Operating costs and expenses per Boe:

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General and administrative

PERIOD ENDED JUNE 30, 2021 COMPARED TO THREE-MONTH PERIOD ENDED JUNE 30, 2020.

the three months ended June 30, 2021 and 2020, revenues from oil, natural gas, and other products sales were $ 4,901,464 and $994,529

PERIOD ENDED SEPTEMBER 30, 2021 COMPARED TO THREE-MONTH PERIOD ENDED SEPTEMBER 30, 2020.

the three months ended September 30, 2021 and 2020, revenues from oil, natural gas, and other products sales were $10,127,933 and $1,645,403

respectively.

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expenses, production taxes, depreciation and depletion and amortization and accretion increased to $5,881,971 cumulatively for the three

months ended June 30, 2021 from $1,527,715 for the same period in 2020.

The increase was primarily due to increased production due to

the addition of the XTO properties for a portion of the period in 2021.

realized and unrealized gain (loss) on derivatives decreased to $(182,034) for the three months ended June 30, 2021, from $(402,374)

in the same period 2020 due primarily to increases in oil prices in 2021 and decreases in oil prices during the same period in 2020,

respectively, for those contracts in existence at that date.

and administrative expenses increased by $1,305,698 to $3,220,104 for the three months ended June 30, 2021, from $1,914,406 for the same

period in 2020.

The increase was primarily due to an increased number of employees and professional fees related to the XTO asset acquisitions

in 2021 and the $989,115 “right to buy” expense in conjunction with the issuance of the unsecured convertible notes.

expense was $2,768,606 and $123,219 for the three months ended June 30, 2021 and 2020, respectively.

The increase in interest expense

of $2,645,387 resulted primarily from interest and amortization of debt issue costs for the convertible notes issued in 2021 ($2,611,221

for the three months ended June 30, 2021).

the reasons discussed above, the previous period net loss increased by $2,298,780 from $(2,973,185) for the three months ended June 30,

2020 to net loss of $(5,271,965) for the three months ended June 30, 2021.

PERIOD ENDED JUNE 30, 2021 COMPARED TO SIX-MONTH PERIOD ENDED JUNE 30, 2020

the six months ended June 30, 2021 and 2020, revenues from oil, natural gas, and other products sales were $ 7,357,922 and $2,308,929

months ended September 30, 2021 from $1,905,055 for the same period in 2020.

The increase was primarily due to increased production attributable

to the addition of the XTO properties for a portion of the period in 2021.

Net realized and unrealized gain (loss) on derivatives decreased to $(32,271)

for the three months ended September 30, 2021, from $(103,166) in the same period 2020 due primarily to the timing and type of contracts

in existence at each quarter-end.

General and administrative expenses increased by

$635,659 to $1,914,326 for the three months ended September 30, 2021, from $1,278,667 for the same period in 2020.

The increase was primarily

due to an increased number of employees and related to the XTO asset acquisition in 2021 and professional fees incurred as a result of

filings in the third quarter.

Interest expense was $4,467,679 and $124,887 for

the three months ended September 30, 2021 and 2020, respectively.

The increase in interest expense of $4,342,792 resulted from interest

and amortization of debt issue costs for the convertible notes issued in 2021.

For the reasons discussed above, the previous period net loss increased

by $2,084,853 from $(1,641,372) for the three months ended September 30, 2020 to net loss of $(3,726,225) for the three months ended September

PERIOD ENDED SEPTEMBER 30, 2021 COMPARED TO NINE-MONTH PERIOD ENDED SEPTEMBER 30, 2020

the nine months ended September 30, 2021 and 2020, revenues from oil, natural gas, and other products sales were $17,485,855 and $3,954,332

respectively.

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in the Company reducing volumes produced.

In 2021, the Company included revenue from the XTO properties for a portion of the period,

which were not owned in 2020 and the Pardus assets for all of 2021 which were only owned for a portion of the 2020 period.

expenses, production taxes, depreciation and depletion and amortization and accretion increased to $5,619,948 for the six months ended

June 30, 2021 from $3,444,600 for the same period in 2020.

The increase was primarily due to increased production due to the addition

of the XTO properties for a portion of the period in 2021 which were not owned in 2020 and the production from the Pardus assets for

the full period in 2021 compared to only a portion of the same period in 2020.

of oil and natural gas properties expense decreased to $-0- for the six months ended June 30, 2021 from $800,452 for the same period

The decrease was due to the change in market prices for oil and natural gas in 2021.

on derivatives increased to $(539,949) for the six months ended June 30, 2021, from a gain of $2,106,671 in the same period 2020 due

to an increase 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.

Additionally, the Company had fewer derivative contracts

and administrative expenses increased by $1,682,759 to $4,126,149 for the six months ended June 30, 2021, from $2,443,390 for the same

period in 2020.

The increase was primarily due to an increased number of employees and professional fees related to the XTO asset acquisitions

in 2021 and the $989,115 “right to buy” expense in conjunction with the issuance of the unsecured convertible notes.

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

expense was $2,905,434 and $256,088 for the six months ended June 30, 2021 and 2020, respectively.

The increase in interest expense of

$2,649,346 resulted primarily from interest and amortization of debt issue costs for the convertible notes in 2021 ($2,611,221 for the

six months ended June 30, 2021).

the reasons discussed above, the previous period net loss increased by $4,883,972 from $(1,385,170) for the six months ended June 30,

2020 to net loss of $(6,269,142) for the six months ended June 30, 2021.

In 2021, the Company included revenue from the XTO properties for the period from close (May

2021) through September 30, 2021and the Pardus assets for all of 2021 which were only owned for a portion of the 2020 period.

expenses, production taxes, depreciation and depletion and amortization and accretion increased to $11,501,919 for the nine months ended

September 30, 2021 from $5,349,655 for the same period in 2020.

The increase was primarily due to increased production attributable to

the XTO properties for the period from close (May 2021) through September 30, 2021and the Pardus assets for all of 2021 which were only

owned for a portion of the 2020 period.

of oil and natural gas properties expense decreased to $-0- for the nine months ended September 30, 2021 from $800,452 for the same period

This change was primarily attributable to the change in market prices for oil and natural gas in 2021.

on derivatives increased to $(572,220) for the nine months ended September 30, 2021, from a gain of $2,003,505 in the same period 2020

due to an increase in oil prices since the agreements were entered into, the types of contracts in existence at each period-end, and

the time to the date of maturity or the balance sheet date.

General and administrative expenses increased by

$2,318,418 to $6,040,475 for the nine months ended September 30, 2021, from $3,722,057 for the same period in 2020.

The increase was

primarily due to an increased number of employees and professional fees related to the XTO asset acquisitions in 2021 and the $989,115

“right to buy” expense in conjunction with the issuance of the unsecured convertible notes.

In 2020, expenses included the

$725,000 allowance for the acquisition deposit on the Ovintiv properties.

Interest expense was $7,373,113 and $380,975 for

the nine months ended September 30, 2021 and 2020, respectively.

The increase in interest expense of $6,992,138 resulted primarily from

interest and amortization of debt issue costs for the convertible notes in 2021.

For the reasons discussed above, the previous period

net loss increased by $6,968,825 from $(3,026,542) for the nine months ended September 30, 2020 to net loss of $(9,995,367) for the nine

months ended September 30, 2021.

AND CAPITAL RESOURCES

of June 30, 2021, the Company had $1,016,877 of cash.

The Company expects to incur costs related to future oil and natural gas acquisitions

for the foreseeable future.

It is expected that management will attempt to raise additional capital for future investment opportunities

and working capital (See Note 1).

Company’s primary sources of short-term liquidity are cash and cash equivalents, net cash provided by operating activities, and

issuance of debt and equity securities.

The Company’s short- and long-term liquidity requirements consist primarily of capital

expenditures, acquisitions of oil and natural gas properties, payments of contractual obligations, and working capital obligations.

for these requirements may be provided by any combination of the Company’s sources of liquidity.

Although the Company expects that

its sources of funding will be adequate to fund its 2021 liquidity requirements, no assurance can be given that such funding sources

will be adequate to meet the Company’s future needs.

the nine months ended September 31, 2021, the Company enhanced its liquidity position by modifying its senior secured notes and extending

the maturity of these notes to June 30, 2023, with the combined objective of increasing liquidity, extending the Company’s debt

maturities, and lowering the Company’s future cash interest expense on long-term debt.

Notes 5, 6 and 9 to the financial statements for information regarding the purchase and development agreements the Company entered into

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will be financed through equity or debt transactions.

oil and natural gas prices present challenges to our industry and our Company.

The economic impact of the COVID-19 pandemic have caused

oil price volatility in 2020.

In the 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 portion of our expected

remaining 2021 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.

Lower oil and natural gas prices present

challenges to our industry and our Company.

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

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

and slower production, and we currently have derivative positions in place for a portion of our expected remaining 2021 production.

and gas prices have improved in 2021;

there can be no assurance that these higher prices will remain at current levels in the future.

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 .

Impact of COVID-19 on Our Business

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condensate to reduce purchase levels.

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

These situations led to production greater than storage capacity at certain 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

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within the meaning of federal securities laws.

All statements, other than statements of historical facts, that address activities, events

All statements, other than statements of historical facts, which address activities, events,

or developments that the Company expects, believes or anticipates will or may occur in the future, including future sources of financing

1 unchanged sentence

Such statements are subject to a number of assumptions, risks

and uncertainties and could be affected by a number of different factors, including the Company's failure to secure short and long-term

and uncertainties and could be affected by a number of distinct factors, including the Company’s failure to secure short and long-term

financing necessary to sustain and grow its operations, increased competition, changes in the markets in which the Company participates

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Company undertakes no duty to update any of the forward-looking statements in this Form 10-Q.

Company has incurred significant losses from operations and there is no assurance that it will achieve profitability or obtain the funds

necessary to finance continued operations.

For other material risks, see the Company's Form 10-K for the year ended December 31, 2020,

which was filed on March 31, 2021.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company has incurred significant losses from

operations and there is no assurance that it will achieve profitability or obtain the funds necessary to finance continued operations.

Related Party Shareholder Concentration

Certain material related party transactions have

resulted in concentrated ownership of the Company and could impact future operations.

Green Tree New Mexico Spin-off

One such instance of a potential future impact relates

to the Company’s best efforts to spin-off to stockholders Green Tree New Mexico on or before December 31, 2022 (See Note 9).

is unknown how this would affect the Company’s liquidity should such a spin-off occur.

For other material risks, see the Company's Form 10-K for the year ended

December 31, 2020, which was filed on March 31, 2021.

AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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