What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2024-03-28 compared with 2023-03-31 · 290 added, 224 removed, 21 unchanged (96% of the section changed)

this Form 10-K, references to “Empire”, the “Company”, “we”, “our”, and “us”

refer to Empire Petroleum Corporation and its wholly-owned subsidiaries, unless context indicates otherwise.

uplisted from the OTCQB to the NYSE American effective March 8, 2022.

Immediately prior to the listing, a reverse stock split of 1 for

All pricing and share amounts for periods prior to the reverse stock split have been stated at post-reverse split amounts.

March 8, 2022, our common stock began trading on the NYSE American under the symbol “EP” and CUSIP 292034303.

Prior to trading

on the NYSE American, our common stock was accessible on the OTCQB.

Petroleum Corporation is an independent energy company that engages in unlocking value in developed assets.

Empire operates the following

wholly-owned subsidiaries in its areas of operations:

• Empire New Mexico LLC d/b/a Green Tree New Mexico (“Empire New

In this Form 10-K, references to “Empire”,

the “Company”, “we”, “our”, and “us” refer to Empire Petroleum Corporation and its wholly-owned

subsidiaries, unless context indicates otherwise.

On March 8, 2022, our common stock began trading on

the NYSE American under the symbol “EP” and CUSIP 292034303.

Prior to trading on the NYSE American, our common stock was accessible

on the OTCQB.

Empire Petroleum Corporation is an independent

energy company that engages in unlocking value in developed assets.

Empire operates the following wholly-owned subsidiaries in its areas

of operations:

New Mexico LLC (“Empire New Mexico”)

New Mexico LLC d/b/a Green Tree New Mexico

○ Empire EMSU LLC

○ Empire EMSU-B LLC

○ Empire AGU LLC

○ Empire NM Assets LLC

Rockies Region

North Dakota LLC (“Empire North Dakota”)

North Dakota Acquisition LLC (“Empire NDA”)

• Empire Texas (“Empire Texas”),

consisting of the following entities:

ND Acquisition LLC (“Empire NDA”)

Texas (“Empire Texas”), consisting of the following entities:

Texas Operating LLC

1 unchanged sentence

Louisiana LLC (“Empire Louisiana”)

was incorporated in the state of Delaware in 1985.

The consolidated financial statements of Empire Petroleum Corporation and subsidiaries

include the accounts of the Company and its wholly-owned subsidiaries.

mission is to increase shareholder value by building oil and natural gas reserves in strategic plays in the United States.

To accomplish

its mission, we plan on executing the following business strategies:

Empire was incorporated in the state of Delaware in

The consolidated financial statements of Empire Petroleum Corporation and subsidiaries include the accounts of the Company and its

wholly-owned subsidiaries.

Our mission is to increase shareholder value by building

oil and natural gas reserves in strategic plays in the United States.

To accomplish its mission, we plan on executing the following business

· Cost-effectively optimize well production

unit operating costs and improve margins

proved developed producing acquisitions in predictable fields that have historically had

low production decline and long lives

on high-quality assets that add scale and provide synergies to our existing portfolio and

core areas of operation

operate as a single segment as each of our operating areas have similar economic characteristics and each meet the criteria for aggregation

as defied by accounting standards related to disclosures about segments of an enterprise.

are an independent operator in four geographic areas in the United States.

As operator, we manage and influence production on operated

We use a combination of experienced field personnel and third-party service providers to execute our mission.

Our properties

have reasonably predictable production profiles and cash flows, subject to commodity price and cost fluctuations.

is common in the industry in which we operate, we selectively participate in drilling and developmental activities in non-operated properties.

Decisions to participate in non-operated properties are made after technical and economic analysis of the projects which also considers

the operating expertise and historical track record of the operators.

New Mexico was formed when we purchased producing assets from XTO in May 2021.

These assets are located in Lea County, New Mexico and

consist of a contiguous and consolidated acreage position consisting of 48,000 gross (40,000 net) acres held by production from approximately

730 wells with an average WI of 72% and average NRI of 61% and 14 RI wells with an average ORRI of 11%.

Empire New Mexico’s assets

primarily produce oil with natural gas and NGLs accompanying oil production.

Empire New Mexico’s properties are in the following

• Grayburg/San

Andres (primary source of production)

• Queen-Seven

North Dakota operates approximately 230 producing properties with an average WI of 89% and NRI of 61% in North Dakota and western Montana

that were acquired in April 2019.

· Reduce unit operating costs and improve margins

· Target proved developed producing acquisitions in predictable fields that have historically had low

production decline and long lives

· Focus on high-quality assets that add scale and provide synergies to our existing portfolio and core

areas of operation

We operate as a single segment as each of our operating

areas have similar economic characteristics and each meet the criteria for aggregation as defined by accounting standards related to disclosures

about segments of an enterprise.

Available Information

Our Annual Report on Form 10-K, quarterly reports

on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d)

of the Exchange Act, as well as proxy statements and other information we file with, or furnish to, the SEC are available free of charge

on our website at www.empirepetroleumcorp.com.

We make these documents available as soon as reasonably practicable after we electronically

file them with, or furnish them to, the SEC.

The information contained on our website, or available by hyperlink from our website, is

not incorporated into this Form 10-K or other documents we file with, or furnish to, the SEC.

We intend to use our website as a means

of disclosing material non-public information and for complying with our disclosure obligations under Regulation FD.

Such disclosures

will be included on our website in the “Investor Relations” sections.

Accordingly, investors should monitor such portions

of our website, in addition to following our press releases, SEC filings and public conference calls and webcasts.

In addition, we use social media to communicate with

our investors and the public about our company, our businesses and our results of operations.

The information we post on social media

could be deemed to be material information.

Therefore, we encourage investors, the media and others interested in our company to review

the information we post on the social media channels listed in the “Investor Relations” section of our website.

We are an independent operator in four geographic

areas in the United States.

As operator, we manage and influence production on operated properties.

We use a combination of experienced

field personnel and third-party service providers to execute our mission.

Our producing properties have reasonably predictable production

profiles and cash flows, subject to commodity price and cost fluctuations.

As is common in the industry in which we operate,

we selectively participate in drilling and developmental activities in non-operated properties.

Decisions to participate in non-operated

properties are made after technical and economic analysis of the projects which also considers the operating expertise and historical

track record of the operators.

Empire New Mexico

Empire New Mexico was formed when we purchased

producing assets from XTO in May 2021.

These assets are located in Lea County, New Mexico and include approximately 670 gross (483 net)

producing and injection wells on a contiguous and consolidated acreage position consisting of 48,000 gross (41,000 net).

14 RI wells with an average ORRI of 11%.

Empire New Mexico’s assets primarily produce oil with natural gas and NGLs accompanying

oil production.

Empire New Mexico’s properties are in the following formations:

· Grayburg/San Andres (primary source of production)

· Queen-Seven Rivers-Yates

We have begun technical work for uplift opportunities

in New Mexico.

Empire North Dakota

Empire North Dakota includes approximately 138

gross (108 net) producing or injection wells on 24,000 gross (18,000 net) acres in North Dakota and western Montana.

We also have smaller

nonoperating interests in 70 gross (less than 1 net) vertical wells.

These properties primarily produce oil with some related gas production.

Assets are located in the

following formations:

(primary source of production)

• Ratcliffe/Mission

assets have experienced near-flat production rates over the last five years.

We have been able to capitalize on operational improvements

to allow more immediate recovery of reserves.

April 2020, Empire Texas acquired approximately 140 gross wells and approximately 30,000 net acres with an average operated WI of 96%

and an average operated NRI of 79% as well as 77 miles of gathering lines and pipelines with related facilities and equipment.

Texas owns concentrated acreage and stacked pay in the historically prolific East Texas Basin.

Assets are concentrated in the Fort Trinidad

Field in Houston and Madison Counties with high working interest and historical production from eight separate formations.

Empire Louisiana

Assets are located in the following formations:

· Madison (primary source of production)

· Ratcliffe/Mission Canyon

The existing producing properties have experienced

near-flat production rates over the last five years.

We have been able to capitalize on operational improvements to allow more immediate

recovery of reserves.

In the fourth quarter of 2023,

the Company commenced a program to further develop its Starbuck Field located in North Dakota (the “Starbuck Drilling Program”).

Empire expects 2024 to be a year of progress as it continues to advance the Starbuck Drilling Program.

The Starbuck Drilling Program’s

first well came online in December 2023 and a total of five wells in the Upper Charles formation have been placed on production as of

the filing date of this report.

The Company is currently optimizing completions while increasing the core production through its enhanced

oil recovery (“EOR”) program.

The Company currently has one

rig in the Starbuck Field.

As the Starbuck Field is strategically designed for EOR production, the Company anticipates EOR development

to begin in the second quarter of 2024 with the goal of providing a meaningful increase in production beginning as soon as the second

half of 2024 and going forward.

Empire has also logged five

vertical pilot wells to help identify additional pay and extend existing reservoirs, which has confirmed three additional primary zones

of interest and two secondary zones of interest.

In addition, the Company has drilled a vertical appraisal well in the Starbuck Field

to core two new target zones for development.

The two new primary target zones of development have been successfully cored and the cores

are under analysis.

The data will then be added to the development plan while the vertical well will be placed on production in the first

quarter of 2024.

Empire Texas includes approximately 121 gross (106

net) producing wells on approximately 43,000 gross (30,000 net) acres as well as 77 miles of gathering lines and pipelines with related

facilities and equipment.

Empire Texas owns concentrated acreage and stacked pay in the historically prolific East Texas Basin.

are concentrated in the Fort Trinidad Field in Houston and Madison Counties with high working interest and historical production from

eight separate formations.

We have begun technical work for uplift opportunities in Texas.

Empire Louisiana

acquired its assets in late 2018 and has 10 producing properties and three saltwater disposal wells in the following formations:

Empire Louisiana’s

assets primarily produce oil from properties with average WI of 58% and NRI of 47%.

and Operating Data

following table sets forth a summary of our production and operating data for the years ended December 31, 2022 and 2021.

normal production declines, increased or decreased production due to future acquisitions, divestitures, and development, 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.

Empire Louisiana includes 12 gross (10 net) producing wells and three saltwater

disposal wells in the Miocene, Frio, Cockfield, and Wilcox formations.

Empire Louisiana’s assets primarily produce oil.

Production and Operating Data

The following table sets forth a summary of our production

and operating data for the years ended December 31, 2023 and 2022.

Because of normal production declines, increased or decreased production

due to future acquisitions, divestitures, and development, 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.

December 31, 2023

1 unchanged sentence

Production and operating data:

Net production volumes:

Net sales volumes:

Natural gas (Mcf)

1 unchanged sentence

Average price per unit:

Natural gas (a)(b)

Natural gas liquids (b)

Natural gas liquids

Operating costs and expenses per Boe:

Lease operating expense

Lease operating expense (excluding workovers)

Total Lease operating expense

Production and ad valorem taxes

Depreciation, depletion, amortization and accretion

General & administrative

the effect of net cash receipts from (payments on) derivatives.

gathering and processing costs in 2022 and 2021 that were previously reported in Lease operating expense within Operating

Costs and expenses.

December 31, 2022 and 2021, we had approximately 1,100 wells which we operated.

completed a pilot drilling program on four wells in North Dakota and are in the process of completing these wells as of December 31,

During 2022, we had no other drilling activity with the exception of four non-operated wells.

No wells were in progress as of December

31, 2021, and we had no drilling activity during 2021 with the exception of four non-operated wells.

have no delivery commitments for oil or natural gas.

and Natural Gas Reserves

primary mission is to optimize existing producing properties;

as such, there are no reserves estimated for undeveloped properties, though

we own acreage that can be drilled in the future and are also a non-operator WI owner on acreage subject to future drilling activities.

The following table represents our oil and natural gas reserves at December 31, 2022 and 2021.

General & administrative (excluding stock-based compensation)

Stock-based compensation

(a) Excludes the effect of net cash receipts from (payments on) derivatives.

At December 31, 2023 and 2022, we had approximately

1,000 gross (710 net) producing and injection wells.

We have no firm delivery commitments for oil or natural

Oil and Natural Gas Reserves

Our primary mission is to optimize existing producing

as such, there are no reserves estimated for undeveloped properties, though we own acreage that can be drilled in the future

and are also a non-operator WI owner on acreage subject to future drilling activities.

The following table represents our oil and natural

gas reserves at December 31, 2023 and 2022.

Proved developed at December 31, 2023

Proved developed at December 31, 2022

proved reserves were calculated using an unweighted arithmetic average of the first-day-of-the-month price within the 12-month period

for the year.

All prices and costs associated with operating wells were held constant in accordance with SEC guidelines.

Prices of $91.14

per barrel of oil, $4.23 per Mcf and $36.29 per barrel of NGL were utilized at December 31, 2022.

Prices of $64.31 per barrel and $7.34

per Mcf were utilized at December 31, 2021.

Natural gas pricing in 2022 includes prices received for NGLs during the year.

did not separately report the NGLs in New Mexico.

Estimation Process

estimation is a subjective process as the underground accumulations of crude oil and natural gas cannot be measured in an exact manner,

and the accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation

and judgment.

The quantities of oil and natural gas that are ultimately recovered, production and operating costs, and future oil and

natural gas prices may differ from those assumed in these estimates.

Our internal professionals work closely with our external engineers

to ensure the integrity, accuracy, and timeliness of data that is furnished to them for their reserve estimation process.

engage an independent petroleum engineering firm, CG&A, to prepare our annual reserve estimates and rely on CG&A’s expertise

to ensure that reserve estimates are prepared in accordance with SEC guidelines.

technical person primarily responsible for the preparation of the reserve report is Zane Meekins, Executive Vice President.

has been with CG&A since 1989 and graduated from Texas A&M University in 1987 with a bachelor's degree in Petroleum Engineering.

He is a registered professional engineer in Texas and has more than 30 years of experience in the estimation and evaluation of oil and

natural gas reserves.

He is also a member of the Society of Petroleum Engineers and The Society of Petroleum Evaluation Engineers.

Weatherl, Vice President of Engineering, is responsible for our reservoir engineering, and is a qualified reserve estimator and is responsible

for overseeing CG&A during the preparation of the annual reserve estimates.

His professional qualifications meet or exceed the qualifications

of reserve estimators set forth in the “Standards Pertaining to Estimation and Auditing of Oil and Natural Gas Reserve Information”

promulgated by the Society of Petroleum Engineers.

His qualifications include a Bachelor of Science degree in Petroleum Engineering from

the University of Tulsa in 1984 and he is a member of the Society of Petroleum Engineers.

Weatherl has been estimating and evaluating

reserves for over 35 years.

primary inputs to the reserve estimation process are technical information, financial data, ownership interest and production data.

relevant field and reservoir technical information, which is updated at least annually, is assessed for validity when CG&A has technical

meetings with our personnel.

Current revenue and expense information is obtained from accounting records, which are subject to external

quarterly reviews, annual audits, and internal controls over financial reporting.

All current financial data such as commodity prices,

lease operating expenses, production taxes and field level commodity price differentials are updated in the reserve database and then

analyzed to ensure that they have been entered accurately and that all updates are complete.

Our ownership in mineral interests and well

production data are subject to internal controls and are incorporated into the reserve database as well as verified internally by our

personnel to ensure accuracy and completeness.

Once the reserve database has been updated with current information, and the relevant

technical support material has been assembled, CG&A meets with technical personnel to review field performance and future development

plans in order to verify the validity of estimates.

Following these reviews, the reserve database is furnished to CG&A so that it

can prepare its independent reserve estimate and final report.

The reserve estimates prepared by CG&A are reviewed and compared to

internal estimates by Mr.

Material reserve estimation differences are reviewed between CG&A and our technical personnel

and additional data is provided to address any variances.

If the supporting documentation does not justify additional changes, CG&A

reserves are accepted.

In the event that additional data supports a reserve estimation adjustment, CG&A will analyze the additional

data and may make changes it solely deems necessary.

Additional data is usually comprised of updated production information on new wells.

Once the review is completed and all material differences are reconciled the reserve report is finalized and our reserve database is

updated with the final estimates provided by CG&A.

recoveries in commodity prices, COVID-19 has impacted and may continue to impact the global economy and disrupt global supply chains

and has the potential to continue to create significant volatility and disruption of financial and commodity markets.

The extent of the

continuing impact of the COVID-19 pandemic on our operational and financial performance, including our ability to execute business strategies

and initiatives in the expected timeframes, is uncertain and depends on various factors outside of our control, including how the pandemic

continues to evolve and how measures taken in response to its effects impact the demand for oil and natural gas, the availability of

personnel, equipment, and services critical to our ability to operate our properties and the impact of potential governmental restrictions.

There is un certainty regarding the extent and duration of any disruption.

market our oil and natural gas in accordance with standard energy industry practices.

This marketing effort endeavors to obtain the combined

highest netback and most secure market available at that time.

sell oil production at the lease locations to third-party purchasers via truck transport or pipeline.

We do not transport, refine or

process the oil we produce.

We sell our produced oil under contracts using market-based pricing, which is adjusted for differentials

based upon oil quality.

sell our natural gas and natural gas liquids under purchase contracts using market-based pricing, which is primarily sold at the lease

sell our oil, natural gas, and NGL production to marketers which is transported by truck or pipeline to storage facilities arranged by

the marketers.

Our marketing of oil and natural gas can be affected by factors beyond our control, the effects of which cannot be accurately

2022, 68% of revenues from oil, natural gas, and NGL sales were to four customers.

Net proved reserves were calculated using an unweighted

arithmetic average of the first-day-of-the-month price within the 12-month period for the year.

All prices and costs associated with operating

wells were held constant in accordance with SEC guidelines.

Prices of $75.45 per barrel of oil, $1.51 per Mcf and $9.82 per barrel of

NGL were utilized at December 31, 2023.

Prices of $91.14 per barrel and $4.23 per Mcf and $36.29 per barrel of NGL were utilized at December

Reserve Estimation Process

Reserve estimation is a subjective process as the

underground accumulations of crude oil and natural gas cannot be measured in an exact manner, and the accuracy of any reserve estimate

is a function of the quality of available data and of engineering and geological interpretation and judgment.

The quantities of oil and

natural gas that are ultimately recovered, production and operating costs, and future oil and natural gas prices may differ from those

assumed in these estimates.

Our internal professionals work closely with our external engineers to ensure the integrity, accuracy, and

timeliness of data that is furnished to them for their reserve estimation process.

We engage an independent petroleum engineering firm,

CG&A, to prepare our annual reserve estimates and rely on CG&A’s expertise to ensure that reserve estimates are prepared

in accordance with SEC guidelines.

The technical person primarily responsible for the

preparation of the reserve report is Zane Meekins, Executive Vice President.

Meekins has been with CG&A since 1989 and graduated

from Texas A&M University in 1987 with a bachelor's degree in Petroleum Engineering.

He is a registered professional engineer in Texas

and has more than 30 years of experience in the estimation and evaluation of oil and natural gas reserves.

He is also a member of the

Society of Petroleum Engineers and the Society of Petroleum Evaluation Engineers.

Brian Weatherl, Vice President of Engineering for

the Company, is responsible for our reservoir engineering, and is a qualified reserve estimator and is responsible for overseeing CG&A

during the preparation of the annual reserve estimates.

His professional qualifications meet or exceed the qualifications of reserve estimators

set forth in the “Standards Pertaining to Estimation and Auditing of Oil and Natural Gas Reserve Information” promulgated

by the Society of Petroleum Engineers.

His qualifications include a Bachelor of Science degree in Petroleum Engineering from the University

of Tulsa in 1984 and he is a member of the Society of Petroleum Engineers.

Weatherl has been estimating and evaluating reserves for

over 35 years.

The primary inputs to the reserve estimation process

are technical information, financial data, ownership interest and production data.

The relevant field and reservoir technical information,

which is updated at least annually, is assessed for validity when CG&A has technical meetings with our personnel.

Current revenue

and expense information is obtained from accounting records, which are subject to external quarterly reviews, annual audits, and internal

controls over financial reporting.

All current financial data such as commodity prices, lease operating expenses, production taxes and

field level commodity price differentials are updated in the reserve database and then analyzed to ensure that they have been entered

accurately and that all updates are complete.

Our ownership in mineral interests and well production data are subject to internal controls

and are incorporated into the reserve database as well as verified internally by our personnel to ensure accuracy and completeness.

the reserve database has been updated with current information, and the relevant technical support material has been assembled, CG&A

meets with technical personnel to review field performance and future development plans in order to verify the validity of estimates.

Following these reviews, the reserve database is furnished to CG&A so that it can prepare its independent reserve estimate and final

The reserve estimates prepared by CG&A are reviewed and compared to internal estimates by Mr.

Material reserve estimation

differences are reviewed between CG&A and our technical personnel and additional data is provided to address any variances.

supporting documentation does not justify additional changes, CG&A reserves are accepted.

In the event that additional data supports

a reserve estimation adjustment, CG&A will analyze the additional data and may make changes it solely deems necessary.

data is usually comprised of updated production information on new wells.

Once the review is completed and all material differences are

reconciled the reserve report is finalized and our reserve database is updated with the final estimates provided by CG&A.

Marketing Arrangements

We market our oil and natural gas in accordance with

standard energy industry practices.

This marketing effort endeavors to obtain the combined highest netback and most secure market available

at that time.

We sell oil production at the lease locations to third-party

purchasers via truck transport or pipeline.

We do not transport, refine or process the oil we produce.

We sell our produced oil under

contracts using market-based pricing, which is adjusted for differentials based upon oil quality.

We sell our natural gas and natural gas liquids under

purchase contracts using market-based pricing, which is primarily sold at the lease location.

Principal Customers

We sell our oil, natural gas, and NGL production to

marketers which is transported by truck or pipeline to storage facilities arranged by the marketers.

Our marketing of oil and natural

gas can be affected by factors beyond our control, the effects of which cannot be accurately predicted.

For 2023, 70% of revenues from oil, natural gas, and

NGL sales were to four customers.

While the loss of these purchasers may result in a temporary interruption in sales of, or a lower price

for, our production, we believe that the loss of these purchasers would not have a material adverse effect on our operations, as there

are alternative purchasers in our producing regions.

oil and natural gas industry in the areas in which we operate is highly competitive.

We encounter strong competition from numerous parties,

ranging generally from small independent producers to major integrated companies.

We primarily encounter significant competition in acquiring

At higher commodity prices, we also face competition in contracting for oil field services, rigs, pressure pumping and workover

equipment and securing trained personnel.

Many of these competitors have financial, technical and personnel resources substantially larger

As a result, our competitors may be able to pay more for desirable properties, or to evaluate, bid for and purchase a greater

number of properties or prospects than our financial or personnel resources will permit.

addition to competition for drilling, pressure pumping and workover equipment, we are also affected by the availability of related equipment

and materials.

The oil and natural gas industry periodically experiences shortages of drilling and workover rigs, equipment, pipe, materials

and personnel, which can delay workover and exploration activities and cause significant price increases.

We are unable to predict the

timing or duration of any such shortages.

conditions often affect the demand for, and prices of, natural gas and can also delay oil and natural gas production.

Demand for natural

gas is traditionally higher in the winter, resulting in higher natural gas prices during the first and fourth quarters.

seasonal fluctuations, results of operations for individual quarterly periods may not be indicative of the results realized on an annual

Price Volatility

market price of oil and natural gas is volatile, subject to speculative movement and depends upon numerous factors beyond our

control, including expectations regarding inflation, global and regional demand, political and economic conditions and production

Future profitability, if any, will depend substantially upon the prevailing prices for oil and natural gas.

market price for oil and natural gas remains depressed in the future, it could have a material adverse effect on our ability to

raise additional capital necessary to finance operations.

Lower oil and natural gas prices may also reduce the amount of oil and

natural gas, if any, that can be produced economically from our properties.

We anticipate that the prices of oil and natural

gas will fluctuate in the near future.

oil and natural gas industry is subject to extensive federal, state and local laws and regulations governing the production, transportation

and sale of hydrocarbons as well as the taxation of income resulting therefrom.

affecting the oil and natural gas industry is constantly changing.

Numerous federal and state departments and agencies have issued

rules and regulations applicable to the oil and natural gas industry.

In general, these rules and regulations regulate, among other

things, the extent to which acreage may be acquired or relinquished;

NGL sales were to three customers.

For 2022, 68% of revenues from oil, natural gas, and NGL sales were to four customers.

While the loss

of these purchasers may result in a temporary interruption in sales of, or a lower price for, our production, we believe that the loss

of these purchasers would not have a material adverse effect on our operations, as there are alternative purchasers in our producing regions.

The oil and natural gas industry in the areas in which

we operate is highly competitive.

We encounter strong competition from numerous parties, ranging generally from small independent producers

to major integrated companies.

We primarily encounter significant competition in acquiring properties.

At higher commodity prices, we

also face competition in contracting for oil field services, rigs, pressure pumping and workover equipment and securing trained personnel.

Many of these competitors have financial, technical and personnel resources substantially larger than ours.

As a result, our competitors

may be able to pay more for desirable properties, or to evaluate, bid for and purchase a greater number of properties or prospects than

our financial or personnel resources will permit.

In addition to competition for drilling, pressure

pumping and workover equipment, we are also affected by the availability of related equipment and materials.

The oil and natural gas industry

periodically experiences shortages of drilling and workover rigs, equipment, pipe, materials and personnel, which can delay workover and

exploration activities and cause significant price increases.

We are unable to predict the timing or duration of any such shortages.

Seasonality of Business

Weather conditions often affect the demand for, and

prices of, natural gas and can also delay oil and natural gas production.

Demand for natural gas is traditionally higher in the winter,

resulting in higher natural gas prices during the first and fourth quarters.

Due to these seasonal fluctuations, results of operations

for individual quarterly periods may not be indicative of the results realized on an annual basis.

Markets and Price Volatility

The market price of oil and natural gas is volatile,

subject to speculative movement and depends upon numerous factors beyond our control, including expectations regarding inflation, global

and regional demand, political and economic conditions and production costs.

Future profitability, if any, will depend substantially upon

the prevailing prices for oil and natural gas.

If the market price for oil and natural gas remains depressed in the future, it could

have a material adverse effect on our ability to raise additional capital necessary to finance operations.

Lower oil and natural gas prices

may also reduce the amount of oil and natural gas, if any, that can be produced economically from our properties.

We anticipate

that the prices of oil and natural gas will fluctuate in the near future.

The oil and natural

gas industry is subject to extensive federal, state and local laws and regulations governing the production, transportation and sale

of hydrocarbons as well as the taxation of income resulting therefrom.

Legislation affecting the oil and natural gas industry is constantly

Numerous federal and state departments and agencies have issued rules and regulations applicable to the oil and natural

gas industry.

In general, these rules and regulations regulate, among other things, the extent to which

acreage may be acquired or relinquished;

spacing of wells;

measures required for preventing waste of oil

and natural gas resources;

and, in some cases, rates of production.

The heavy and increasing regulatory burdens on the oil and

natural gas industry increase our cost of doing business and, consequently, affect profitability.

oil and natural gas operations are also subject to numerous federal, state and local laws and regulations relating to environmental protection.

These laws govern, among other things, the amounts and types of substances and materials that may be released into the environment, the

issuance of permits in connection with exploration, drilling and production activities, the reclamation and abandonment of wells and

facility sites and the remediation of contaminated sites.

These laws and regulations may impose substantial liabilities if we fail

to comply or if any contamination results from our operations.

December 31, 2022, we had forty full-time employees, not including contract personnel and outsourced service providers.

Our team is broadly

experienced in oil and natural gas operations and follows a strategy of outsourcing most accounting, human resources, and other non-core

corporate headquarters are at 2200 South Utica Place, Suite 150, Tulsa, Oklahoma, with field offices in North Dakota, Texas, and New

measures required for preventing waste of oil and natural gas resources;

in some cases, rates of production.

The heavy and increasing regulatory burdens on the oil and natural gas industry increase our

cost of doing business and, consequently, affect profitability.

Our oil and natural

gas operations are also subject to numerous federal, state and local laws and regulations relating to environmental protection.

laws govern, among other things, the amounts and types of substances and materials that may be released into the environment, the issuance

of permits in connection with exploration, drilling and production activities, the reclamation and abandonment of wells and facility

sites and the remediation of contaminated sites.

These laws and regulations may impose substantial liabilities if we fail to comply

or if any contamination resu lts from our operations.

At December 31, 2023, we had 50 full-time employees,

not including contract personnel and outsourced service providers.

Our team is broadly experienced in oil and natural gas operations and

follows a strategy of outsourcing most accounting, human resources, and other non-core functions.

Office Locations

Our corporate headquarters are at 2200 South Utica

Place, Suite 150, Tulsa, Oklahoma, with field offices in North Dakota, Texas, and New Mexico.

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 1. Business