Some statements contained in this Report may constitute “forward-looking statements” for purposes of United States federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this report may include, for example, statements about:
| ● | our expectations around the performance of our business; |
| ● | our potential ability to obtain additional financing; |
| ● | the level of production on our properties; |
| ● | overall and regional supply and demand factors, delays, or interruptions of production; |
| ● | our public securities’ potential liquidity and trading; |
| ● | future operating results. |
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SUMMARY OF SIGNIFICANT RISKS AFFECTING OUR COMPANY
Our business is subject to multiple risks and uncertainties, as more fully described in “Risk Factors” and elsewhere in this Report. We urge you to read the disclosures under the caption “Risk Factors” and this Report in full. Our significant risks may be summarized as follows:
| ● | Our producing properties are located in the Permian Basin, making it vulnerable to risks associated with operating in a single geographic area. |
| ● | Title to the properties in which we acquire an interest may be impaired by title defects. |
| ● | We depend on various services for the development and production activities on the properties we operate. Substantially all our revenue is derived from these producing properties. A reduction in the expected number of wells to be developed on our acreage by or our failure to develop and operate the wells on our acreage could have an adverse effect on our results of operations and cash flows adequately and efficiently. |
| ● | Our identified development activities are susceptible to uncertainties that could materially alter the occurrence or timing of our development activities. |
| ● | Acquisitions and development of our leases will require substantial capital, and we may be unable to obtain needed capital or financing on satisfactory terms or at all. |
| ● | We currently plan to enter hedging arrangements with respect to the production of crude oil, and possibly natural gas which is a smaller portion of the reserves. |
| ● | Our estimated reserves are based on many assumptions that may turn out to be inaccurate. Any material inaccuracies in these reserve estimates or underlying assumptions will materially affect the quantities and present value of its reserves. |
| ● | We believe we currently have ineffective internal control over our financial reporting. |
| ● | A substantial majority of our revenues from crude oil and gas producing activities are derived from our operating properties that are based on the price at which crude oil and natural gas produced from the acreage underlying our interests are sold. |
| ● | If commodity prices decrease to a level such that our future undiscounted cash flows from our properties are less than their carrying value, we may be required to take write-downs of the carrying values of our properties. |
| ● | The unavailability, high cost or shortages of rigs, equipment, raw materials, supplies or personnel may restrict or result in increased costs to develop and operate our properties. |
| ● | The marketability of crude oil and natural gas production is dependent upon transportation and processing and refining facilities, which we cannot control. |
| ● | Drilling for and producing crude oil and natural gas are high-risk activities with many uncertainties that may materially adversely affect our business, financial condition, results of operations and cash flows. |
| ● | Crude oil and natural gas operations are subject to various governmental laws and regulations. |
| ● | Federal and state legislative and regulatory initiatives relating to hydraulic fracturing could cause us to incur increased costs, additional operating restrictions or delays and have fewer potential development locations. |
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