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In particular, risks associated with our business include:
+Added: Our need to raise additional capital to support our operations and repay outstanding indebtedness.
The future price of oil, natural gas and NGL;
The impact of public health crises, similar to COVID-19, on the Company’s operations, future prospects, the value of its properties, and the economy in general, including the related effect on the supply and demand, and ultimate price of oil and natural gas;
+Added: The effect of political and economic conditions in oil and natural gas producing countries, including uncertainty or instability resulting from civil unrest, terrorism or war, such as the current conflicts between Russia and Ukraine, the Israel-Hamas war, the Israel-Iran conflict, recent events in Venezuela, and other instability in the Middle East;
Current and future declines in economic activity and recessions, changes in inflation and interest rates, and their effect on the Company, its property, prospects and the supply and demand, and ultimate price of oil and natural gas;
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Our ability to generate sufficient cash flow to meet any future debt service and other obligations due to events beyond our control;
−Removed: The fact that all of our assets and operations are located in the Permian Basin and the D-J Basin, making us vulnerable to risks associated with operating in only two geographic areas;
+Added: The fact that all of our assets and operations are located in the Permian Basin, the Powder River Basin, and the D-J Basin, making us vulnerable to risks associated with operating in only three geographic areas;
The speculative nature of our oil and gas operations, and general risks associated with the exploration for, and production of oil and gas;
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Our dependence on the continued involvement of our present management;
−Removed: The fact that Dr.
−Removed: Kukes, our former CEO and newly appointed Executive Chairman of the Company's Board of Directors, beneficially owns a majority of our common stock and that his interests may be different from other shareholders;
+Added: The fact that affiliates of Juniper Capital Advisors, L.P.
+Added: (“Juniper”), which are entitled to appoint, and have appointed, three of the six members of the Company's Board of Directors, beneficially own a majority of our common stock and that Juniper’s interests may be different from other shareholders;
Our ability to maintain the listing of our common stock on the NYSE American;
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Because approximately 72% of our estimated proved reserves as of December 31, 2025 were oil, our financial results are more sensitive to movements in oil prices.
−Removed: The price of crude oil has experienced significant volatility over the last five years, with the price per barrel of West Texas Intermediate (“ WTI ”) crude, dropping below $20 per barrel in 2020 due in part to reduced global demand stemming from the global COVID-19 outbreak, and surging to over $120 a barrel in early March 2022, following Russia’s invasion of the Ukraine, to the $70s in recent months.
+Added: The price of crude oil has experienced significant volatility over the last five years, with the price per barrel of West Texas Intermediate (“ WTI ”) crude, dropping below $48 per barrel in 2021 and surging to over $120 a barrel in early March 2022, following Russia’s invasion of the Ukraine, to the $90s in early 2026, and more recently increasing again to the mid-$90s per barrel following the initiation of the recent conflict in Iran .
A prolonged period of low market prices for oil and natural gas, or further declines in the market prices for oil and natural gas, will likely result in capital expenditures being further curtailed and will adversely affect our business, financial condition and liquidity and our ability to meet obligations, targets or financial commitments and could ultimately lead to restructuring or filing for bankruptcy, which would have a material adverse effect on our stock price and indebtedness.
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Year ended December 31, 2025
+Added: Quarter ended March 31, 2026*
+Added: * Through March 16, 2026.
We have a limited operating history, have incurred net losses in the past and may incur net losses in the future.
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As a result, we may not be able to achieve or sustain profitability or positive cash flows provided by our operating activities in the future.
−Removed: We may need additional capital to complete future acquisitions, conduct our operations and fund our business beyond 2025, and our ability to obtain the necessary funding is uncertain.
−Removed: We may need to raise additional funding to complete future potential acquisitions and may be required to raise additional funds through public or private debt or equity financing or other various means to fund our operations and complete exploration and drilling operations beyond 2025 and acquire assets.
+Added: We may need additional capital to complete future acquisitions and conduct our operations and fund our business in and beyond 2026, and will need to raise additional capital to repay outstanding liabilities, and our ability to obtain the necessary funding is uncertain.
+Added: We may need additional capital to complete future acquisitions and conduct our operations and fund our business in and beyond 2026, and will need to raise additional capital to repay outstanding liabilities, and may be required to raise additional funds through public or private debt or equity financing or other various means to repay outstanding liabilities, fund our operations and complete exploration and drilling operations in and beyond 2026 and acquire assets.
In such a case, adequate funds may not be available when needed or may not be available on favorable terms.
−Removed: If we need to raise additional funds in the future by issuing equity securities, including sales of common stock under our December 2024 Sales Agreement entered into with Roth Capital Partners, LLC and A.G.P./Alliance Global Partners, pursuant to which we can sell up to $8 million in at-the-market offerings, dilution to existing stockholders will result, and such securities may have rights, preferences and privileges senior to those of our common stock.
+Added: If we need to raise additional funds in the future by issuing equity securities, including sales of common stock under our December 2024 Sales Agreement entered into with Roth Capital Partners, LLC and A.G.P./Alliance Global Partners, pursuant to which we can sell up to $8 million in at-the-market offerings, dilution to existing stockholders will result, and such securities may have rights, preferences and privileges senior to those of our common stock, and/or through drawing debt under our A&R Credit Agreement.
If funding is insufficient at any time in the future and we are unable to generate sufficient revenue from new business arrangements, to complete planned acquisitions or operations, our results of operations and the value of our securities could be adversely affected.
+Added: As of the date of this Report, we owe $98.0 million under our A&R Credit Agreement, which amounts are due and payable on October 31, 2029.
+Added: Such funds may not be available when needed or may not be available on favorable terms.
Additionally, due to the nature of oil and gas interests, i.e., that rates of production generally decline over time as oil and gas reserves are depleted, if we are unable to drill additional wells and develop our reserves, either because we are unable to raise sufficient funding for such development activities, or otherwise, or in the event we are unable to acquire additional operating properties, we believe that our revenues will continue to decline over time.
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If this were to happen, we may be forced to scale back our business plan, sell or liquidate assets to satisfy outstanding debts, all of which could result in the value of our outstanding securities declining in value.
−Removed: We have concluded that certain of our previously issued financial statements should not be relied upon and have restated certain of our previously issued financial statements which may affect investor confidence and raise reputational issues and may subject us to additional risks and uncertainties, including increased professional costs and the increased possibility of legal proceedings and regulatory inquiries.
−Removed: As discussed in Note 4 to our audited consolidated financial statements included under Restatement of Previously Issued Consolidated Financial Statements, we determined to restate our consolidated financial statements as of December 31, 2023 and 2022, respectively, after we identified errors in our calculation of depletion expenses for our oil and gas properties.
−Removed: As a result of this error and the resulting restatement of our consolidated financial statements for the impacted periods, we have incurred, and may continue to incur, unanticipated costs for accounting and legal fees in connection with or related to the restatement, and have become subject to a number of additional risks and uncertainties, including the increased possibility of litigation and regulatory inquiries.
−Removed: Any of the foregoing may affect investor confidence in the accuracy of our financial disclosures and may raise reputational risks for our business, both of which could harm our business and financial results.
−Removed: Our industry and the broader US economy have experienced higher than expected inflationary pressures in 2022, related to continued supply chain disruptions, labor shortages and geopolitical instability.
−Removed: Should these conditions persist our business, results of operations and cash flows could be materially and adversely affected.
−Removed: Year 2022 saw significant increases in the costs of certain services and materials, including steel, sand and fuel, as a result of availability constraints, supply chain disruption, increased demand, labor shortages associated with a fully employed US labor force, high inflation, interest rates and other factors, with supply and demand fundamentals being further aggravated by disruptions in global energy supply caused by multiple geopolitical events, including the ongoing conflict between Russia and Ukraine and the current armed conflict in Israel and the Gaza Strip, all resulting in an estimated cost increase of approximately 25% to 30% per well on our Permian Asset and 10% to 20% on our D-J Basin Asset, based on costs we experienced commencing in the third quarter of 2021 and continuing throughout 2022.
−Removed: Service and materials costs also increased accordingly through 2022, stabilizing in 2023 in 2024, with general supply chain and inflation issues seen throughout the industry leading to increased operating costs.
−Removed: While the Company is cautiously optimistic that such costs have plateaued and will hold at current levels as we have not seen significant cost increases in 2024 and thus far in 2025, supply chain constraints, the effect of tariffs, and inflationary pressures may adversely impact our operating costs and may negatively impact our ability to procure materials and equipment in a timely and cost-effective manner, if at all, which could result in reduced margins and production delays and, as a result, our business, financial condition, results of operations and cash flows could be materially and adversely affected.
We have been and may continue to be negatively impacted by inflation.
Recent increases in inflation have had an adverse effect on us.
−Removed: Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability, including the ongoing conflict between the Ukraine and Russia and the current armed conflict in Israel and the Gaza Strip, and the effect of tariffs.
+Added: Current and future inflationary effects may be driven by, among other things, supply chain disruptions and governmental stimulus or fiscal policies, and geopolitical instability, including the recent armed conflict in Israel and the Gaza Strip, and the ongoing conflicts between the Ukraine and Russia and the United States and Iran, and the effect of tariffs.
Increases in inflation, have in the past, and could in the future, impact our costs of labor, equipment and services and the margins we are able to realize on our wells, all of which could have an adverse impact on our business, financial position, results of operations and cash flows.
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Economic uncertainty may affect our access to capital and/or increase the costs of such capital.
−Removed: Global economic conditions continue to be volatile and uncertain due to, among other things, consumer confidence in future economic conditions, fears of recession and trade wars, the effect of tariffs, the price of energy, fluctuating interest rates, the availability and cost of consumer credit, the availability and timing of government stimulus programs, levels of unemployment, increased inflation, and tax rates.
+Added: Global economic conditions continue to be volatile and uncertain due to, among other things, consumer confidence in future economic conditions, ongoing wars and conflicts, including the ongoing conflict between the United States and Iran, fears of recession and trade wars, the effect of tariffs, the price of energy, fluctuating interest rates, the availability and cost of consumer credit, the availability and timing of government stimulus programs, levels of unemployment, increased inflation, and tax rates.
These conditions remain unpredictable and create uncertainties about our ability to raise capital in the future.
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We have entered into a Stipulated Final Order with the Director of the OCD which requires that the Company fund the plugging and abandonment of an aggregate of approximately 299 legacy vertical wells in our Permian Basin Asset, compliance with which may be costly and our failure to comply with the SFO may materially and adversely affect our business, results of operations and cash flows.
−Removed: The Company has entered into an SFO with the OCD through RAZO, the Company’s New Mexico operating subsidiary, which requires, among other things, that the Company reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO.
+Added: The Company has entered into an SFO with the OCD through RAZO, the Company’s New Mexico operating subsidiary, which requires, among other things, that the Company reimburse the OCD for actual costs incurred by the OCD for plugging and abandoning approximately 299 inactive legacy wells in the Permian Basin Asset (of which seven have been plugged to date) at a rate of $2.00 per gross barrel of oil sold by RAZO during any production reporting period, subject to a minimum payment of $30,000 per month by RAZO.
RAZO has been timely paying each reimbursement invoice received from the OCD in accordance with the SFO and is in full compliance with the SFO.
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Additionally, in the event the Company is unable to fully comply with the terms of the SFO, then the Company could be subject to significant civil penalties and sanctions, which would likely have a material adverse effect on our business, financial condition and results of operations, could require us to raise additional funding which may not be available on commercially reasonable terms, if at all, and may negatively affect our drilling plans in the future, and may cause the value of our securities to decline in value.
−Removed: We may not be able to generate sufficient cash flow to meet any future debt service and other obligations due to events beyond our control.
−Removed: Our ability to generate cash flows from operations, to make payments on or refinance potential future indebtedness and to fund working capital needs and planned capital expenditures will depend on our future financial performance and our ability to generate cash in the future.
−Removed: Our future financial performance will be affected by a range of economic, financial, competitive, business and other factors that we cannot control, such as general economic, legislative, regulatory and financial conditions in our industry, the economy generally, the price of oil and other risks described below.
−Removed: A significant reduction in operating cash flows resulting from changes in economic, legislative or regulatory conditions, increased competition or other events beyond our control could increase the need for additional or alternative sources of liquidity and could have a material adverse effect on our business, financial condition, results of operations, prospects and our ability to service future potential debt and other obligations.
−Removed: If we are unable to service future potential indebtedness or to fund our other liquidity needs, we may be forced to adopt an alternative strategy that may include actions such as reducing or delaying capital expenditures, selling assets, restructuring or refinancing such indebtedness, seeking additional capital, or any combination of the foregoing.
−Removed: If we raise debt, it would increase our interest expense, leverage and our operating and financial costs.
−Removed: We cannot assure you that any of these alternative strategies could be affected on satisfactory terms, if at all, or that they would yield sufficient funds to make required payments on future potential indebtedness or to fund our other liquidity needs.
−Removed: Reducing or delaying capital expenditures or selling assets could delay future cash flows.
−Removed: In addition, the terms of future debt agreements may restrict us from adopting any of these alternatives.
−Removed: We cannot assure you that our business will generate sufficient cash flows from operations or that future borrowings will be available in an amount sufficient to enable us to pay such future potential indebtedness or to fund our other liquidity needs.
−Removed: If for any reason we are unable to meet our future potential debt service and repayment obligations, we may be in default under the terms of the agreements governing such indebtedness, which could allow our creditors at that time to declare such outstanding indebtedness to be due and payable.
−Removed: Under these circumstances, our lenders could compel us to apply all of our available cash to repay our borrowings.
−Removed: In addition, the lenders under our credit facilities or other secured indebtedness could seek to foreclose on any of our assets that are their collateral.
−Removed: If the amounts outstanding under such indebtedness were to be accelerated, or were the subject of foreclosure actions, our assets may not be sufficient to repay in full the money owed to the lenders or to our other debt holders.
−Removed: All of our crude oil, natural gas and NGLs production is located in the Permian Basin and the D-J Basin, making us vulnerable to risks associated with operating in only two geographic areas.
+Added: All of our crude oil, natural gas and NGLs production is located in the Permian Basin, the Powder River Basin and the D-J Basin, making us vulnerable to risks associated with operating in only three geographic areas.
In addition, we have a large amount of proved reserves attributable to a small number of producing formations.
−Removed: Our current operations are focused solely in the Permian Basin located in Chaves and Roosevelt Counties, New Mexico, and the D-J Basin of Weld and Morgan Counties, Colorado, with potential future operations extending into Laramie County, Wyoming, which means our current producing properties and new drilling opportunities are geographically concentrated in those two areas.
+Added: Our current operations are focused solely in the Permian Basin located in Chaves and Roosevelt Counties, New Mexico, and the D-J Basin of Weld and Morgan Counties, Colorado, with future operations extending into the Powder River Basin in Campbell and Laramie Counties, Wyoming, as a result of our October 2025 Mergers, with which means our current producing properties and new drilling opportunities are geographically concentrated in those three areas.
Because our operations are not as diversified geographically as many of our competitors, the success of our operations and our profitability may be disproportionately exposed to the effect of any regional events, including:
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curtailment of production or interruption in the availability of gathering, processing or transportation infrastructure and services, and any resulting delays or interruptions of production from existing or planned new wells.
−Removed: For example, bottlenecks in processing and transportation that have occurred in some recent periods in the Permian Basin and D-J Basin may negatively affect our results of operations, and these adverse effects may be disproportionately severe to us compared to our more geographically diverse competitors.
+Added: For example, bottlenecks in processing and transportation that have occurred in some recent periods in the Permian Basin, Powder River Basin, and D-J Basin may negatively affect our results of operations, and these adverse effects may be disproportionately severe to us compared to our more geographically diverse competitors.
Similarly, the concentration of our assets within a small number of producing formations exposes us to risks, such as changes in field-wide rules that could adversely affect development activities or production relating to those formations.
Such an event could have a material adverse effect on our results of operations and financial condition.
−Removed: In addition, in areas where exploration and production activities are increasing, as has been the case in recent years in the Permian Basin and D-J Basin, the demand for, and cost of, drilling rigs, equipment, supplies, personnel and oilfield services increase.
+Added: In addition, in areas where exploration and production activities are increasing, as has been the case in recent years in the Permian Basin, the Powder River Basin, and D-J Basin, the demand for, and cost of, drilling rigs, equipment, supplies, personnel and oilfield services increase.
Shortages or the high cost of drilling rigs, equipment, supplies, personnel or oilfield services could delay or adversely affect our development and exploration operations or cause us to incur significant expenditures that are not provided for in our capital forecast, which could have a material adverse effect on our business, financial condition or results of operations.
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Historically, the commodities market has been volatile.
−Removed: For example, the price of crude oil has experienced significant volatility over the last five years, with the price per barrel of West Texas Intermediate (“ WTI ”) crude, dropping below $20 per barrel in 2020 due in part to reduced global demand stemming from the global COVID-19 outbreak, and surging to over $120 a barrel in early March 2022, following Russia’s invasion of the Ukraine, to the $70s in recent months.
+Added: For example, the price of crude oil has experienced significant volatility over the last five years, with the price per barrel of West Texas Intermediate (“ WTI ”) crude, dropping below $48 per barrel in 2021, and surging to over $120 a barrel in early March 2022, following Russia’s invasion of the Ukraine, to the $60s in early 2026, to around $98 more recently following the initiation of the recent conflict in Iran.
Prices for natural gas and NGLs experienced declines of similar magnitude.
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weather conditions and natural disasters;
−Removed: political conditions in or affecting oil, NGLs and natural gas producing regions and/or pipelines, including in Eastern Europe, the Middle East and South America, for example, as experienced with the Russian invasion of the Ukraine in February 2022, and the current armed conflict in Israel and the Gaza Strip, which conflicts are ongoing;
+Added: political conditions in or affecting oil, NGLs and natural gas producing regions and/or pipelines, including in Eastern Europe, the Middle East and South America, for example, as experienced with the recent armed conflict in Israel and the Gaza Strip, the Russian invasion of the Ukraine in February 2022, and the more recent conflict between the United States and Iran (all of which conflicts are ongoing);
the continued threat of terrorism and the impact of military action and civil unrest;
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Declines in oil, NGL or natural gas prices have not, and will not, only reduce our revenue, but have and will reduce the amount of oil, NGL and natural gas that we can produce economically.
−Removed: Should natural gas, NGL or oil prices decline from current levels and remain there for an extended period of time, we may choose to shut-in our operated wells, (similar to our shut-in of our operated wells in 2020 in response to the COVID-19 pandemic), delay some or all of our exploration and development plans for our prospects, or to cease exploration or development activities on certain prospects due to the anticipated unfavorable economics from such activities, and, as a result, we may have to make substantial downward adjustments to our estimated proved reserves, each of which would have a material adverse effect on our business, financial condition and results of operations.
+Added: Should natural gas, NGL or oil prices decline from current levels and remain there for an extended period of time, we may choose to shut-in our operated wells, (similar to our shut-in of our operated wells in the Permian Basin and the D-J Basin in 2020 in response to the COVID-19 pandemic), delay some or all of our exploration and development plans for our prospects, or to cease exploration or development activities on certain prospects due to the anticipated unfavorable economics from such activities, and, as a result, we may have to make substantial downward adjustments to our estimated proved reserves, each of which would have a material adverse effect on our business, financial condition and results of operations.
We have in the past incurred impairments and future conditions might require us to incur additional impairments or make write-downs in our assets, which would adversely affect our balance sheet and results of operations.
We review our long-lived tangible and intangible assets for impairment whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.
−Removed: For example, for the year ended December 31, 2020, due to falling oil and gas prices, we incurred a $19.3 million impairment of our oil and gas properties.
−Removed: No impairment was incurred for the years ended December 31, 2024 and 2023.
−Removed: In the past we have been required to impair our assets and, if conditions in any of the businesses in which we compete were to deteriorate in the future, we could determine that certain of our assets were impaired and we would then be required to write-off all or a portion of our costs for such assets.
−Removed: Prior write-offs have adversely affected our balance sheet and results of operations and any future significant write-offs would similarly adversely affect our balance sheet and results of operations.
+Added: For example, for the year ended December 31, 2020, due to falling oil and gas prices, we incurred a $19.3 million impairment of our oil and gas properties with respect to our D-J Basin properties, and during the years ended December 31, 2024 and 2023, the Acquired Companies recorded impairment charges of $3.9 million and $21.1 million, respectively, with respect to their proved and unproved oil and natural gas properties in the PRB for 2024 and both the PRB and D-J Basin for 2023.
+Added: Aside from certain lease expirations, no significant impairment was incurred for the year ended December 31, 2025.
+Added: We could be at risk for proved and unproved property impairments if we experience adverse market conditions for an extended period of time.
+Added: The carrying values of our properties are sensitive to declines in oil, natural gas and NGL prices as well as increases in various development and operating costs and expenses.
+Added: If oil, natural gas and NGL prices remain depressed for extended periods of time or decline materially from current levels, we may be required to record additional write-downs of the carrying value of our proved oil and natural gas properties.
+Added: Further, we periodically evaluate our unproved oil and natural gas properties to determine the recoverability of our costs.
+Added: Prior write-offs have adversely affected balance sheet assets and results of operations and any future significant write-offs would similarly adversely affect our balance sheet and results of operations.
Declining general economic, business or industry conditions have, and will continue to have, a material adverse effect on our results of operations, liquidity and financial condition, and are expected to continue having a material adverse effect for the foreseeable future.
−Removed: Concerns over global economic conditions, the duration and effects of future pandemics, and the results thereof, energy costs, geopolitical issues (including, but not limited to the current Ukraine/Russia and Israel/Gaza Strip conflicts), inflation, increasing interest rates and the availability and cost of credit have contributed to increased economic uncertainty and diminished expectations for the global economy.
+Added: Concerns over global economic conditions, the duration and effects of future pandemics, and the results thereof, energy costs, geopolitical issues (including, but not limited to the Israel/Gaza Strip conflict, the Ukraine/Russia conflict and the current Iran conflict), inflation, increasing interest rates and the availability and cost of credit have contributed to increased economic uncertainty and diminished expectations for the global economy.
These factors, combined with volatile prices of oil and natural gas, and declining business and consumer confidence, have precipitated an economic slowdown, which could expand to a recession or global depression.
If the economic climate in the United States or abroad deteriorates, demand for petroleum products could diminish, which could further impact the price at which we can sell our oil, natural gas and natural gas liquids, affect the ability of our vendors, suppliers and customers to continue operations, and ultimately adversely impact our results of operations, liquidity and financial condition to a greater extent that it has already.
+Added: Our business operations may be affected by worldwide economic, political and miliary events, including certain ongoing conflicts.
+Added: Worldwide economic, political and military events, including tax, trade and tariff policies of the United States and other countries involved in global energy markets, war, terrorist activity, events in the Middle East and initiatives by OPEC+, have contributed, and are likely to continue to contribute, to oil and natural gas price volatility.
+Added: For example, recent events in Venezuela, the ongoing armed conflicts between Russia and Ukraine, and escalating tensions involving the United States, Israel and Iran, including direct military engagements and retaliatory actions, have led to heightened regional instability and increased global economic uncertainty.
+Added: In particular, recent hostilities involving Iran have resulted in attacks on commercial shipping and energy infrastructure, as well as an effective disruption and, at times, near-total suspension of maritime traffic through the Strait of Hormuz, a critical chokepoint through which approximately 20% of the world’s oil supply transits.
+Added: The disruption of shipping lanes in and around the Persian Gulf, including congestion, rerouting and the anchoring of vessels outside the Strait of Hormuz, has caused significant delays in the transportation of crude oil, liquefied natural gas and refined products, and has contributed to increased freight, insurance and security costs, as well as volatility in global energy prices.
+Added: In addition, damage to or disruption of key regional ports and infrastructure, including Iranian port facilities, and the risk of further military strikes or blockades, have exacerbated supply chain challenges and increased uncertainty regarding the availability and cost of energy commodities.
+Added: The potential for broader regional conflict involving Iran, including possible prolonged closure or continued disruption of the Strait of Hormuz, as well as escalating hostilities involving the Houthi movement in Yemen, Hezbollah in Lebanon and other regional actors, has increased significantly.
+Added: Any continuation or escalation of these conflicts, including sustained disruptions to critical global shipping routes or energy infrastructure, could materially and adversely affect global supply and demand for oil and natural gas, increase commodity price volatility, disrupt our operations or those of our customers, suppliers or partners, and have a material adverse effect on our business, financial condition and results of operations.
+Added: Volatility in oil and gas prices makes it hard for us to plan and project our operations, capital expenditures, and financial performance.
+Added: Volatility in oil and natural gas prices, including for the reasons discussed in the risk factors above, significantly impairs our ability to accurately plan and project our operations, capital expenditures, and financial performance.
+Added: These commodity prices are inherently unpredictable due to factors such as global supply and demand imbalances, geopolitical events, economic conditions, and regulatory changes, making it extremely difficult to forecast future price movements with any certainty.
+Added: As a result, prolonged periods of low or highly volatile prices can lead to the reduction, deferral, or cancelation of exploration, development, and production activities, including but us or our operators.
+Added: This uncertainty may force us to adjust our own capital spending plans, delay projects, revise budgets, and recalibrate internal projections and forecasts, which may result in reduced operational efficiency, impairments to proved reserves or other assets, and challenges in meeting financial targets or liquidity needs.
+Added: For instance, sharp declines in prices can render certain development projects uneconomic, leading to lower-than-anticipated production volumes and cash flows, while sudden spikes may create inflationary pressures on costs without corresponding revenue gains in the near term.
+Added: Ultimately, such price volatility contributes to greater unpredictability in our business planning, potentially materially and adversely affecting our results of operations, financial condition, and ability to execute our long-term strategy.
Our exploration, development and exploitation projects require substantial capital expenditures that may exceed cash on hand, cash flows from operations and potential borrowings, and we may be unable to obtain needed capital on satisfactory terms, which could adversely affect our future growth.
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our ability to access the equity and debt capital markets.
−Removed: In addition, future events, such as terrorist attacks, wars, threat of wars, or combat peace-keeping missions, financial market disruptions, general economic recessions, oil and natural gas industry recessions, large company bankruptcies, accounting scandals, pandemic diseases, overstated reserves estimates by major public oil companies and disruptions in the financial and capital markets have caused financial institutions, credit rating agencies and the public to more closely review the financial statements, capital structures and earnings of public companies, including energy companies.
+Added: In addition, future events, such as terrorist attacks, wars and conflicts, threat of wars and conflicts, or combat peace-keeping missions, financial market disruptions, general economic recessions, oil and natural gas industry recessions, large company bankruptcies, accounting scandals, pandemic diseases, overstated reserves estimates by major public oil companies and disruptions in the financial and capital markets have caused financial institutions, credit rating agencies and the public to more closely review the financial statements, capital structures and earnings of public companies, including energy companies.
Such events have constrained the capital available to the energy industry in the past, and such events or similar events could adversely affect our access to funding for our operations in the future.
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Any significant variance to our estimates could materially affect the quantities and present value of our reserves.
+Added: Approximately 49% of our total proved reserves are classified as proved undeveloped and may ultimately prove to be less than estimated.
+Added: On December 31, 2025, approximately 49% of our total proved reserves of oil, natural gas and NGLs were classified as proved undeveloped.
+Added: It will take substantial capital to drill our non-producing and undeveloped locations.
+Added: Our estimate of proved reserves on December 31, 2025 assumes that we will need to spend significant development capital expenditures to develop these reserves.
+Added: Further, our drilling efforts may be delayed or unsuccessful, and actual reserves may prove to be less than current reserve estimates, which could have a material adverse effect on our financial condition, future cash flows and the results of operations.
+Added: If actual reserves are lower than anticipated, the financial condition and results of operations of the Company could be adversely affected.
+Added: The Company’s ability to achieve anticipated production levels depends on the accuracy of its reserve estimates, which are inherently uncertain.
+Added: Actual reserves may differ materially from estimates due to future development timing, development expenditures, operating costs, and reservoir performance as well as commodity price factors.
+Added: If actual reserves are lower than anticipated, the financial condition and results of operations of the Company could be adversely affected.
+Added: Approximately 181,093 net acres in the PRB are located on federal lands as of December 31, 2025, which are subject to administrative permitting requirements, current and potential federal legislation, regulation and orders and pending litigation that may limit or restrict oil and natural gas operations on federal lands.
+Added: At December 31, 2025, approximately 181,093 net acres in the PRB were on federal lands administered by the Bureau of Land Management.
+Added: In addition to permits issued by state and local authorities, oil and natural gas activities on federal lands also require permits from the BLM.
+Added: Permitting for oil and natural gas activities on federal lands can take significantly longer than the permitting process for oil and natural gas activities not located on federal lands.
+Added: In addition, the advancement of presidential administrative priorities and government disruptions, such as a shutdown of the U.S.
+Added: federal government resulting from the failure to pass budget appropriations, adopt continuing funding resolutions or raise the debt ceiling, could delay or halt the availability of federal leases or the granting and renewal of permits or other licenses, approvals or certificates required to conduct our operations.
+Added: Delays in making federal acreage available for leasing by oil and gas operators or obtaining necessary permits or other approvals can disrupt our operations and have a material adverse effect on our business.
+Added: Under certain circumstances, the BLM may require operations on federal leases to be suspended or terminated.
+Added: Any such suspension or termination could materially and adversely affect our interests on federal lands.
+Added: In addition, litigation related to leasing and permitting of federal lands could also restrict, delay or limit our ability to conduct operations on our federal leasehold or acquire additional federal leasehold.
+Added: For example, in 2022, two environmental advocacy groups filed suit against the U.S.
+Added: Department of Interior and the BLM challenging certain lease sales by the BLM beginning in December of 2017 (the “ BLM Litigation ”).
+Added: On January 17, 2025, a three-judge panel of the Ninth Circuit Court of Appeals upheld vacatur of various leases sold by the BLM, on grounds that the BLM violated the NEPA (defined herein) and the Federal Land Planning and Management Act when selling certain leases.
+Added: It remains unclear whether parties involved in the BLM Litigation will seek en banc review of the decision.
+Added: While the Company is not named in the BLM Litigation (as defendants, intervenors or otherwise), certain of the leases owned by the Company in the PRB covering approximately 82,804 acres (as of December 31, 2025) have been “ placed in suspense ” pending a ruling by the Ninth Circuit Court of Appeals in the BLM Litigation.
+Added: It is possible that the Ninth Circuit Court of Appeals ruling could result in the cancellation of these leases.
+Added: In addition, as part of the BLM Litigation, on September 13, 2024, the U.S.
+Added: District Court for the District of Columbia issued a ruling temporarily enjoining further applications for permits to drill with respect to certain of the Company’s BLM leases, citing erroneous data that overstated the amount of available groundwater in the Converse County Oil and Gas Project’s (the “ Project’s ”) Environmental Impact Statement.
+Added: This ruling had the effect of halting federal APD approvals within the area of the Project until the court “ determines the appropriate final remedy ” to correct the deficiency being alleged in the case.
+Added: It is possible that the BLM’s review and ultimate approval of our APDs could be impacted by this federal court ruling.
+Added: If the January 17, 2025 Ninth Circuit Court of Appeals decision remains final, or if a final judgment on any similar future litigation results in the cancellation of leases or otherwise restricts production of our oil, natural gas or NGLs assets, our financial condition, results of operations and cash flows could be materially and adversely affected;
+Added: however, we could also receive the return of up to $79 million of total lease bonuses previously paid in certain circumstances, which would have a positive effect on working capital.
+Added: Our hedging activities may prevent us from fully benefiting from increases in crude oil, natural gas and NGLs prices and may expose us to other risks, including counterparty risk, and our future production may not be sufficiently protected from any declines in commodity prices by our existing or future hedging arrangements.
+Added: We use financial derivative instruments (primarily financial fixed price swaps and collar contracts) to hedge the impact of fluctuations in commodity prices on our results of operations and cash flows.
+Added: In connection with the entry into the A&R Credit Agreement, the Company was required to hedge at least 75% of its projected proved developed producing reserves (PDP) oil and gas production at the time of entry into the A&R Credit Agreement, for the first 24 months of the agreement, and 50% of its projected PDP of oil and gas production for months 25–36.
+Added: Afterward, within 60 days after each fiscal quarter, the Company must show it has hedged at least 50% of expected oil and gas production for the next 18 months.
+Added: The Company may hedge crude oil, natural gas, or natural gas liquids (on a barrel of oil equivalent basis) to meet these requirements, but may not hedge more than 75% of anticipated production (on a barrel of oil equivalent basis) for any month.
+Added: As of the date of this report, the Company currently has approximately 75% of its crude oil production hedged through November 2027 and approximately 51% hedged from December 2027 through November 2028, and ~75% of its natural gas production hedged through November 2027 and approximately 50% hedged from December 2027 through November 2028, at various prices.
+Added: Our hedging activities may expose us to the risk of financial loss in certain circumstances, including instances in which the counterparties to our hedging contracts fail to perform under the contracts.
+Added: Our hedges may in the future result in losses and reduce the amount of revenue we would otherwise obtain upon the sale of our oil and natural gas production and may also decrease our margins and net revenues.
+Added: Our actual future production may be significantly higher or lower than we estimate at the time we enter into derivative contracts for the relevant period.
+Added: If the actual amount of production is higher than we estimated, we will have greater commodity price exposure than we intended.
+Added: If the actual amount of production is lower than the notional amount that is subject to our derivative instruments, we might be forced to satisfy all or a portion of our derivative transactions without the benefit of the cash flow from our sale of the underlying physical commodity, resulting in a substantial diminution of our liquidity.
+Added: As a result of these factors, our hedging activities may not be as effective as we intend in reducing the volatility of our cash flows, and in certain circumstances may actually increase the volatility of our cash flows.
+Added: To the extent that we have engaged, or in the future engage, in hedging activities to protect ourselves against commodity price declines, we may be prevented from fully realizing the benefits of increases in commodity prices above the prices established by our hedging contracts.
+Added: In addition, our hedging activities may expose us to the risk of financial loss in certain circumstances, including instances in which the counterparties to our hedging contracts fail to perform under the contracts.
+Added: Derivative instruments also expose us to the risk of financial loss in some circumstances, including when:
+Added: the counter-party to the derivative instrument defaults on its contract obligations;
+Added: there is an increase in the differential between the underlying price in the derivative instrument and actual prices received;
+Added: the steps we take to monitor our derivative financial instruments do not detect and prevent transactions that are inconsistent with our risk management strategies.
+Added: In addition, depending on the type of derivative arrangements we enter into, the agreements could limit the benefit we would receive from increases in oil and gas prices.
+Added: It cannot be assumed that the hedging transactions we have entered into, or will enter into, will adequately protect us from fluctuations in commodity prices.
+Added: Increases in the differential between the ceiling value for oil and natural gas prices set forth in our commodity derivative contracts and commodity derivative collar contracts is anticipated to affect our business, financial condition and results of operations.
+Added: For more information regarding our current derivative instruments see “Item 8 Financial Statements and Supplementary Data” – “Note 10 – Derivatives”.
We may have accidents, equipment failures or mechanical problems while drilling or completing wells or in production activities, which could adversely affect our business.
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Our strategy as an onshore resource player may result in operations concentrated in certain geographic areas and may increase our exposure to many of the risks described in this Annual Report.
−Removed: Our current operations are concentrated in the states of New Mexico and Colorado, with future operations potentially extending into Wyoming.
+Added: Our current operations are concentrated in the states of New Mexico, Colorado, and Wyoming.
This concentration may increase the potential impact of many of the risks described in this Annual Report.
60 unchanged sentences
We have limited control over activities on properties we do not operate.
−Removed: We are not the operator on some of our properties located in our D-J Basin Asset, and, as a result, our ability to exercise influence over the operations of these properties or their associated costs is limited.
+Added: We are not the operator on all of our properties located in our D-J Basin and PRB Asset, and, as a result, our ability to exercise influence over the operations of these properties or their associated costs is limited.
Our dependence on the operators and other working interest owners of these projects and our limited ability to influence operations and associated costs or control the risks could materially and adversely affect the realization of our targeted returns on capital in drilling or acquisition activities.
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One or more of the technologies that we will use or that we may implement in the future may become obsolete, and we may be adversely affected.
−Removed: If we do not hedge our exposure to reductions in oil and natural gas prices, we may be subject to significant reductions in prices.
−Removed: Alternatively, we may use oil and natural gas price hedging contracts, which involve credit risk and may limit future revenues from price increases and result in significant fluctuations in our profitability.
−Removed: In the event that we continue to choose not to hedge our exposure to reductions in oil and natural gas prices by purchasing futures and/or by using other hedging strategies, we may be subject to a significant reduction in prices which could have a material negative impact on our profitability.
−Removed: Alternatively, we may elect to use hedging transactions with respect to a portion of our oil and natural gas production to achieve more predictable cash flow and to reduce our exposure to price fluctuations.
−Removed: While the use of hedging transactions limits the downside risk of price declines, their use also may limit future revenues from price increases.
−Removed: Hedging transactions also involve the risk that the counterparty may be unable to satisfy its obligations.
Uncertainties associated with enhanced recovery methods may result in us not realizing an acceptable return on our investments in such projects.
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These could result in a material adverse effect on our prospects, business, financial condition and our results of operations.
−Removed: A substantial percentage of our Colorado and New Mexico properties, and all of our Wyoming properties, are undeveloped;
+Added: Approximately 50% of our Colorado, New Mexico, and Wyoming properties, are undeveloped;
therefore, the risk associated with our success is greater than would be the case if the majority of such properties were categorized as proved developed producing.
−Removed: Because a substantial percentage of our Colorado and New Mexico properties, and all of our Wyoming properties, are undeveloped, we will require significant additional capital to develop such properties before they may become productive.
+Added: Because approximately 50% of our Colorado, New Mexico, and Wyoming properties, are undeveloped, we will require significant additional capital to develop such properties before they may become productive.
Further, because of the inherent uncertainties associated with drilling for oil and gas, some of these properties may never be developed to the extent that they result in positive cash flow.
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As a result, we may incur material write-downs and the value of our undeveloped acreage could decline if drilling results are unsuccessful.
−Removed: Our operations in the Permian Basin in Chaves and Roosevelt Counties, New Mexico, and the D-J Basin in Weld and Morgan Counties, Colorado, and potentially extending into Laramie County, Wyoming, involve utilizing the latest drilling and completion techniques in order to maximize cumulative recoveries and therefore generate the highest possible returns.
+Added: Our operations in the Permian Basin in Chaves and Roosevelt Counties, New Mexico, the D-J Basin in Weld and Morgan Counties, Colorado, and the PRB in Laramie and Campbell Counties, Wyoming, involve utilizing the latest drilling and completion techniques in order to maximize cumulative recoveries and therefore generate the highest possible returns.
The additional risks that we face while drilling horizontally include, but are not limited to, the following:
41 unchanged sentences
Technological changes, such as developments in renewable energy and low-carbon transportation, could also adversely affect demand for our products.
−Removed: The $1.1 million owed to us under a secured convertible promissory note due from Tilloo in the Milnesand Sale may not be repaid.
−Removed: On November 9, 2023, pursuant to the terms of the Milnesand Sale, the Company entered into a five-year secured promissory note (the “ Note ”) with Tilloo, bearing interest at 10% per annum, with no payments due until January 8, 2025, and fully-amortized payments due monthly over the remaining four years of the term thereafter until maturity.
−Removed: The Note contains customary events of default and is secured by a lien over all the assets and capital shares of EOR Operating Company (“ EOR ”), our prior wholly-owned subsidiary which was sold to Tilloo, created under a Security Agreement, a Security Agreement (Pledge of Corporate Securities), and a Mortgage entered into by and between the Company and Tilloo.
−Removed: Tilloo failed to make the initial installment payment due under the Tilloo Note on January 8, 2025.
−Removed: The Company issued a notice of default under the Tilloo Note to Tilloo in mid-January 2025, and the Company intends to pursue all available avenues and remedies, including potential foreclosure under the security agreement and mortgages securing the secured obligation, to resolve these matters.
−Removed: However, Tilloo may not make any payments under the Note and the Company may not be able to recover amounts due under the Note.
−Removed: Furthermore, litigation relating to the repayment of the Note, if initiated, may take away time and resources that management would otherwise have spent on other matters, which may adversely affect our results of operations and ultimately the value of our common stock.
−Removed: The requirements, restrictions and covenants in our RBL, including interest payable thereunder, may restrict our ability to operate our business and might lead to a default under such agreement.
−Removed: Borrowings under the RBL may be alternate base rate (“ ABR ”) loans or SOFR loans, at the election of the Company.
+Added: The requirements, restrictions and covenants in our A&R Credit Agreement, including interest payable thereunder, may restrict our ability to operate our business and might lead to a default under such agreement.
+Added: Borrowings under the A&R Credit Agreement may be alternate base rate (“ ABR ”) loans or SOFR loans, at the election of the Company.
Interest is payable quarterly for ABR loans and at the end of the applicable interest period for SOFR loans.
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The Company also pays a commitment fee on unused commitment amounts under its facility of 37.5 basis points or 50 basis points, depending on the percentage of the borrowing base utilized.
−Removed: The Company may repay any amounts borrowed under the RBL prior to the maturity date without any premium or penalty, and is required to repay certain portions of the amounts borrowed under the RBL upon the occurrence of certain events.
−Removed: The RBL includes customary representations and warranties, and affirmative and negative covenants of the Company for a facility of that size and type, including prohibiting the Loan Parties from creating any indebtedness without the consent of the lenders, subject to certain exceptions, and requiring the Company to have a net leverage ratio (the ratio of (a) total net debt to (b) EBITDAX) of no less than 1.0 to 1.0 and a current ratio (the ratio of (i) consolidated current assets to (ii) consolidated current liabilities) of no less than 1.0 to 1.0.
−Removed: EBITDAX is defined as 'Earnings Before Interest, Taxes, Depreciation (or Depletion), Amortization, and Exploration Expense
−Removed: In addition, the RBL is subject to customary events of default for a facility of that size and type, including a change in control.
−Removed: If an event of default occurs and is continuing, the administrative agent may, with the consent of majority lenders, or shall, at the request of the majority lenders, accelerate any amounts outstanding and terminate lender commitments and declare the entire amount of obligations owed under the RBL immediately due and payable and take certain other actions provided for under the RBL.
+Added: The Company may repay any amounts borrowed under the A&R Credit Agreement prior to the maturity date without any premium or penalty, and is required to repay certain portions of the amounts borrowed under the A&R Credit Agreement upon the occurrence of certain events.
+Added: The A&R Credit Agreement includes customary representations and warranties, and affirmative and negative covenants of the Company for a facility of that size and type, including prohibiting the Company from creating any indebtedness without the consent of the Lenders, subject to certain exceptions, and the maintenance of the following financial ratios:
+Added: (i) a current ratio, which is the ratio of the Company’s consolidated current assets (including unused commitments under the A&R Credit Agreement and excluding non- cash derivative assets) to its consolidated current liabilities (excluding the current portion of long-term debt under the A&R Credit Agreement and non-cash derivative liabilities), of not less than 1.0 to 1.0; and (ii) a leverage ratio, which is the ratio of Total Net Debt to EBITDAX (each as defined in the A&R Credit Agreement) for the prior four fiscal quarters, of not greater than 3.0 to 1.0.
+Added: The Company is required to hedge at least 75% of its projected proved developed producing reserves (PDP) oil and gas production at the time of entry into the A&R Credit Agreement, for the first 24 months of the agreement, and 50% of its projected PDP of oil and gas production for months 25-36.
+Added: Afterward, within 60 days after each fiscal quarter, the Company must show it has hedged at least 50% of expected oil and gas production for the next 18 months.
+Added: The Company may hedge crude oil, natural gas, or natural gas liquids (on a barrel of oil equivalent basis) to meet these requirements, but may not hedge more than 75% of anticipated production (on a barrel of oil equivalent basis) for any month.
+Added: In addition, the A&R Credit Agreement is subject to customary events of default for a facility of that size and type, including a change in control.
+Added: If an event of default occurs and is continuing, the administrative agent may, with the consent of majority lenders, or shall, at the request of the majority lenders, accelerate any amounts outstanding and terminate lender commitments and declare the entire amount of obligations owed under the A&R Credit Agreement immediately due and payable and take certain other actions provided for under the A&R Credit Agreement.
As a result of these requirements, covenants and limitations, we may not be able to respond to changes in business and economic conditions and to obtain additional financing, if needed, and we may be prevented from engaging in transactions that might otherwise be beneficial to us.
−Removed: The breach of any of these requirements or covenants could result in a default under the RBL or future credit facilities.
−Removed: Upon the occurrence of an event of default, the lenders could elect to declare all amounts outstanding under such RBL or future debt facilities, including accrued interest or other obligations, to be immediately due and payable.
−Removed: If amounts outstanding under such RBL or future debt facilities were to be accelerated, our assets might not be sufficient to repay in full that indebtedness and our other indebtedness.
+Added: The breach of any of these requirements or covenants could result in a default under the A&R Credit Agreement or future credit facilities.
+Added: Upon the occurrence of an event of default, the lenders could elect to declare all amounts outstanding under such A&R Credit Agreement or future debt facilities, including accrued interest or other obligations, to be immediately due and payable.
+Added: If amounts outstanding under such A&R Credit Agreement or future debt facilities were to be accelerated, our assets might not be sufficient to repay in full that indebtedness and our other indebtedness.
A prolonged period of weak, or a significant decrease in, industry activity and overall markets may make it difficult to comply with our covenants and the other restrictions in the agreements governing our debt and current global and market conditions have increased the potential for that difficulty.
−Removed: As of the date of this Report, the RBL has a balance of $0.
−Removed: Amounts, if any, that we borrow under the RBL, are due on September 11, 2028.
−Removed: Our obligations under the RBL are secured by a first priority security interest in substantially all of our assets and various Company guarantees.
−Removed: The amounts borrowed pursuant to the terms of the RBL are secured by substantially all of the present and after-acquired assets of the Company and its subsidiaries.
−Removed: Additionally, certain of our subsidiaries have guaranteed the amounts due, and obligations under, the RBL.
−Removed: As a result of the above, our creditors, in the event of the occurrence of a default under the RBL, may enforce their security interests over our assets and/or our subsidiaries which secure such obligations, may take control of our assets and operations, force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and operations.
+Added: As of the date of this Report, the A&R Credit Agreement has a balance of $98.0 million.
+Added: Amounts, if any, that we borrow under the A&R Credit Agreement, are due on October 31, 2029.
+Added: Our obligations under the A&R Credit Agreement are secured by a first priority security interest in substantially all of our assets and various Company guarantees.
+Added: The amounts borrowed pursuant to the terms of the A&R Credit Agreement are secured by substantially all of the present and after-acquired assets of the Company and its subsidiaries.
+Added: Additionally, certain of our subsidiaries have guaranteed the amounts due, and obligations under, the A&R Credit Agreement.
+Added: As a result of the above, our creditors, in the event of the occurrence of a default under the A&R Credit Agreement, may enforce their security interests over our assets and/or our subsidiaries which secure such obligations, may take control of our assets and operations, force us to seek bankruptcy protection, or force us to curtail or abandon our current business plans and operations.
If that were to happen, any investment in the Company (including, but not limited to, any investment in our common stock) could become worthless.
Continued increases in interest rates will cause our debt service obligations to increase and may have an adverse effect on our operations.
−Removed: The amounts borrowed under the RBL bear interest at either the SOFR Rate or the ABR Rate.
+Added: The amounts borrowed under the A&R Credit Agreement bear interest at either the SOFR Rate or the ABR Rate.
Interest rates have recently been subject to increasing volatility and any increase in the interest rates associated with our floating-rate debt would increase our debt service costs and affect our results of operations.
5 unchanged sentences
Potential conflicts of interest could arise for certain members of our management team that hold management positions with other entities and our largest stockholder.
−Removed: Kukes, our former CEO and newly appointed Executive Chairman of the Company's Board of Directors, J.
−Removed: Douglas Schick, our President and newly appointed Chief Executive Officer and a member of the board, and Clark R.
−Removed: Moore, our Executive Vice President, General Counsel and Secretary, hold various other management positions with privately-held companies, some of which are involved in the oil and gas industry, and Dr.
−Removed: Kukes is the trustee and beneficiary of The SGK 2018 Revocable Trust, the Company’s largest stockholder.
−Removed: Kukes also beneficially owns 65.4% of our voting securities.
−Removed: We believe these positions require only an immaterial amount of each officer’s time and will not conflict with their roles or responsibilities with our company.
−Removed: If any of these companies enter into one or more transactions with our company, or if the officer’s position with any such company requires significantly more time than currently anticipated, potential conflicts of interests could arise from the officers performing services for us and these other entities.
−Removed: We have in the past been significantly dependent on capital provided to us by Dr.
−Removed: Kukes and may rely on Dr.
−Removed: Kukes for additional funding in the future.
−Removed: In 2018 and 2019, Dr.
−Removed: Kukes, the Company’s former Chief Executive Officer and director and current Executive Chairman of the Company's Board of Directors, loaned us an aggregate of $51.7 million to support our operations and for acquisitions through an entity owned and controlled by him, all of which loans were evidenced by promissory notes.
−Removed: The promissory notes generally had terms which were more favorable to us than we would have been able to obtain from third parties, including, generally favorable interest rates, no restrictions on further borrowing or financial covenants and no security interests in our assets.
−Removed: All of such notes have to date been converted into 29.5 million shares of common stock at conversion prices which were above the then-trading prices of our common stock.
−Removed: Additionally, pursuant to subscription agreements, Dr.
−Removed: Kukes’ entity purchased an additional aggregate of 15.0 million shares of common stock from the Company in private transactions for $28.0 million in 2019, also on substantially more favorable terms to us than could be obtained with third parties.
−Removed: Subsequent to September 2019, we have not received any additional capital from Dr.
−Removed: Kukes, instead funding our operations primarily through the sale of securities in public offerings, the sale of oil and gas properties, and sales of crude oil and natural gas.
−Removed: Kukes has verbally advised us that he intends to provide us additional funding as needed, nothing has been documented to date, and such future funding, if any, may not ultimately be provided on favorable terms, if at all.
−Removed: In the event that we are forced to obtain funding from parties other than Dr.
−Removed: Kukes, such funding terms will likely not be as favorable to the Company as the funding provided by Dr.
−Removed: Kukes, and may not be available in such amounts as previously provided by Dr.
−Removed: In the event Dr.
−Removed: Kukes fails to provide us future funding, when and if needed, it could have a material adverse effect on our liquidity, results of operations and could force us to borrow funds from outside sources on less favorable terms than our prior debt or sell equity to outside investors on less favorable terms than the equity we issued to Dr.
+Added: Douglas Schick, our President and Chief Executive Officer and a member of the board, Clark R.
+Added: Moore, our Executive Vice President, General Counsel and Secretary, and Mr.
+Added: Reagan Dukes, our Chief Operating Officer, and various of our directors, including Josh Schmidt, our Chairman and Edward Geiser, hold various other management positions with privately-held companies, some of which are involved in the oil and gas industry.
+Added: We believe these positions require only an immaterial amount of each applicable officer’s time and will not conflict with the roles of our officers or directors, their or responsibilities with our company.
+Added: If any of these companies enter into one or more transactions with our company, or if the officer’s or director’s position with any such company requires significantly more time than currently anticipated, potential conflicts of interests could arise from the officers or directors performing services for us and these other entities.
+Added: Additionally, pursuant to our Amended and Restated Certificate of Formation, the Juniper Shareholder and its affiliates (the “Juniper Investor Group”, which term includes the Juniper Directors) and Dr.
+Added: Simon Kukes and his affiliates (collectively, the “PED Investor Group”), may each engage in other business ventures, including those that compete with or overlap with our business.
+Added: Each group may hold positions, invest in, or develop opportunities related to other entities (“Other Investments”), potentially creating conflicts of interest.
+Added: Pursuant to the Amended and Restated Certificate of Formation, the Company explicitly waives any right or expectation to participate in certain described corporate opportunities including businesses that may compete with, overlap with, complement, or otherwise be suitable for the Company or its subsidiaries and agrees that neither the investor groups, nor their representatives or directors, are obligated to share or offer these opportunities to the Company, unless the opportunity arises solely from their role as a director of the Company or through specific information rights in the Shareholder Agreement (“Renounced Business Opportunities”).
+Added: However, the Company remains free to pursue any such renounced opportunities on its own.
+Added: The provisions in our Amended and Restated Certificate of Formation permitting the Juniper Investor Group and the PED Investor Group to engage in other business activities, including those that may compete with or overlap with our business, could result in conflicts of interest and limit our access to attractive business opportunities.
+Added: Because these investors and their affiliated directors are not restricted from pursuing competing ventures or investments, they may allocate time, resources and opportunities to other entities in which they have an interest, which could adversely affect our ability to compete effectively or pursue strategic initiatives.
We depend significantly upon the continued involvement of our present management.
−Removed: We depend to a significant degree upon the involvement of our management, specifically, our former Chief Executive Officer and newly appointed Executive Chairman of the Company's Board of Directors, Dr.
−Removed: Kukes and our President and newly appointed Chief Executive Officer and a member of the board, Mr.
+Added: We depend to a significant degree upon the involvement of our management, specifically, our President and Chief Executive Officer, and member of the board, Mr.
Douglas Schick.
−Removed: Our performance and success are dependent to a large extent on the efforts and continued employment of Dr.
−Removed: Kukes and Mr.
−Removed: We do not believe that Dr.
−Removed: Schick could be quickly replaced with personnel of equal experience and capabilities, and their successor(s) may not be as effective.
+Added: Our performance and success are dependent to a large extent on the efforts and continued employment of Mr.
+Added: We do not believe that Mr.
+Added: Schick could be quickly replaced with personnel of equal experience and capabilities, and his successor(s) may not be as effective.
Schick or any of our other key personnel resign or become unable to continue in their present roles and if they are not adequately replaced, our business operations could be adversely affected.
−Removed: We have no employment or similar agreement in place with Dr.
Schick is party to an employment agreement with us which has no stated term and can be terminated by either party without cause.
2 unchanged sentences
If any of our directors resign or become unable to continue in their present role, it may be difficult to find replacements with the same knowledge and experience and as a result, our operations may be adversely affected.
−Removed: Kukes, our former Chief Executive Officer and newly appointed Executive Chairman of the Company's Board of Directors, beneficially owns 65.4% of our common stock, which gives him majority voting control over stockholder matters and his interests may be different from your interests;
+Added: Juniper beneficially owns 52% of our common stock, which gives Juniper majority voting control over stockholder matters and Juniper’s interests may be different from your interests;
and as a result of such ownership, we are a “ controlled company ” under applicable NYSE American rules.
−Removed: Kukes, our former Chief Executive Officer and newly appointed Executive Chairman of the Company's Board of Directors, through his individual ownership of the Company and through his position as trustee and beneficiary of The SGK 2018 Revocable Trust, which beneficially owns approximately 56.7% of our issued and outstanding common stock and Dr.
−Removed: Kukes, together with the ownership of The SGK 2018 Revocable Trust, beneficially owns approximately 65.4% of our issued and outstanding common stock.
−Removed: Kukes can control the outcome of all matters requiring a stockholder vote, including the election of directors, the adoption of amendments to our certificate of formation or bylaws and the approval of mergers and other significant corporate transactions.
−Removed: Subject to any fiduciary duties owed to the stockholders generally, while Dr.
−Removed: Kukes’ interests may generally be aligned with the interests of our stockholders, in some instances Dr.
−Removed: Kukes may have interests different than the rest of our stockholders, including but not limited to, future potential company financings in which Dr.
−Removed: Kukes or The SGK 2018 Revocable Trust may participate, or his leadership at the Company.
−Removed: Kukes’ influence or control of our company as a stockholder may have the effect of delaying or preventing a change of control of our company and may adversely affect the voting and other rights of other stockholders.
−Removed: Kukes controls the stockholder vote, investors may find it difficult to replace Dr.
−Removed: Kukes (and such persons as he may appoint from time to time) as members of our management if they disagree with the way our business is being operated.
−Removed: Additionally, the interests of Dr.
−Removed: Kukes may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other stockholders.
−Removed: Kukes’ ownership of the Company, as discussed above, we are a “ controlled company ” under the rules of the NYSE American.
+Added: Juniper beneficially owns approximately 52% of our issued and outstanding common stock.
+Added: As such, Juniper can control the outcome of all matters requiring a stockholder vote, including the election of directors, the adoption of amendments to our certificate of formation or bylaws and the approval of mergers and other significant corporate transactions.
+Added: In addition, Juniper is entitled to appoint, and has appointed, three of the six members of the Company's Board of Directors pursuant to the Shareholder Agreement.
+Added: Subject to any fiduciary duties owed to the stockholders generally, while Juniper’s interests may generally be aligned with the interests of our stockholders, in some instances Juniper may have interests different than the rest of our stockholders, including but not limited to, future potential company financings in which Juniper may participate.
+Added: Juniper also has significant influence on our Board of Directors due to appointment of three of the six current members of the Company’s Board.
+Added: Juniper’s influence or control of our company as a stockholder and through its Board appointments may have the effect of delaying or preventing a change of control of our company and may adversely affect the voting and other rights of other stockholders.
+Added: Because Juniper controls the stockholder vote, investors will not be able to replace its appointees to the Board of Directors and may also not be able to replace other appointees, if they disagree with the way our business is being operated.
+Added: Additionally, the interests of Juniper may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other stockholders.
+Added: Due to Juniper’s ownership of the Company, as discussed above, we are a “ controlled company ” under the rules of the NYSE American.
Under these rules, a company of which more than 50% of the voting power is held by an individual, a group or another company is a “ controlled company ” and, as such, can elect to be exempt from certain corporate governance requirements, including requirements that:
3 unchanged sentences
As a “ controlled company, ” we may elect to rely on some or all of these exemptions, provided that we have to date not taken advantage of any of these exemptions and do not currently intend to take advantage of any of these exemptions moving forward.
−Removed: Notwithstanding that, should the interests of Dr.
−Removed: Kukes differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE American corporate governance standards.
+Added: Notwithstanding that, should the interests of Juniper differ from those of other stockholders, the other stockholders may not have the same protections afforded to stockholders of companies that are subject to all of the NYSE American corporate governance standards.
Even if we do not avail ourselves of these exemptions, our status as a controlled company could make our common stock less attractive to some investors or otherwise harm our stock price.
+Added: The Shareholder Agreement provides that the Board will consist of six directors or such other number as approved by the Board in accordance with the organizational documents of the Company and the Shareholder Agreement and be constituted as follows:
+Added: three Directors nominated by the Juniper Shareholder, which must include at least one independent director (initially, Edward Geiser, Josh Schmidt and Martyn Willsher);
+Added: two Directors, as nominated by the Governance Committee, which must include at least one independent director (initially, J.
+Added: Douglas Schick and John K.
+Added: one independent director mutually agreed in writing by the Juniper Shareholder and the Governance Committee (initially Kristel Franklin), who was appointed as a member of the Board at Closing.
+Added: The right of the Juniper Shareholder to nominate Juniper Directors pursuant to the Shareholder Agreement will depend on its, together with its affiliates’, ownership of 3,181,818 shares of Company common stock issued to the Juniper Shareholder and its affiliates on February 27, 2026, on the applicable date of determination, as measured relative to a total of 13,300,815 shares of common stock issued and outstanding on February 27, 2026 (“ Juniper Beneficial Ownership ”), as follows:
+Added: if Juniper Beneficial Ownership is 50% or more, the Juniper Shareholder may nominate three Juniper Directors, including one which must be an independent director;
+Added: if Juniper Beneficial Ownership is between 30% and 49.9%, the Juniper Shareholder may nominate two Juniper Directors;
+Added: if Juniper Beneficial Ownership is between 10% and 29.9%, the Juniper Shareholder may nominate one Juniper Director;
+Added: and if Juniper Beneficial Ownership is less than 10%, the Juniper Shareholder loses the right to nominate any Juniper Directors.
+Added: The nomination of such Juniper Directors is subject to such persons not being prohibited from serving as a member of the Board.
+Added: In the event any Juniper Director ceases serving as a member of the Board for any reason, the Juniper Shareholder has the right to designate a replacement, and subject to certain customary exceptions, the Board is required to take all reasonable actions within its control to appoint such replacement person as a member of the Board of the Company to fill such vacancy.
+Added: The Juniper Shareholder also has the right to remove any Juniper Director at any time for any reason.
+Added: The Board is prohibited from increasing or decreasing the number of members of the Board without the affirmative vote of a majority of the independent directors then on the Board that are not Juniper Directors, and the written consent of the Juniper Shareholder.
+Added: In some instances, affiliates of Juniper may have interests different than the rest of our shareholders.
+Added: The influence or control of our Company by such persons may have the effect of delaying or preventing a change of control of our Company and may adversely affect the voting and other rights of other shareholders.
+Added: Additionally, the interests of such persons may differ from the interests of the other shareholders and thus result in corporate decisions that are adverse to other shareholders.
In addition, this concentration of ownership might adversely affect the market price of our common stock by:
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or (3) discouraging a potential acquirer from making a tender offer or otherwise attempting to obtain control of our Company.
−Removed: Because of the ownership of securities of Dr.
−Removed: Kukes, investors may find it difficult to replace our current directors (and such persons as they may appoint from time to time) as members of our management if they disagree with the way our business is being operated.
−Removed: Additionally, the interests of Dr.
−Removed: Kukes may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other stockholders.
+Added: Because of the ownership of securities of Juniper, investors may find it difficult to replace our current directors (and such persons as they may appoint from time to time) as members of our management if they disagree with the way our business is being operated.
+Added: Additionally, the interests of Juniper may differ from the interests of the other stockholders and thus result in corporate decisions that are adverse to other stockholders.
Risks Relating to Government Regulations
−Removed: Changes in the legal and regulatory environment governing the oil and natural gas industry, particularly changes in the current Colorado forced pooling system and drilling operation set-back rules, salt water disposal permitting regulations in New Mexico or Wyoming, and new federal orders restricting operations on federal lands, could have a material adverse effect on our business.
−Removed: Our business is subject to various forms of government regulation, including laws, regulations and federal orders concerning the location, spacing and permitting of the oil and natural gas wells we drill, among other matters.
−Removed: In particular, our business in the D-J Basin of Colorado utilizes a methodology available in Colorado known as “ forced pooling, ” which refers to the ability of a holder of an oil and natural gas interest in a particular prospective drilling spacing unit to apply to the Colorado Oil and Gas Conservation Commission for an order forcing all other holders of oil and natural gas interests in such area into a common pool for purposes of developing that drilling spacing unit.
+Added: New or revised rules, regulations and policies may be issued, and new legislation may be proposed, that could impact the oil and gas exploration and production industry .
+Added: New or revised rules, regulations and policies may be issued, and new legislation may be proposed, that could impact the oil and gas exploration and production industry.
+Added: Such rules, regulations, policies and legislation may affect, among other things, (i) permitting for oil and gas drilling on state, tribal and federal lands;
+Added: (ii) the leasing of state, tribal and federal lands for oil and gas development;
+Added: (iii) the regulation and disclosure of greenhouse gas emissions and/or other climate change-related matters associated with oil and gas operations (e.g., the development, implementation and carrying out of carbon capture and storage activities, including associated financial or tax incentives);
+Added: (iv) the use of hydraulic fracturing on state, tribal and federal lands;
+Added: (v) the calculation of royalty payments in respect of oil and gas production from state, tribal and federal lands (including, but not limited to, an increase in applicable royalty percentages);
+Added: federal income tax laws applicable to oil and gas exploration and production companies;
+Added: and (vii) the use of financial derivative instruments to hedge the financial impact of fluctuations in crude oil, natural gas and NGLs prices.
+Added: For example, our business in the D-J Basin of Colorado utilizes a methodology available in Colorado known as “ forced pooling, ” which refers to the ability of a holder of an oil and natural gas interest in a particular prospective drilling spacing unit to apply to the Colorado Oil and Gas Conservation Commission for an order forcing all other holders of oil and natural gas interests in such area into a common pool for purposes of developing that drilling spacing unit.
In addition, our Permian Basin operations require significant salt water disposal capacity, with the permitting of necessary salt water disposal wells being regulated by the New Mexico State Land Office.
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While this had no impact on existing or ongoing operations, potentially subsequent federal orders could restrict our ability to develop our leases on federal lands, which could adversely affect our business, financial condition and results of operations.
+Added: Further, drilling long lateral wells in Wyoming typically involves interception and development of multiple federal leases.
+Added: However, for several years, the federal government, through the BLM, has limited the number of minerals acres made available for lease.
+Added: As a result, many operators suffer from leasehold “ gaps ” in their drilling units, which effectively prohibit these operators from developing their existing federal leasehold at no-fault of the operator.
+Added: Section 39 allows for the suspension of operations and production on leases when the necessary federal tracts for exploration and development are not yet available.
+Added: Section 39 suspense must be requested annually.
+Added: Certain of the leases owned by the Company in the PRB have been “ placed in suspense ” under Section 39.
+Added: The ability of the Company to effectively develop these leases is subject to its ability to close existing “ gaps ” in its federal leasehold by leasing additional acreage from the BLM.
In the event that federal, state or local restrictions or prohibitions are adopted in areas where we conduct operations, that restrict operations or otherwise impose more stringent limitations on the production and development of oil and natural gas, including, among other things, the development of increased setback distances, we and similarly situated oil and natural exploration and production operators in the state may incur significant costs to comply with such requirements or may experience delays or curtailment in the pursuit of exploration, development, or production activities, and possibly be limited or precluded in the drilling of wells or in the amounts that we and similarly situated operates are ultimately able to produce from our reserves.
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By further example, in April 2019, Colorado Senate Bill 19-181 (the “ Bill ”) was passed into law, which prioritizes the protection of public safety, health, welfare, and the environment in the regulation of the oil and gas industry by modifying the State’s oil and gas statutes and clarifying, reinforcing, and establishing local governments’ regulatory authority over the surface impacts of oil and gas development in Colorado.
−Removed: This Bill, among other things, gives more power to local government entities in making land use decisions about oil and gas development and regulation, and directs the Energy & Carbon Management Commission (“ ECMC ”) (formerly the Colorado Oil & Gas Conservation Commission (“ COGCC ”)) to promulgate rules to ensure, among other things, proper wellbore integrity, allow public disclosure of flowline information, and evaluate when inactive or shut-in wells must be inspected before being put into production or used for injection.
+Added: This Bill, among other things, gives more power to local government entities in making land use decisions about oil and gas development and regulation, and directs the ECMC (formerly the COGCC)) to promulgate rules to ensure, among other things, proper wellbore integrity, allow public disclosure of flowline information, and evaluate when inactive or shut-in wells must be inspected before being put into production or used for injection.
In addition, the Bill requires that owners of more than 50% of the mineral interests in lands to be pooled must have joined in the application for a pooling order and that the application must include proof that the applicant received approval for the facilities from the affected local government or that the affected local government does not regulate such facilities.
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As reported under “ Part II ” - “ Item 9A.
−Removed: Controls and Procedures ”, as of December 31, 2024, our Chief Executive Officer (“ CEO ”) and Chief Accounting Officer (“ CAO ”) have determined that our disclosure controls and procedures were not effective.
+Added: Controls and Procedures ” , as of December 31, 2025, our Chief Executive Officer (“ CEO ”) and Chief Financial Officer (“ CFO ”) have determined that our disclosure controls and procedures were not effective.
Separately, management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 and determined that such internal control over financial reporting was not effective as a result of such assessment, and such internal control over financial reporting.
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A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis.
−Removed: As of December 31, 2024, there was a material weakness in our internal control over financial reporting related to the review of the inputs to the calculation of depreciation, depletion, and amortization of our reserves, including the review over the proper inclusion of all production for the current year in the reserve base for our calculation of depreciation, depletion, and amortization of our reserves.
−Removed: The error was identified through the course of the Company’s preparation of its year-ended December 31, 2024 financial statements.
−Removed: There was also a material weakness in the preparation of the tax provision.
−Removed: The Company has already developed a plan to implement new controls and procedures designed to address the identified material weaknesses.
+Added: Through the course of the Company’s preparation of its year-ended December 31, 2025 financial statements, a material weakness in our internal control over financial reporting was extended which also related to the review of our inputs to the depreciation, depletion, and amortization calculations, specifically that we did not have effective controls over the proper segregation of total proved reserves and total proved developed reserves in the depletable base of our leasehold and drilling costs calculation, and we did not accurately include the correct inputs in our depletion calculations related to our acquired properties per the Mergers.
+Added: We have already developed a plan to implement new controls and procedures designed to address the identified material weakness.
The Company believes these new controls and procedures will remediate the material weaknesses in a future period.
−Removed: However, there is the potential that the Company’s already implemented efforts to remedy the material weaknesses will be ineffective and/or that additional material weaknesses could occur regardless of the remediation or additional controls implemented by the Company.
+Added: However, there is the potential that the Company’s already implemented efforts to remedy the material weakness will be ineffective and/or that additional material weaknesses could occur regardless of the remediation or additional controls implemented by the Company.
Maintaining effective disclosure controls and procedures and effective internal control over financial reporting are necessary for us to produce reliable financial statements and the Company is committed to remediating its material weaknesses in such controls as promptly as possible.
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In addition, even if we are successful in strengthening our controls and procedures, those controls and procedures may not be adequate to prevent or identify irregularities or facilitate the fair presentation of our financial statements or our periodic reports filed with the SEC.
+Added: We have previously concluded that certain of our previously issued financial statements should not be relied upon and have restated certain of our previously issued financial statements which may affect investor confidence and raise reputational issues and may subject us to additional risks and uncertainties, including increased professional costs and the increased possibility of legal proceedings and regulatory inquiries.
+Added: As previously disclosed, on March 28, 2025, the Audit Committee of the Board, after discussion with the Company’s senior management and the Company’s then independent registered public accounting firm, Marcum LLP (“ Marcum ”), concluded that the Company’s previously issued audited financial statements included in the Company’s (i) audited consolidated financial statements as of and for the fiscal year ended December 31, 2023, originally included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “ 2023 10-K ”), and (ii) audited consolidated financial statements as of and for the fiscal year ended December 31, 2022, originally included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (the “ 2022 10-K ”)(collectively, the “ Form 10-Ks ”) filed with the Commission on March 18, 2024 and March 29, 2023, respectively, should no longer be relied upon and should be restated due to errors in the accounting for the depletion expense related to the Company’s oil and gas properties.
+Added: These errors led to an overstatement of depletion expense during the impacted periods.
+Added: Additionally, on October 27, 2025, the Audit Committee, after discussion with the Company’s senior management and the Company’s former independent registered public accounting firm, Marcum, which audited the Company’s financial statements for the year ended December 31, 2024, concluded that the Company’s previously issued audited financial statements included in the Company’s audited consolidated financial statements as of and for the fiscal year ended December 31, 2024, originally included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2024 filed with the Commission on March 31, 2025, should no longer be relied upon and should be restated due to an error in the accounting for the prior period net operating losses in the calculation of the tax provision for the impacted period.
+Added: This error resulted in an overstatement of the Company’s tax benefit and deferred income tax account during the impacted period.
+Added: All of the prior financial statements which included errors have since been restated and such restatements have been included in the financial statements included in this Annual Report.
+Added: As a result of the errors discussed above and the resulting restatements of our consolidated financial statements for the impacted periods, we have incurred, and may continue to incur, unanticipated costs for accounting, legal and other professional fees in connection with or related to the restatement, and have become subject to a number of additional risks and uncertainties.
+Added: These include, among other things, an increased risk of shareholder litigation, including securities class actions and derivative lawsuits, as well as regulatory inquiries and investigations.
+Added: Any such litigation or inquiries could result in substantial costs, diversion of management’s attention, and potential adverse judgments, settlements or penalties.
+Added: In addition, these matters may adversely affect investor confidence in the accuracy of our financial disclosures and raise reputational risks for our business, either of which could harm our business, financial condition and results of operations.
Risks Related to Our Common Stock
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Our common stock is currently listed on the NYSE American.
−Removed: In order to maintain this listing, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of stockholders’ equity and a minimum number of public stockholders.
+Added: For continued listing on the NYSE American, we must maintain certain share prices, financial and share distribution targets, including maintaining a minimum amount of shareholders’ equity ($2 million if we have reported losses from continuing operations and/or net losses in two of the prior three years;
+Added: $4 million if we have reported losses from continuing operations and/or new losses in three of the last four fiscal years;
+Added: and $6 million if we have losses from continuing operations and/or net losses in the last five fiscal years), a minimum market value ($1 million) and a minimum number of public shareholders (300), subject to certain exceptions.
In addition to these objective standards, the NYSE American may delist the securities of any issuer if, in its opinion, the issuer’s financial condition and/or operating results appear unsatisfactory;
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or if any other event occurs or any condition exists which makes continued listing on the NYSE American, in its opinion, inadvisable.
+Added: Finally, NYSE American rules require us, as long as we remain a smaller reporting company, to maintain at least 50% independent directors and to have an audit committee of at least two persons, subject to controlled company exceptions.
If the NYSE American delists our common stock, investors may face material adverse consequences, including, but not limited to, a lack of trading market for our securities, reduced liquidity, decreased analyst coverage of our securities, and an inability for us to obtain additional financing to fund our operations.
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No cumulative voting — Our Certificate of Formation and Bylaws do not include a provision for cumulative voting in the election of directors.
−Removed: Vacancies — Our Bylaws provide that vacancies on our Board may be filled by a majority of directors in office, although less than a quorum, and not by the stockholders.
−Removed: Preferred Stock — Our Certificate of Formation allows us to issue up to 100,000,000 shares of preferred stock, of which 66,625 shares have been designated as Series A preferred stock.
+Added: Vacancies — Our Bylaws provide that vacancies on our Board may be filled by a majority of directors in office, although less than a quorum, and not by the stockholders, except as discussed below in connection with the Shareholder Agreement.
+Added: Preferred Stock — Our Certificate of Formation allows us to issue up to 100,000,000 shares of preferred stock.
The undesignated preferred stock may have rights senior to those of the common stock and that otherwise could adversely affect the rights and powers, including voting rights, of the holders of common stock.
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The existence of authorized but unissued shares of common stock could render more difficult or discourage an attempt to obtain control of a majority of our common stock by means of a proxy contest, tender offer, merger or otherwise.
−Removed: Limitation of Liability and Indemnification — Our Certificate of Formation limits the liability of, and provides indemnification to, our directors and officers.
+Added: Number of Directors .
+Added: The number of members of the Board of Directors shall never be less than one and so long as the Shareholder Agreement is in effect the number of directors of the Corporation may not be changed, whether by amendment to the Bylaws of the Corporation or otherwise, if doing so would violate any covenant of the Corporation in the Shareholder Agreement.
+Added: Additionally, the Bylaws provide that the number of directors shall be five (5), provided that the Board of Directors may, pursuant to a resolution adopted by a majority of the Board, fix a greater number of directors from time to time;
+Added: provided that, so long as the Shareholder Agreement is in effect, and as of the date of any proposed increase in the number of directors, the Company is in compliance with the Shareholder Agreement.
+Added: Chairman of the Board of Directors.
+Added: Subject to the terms of the Shareholder Agreement, the directors may from time to time elect from their number a Chairman of the Board of Directors.
+Added: A majority of the directors then in office shall constitute a quorum for all purposes at any meeting of the Board of Directors;
+Added: provided, that, for so long as a Juniper Director that is not an independent director serves on the Board of Directors, at least one such Juniper Director must be present at such meeting to constitute a quorum.
+Added: Selection of Committee Members .
+Added: Each committee shall consist of such number of directors, with such qualifications, as may be required by applicable laws, regulations or stock exchange rules or as from time to time may be fixed by the Board of Directors;
+Added: provided that, so long as the Shareholder Agreement is in effect, the Board of Directors may not designate a committee or its members in a manner that would violate any covenant of the Company in the Shareholder Agreement.
Additionally, Title 2, Chapter 21, Subchapter M of the Texas Business Organizations Code (the “ Texas Business Combination Law ”) provides that a Texas corporation may not engage in specified types of business combinations, including mergers, consolidations and asset sales, with a person, or an affiliate or associate of that person, who is an “affiliated shareholder,” for a period of three years from the date that person became an affiliated shareholder, subject to certain exceptions.
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As a result, the issuance of shares of common stock and/or preferred stock may cause the value of our securities to decrease.
+Added: Risks Relating to the Mergers
+Added: Combining the businesses of NPOG and COG with the Company may be more difficult, costly or time-consuming than expected and the Company may fail to realize the anticipated synergies and other benefits of the Mergers, which may adversely affect the Company’s business results and negatively affect the value of our Common Stock.
+Added: The Company and each of the Acquired Companies have operated prior to the closing of the Mergers, independently.
+Added: The success of the Mergers will depend on, among other things, the ability of the Company and the Acquired Companies to combine their businesses in a manner that facilitates growth opportunities and realizes expected cost savings.
+Added: We entered into the Merger Agreement because we believe that the transactions contemplated by the Merger Agreement are fair to and in the best interests of our shareholders and that combining the businesses of the Company and the Acquired Companies will produce benefits as well as cost savings and other cost and capital expenditure synergies.
+Added: The Company and the Acquired Companies must successfully combine their respective businesses in a manner that permits these benefits to be realized.
+Added: For example, the following issues, among others, must be addressed in integrating the operations of the companies in order to realize the anticipated benefits of the Mergers:
+Added: combining the companies’ operations and corporate functions;
+Added: combining the businesses of the Company and the Acquired Companies and meeting the capital requirements of the Company, in a manner that permits the Company to achieve any cost savings or other synergies anticipated to result from the Mergers, the failure of which would result in the anticipated benefits of the Mergers not being realized in the time frame currently anticipated or at all;
+Added: integrating personnel from the companies;
+Added: integrating and unifying our reserves and the development of our new PUDs;
+Added: identifying and eliminating underperforming or uncertain wells;
+Added: harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;
+Added: maintaining existing agreements with customers, suppliers, distributors and vendors, avoiding delays in entering into new agreements with prospective customers, suppliers, distributors and vendors, and leveraging relationships with such third parties for the benefit of the Company;
+Added: addressing possible differences in business backgrounds, corporate cultures and management philosophies;
+Added: consolidating the companies’ administrative and information technology infrastructure;
+Added: coordinating distribution and marketing efforts;
+Added: effecting actions that may be required in connection with obtaining regulatory or other governmental approvals.
+Added: It is possible that the integration process could result in the loss of key employees of the Company or the Acquired Companies, the disruption of either the Company’s or the Acquired Companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated.
+Added: In addition, the actual integration may result in additional and unforeseen expenses.
+Added: If the Company is not able to adequately address integration challenges, we may be unable to successfully integrate operations and the anticipated benefits of the integration plan may not be realized.
+Added: In addition, the Company must achieve the anticipated growth and cost savings without adversely affecting current revenues and investments in future growth.
+Added: If the Company is not able to successfully achieve these objectives, the anticipated synergies and other benefits of the Mergers may not be realized fully, or at all, or may take longer to realize than expected.
+Added: Additionally, we may inherit from the Acquired Companies legal, regulatory, and other risks that occurred prior to the Mergers, whether known or unknown to us, which may be material to the Company.
+Added: Actual growth, cost and capital expenditure synergies and other cost savings, if achieved, may be lower than what we expect and may take longer to achieve than anticipated.
+Added: Moreover, at times the attention of the Company’s management and resources may be focused on the integration of the businesses of the company and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt the Company’s ongoing businesses.
+Added: An inability to realize the full extent of the anticipated benefits of the Mergers, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the Company, which may adversely affect the value of the Company’s common stock following the consummation of the Mergers.
+Added: Moreover, if the Company is unable to realize the full strategic and financial benefits currently anticipated from the Mergers, PEDEVCO shareholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the Company is able to realize only part of the strategic and financial benefits currently anticipated from the Mergers.
+Added: The Company may not be able to retain suppliers or distributors, or suppliers or distributors may seek to modify contractual relationships with the Company, which could have an adverse effect on the Company’s business and operations.
+Added: Third parties may terminate or alter existing contracts or relationships with the Company.
+Added: As a result of the Mergers, the Company may experience impacts on relationships with suppliers and distributors that may harm the Company’s business and results of operations.
+Added: Certain suppliers or distributors may seek to terminate or modify contractual obligations following the Mergers whether or not contractual rights are triggered as a result of the Mergers.
+Added: There can be no guarantee that customers, suppliers and distributors will remain with or continue to have a relationship with the Company or do so on the same or similar contractual terms following the Mergers.
+Added: If any customers, suppliers or distributors seek to terminate or modify contractual obligations or discontinue the relationship with the Company, then the Company’s business and results of operations may be harmed.
+Added: If the Company’s suppliers were to seek to terminate or modify an arrangement with the Company, then the Company may be unable to procure necessary supplies from other suppliers in a timely and efficient manner and on acceptable terms, or at all.
+Added: The Acquired Companies were not U.S.
+Added: public reporting companies prior to the closing of the Mergers, and the obligations associated with integrating into a public company may require significant resources and management attention.
+Added: The Acquired Companies were private companies that were not subject to reporting requirements and did not have accounting personnel specifically employed to review internal controls over financial reporting prior to the closing of the Mergers.
+Added: Upon completion of the Mergers, the Acquired Companies became subject to the rules and regulations established from time to time by the SEC and NYSE American.
+Added: In addition, as a public company, we are required to document and test our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, so that our management can certify as to the effectiveness of our internal control over financial reporting in connection with the annual report.
+Added: Bringing the Acquired Companies into compliance with these rules and regulations and integrating the Acquired Companies into our current compliance and accounting system will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources.
+Added: Furthermore, the need to establish the necessary corporate infrastructure to integrate the Acquired Companies may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, financial condition and results of operations.
+Added: However, the measures we take may not be sufficient to satisfy our obligations as a public company.
+Added: If we do not continue to develop and implement the right processes and tools to manage our changing operations following the Mergers and maintain our culture, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition and results of operations.
+Added: In addition, we cannot predict or estimate the amount of additional costs we may incur to bring the Acquired Companies into compliance with these requirements.
+Added: We anticipate that these costs will materially increase our general and administration expenses.
+Added: These additional obligations could have a material adverse effect on our business, financial condition, results of operations and cash flow.
+Added: The Company’s ability to utilize its net operating loss carryforwards and tax credit carryforwards may be subject to limitations.
+Added: The Company’s ability to use its federal and state net operating losses (“ NOLs ”) to offset potential future taxable income and related income taxes that would otherwise be due is dependent upon the Company’s generation of future taxable income, and the Company cannot predict with certainty when, or whether, the Company will generate sufficient taxable income to use all of its available NOLs.
+Added: Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “ Code ”) and corresponding provisions of state law, if a corporation undergoes an “ ownership change, ” its ability to use its pre-change NOL carryforwards and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income may be limited.
+Added: A Section 382 “ ownership change ” is generally defined as a greater than 50 percentage point change (by value) in its equity ownership by certain 5% shareholders over a three-year period.
+Added: The Company may have experienced such ownership changes in the past, and the Mergers also result in an ownership change.
+Added: The Company may experience additional ownership changes in the future due to subsequent shifts in its stock ownership (some of which are outside of its control).
+Added: The Acquired Companies may have experienced ownership changes in the past, may experience an ownership change as a result of the Mergers and the PIPE Financing, and may experience ownership changes in the future due to subsequent shifts in the Company’s stock ownership (some of which are outside of its control).
+Added: Consequently, even if the Company achieves profitability, it may not be able to utilize a material portion of the Acquired Companies’ or the Company’s pre-Mergers NOL carryforwards and other tax attributes, which could have a material adverse effect on cash flow and results of operations.
+Added: Similar provisions of state tax law may also apply to limit the Company’s use of accumulated state tax attributes.
+Added: There is also a risk that due to regulatory changes, such as suspensions on the use of NOLs, or other unforeseen reasons, the Company’s existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.
+Added: In addition, if the Company is not deemed to continue its historic business for two years after an ownership change, the Company pre-change NOL carryforwards and other pre-change tax attributes may be reduced to zero ($0).
General Risk Factors
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Any acquisition or business combination transaction we enter into in the future could cause substantial dilution to existing stockholders, result in one party having majority or significant control over the Company or result in a change in business focus of the Company.
−Removed: We may incur indebtedness which could reduce our financial flexibility, increase interest expense and adversely impact our operations and our unit costs.
−Removed: We currently have no outstanding indebtedness, but we may incur significant amounts of indebtedness in the future in order to make acquisitions or to develop our properties.
+Added: We may incur additional indebtedness which could reduce our financial flexibility, increase interest expense and adversely impact our operations and our unit costs.
+Added: We currently have $98.0 million outstanding indebtedness under our A&R Credit Agreement, and we may incur significant additional amounts of indebtedness in the future in order to make acquisitions or to develop our properties.
Our level of indebtedness could affect our operations in several ways, including the following:
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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.