New ERA Energy & Digital, Inc.

Previous wording

Immediately following the reincorporation, the Company completed its business combination (the “Business Combination”) with New Era Helium Corp., a Nevada corporation, pursuant to that certain Business Combination Agreement and Plan of Reorganization, dated as of January 3, 2024 (as amended on June 5, 2024, August 8, 2024, September 11, 2024, and September 30, 2024, the “BCA”), by and among New Era Helium Corp., Roth CH Acquisition V Co., Roth CH V Holdings, Inc., and Roth CH V Merger Sub Corp., a Delaware corporation and a wholly-owned subsidiary of Roth CH Acquisition V Co. The Company subsequently changed its name to “New Era Helium, Inc.” and later to “New Era Energy & Digital, Inc.”

Current wording

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “New Era,” “we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Company's completion of its business combination with New Era Helium Corp., a Nevada corporation, pursuant to that certain Business Combination Agreement and Plan of Reorganization, dated as of January 3, 2024 (as amended on June 5, 2024, August 8, 2024, September 11, 2024, and September 30, 2024, the "BCA"), by and among New Era Helium Corp., Roth CH Acquisition V Co., Roth CH V Holdings, Inc., and Roth CH V Merger Sub Corp., a Delaware corporation and a wholly-owned subsidiary of Roth CH Acquisition V Co. (the “Business Combination”), the business and operations of New Era Energy & Digital, Inc. and its consolidated subsidiaries, and (ii) prior to the Business Combination, New Era Energy & Digital, Inc. (the predecessor entity in existence prior to the consummation of the Business Combination) and its consolidated subsidiary.

Previous wording

We are a vertically-integrated developer and operator of next-generation digital infrastructure and integrated power assets accelerating speed-to-power for advanced AI hyperscalers. In the second half of 2025, we executed a strategic pivot from our legacy natural gas operations to focus exclusively on developing data center campuses where power, land, and connectivity can be assembled and delivered on accelerated timelines. Our mission is to deliver speed-to-power by converging behind-the-meter power flexibility with data center development capabilities. Our primary strategy is to aggregate and entitle “Powered Land” and to develop “Powered Shells” and build-to-suit assets in power-advantaged markets, beginning with the Permian Basin, which benefits from energy abundance, regulatory clarity, and fiber connectivity.

Current wording

The Company is a vertically-integrated developer and operator of next-generation digital infrastructure and integrated power assets accelerating speed-to-power for advanced artificial intelligence (“AI”) hyperscalers. In the second half of 2025, we executed a strategic pivot from our legacy natural gas operations to focus exclusively on developing data center campuses where power, land, and connectivity can be assembled and delivered on accelerated timelines. Our mission is to deliver speed-to-power by converging behind-the-meter power flexibility with data center development capabilities. Our primary strategy is to aggregate and entitle “Powered Land” and to develop “Powered Shells” and build-to-suit assets in power-advantaged markets, beginning with the Permian Basin, which benefits from energy abundance, regulatory clarity, and fiber connectivity.

Previous wording

We are initially focused on our flagship project, TCDC, a 438-acre campus in Ector County, Texas, designed to support over 1 GW of potential compute capacity through phased development, with projected power delivery beginning as early as the end of 2027. We believe our proximity to major natural gas pipelines, fiber networks and CO2 pipelines will provide us with the ability to serve our customers lower transmission costs and best-in-class uptime for purposes of reliably generating AI compute to capitalize on the AI revolution. We intend to execute through partnering across engineering, construction, procurement, power generation and sustainability with a world-class developer partner to provide our hyperscaler tenants with certainty of execution and speed-to-power.

Current wording

We are initially focused on our flagship project, Texas Critical Data Centers LLC (“TCDC”), a 493-acre campus in Ector County, Texas, designed to support over 1 gigawatt (“GW”) of potential compute capacity through phased development, with projected power delivery beginning as early as the end of 2027. We believe our proximity to major natural gas pipelines, fiber networks and CO2 pipelines will provide us with the ability to serve our customers lower transmission costs and best-in-class uptime for purposes of reliably generating AI compute to capitalize on the AI revolution. We intend to execute through partnering across engineering, construction, procurement, power generation and sustainability with a world-class developer partner to provide our hyperscaler tenants with certainty of execution and speed-to-power.

Previous wording

On January 16, 2026, we acquired the remaining 50% member interest in TCDC, from SharonAI, pursuant to the Membership Interest Purchase Agreement (the “SharonAI Purchase Agreement”), dated as of January 16, 2026, by and between the Company and SharonAI, for an aggregate purchase price of $70 million, of which (a) $10 million is payable in cash, (b) $10 million is payable in equity securities to be issued in connection with the Company’s next equity financing transaction, and (c) $50 million is payable in the form of a senior secured convertible promissory note (the “Convertible Note”). The entirety of the acquisition consideration is subject to a 19.99% ownership cap. On March 31, 2026, the Company paid SharonAI $9.85 million in cash and issued to SharonAI 2,091,351 shares of common stock (at a price per share of $4.78) in satisfaction of the Company’s obligation to pay $10 million in equity securities under the Membership Interest Purchase Agreement. On April 24, 2026, the Company paid $50 million principal plus accrued interest in cash in satisfaction of its obligations under the Convertible Note.

Current wording

On January 16, 2026, we acquired the remaining 50% membership interest in TCDC, from SharonAI, Inc. (“SharonAI”), pursuant to the Membership Interest Purchase Agreement (the “SharonAI Purchase Agreement”), dated as of January 16, 2026, by and between the Company and SharonAI, for an aggregate purchase price of $70 million, of which (a) $10 million is payable in cash, (b) $10 million is payable in equity securities to be issued in connection with the Company’s next equity financing transaction, and (c) $50 million is payable in the form of a senior secured convertible promissory note (the “SharonAI Note”). The entirety of the acquisition consideration is subject to a 19.99% ownership cap. The Company paid SharonAI $10.0 million in cash and issued to SharonAI 2,091,351 shares of common stock (at a price per share of $4.78) in satisfaction of the Company’s obligation to pay $10 million in equity securities under the SharonAI Purchase Agreement. On April 24, 2026, the Company paid $50 million principal plus accrued interest in cash in satisfaction of its obligations under the SharonAI Note.

Previous wording

The Investor also waived certain provisions of that certain Securities Purchase Agreement, dated December 6, 2024, between the Company and the Investor (the “Securities Purchase Agreement”), relating to restrictions on Variable Rate Transactions (as defined in the Securities Purchase Agreement), additional issuances of equity securities, redemption or payment of cash dividends, and stock splits. The parties agreed to certain administrative updates to the Securities Purchase Agreement including cashless exercise after 75 days from the effective date of the Amended Waiver (solely to the extent a resale registration statement is not effective), registration rights obligations, the provision of a transfer agent instruction letter, and a forced exercise provision granting the Company the right to force exercise of the Investor Warrants assuming certain conditions are met.

Current wording

The Investor also waived certain provisions of that certain Securities Purchase Agreement, dated December 6, 2024, between the Company and the Investor (together with the First Tranche Warrant and Second Tranche Warrant issued on December 6, 2024, the “Warrant Purchase Agreement”), relating to restrictions on Variable Rate Transactions (as defined in the Warrant Purchase Agreement), additional issuances of equity securities, redemption or payment of cash dividends, and stock splits. The parties agreed to certain administrative updates to the Warrant Purchase Agreement including cashless exercise after 75 days from the effective date of the Amended Waiver (solely to the extent a resale registration statement is not effective), registration rights obligations, the provision of a transfer agent instruction letter, and a forced exercise provision granting the Company the right to force exercise of the Investor Warrants assuming certain conditions are met.

Previous wording

We currently sell our natural gas and natural gas liquids to Cimmaron Midstream, formerly known as IACX, (“Cimmaron”) a processor, pursuant to that certain Marketing Agreement, at a price based on an index price from the purchaser, which expired on May 31, 2024. This agreement currently continues on a month-to-month basis unless and until terminated by the Company or the purchaser with a 30-day advance notice. IACX processes our gas for natural gas liquids and other usable components in its facilities. We receive value for our natural gas and any associated natural gas liquids as further defined as hydrocarbons pursuant to the Marketing Agreement. Although the Company produces helium alongside its natural gas, IACX will not compensate us for our helium produced under our existing contract. To date, we have not generated any revenue from the production of helium.

Current wording

We currently sell our natural gas and natural gas liquids to Cimmaron Midstream, formerly known as IACX, (“Cimmaron”) a processor, pursuant to that certain Marketing Agreement (the “Marketing Agreement”), at a price based on an index price from the purchaser, which expired on May 31, 2024. This Marketing Agreement currently continues on a month-to-month basis unless and until terminated by the Company or the purchaser with a 30-day advance notice. Cimmaron processes our gas for natural gas liquids and other usable components in its facilities. We receive value for our natural gas and any associated natural gas liquids as further defined as hydrocarbons pursuant to the Marketing Agreement. Although the Company produces helium alongside its natural gas, Cimmaron will not compensate us for our helium produced under our existing contract. To date, we have not generated any revenue from the production of helium.

Previous wording

The Company reviews its deferred tax assets for recoverability and establishes a valuation allowance based on projected future taxable income, applicable tax strategies and the expected timing of the reversals of existing temporary differences. A valuation allowance is provided when it is more likely than not (likelihood of greater than 50 percent) that some portion or all the deferred tax assets will not be realized. The balance of the Company’s valuation allowance as of $12,389,779 and $10,003,463 as of March 31, 2026 and December 31, 2025, respectively.

Current wording

The Company reviews its deferred tax assets for recoverability and establishes a valuation allowance based on projected future taxable income, applicable tax strategies and the expected timing of the reversals of existing temporary differences. A valuation allowance is provided when it is more likely than not (likelihood of greater than 50 percent) that some portion or all the deferred tax assets will not be realized. The balance of the Company’s valuation allowance was $17,272,926 and $10,003,463 as of June 30, 2026 and December 31, 2025, respectively.

Previous wording

To provide readers with meaningful comparisons, the following analysis provides comparisons of the financial results for the three months ended March 31, 2026 and 2025. We analyze and explain the differences between periods in the specific line items of the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Current wording

To provide readers with meaningful comparisons, the following analysis provides comparisons of the financial results for the three and six months ended June 30, 2026 and 2025. We analyze and explain the differences between periods in the specific line items of the Consolidated Statements of Operations and Comprehensive (Loss) Income.

Previous wording

The following table summarizes the Company’s net audited consolidated revenues disaggregated by product category:

Current wording

The following table summarizes the Company’s net consolidated revenues disaggregated by product category:

Previous wording

Natural gas, net represented 91.3% of the revenue for the three months ended March 31, 2026, compared to 85.8% for the three months ended March 31, 2025, and increased $452,542 for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase in revenue was primarily due to $379,000 increase related to a $1.56 per Mcf increase in gas prices net of processing and transportation, and $74,000 increase related to 51 MMcf increase in gas sales volumes.

Current wording

Natural gas, net decreased $176,131 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The decrease in revenue was primarily due to a $0.77 per Mcf decrease in gas prices net of processing and transportation and a 31 MMcf decrease in gas sales volumes.

Previous wording

Natural gas liquids (“NGLs”) represented 8.7% of the revenue for the three months ended March 31, 2026, compared to 14.2% for the three months ended March 31, 2025, and increased $23,356 for the three months ended March 31, 2026 compared to the three months ended March 31, 2025. The increase in revenue was primarily due to $38,000 increase related to a 638 per Bbl increase in NGL sales volumes, partially offset by $14,000 decrease related to $10.15 Bbl decrease in NGL prices.

Current wording

Natural gas liquids (“NGLs”) increased $3,514 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase in revenue was primarily due a $68.57 per barrel increase in NGL prices, partially offset by a 700 barrel decrease in NGL sales volumes.

Previous wording

The Company experienced an overall increase in operating expenses of $6,014,757 for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025.

Current wording

The Company experienced an overall increase in operating expenses of $14,845,117 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025.

Previous wording

Impairment expenses increased $375,000 for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase in the first quarter of 2026 was due to impairment of the gas plant related to payments made towards the plan during the quarter ended March 31, 2026 and the change in the Company’s strategy that occurred in late 2025.

Current wording

Lease operating expenses decreased $126,025 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. Impairment expenses increased $250,000 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase was due to impairment of the gas plant related to payments made towards the plant during the three months ended June 30, 2026 and the change in the Company’s strategy that occurred in late 2025.

Previous wording

Depletion, depreciation, amortization and accretion increased $176,451 for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. The increase was primarily due to a $8,000 increase in accretion expense associated with asset retirement obligations, a $38,000 increase in depletion expense due to a 51 MMcf increase in gas sales volumes, and a $8,000 increase in depreciation expenses associated with the purchase of equipment during 2025 and 2026, partially offset by a $123,000 decrease in depletion expense related to a decrease in the depletion rate.

Current wording

Depletion, depreciation, amortization and accretion increased $162,332 for the three months ended June 30, 2026 as compared to the three months ended June 30, 2025. The increase was primarily attributable to higher accretion expense associated with asset retirement obligations, partially offset by lower depletion expense due a decrease in the depletion rate.

Previous wording

Interest income decreased $3,794 for the three months ended March 31, 2026, as compared to the three months ended March 31, 2025. This interest income relates to interest earned on the Company’s certificates of deposit.

Current wording

Interest income increased $33,756 for the three months ended June 30, 2026, as compared to the three months ended June 30, 2025, respectively. This interest income relates to interest earned on higher cash equivalents on hand.

Previous wording

Change in fair value of derivative asset decreased $15,403 as the company paid off the associated debt instrument in the quarter ended December 31, 2025.

Current wording

Change in fair value of derivative asset decreased $156,659 as the company paid off the associated debt instrument in the quarter ended December 31, 2025.

Previous wording

On January 23, 2026, we filed a shelf registration statement on Form S-3 (File No. 333-292892) with the SEC, which was declared effective on January 30, 2026 (the “Registration Statement”). The Registration Statement, which includes a base prospectus, allows us at any time to offer any combination of securities described in the prospectus in one or more offerings in an aggregate amount of up to $350 million. The Registration Statement is intended to provide us flexibility to conduct registered sales of our securities, subject to market conditions and our future capital needs. The terms of any future offering under the Registration Statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering. On April 10, 2026, we closed an underwritten public offering of 29,850,746 shares of common stock, at a price to the public of $3.35 per share, resulting in net proceeds to the Company of approximately $93.4 million pursuant to the Registration Statement. In connection with the underwritten public offering, the underwriters exercised their option to purchase an additional 4,477,611 shares of common stock at the public offering price, resulting in additional net proceeds of approximately $14 million.

Current wording

On January 23, 2026, we filed a shelf registration statement on Form S-3 (File No. 333-292892) with the SEC, which was declared effective on January 30, 2026 (the “Registration Statement”). The Registration Statement, which includes a base prospectus, allows us at any time to offer any combination of securities described in the prospectus in one or more offerings in an aggregate amount of up to $350 million. The Registration Statement is intended to provide us flexibility to conduct registered sales of our securities, subject to market conditions and our future capital needs. The terms of any future offering under the Registration Statement will be established at the time of such offering and will be described in a prospectus supplement filed with the SEC prior to the completion of any such offering.

Previous wording

From February through April 2026, we issued 5,171,540 shares of common stock underlying the First Tranche Warrant and 602,460 shares of common stock underlying the Second Tranche Warrant to the Investor at an exercise price of $2.00 per share for total proceeds of $11,348,000.

Current wording

From February through June 2026, we issued 5,171,540 shares of common stock underlying the First Tranche Warrant and 7,992,460 shares of common stock underlying the Second Tranche Warrant to the Investor at an exercise price of $2.00 per share for total gross proceeds of $26,328,000.

Previous wording

Subsequent to March 31, 2026, the Company strengthened its liquidity position through a combination of debt and equity financings. On April 8, 2026, TCDC, the Company’s wholly owned subsidiary, entered into a senior secured term loan facility providing for borrowings of up to $290.0 million, including an initial committed tranche of $20.0 million, which was fully funded on April 13, 2026. In addition, on April 10, 2026, the Company completed an underwritten public offering, resulting in net proceeds of approximately $93.4 million. In connection with the underwritten public offering, the underwriters exercised their option to purchase additional shares of common stock at the public offering price, resulting in additional net proceeds of approximately $14 million. The Company used the proceeds from the offering to repay outstanding borrowings under its senior secured convertible promissory note, and intends to use any remaining proceeds available for general corporate purposes.

Current wording

Additionally, during the three months ended June 30, 2026, the Company significantly strengthened its liquidity position. On April 8, 2026, TCDC, the Company’s wholly owned subsidiary, entered into the Term Loan Agreement providing for borrowings of up to $290.0 million, including an initial committed tranche of $20.0 million, which was fully funded on April 13, 2026. Access to additional amounts under the Term Loan Agreement beyond the initial committed tranche is subject to lender approval and the satisfaction of certain conditions. On April 10, 2026, we closed an underwritten public offering of 29,850,746 shares of common stock, at a price to the public of $3.35 per share, resulting in proceeds, net of underwriters’ discount and issuance costs, of approximately $93.4 million pursuant to the Registration Statement. In connection with the underwritten public offering, the underwriters exercised their option to purchase an additional 4,477,611 shares of common stock at the public offering price, resulting in additional net proceeds of approximately $14.1 million. The Company used a portion of the offering proceeds to repay in full the outstanding borrowings under the SharonAI Note.

Previous wording

We may also experience delays in construction that extend beyond our estimated development timeline. Prolonged development periods could increase project costs beyond budgeted amounts and reduce the availability of construction loans from project partners or third party financing sources during interim periods. Any such timing misalignments could necessitate additional bridge capital or contingency financing, which may not be available on acceptable terms, or at all. Furthermore, unanticipated events—such as permitting delays, failure to secure required regulatory approvals, or force majeure events—could result in liquidity shortfalls or force us to amend our capital plan.

Current wording

Despite our ability to leverage or use various sources of capital, other factors may impact our capital plan. For example, we may also experience delays in construction that extend beyond our estimated development timeline. Prolonged development periods could increase project costs beyond budgeted amounts and reduce the availability of construction loans from project partners or third party financing sources during interim periods. Any such timing misalignments could necessitate additional bridge capital or contingency financing, which may not be available on acceptable terms, or at all. Furthermore, unanticipated events—such as permitting delays, failure to secure required regulatory approvals, or force majeure events—could result in liquidity shortfalls or force us to amend our capital plan.

Previous wording

We had a cash balance of $2,224,771 as of March 31, 2026. We also had a working capital deficit of $57,951,239 as of March 31, 2026.

Current wording

We had a cash, cash equivalent and restricted cash of $84,821,390 as of June 30, 2026. We also had a working capital surplus of $82,879,767 as of June 30, 2026.

Previous wording

The Company’s future capital requirements will depend on many factors, including its rate of revenue growth and the timing and extent of expenditures to support sales, marketing, and infrastructure development. The Company currently expects to require approximately $73.7 million over the next twelve months, including up to $50.0 million payable by June 30, 2026 related to outstanding financing arrangements. The Company also expects to incur approximately $10.0 million in general and administrative expenses and approximately $3.9 million of other costs. Upon execution of binding term sheets or definitive agreements with data center users, these expected costs may increase materially.

Current wording

The Company’s future capital requirements will depend on many factors, including its future rate of revenue growth and the timing and extent of expenditures to support sales, marketing, and infrastructure development, including the buildout of data center capacity. The Company currently expects cash requirements of approximately $25 million to $30 million over the next twelve months. Upon execution of binding term sheets or definitive agreements with data center users, these expected expenditures may increase materially; the Company expects that any such increases would be funded through a combination of customer prepayments, additional borrowings under the term loan facility, equity offerings and cash on hand.

Previous wording

Cash flows for the three months ended March 31, 2026 and 2025

Current wording

Cash flows for the six months ended June 30, 2026 and 2025

Previous wording

Cash used in operating activities was $6,397,454 for the three months ended March 31, 2026, primarily driven by a net loss of $8,991,887. This was partially offset by non-cash adjustments, including stock-based compensation of $1,729,138, amortization of debt discount and debt issuance costs of $659,546, depletion, depreciation, amortization, and accretion of $374,860, and impairment expense of $375,000. Cash used in operating activities was also impacted by changes in working capital, including increases in accounts receivable of $670,472 and prepaid and other current assets of $123,496, partially offset by increases in accrued liabilities of $1,452,978 and accounts payable of $55,302.

Current wording

Cash used in operating activities was $10,879,659 for the six months ended June 30, 2026, primarily driven by a net loss of $31,266,599. This was partially offset by non-cash adjustments, including stock-based compensation of $14,169,558, amortization of debt discount and debt issuance costs of $1,021,742, depletion, depreciation, amortization, and accretion of $769,210, and impairment expense of $625,000, respectively. Cash used in operating activities was also impacted by changes in working capital, including increases in accounts receivable of $296,920 and prepaid and other current assets of $795,981, partially offset by increases in accrued liabilities of $1,584,469 and accounts payable of $1,137,831.

Previous wording

Operating activities used cash of $2,830,194 for the three months ended March 31, 2025. Net loss of $3,320,256 was affected by depletion, depreciation, amortization, and accretion of $198,409, change in fair value of derivative asset of $15,403, and accrued interest on note payable and other liabilities of $42,515 and amortization of debt discount of $1,160,447, offset by change in fair value of derivative liability of $190,977 and interest income on investments and notes receivable of $15,380. Changes in operating assets and liabilities used $720,355 of cash for operating activities.

Current wording

Operating activities used cash of $4,679,487 for the six months ended June 30, 2025. Net loss of $6,926,260 was affected by depletion, depreciation, amortization, and accretion of $430,427, amortization of debt discount of $2,344,697 and accrued interest on note payable and other liabilities of $86,330, offset by change in fair value of derivative asset of $141,256, change in fair value of derivative liability of $91,703 and interest income on investments and notes receivable of $26,328. Changes in operating assets and liabilities used $355,394 of cash for operating activities.

Previous wording

Investing activities used cash of $6,480,435 for the three months ended March 31, 2026, related to the purchase of TCDC, purchase of property, plant and equipment and the purchase of land.

Current wording

Investing activities used cash of $877,546 for the six months ended June 30, 2025, related to the purchase of property, plant and equipment of $802,546 and investment in joint venture of $75,000.

Previous wording

Financing activities provided cash of $3,487,593 for the three months ended March 31, 2025, primarily related to proceeds from exercise of warrants and proceeds from the convertible note, offset by repayment on convertible note and debt issuance costs.

Current wording

Financing activities provided cash of $9,703,114 for the six months ended June 30, 2025, related to proceeds from the convertible note of $2,790,000 and issuance of common stock of $8,413,964 offset by repayment on the convertible notes of $1,416,667 and debt issuance costs of $84,183.

Previous wording

The Company continually assesses both positive and negative evidence for recoverability of its deferred tax assets and based on projected future taxable income, applicable tax strategies and the expected timing of the reversals of existing temporary differences, the Company maintained a valuation allowance of $12,389,779 for the three months ended March 31, 2026. There can be no assurance that facts and circumstances will not materially change and require the Company to revise this valuation allowance in a future period.

Current wording

The Company continually assesses both positive and negative evidence for recoverability of its deferred tax assets and based on projected future taxable income, applicable tax strategies and the expected timing of the reversals of existing temporary differences, the Company maintained a valuation allowance of $17,272,926 as of June 30, 2026. There can be no assurance that facts and circumstances will not materially change and require the Company to revise this valuation allowance in a future period.

Previous wording

The Company, as a lessee of oil and gas properties, is subject to various federal, provincial, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. There can be no assurance, however, that current regulatory requirements will not change, or past noncompliance with environmental laws will not be discovered on the Company’s properties.

Current wording

The Company, as a lessee of oil and gas properties, is subject to various federal, provincial, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. There can be no assurance, however, that current regulatory requirements will not change, or past noncompliance with environmental laws will not be discovered on the Company’s properties which may, in turn, require further remediation efforts.