EX-99.22 23 ex99-22.htm

Exhibit 99.22

CONDENSED CONSOLIDATED INTERIM

FINANCIAL STATEMENTS

JUNE 30, 2023

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Unaudited, Expressed in Thousands of United States Dollars)

|  | June 30, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
Current assets |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 945 |  |  | $ | 1,037 |
Trade and other receivables |  |  | 4,272 |  |  |  | 5,773 |
Deposits and prepaid expenses |  |  | 369 |  |  |  | 670 |
Fair value of commodity contracts (Note 2) |  |  | 123 |  |  |  |  |
|  |  | 5,709 |  |  |  | 7,480 |
Non-current assets |  |  |  |  |  |  |  |
Property, plant and equipment (Note 4) |  |  | 189,441 |  |  |  | 176,554 |
Right of use assets (Note 5) |  |  | 1,299 |  |  |  | 48 |
Fair value of commodity contracts (Note 2) |  |  | 206 |  |  |  | - |
|  |  | 190,946 |  |  |  | 176,602 |
Total assets |  | $ | 196,655 |  |  | $ | 184,082 |
Current liabilities |  |  |  |  |  |  |  |
Trade and other payables |  | $ | 13,075 |  |  | $ | 12,596 |
Lease payable |  |  | 908 |  |  |  | 32 |
Fair value of commodity contracts (Note 2) |  |  | - |  |  |  | 1,421 |
|  |  | 13,983 |  |  |  | 14,049 |
Non-current liabilities |  |  |  |  |  |  |  |
Loans and borrowings (Note 7) |  |  | 17,746 |  |  |  | 17,799 |
Asset retirement obligations |  |  | 1,704 |  |  |  | 1,425 |
Lease payable |  |  | 415 |  |  |  | 17 |
Fair value of commodity contracts (Note 2) |  |  | - |  |  |  | 594 |
|  |  | 19,865 |  |  |  | 19,835 |
Equity |  |  |  |  |  |  |  |
Share capital |  |  | 296,227 |  |  |  | 296,221 |
Contributed surplus |  |  | 23,693 |  |  |  | 23,254 |
Deficit |  |  | (157,113 | ) |  |  | (169,277 | )
Total Equity |  |  | 162,807 |  |  |  | 150,198 |
Total equity and liabilities |  | $ | 196,655 |  |  | $ | 184,082 |

See accompanying notes to condensed consolidated interim financial statements.

1

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF

OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited, expressed in Thousands of United States dollars, except per share amounts)

|  | Three months ended June 30 |  |  | Six months ended June 30 |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Revenue |  |  |  |  |  |  |  |  |  |  |  |
Oil and natural gas revenue, net of royalties (Note 9) |  | $ | 10,114 |  |  | $ | 12,428 |  |  | $ | 24,407 |  |  | $ | 17,975 |
Other income |  |  | - |  |  |  | 28 |  |  |  | 1 |  |  |  | 29 |
|  |  | 10,114 |  |  |  | 12,456 |  |  |  | 24,408 |  |  |  | 18,004 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Production and operating expenses |  |  | 1,147 |  |  |  | 1,364 |  |  |  | 2,700 |  |  |  | 2,271 |
Depletion and depreciation (Note 4,5) |  |  | 3,375 |  |  |  | 2,087 |  |  |  | 7,713 |  |  |  | 3,226 |
General and administrative expenses |  |  | 1,021 |  |  |  | 844 |  |  |  | 1,951 |  |  |  | 1,530 |
Share based compensation (Note 8) |  |  | 356 |  |  |  | 32 |  |  |  | 374 |  |  |  | 157 |
|  |  | 5,899 |  |  |  | 4,327 |  |  |  | 12,738 |  |  |  | 7,184 |
Finance income |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Unrealized gain on financial commodity contracts (Note 2) |  |  | 777 |  |  |  | 746 |  |  |  | 2,167 |  |  |  | - |
Interest income |  |  | - |  |  |  | 1 |  |  |  | - |  |  |  | 3 |
Foreign exchange gain |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 7 |
|  |  | 777 |  |  |  | 747 |  |  |  | 2,167 |  |  |  | 10 |
Finance expense |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized loss on financial commodity contracts (Note 2) |  |  | 300 |  |  |  | 1,648 |  |  |  | 714 |  |  |  | 2,790 |
Unrealized loss on financial commodity contracts (Note 2) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,040 |
Interest on loans and borrowings |  |  | 375 |  |  |  | 212 |  |  |  | 860 |  |  |  | 437 |
Foreign exchange loss |  |  | 5 |  |  |  | 3 |  |  |  | 10 |  |  |  | - |
Accretion |  |  | 44 |  |  |  | 6 |  |  |  | 89 |  |  |  | 12 |
|  |  | 724 |  |  |  | 1,869 |  |  |  | 1,673 |  |  |  | 6,279 |
Net income and comprehensive income |  | $ | 4,268 |  |  | $ | 7,007 |  |  | $ | 12,164 |  |  | $ | 4,551 |
Basic net income per share (Note 6) |  | $ | 0.12 |  |  | $ | 0.20 |  |  | $ | 0.34 |  |  | $ | 0.13 |
Diluted net income per share (Note 6) |  |  | 0.12 |  |  |  | 0.19 |  |  |  | 0.33 |  |  |  | 0.13 |

See accompanying notes to the condensed consolidated interim financial statements.

2

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited, Expressed in Thousands of United States Dollars, except number of common shares)

|  | Number of common shares (Note 6) |  |  | Share capital |  |  | Contributed Surplus |  |  | Deficit |  |  | Total Equity |
Balance at January 1, 2022 |  |  | 35,258,778 |  |  | $ | 296,060 |  |  | $ | 22,948 |  |  | $ | (185,920 | ) |  | $ | 133,088 |
Share based compensation (Note 8) |  |  |  |  |  |  |  |  |  |  | 178 |  |  |  |  |  |  |  | 178 |
Rights offering |  |  | 357,143 |  |  |  | 161 |  |  |  |  |  |  |  |  |  |  |  | 161 |
Net income for the period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 4,551 |  |  |  | 4,551 |
Balance at June 30, 2022 |  |  | 35,615,921 |  |  | $ | 296,221 |  |  | $ | 23,126 |  |  | $ | (181,369 | ) |  | $ | 137,978 |
Balance at January 1, 2023 |  |  | 35,615,921 |  |  | $ | 296,221 |  |  | $ | 23,254 |  |  | $ | (169,277 | ) |  | $ | 150,198 |
Share based compensation (Note 8) |  |  |  |  |  |  |  |  |  |  | 441 |  |  |  |  |  |  |  | 441 |
Stock options exercised (Note 8) |  |  | 5,000 |  |  |  | 6 |  |  |  | (2 | ) |  |  | - |  |  |  | 4 |
Net income for the period |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 12,164 |  |  |  | 12,164 |
Balance at June 30, 2023 |  |  | 35,620,921 |  |  | $ | 296,227 |  |  | $ | 23,693 |  |  | $ | (157,113 | ) |  | $ | 162,807 |

See accompanying notes to the condensed consolidated interim financial statements.

3

KOLIBRI GLOBAL ENERGY INC.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30

(Unaudited, Expressed in Thousands of United States Dollars)

|  | 2023 |  |  | 2022 |
Cash flows from operating activities |  |  |  |  |  |  |  |
Net income (loss) |  | $ | 12,164 |  |  | $ | 4,551 |
Adjustments for: |  |  |  |  |  |  |  |
Depletion and depreciation |  |  | 7,713 |  |  |  | 3,226 |
Accretion |  |  | 89 |  |  |  | 12 |
Amortization of loan acquisition costs |  |  | 50 |  |  |  | 52 |
Unrealized (gain) loss on financial commodity contracts |  |  | (2,167 | ) |  |  | 3,040 |
Share based compensation (Note 8) |  |  | 374 |  |  |  | 157 |
Other non-cash loss (income) |  |  | - |  |  |  | 6 |
Unrealized foreign exchange gain |  |  | - |  |  |  | 7 |
Change in non-cash working capital (Note 3) |  |  | 819 |  |  |  | (1,494 | )
Net cash from operating activities |  |  | 19,042 |  |  |  | 9,557 |
Cash flows from investing activities |  |  |  |  |  |  |  |
Additions to property, plant and equipment (Note 4) |  |  | (19,930 | ) |  |  | (14,973 | )
Change in non-cash working capital (Note 3) |  |  | 1,285 |  |  |  | 1,877 |
Net cash used in investing activities |  |  | (18,645 | ) |  |  | (13,096 | )
Cash flows from financing activities |  |  |  |  |  |  |  |
Proceeds from equity offering, net |  |  | - |  |  |  | 161 |
Repayment of loans and borrowings, net |  |  | (3,000 | ) |  |  | (1,011 | )
Proceeds from loans and borrowings |  |  | 2,897 |  |  |  | - |
Lease payments |  |  | (392 | ) |  |  | (38 | )
Proceeds from stock option exercises |  |  | 6 |  |  |  |  |
Net cash used in financing activities |  |  | (489 | ) |  |  | (888 | )
Change in cash and cash equivalents |  |  | (92 | ) |  |  | (4,427 | )
Cash and cash equivalents, beginning of period |  |  | 1,037 |  |  |  | 7,316 |
Cash and cash equivalents, end of period |  | $ | 945 |  |  | $ | 2,889 |

See accompanying notes to the condensed consolidated interim financial statements.

4

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

1. | NATURE OF OPERATIONS AND BASIS OF PRESENTATION

Kolibri Global Energy Inc. (the “Company” or “KEI”), was incorporated under the Business Corporations Act (British Columbia) on May 6, 2008. KEI is an international energy company focused on finding and exploiting energy projects in oil, gas and clean and sustainable energy. The Company owns and operates energy properties in the United States. The Company continues to utilize its technical and operational expertise to identify and acquire additional projects. The Company’s shares are traded on the Toronto Stock Exchange under the stock symbol KEI and on the OTCQX under the stock symbol KGEIF.

These condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard (IAS) 34, “Interim Financial Reporting” following the same accounting policies, except as described in Note 3, and methods of computation as the annual consolidated financial statements of the Company for the year ended December 31, 2022. The disclosures provided below are incremental to those included with the annual consolidated financial statements and certain disclosures, which are normally required to be included in the notes to the annual consolidated financial statements, have been condensed or omitted. These condensed consolidated interim financial statements should be read in conjunction with the consolidated financial statements and notes thereto in the Company’s annual filings for the year ended December 31, 2022.

The condensed consolidated interim financial statements were approved by the Company’s Board of Directors on August 3, 2023.

2. | FINANCIAL RISK MANAGEMENT

Credit Risk

The Company’s accounts receivable are with customers and joint interest partners in the petroleum and natural gas business and are subject to normal credit risks. Concentration of credit risk is mitigated by marketing to numerous purchasers under normal industry sale and payment terms. The Company routinely assesses the financial strength of its customers. The Company is exposed to certain losses in the event of non-performance by counterparties to commodity price contracts. The Company mitigates this risk by entering into transactions with highly rated financial institutions.

Commodity price risk

The Company has entered into financial commodity contracts which are summarized in the table below. Total Volume Hedged in the table is the annual volumes and Price is the fixed price specified in the financial commodity contracts.

5

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

2. | FINANCIAL RISK MANAGEMENT (continued)

At June 30, 2023 the following financial commodity contracts were outstanding and recorded at estimated fair value:

|  |  |  |  | Total Volume Hedged |  |  | Price |
Commodity |  | Period |  |  | (BBLS) |  |  | ($/BBL) |
Oil – WTI Swap |  |  | July 1, 2023 to December 29, 2023 |  |  |  | 18,000 |  |  |  | $90.45 |
Oil – WTI Costless Collars |  |  | July 1, 2023 to December 29, 2023 |  |  |  | 24,000 |  |  |  | $70.00 - $94.00 |
Oil – WTI Swap |  |  | July 1, 2023 to December 31, 2023 |  |  |  | 54,000 |  |  |  | $64.90 |
Oil – WTI Put |  |  | July 1, 2023 to March 31, 2024 |  |  |  | 58,500 |  |  |  | $60.00 |
Oil – WTI Swap |  |  | January 1, 2024 to May 31, 2024 |  |  |  | 40,000 |  |  |  | $62.77 |
Oil – WTI Costless Collars |  |  | January 2, 2024 to June 28, 2024 |  |  |  | 6,000 |  |  |  | $65.00 - $79.50 |
Oil – WTI Costless Collars |  |  | January 2, 2024 to June 28, 2024 |  |  |  | 24,000 |  |  |  | $65.00 - $86.00 |
Oil – WTI Costless Collars |  |  | June 3, 2024 to June 28, 2024 |  |  |  | 8,000 |  |  |  | $60.00 - $78.15 |
Oil – WTI Costless Collars |  |  | July 1, 2024 to September 30, 2024 |  |  |  | 21,000 |  |  |  | $60.00 - $86.65 |
Oil – WTI Costless Collars |  |  | July 1, 2024 to September 30, 2024 |  |  |  | 18,000 |  |  |  | $60.00 - $78.00 |
Oil – WTI Costless Collars |  |  | October 1, 2024 to December 31, 2024 |  |  |  | 39,000 |  |  |  | $60.00 - $82.50 |
Oil – WTI Costless Collars |  |  | January 1, 2025 to March 31, 2025 |  |  |  | 36,000 |  |  |  | $60.00 - $77.00 |

The estimated fair value results in a $0.3 million asset as of June 30, 2023 (December 31, 2022: $2.0 million liability) for the financial oil and gas contracts which has been determined based on the prospective amounts that the Company would receive or pay to terminate the contracts, consisting of a current asset of $0.1 million and a long term asset of $0.2 million (December 31, 2022: current liability of $1.4 million and a long term liability of $0.6 million).

In July 2023, the Company entered into the following additional financial commodity contracts:

|  |  |  |  | Total Volume Hedged |  |  | Price |
Commodity |  | Period |  |  | (BBLS) |  |  | ($/BBL) |
Oil – WTI Put |  |  | April 1, 2024 to June 28, 2024 |  |  |  | 1,650 |  |  |  | $60.00 |
Oil – WTI Costless Collars |  |  | April 1, 2025 to June 30, 2025 |  |  |  | 20,400 |  |  |  | $60.00 - $75.40 |

The realized and unrealized gains/losses from the financial commodity contracts are as follows:

|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Realized loss on financial commodity contracts |  | $ | (300 | ) |  | $ | (1,648 | ) |  | $ | (714 | ) |  | $ | (2,790 | )
Unrealized gain (loss) on financial commodity contracts |  | $ | 777 |  |  | $ | 746 |  |  | $ | 2,167 |  |  | $ | (3,040 | )

6

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

2. | FINANCIAL RISK MANAGEMENT (continued)

The Company classifies fair value measurements according to the following hierarchy based on the amount of observable inputs used to value the instrument:

Level 1 fair value measurements are based on unadjusted quoted market prices.

Level 2 fair value measurements are based on valuation models and techniques where the significant inputs are derived from quoted indices.

Level 3 fair value measurements are based on unobservable information.

The Company’s cash and cash equivalents are classified as Level 1 and the commodity derivative contracts are classified as Level 2.

3. | SUPPLEMENTAL CASH FLOW INFORMATION

Changes in non-cash flow working capital is comprised of the following source (use) of cash:

|  | Six months ended June 30, |
|  | 2023 |  |  | 2022 |
Trade and other receivables |  | $ | 1,501 |  |  | $ | (4,343 | )
Deposits and prepaid expenses |  |  | 301 |  |  |  | (435 | )
Trade and other payables |  |  | 302 |  |  |  | 5,165 |
Foreign currency |  |  | - |  |  |  | (4 | )
|  | $ | 2,104 |  |  | $ | 383 |
Related to operating activities |  | $ | 819 |  |  | $ | (1,494 | )
Related to investing activities |  | $ | 1,285 |  |  | $ | 1,877 |

7

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

4. | PROPERTY, PLANT AND EQUIPMENT

|  | Oil and Natural Gas Interests |  |  | Processing and Other Equipment |  |  | Total |
Cost or deemed cost |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2022 |  | $ | 197,116 |  |  | $ | 1,379 |  |  | $ | 198,495 |
Additions |  |  | 37,112 |  |  |  | 5 |  |  |  | 37,117 |
Disposals |  |  | (102 | ) |  |  | (6 | ) |  |  | (108 | )
Balance at December 31, 2022 |  | $ | 234,126 |  |  | $ | 1,378 |  |  | $ | 235,504 |
Additions (a) |  |  | 20,186 |  |  |  | 52 |  |  |  | 20,238 |
Balance at June 30, 2023 |  | $ | 254,312 |  |  | $ | 1,430 |  |  | $ | 255,742 |
Accumulated depletion and depreciation |  |  |  |  |  |  |  |  |  |  |  |
Balance at January 1, 2022 |  | $ | 50,095 |  |  | $ | 1,324 |  |  | $ | 51,419 |
Depletion and depreciation for the period |  |  | 7,515 |  |  |  | 16 |  |  |  | 7,531 |
Balance at December 31, 2022 |  | $ | 57,610 |  |  | $ | 1,340 |  |  | $ | 58,950 |
Depletion and depreciation for the period |  |  | 7,337 |  |  |  | 14 |  |  |  | 7,351 |
Balance at June 30, 2023 |  | $ | 64,947 |  |  | $ | 1,354 |  |  | $ | 66,301 |
Net carrying amounts |  |  |  |  |  |  |  |  |  |  |  |
At December 31, 2022 |  | $ | 176,516 |  |  | $ | 38 |  |  | $ | 176,554 |
At June 30, 2023 |  | $ | 189,365 |  |  | $ | 76 |  |  | $ | 189,441 |

| (a) | Includes non-cash additions of $67 from capitalized stock-based compensation and $245 from assets related to ARO liabilities.

5. | LEASES AND RIGHT OF USE ASSETS

|  |  | Right of Use Assets |
Balance at January 1, 2022 |  |  | $ | 38 |
Additions |  |  |  | 61 |
Depreciation |  |  |  | (51 | )
Balance at December 31, 2022 |  |  |  | 48 |
Additions |  |  |  | 1,613 |
Depreciation |  |  |  | (362 | )
Balance at June 30, 2023 |  |  | $ | 1,299 |

The amount of interest accretion recorded in the statement of operations totaled $27 and $1 for the second quarter of 2023 and 2022, respectively, and $55 and $1 for the six months ended June 30, 2023 and 2022, respectively.

8

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

6. | EARNINGS PER SHARE

|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Basic earnings per share |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 4,268 |  |  | $ | 7,007 |  |  | $ | 12,164 |  |  | $ | 4,551 |
Weighted average number of common shares - basic |  |  | 35,621 |  |  |  | 35,616 |  |  |  | 35,620 |  |  |  | 35,604 |
Net income per share – basic |  | $ | 0.12 |  |  | $ | 0.20 |  |  |  | 0.34 |  |  | $ | 0.13 |
Diluted earnings per share |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Net income |  | $ | 4,268 |  |  | $ | 7,007 |  |  | $ | 12,164 |  |  | $ | 4,551 |
Effect of outstanding options and RSUs |  |  | 875 |  |  |  | 333 |  |  |  | 866 |  |  |  | 293 |
Weighted average number of common shares - diluted |  |  | 36,496 |  |  |  | 35,949 |  |  |  | 36,486 |  |  |  | 35,897 |
Net income per share – diluted |  | $ | 0.12 |  |  | $ | 0.19 |  |  |  | 0.33 |  |  | $ | 0.13 |

7. | LOANS AND BORROWINGS

In May 2022, the Company’s US subsidiary amended the credit facility from BOK Financial, which is secured by the US subsidiary’s interests in the Tishomingo Field. The credit facility expires in June 2026 and is intended to fund the drilling of the Caney wells in the Tishomingo Field.

The borrowing base of the credit facility was increased to $40.0 million in May 2023 and the Company has an available borrowing capacity of $21.8 million at June 30, 2023. The credit facility is subject to a semi-annual review and redetermination of the borrowing base. The next redetermination will be in the third quarter of 2023. Future commitment amounts will be subject to new reserve evaluations and there is no guarantee that the size and terms of the credit facility will remain the same after the borrowing base redetermination. Any redetermination of the borrowing base is effective immediately and if the borrowing base is reduced, the Company has six months to repay any shortfall.

The credit facility has two primary debt covenants. One covenant requires the US subsidiary to maintain a positive working capital balance which includes any unused excess borrowing capacity and excludes the fair value of commodity contracts, the current portion of long-term debt (the “Current Ratio”). The second covenant ensures the ratio of outstanding debt and long-term liabilities to a trailing twelve month adjusted EBITDA amount (the “Maximum Leverage Ratio”) be no greater than 3 to 1 at any quarter end. Adjusted EBITDA is defined as net income excluding interest expense, depreciation, depletion and amortization expense, and other non-cash and non-recurring charges including severance, share based compensation expense and unrealized gains or losses on commodity contracts.

9

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

7. | LOANS AND BORROWINGS (continued)

The Company was in compliance with both covenants for the quarter ended June 30, 2023. At June 30, 2023, the Current Ratio of the US Subsidiary was 1.97 to 1.0 and the Maximum Leverage Ratio was 0.60 to 1.0 for the three months ended June 30, 2023. The Company is forecasting to be in compliance with the debt covenants for the next 12 months.

At June 30, 2023, loans and borrowings of $17.7 million (December 31, 2022: $17.8 million) are presented net of loan acquisition costs of $0.4 million (December 31, 2022: $0.4 million).

8. | SHARE BASED COMPENSATION

Stock Options

The Company has an option program that entitles officers, directors, employees and certain consultants to purchase shares in the Company. Options are granted at the market price of the shares at the date of grant, have a five to ten year term and generally vest over two years.

The number and weighted average exercise prices of share options are as follows:

|  |  | Six months ended June 30, |
|  |  | 2023 |  |  | 2022 |
|  |  |  | Number of options |  |  |  | Weighted average exercise price |  |  |  | Number of options |  |  |  | Weighted average exercise price |
Outstanding at January 1 |  |  |  | 776,000 |  |  | $ | 1.67 |  |  |  | 143,500 |  |  | $ | 5.00 |
Granted |  |  |  | 206,800 |  |  |  | 5.23 |  |  |  | 559,500 |  |  |  | 0.80 |
Exercised |  |  |  | (5,000 | ) |  |  | 0.80 |  |  |  | - |  |  |  | - |
Expired/cancelled |  |  |  | (108,500 | ) |  |  | 5.62 |  |  |  | - |  |  |  | - |
Outstanding at June 30 |  |  |  | 869,300 |  |  | $ | 2.03 |  |  |  | 703,000 |  |  | $ | 1.65 |
Exercisable at June 30 |  |  |  | 494,935 |  |  | $ | 1.62 |  |  |  | 329,999 |  |  | $ | 2.62 |

The range of exercise prices for the outstanding options is as follows:

|  |  | Number of outstanding stock options |  |  | Weighted average exercise price |  |  | Weighted average contractual life (years) |
$5.00 to $6.00 |  |  |  | 206,800 |  |  | $ | 5.23 |  |  |  | 4.8 |
$1.80 to $5.00 |  |  |  | 108,000 |  |  | $ | 2.23 |  |  |  | 2.9 |
$0.80 to $2.90 |  |  |  | 554,500 |  |  | $ | 0.80 |  |  |  | 3.5 |
|  |  |  | 869,300 |  |  | $ | 2.03 |  |  |  | 3.7 |

10

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

8. | SHARE BASED COMPENSATION (continued)

The fair value of the stock options was estimated using Black Scholes model with the following weighted average inputs:

|  | 2023 |  |  | 2022 |
Fair value at grant date (per option) |  | $ | 5.00 |  |  |  | 0.70 |
Volatility (%) |  |  | 110.00 |  |  |  | 149.68 |
Forfeiture rate (%) |  |  | 5 | % |  |  | 5 | %
Option life (years) |  |  | 10 |  |  |  | 5 |
Risk-free interest rate (%) |  |  | 2.89 |  |  |  | 1.56 |

Restricted Stock Units

The Company has a restricted stock unit (“RSU”) program that entitles officers, directors and employees to obtain RSUs that are issuable as shares in the Company as they are vested. The RSUs are redeemable over a three year vesting period, with the 1/3 of the grant vesting on the first, second and third years from the date of grant. The Company granted 119,140 RSUs in the second quarter of 2023 to directors, officers and employees. The fair value at grant date for the RSUs was $5.28 per RSU which was the closing share price on the date of grant.

RSUs are valued using the fair-value method where compensation cost attributable to all share units granted are measured at fair value at the grant date and expensed over the vesting period with a corresponding increase to contributed surplus. The Company capitalizes a portion of share based compensation that is directly attributable to development activities. A forfeiture rate is estimated on the grant date and is adjusted to reflect the actual number of units that vest.

Share based compensation was recorded as follows:

|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Expensed |  | $ | 356 |  |  | $ | 32 |  |  | $ | 374 |  |  | $ | 157 |
Capitalized |  | $ | 65 |  |  | $ | 4 |  |  | $ | 67 |  |  | $ | 20 |

9. | REVENUES

Revenue is recognized when the performance obligations are satisfied and revenue can be reliably measured. Revenue is measured at the consideration specified in the contracts and represents amounts receivable for goods or services provided in the normal course of business, net of discounts, customs duties and sales taxes. All revenue is based on variable prices. Performance obligations associated with the sale of crude oil, natural gas, and natural gas liquids are satisfied at the point in time when the products are delivered to and title passes to the customer. Performance obligations associated with processing services, transportation, and marketing services are satisfied at the point in time when the services are provided.

11

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

9. | REVENUES (continued)

Oil, natural gas liquids and natural gas are mostly sold under contracts of varying price and volume terms. Revenues for oil are typically collected on the 20th day of the month following production, while natural gas and NGL revenues are collected by the 45th day of the month following production.

The following table presents the Company’s gross oil and gas revenue disaggregated by revenue source:

|  | Three months ended June 30, |  |  | Six months ended June 30, |
|  | 2023 |  |  | 2022 |  |  | 2023 |  |  | 2022 |
Oil revenue |  | $ | 11,989 |  |  | $ | 14,365 |  |  | $ | 28,267 |  |  | $ | 20,544 |
Natural gas revenue |  |  | 232 |  |  |  | 750 |  |  |  | 1,047 |  |  |  | 1,141 |
NGL revenue |  |  | 525 |  |  |  | 1,029 |  |  |  | 1,506 |  |  |  | 1,570 |
|  |  | 12,746 |  |  |  | 16,144 |  |  |  | 30,820 |  |  |  | 23,255 |
Royalties |  |  | (2,632 | ) |  |  | (3,716 | ) |  |  | (6,413 | ) |  |  | (5,280 | )
|  | $ | 10,114 |  |  | $ | 12,428 |  |  | $ | 24,407 |  |  | $ | 17,975 |

10. | SEGMENTED INFORMATION

The Company defines its reportable segments based on the countries where it conducts business.

Three months ended June 30, 2023
|  | United States |  |  | Canada and Other |  |  | Total |
Oil and natural gas revenues, net of royalties |  | $ | 10,114 |  |  | $ | - |  |  | $ | 10,114 |
Production and operating expenses |  |  | 1,147 |  |  |  | - |  |  |  | 1,147 |
Depletion and depreciation |  |  | 3,375 |  |  |  | - |  |  |  | 3,375 |
General and administrative expenses |  |  | 881 |  |  |  | 140 |  |  |  | 1,021 |
Share based compensation |  |  | 344 |  |  |  | 12 |  |  |  | 356 |
|  |  | 5,747 |  |  |  | 152 |  |  |  | 5,899 |
Finance income |  |  | 777 |  |  |  | - |  |  |  | 777 |
Finance expense |  |  | (719 | ) |  |  | (5 | ) |  |  | (724 | )
Net income (loss) |  |  | 4,425 |  |  |  | (157 | ) |  |  | 4,268 |
Assets |  | $ | 196,497 |  |  | $ | 158 |  |  | $ | 196,655 |
Capital expenditure |  | $ | 15,742 |  |  | $ | - |  |  | $ | 15,742 |

12

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

10. | SEGMENTED INFORMATION (continued)

Six months ended June 30, 2023
|  | United States |  |  | Canada and Other |  |  | Total |
Oil and natural gas revenues, net of royalties |  | $ | 24,407 |  |  | $ | - |  |  | $ | 24,407 |
Other income |  |  | 1 |  |  |  | - |  |  |  | 1 |
|  |  | 24,408 |  |  |  | - |  |  |  | 24,408 |
Production and operating expenses |  |  | 2,700 |  |  |  | - |  |  |  | 2,700 |
Depletion and depreciation |  |  | 7,713 |  |  |  | - |  |  |  | 7,713 |
General and administrative expenses |  |  | 1,667 |  |  |  | 284 |  |  |  | 1,951 |
Share based compensation |  |  | 354 |  |  |  | 20 |  |  |  | 374 |
|  |  | 12,434 |  |  |  | 304 |  |  |  | 12,738 |
Finance income |  |  | 2,167 |  |  |  | - |  |  |  | 2,167 |
Finance expense |  |  | (1,663 | ) |  |  | (10 | ) |  |  | (1,673 | )
Net income (loss) |  |  | 12,478 |  |  |  | (314 | ) |  |  | 12,164 |
Assets |  | $ | 196,497 |  |  | $ | 158 |  |  | $ | 196,655 |
Capital expenditures |  | $ | 19,930 |  |  | $ | - |  |  | $ | 19,930 |

13

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

10. | SEGMENTED INFORMATION (continued)

Three months ended June 30, 2022
|  | United States |  |  | Canada and Other |  |  | Total |
Oil and natural gas revenues, net of royalties |  | $ | 12,428 |  |  | $ | - |  |  | $ | 12,428 |
Other income |  |  | 28 |  |  |  |  |  |  |  | 28 |
|  |  | 12,456 |  |  |  | - |  |  |  | 12,456 |
Production and operating expenses |  |  | 1,364 |  |  |  | - |  |  |  | 1,364 |
Depletion and depreciation |  |  | 2,087 |  |  |  | - |  |  |  | 2,087 |
General and administrative expenses |  |  | 717 |  |  |  | 127 |  |  |  | 844 |
Share based compensation |  |  | 28 |  |  |  | 4 |  |  |  | 32 |
|  |  | 4,196 |  |  |  | 131 |  |  |  | 4,327 |
Finance income |  |  | 746 |  |  |  | 1 |  |  |  | 747 |
Finance expense |  |  | (1,866 | ) |  |  | (3 | ) |  |  | (1,869 | )
Net income (loss) |  |  | 7,140 |  |  |  | (133 | ) |  |  | 7,007 |
Assets |  | $ | 168,917 |  |  | $ | 276 |  |  | $ | 169,193 |
Capital expenditure |  | $ | 7,572 |  |  | $ | - |  |  | $ | 7,572 |

14

Notes to the Condensed Consolidated Interim Financial Statements

For the Three and Six Months Ended June 30, 2023 and 2022

(Unaudited, expressed in Thousands of United States dollars except per share information)

10. | SEGMENTED INFORMATION (continued)

Six months ended June 30, 2022
|  | United States |  |  | Canada and Other |  |  | Total |
Oil and natural gas revenues, net of royalties |  | $ | 17,975 |  |  | $ | - |  |  | $ | 17,975 |
Other income |  |  | 29 |  |  |  | - |  |  |  | 29 |
|  |  | 18,004 |  |  |  | - |  |  |  | 18,004 |
Production and operating expenses |  |  | 2,271 |  |  |  | - |  |  |  | 2,271 |
Depletion and depreciation |  |  | 3,226 |  |  |  | - |  |  |  | 3,226 |
General and administrative expenses |  |  | 1,283 |  |  |  | 247 |  |  |  | 1,530 |
Share based compensation |  |  | 134 |  |  |  | 23 |  |  |  | 157 |
|  |  | 6,914 |  |  |  | 270 |  |  |  | 7,184 |
Finance income |  |  | - |  |  |  | 10 |  |  |  | 10 |
Finance expense |  |  | (6,279 | ) |  |  | - |  |  |  | (6,279 | )
Net income (loss) |  |  | 4,811 |  |  |  | (260 | ) |  |  | 4,551 |
Assets |  | $ | 168,917 |  |  | $ | 276 |  |  | $ | 169,193 |
Capital expenditures |  | $ | 14,973 |  |  | $ | - |  |  | $ | 14,973 |

15