FORWARD-LOOKING STATEMENTS

The discussion and analysis below includes certain forward-looking statements that are subject to risks, uncertainties and other factors, as described in "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2021, that could cause our actual growth, results of operations, performance, financial position and business prospects and opportunities for this fiscal year and periods that follow to differ materially from those expressed in or implied by those forward-looking statements. Readers are cautioned that forward-looking statements contained in this Quarterly Report on Form 10-Q should be read in conjunction with our disclosure under the heading "Disclosure Regarding Forward-Looking Statements" below.


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General Business Development

The Company was formed on September 26, 2013 in the State of Colorado.





Business Strategy

Our strategy is to acquire producing properties that the Company can operate which have proven un-drilled locations available for further development. In the process of identifying drilling prospects, the Company will utilize the expertise of existing management and employ contract engineering firms available to further evaluate the properties.

The company is actively pursuing acquisition of additional properties in Oklahoma, Texas and New Mexico.

Liquidity and Capital Resources

As of June 30, 2022, we had total current assets of $1,125,638 and total current liabilities of $3,989,289.

The Company used $522,971 of cash in operating activities during the six months ended June 30, 2022, compared to $189,476 used in operations during the same period in 2021. Net cash used in operating activities during the six months ended June 30, 2022 was mainly comprised of our $770,673 net loss during the period, adjusted by a non-cash charges of $12,211 for gain on change in fair value of derivative liabilities, stock-based compensation of $114,000, amortization of debt discounts of $38,943 and changes in operating assets and liabilities of $106,971. Net cash used in operating activities during the six months ended June 30, 2021 was mainly comprised of our $496,819 net loss during the period, adjusted by a non-cash charges of $120,250 gain on settlement of accounts payable, $5,099 for loss on change in fair value of derivative liabilities, stock-based compensation of $111,000, amortization of debt discounts of $2,754, write off of option contract associated with oil and gas properties of $85,500, default interest added to note payable of $50,000, asset retirement obligations expense of $19 and changes in operating assets and liabilities of $173,202.

The Company used cash of $756,298 for investing activities during the six months ended June 30, 2022 which consisted of $756,298 for the acquisition of oil and gas property. The Company used cash of $40,000 for investing activities during the six months ended June 30, 2022 related to deposits for oil and gas properties.

The Company generated cash of $2,371,801 from financing activities during the six months ended June 30, 2022 which consisted of $110,235 in proceeds from advances from related parties, $499,996 from senior secured convertible notes payable from related party and $1,761,570 in proceeds from unexecuted subscription agreements. The Company generated cash of $229,600 from financing activities during the six months ended June 30, 2021 which consisted of $159,600 advances from related party, $65,00 of proceeds from note payable, related party and $5,000 in proceeds from the sale of common stock.





Going Concern

The future of our company is dependent upon its ability to obtain financing and upon future profitable operations. Management has plans to seek additional capital through a private placement and public offering of its common stock, if necessary. See Note 2 to the unaudited consolidated financial statements for additional information.





Results of Operations

We generated revenue of $5,239 and $0 during the three months ended June 30, 2022 and 2021, respectively. Lease operating expenses were $47,558 and $0 during the three months ended June 30, 2022 and 2021, respectively. The increase in lease operating expenses was due to an increase in geological expenses. Total operating expenses were $312,269 during the three months ended June 30, 2022 compared to $212,961 during the same period in 2021. The increase in operating expenses was due to a $25,362 increase in professional fees and $85,946 increase in general and administrative expenses which were offset by $12,000 decrease in board of director fees.

We generated revenues of $5,239 and $0 during the six months ended June 30, 2022 and 2021. Lease operating expenses were $49,434 and $0 during the six months ended June 30, 2022 and 2021, respectively. The increase in lease operating expenses was due to an increase in geological expenses. Total operating expenses were $658,287 during the six months ended June 30, 2022 compared to $382,133 during the same period in 2021. The increase in operating expenses was due to a $162,131 increase in professional fees and $5,773 increase in general administrative expenses which were offset by $12,000 decrease in board of director fees and a $120,250 gain on settlement of accounts payable in 2021.

Off-Balance sheet arrangements

As of June 30, 2022, we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities, established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.





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Critical Accounting Policies

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. Our accounting policies are described in Note 1 to our audited consolidated financial statements for 2021 appearing in our Annual Report on Form 10-K for the year ended December 31, 2021.

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