Risk Factors Update Summary

• Total costs to restart production estimated at $197,000,000, with potential for significant increases.
• The Inflation Reduction Act of 2022 imposes a methane emissions charge starting at $900 per ton, increasing to $1,500 in 2026.
• Loss of key personnel could cause default under existing indebtedness agreement, requiring James C. Flores to remain actively involved.
• Added exemptions from holding non-binding advisory votes on executive compensation. Shareholders may lack access to important information.
• Uncertainty if sufficient cash available to restart production of SYU Assets without generating revenue.
• The IRA provides incentives for renewable energy, clean fuels, and electric vehicles, potentially decreasing demand.
• Failure to restart production by January 1, 2026, may result in EM exercising reassignment option.
• Failure to attract or retain qualified personnel may negatively impact business and results of operations.
• Emerging growth company status will end upon reaching $1.235 billion in annual revenue.
• Increased costs for decommissioning and financial assurance due to uncertain estimates and changing factors.
• Increased competition with larger companies may adversely impact business activities, financial condition, and results.
• Restrictive covenants in Term Loan Agreement could limit growth and ability to engage in business activities.
• Title defects may render leases worthless, affecting results of operations and financial condition.
• Volatility in oil, natural gas, and NGL prices greatly affects cash flow and financial condition.
• Potential inability to fund capital requirements due to inadequate availability of funds on acceptable terms.
• Estimated petroleum quantities classified as "contingent resources" may not be recovered or reclassified.
• Investors may find Common Stock less attractive if exemptions are utilized, potentially impacting trading prices.
• Potential negative impact on liquidity and operations due to increased collateral requirements for bonding arrangements.
• Potential material adverse effects if unable to raise additional capital for operations and repairs.
• Material weakness identified in internal control over financial reporting, affecting accurate and timely financial statements.
• Risks associated with developing and producing oil, gas, and NGLs in offshore waters.
• Increased scrutiny by SEC and government agencies on securities holders due to de-SPAC transaction.
• Dependence on third parties for transportation services subject to complex laws and regulations.
• Potential for significant fluctuations in stock price due to market factors and changes in laws and regulations.