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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant To Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~September~~March 3031, ~~2022~~2023

☐ Transition Report Under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to __________

Commission File Number: 000-52690

PETROLIA ENERGY CORPORATION

(Exact name of registrant as specified in its charter)

Texas

86-1061005

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

710 N. Post Oak Road, Suite 400

Houston, Texas

77024

(Address of principal executive offices)

(Zip Code)

(832-) 723-1266)

(~~Registrant’s~~Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None.

Indicate by check mark whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the issuer was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days. Yes ☐☒ No ☒☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐☒ No ☒☐

Indicate by check mark whether the registrant is large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See definition of “large accelerated filer,” accelerated filer” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer ☐	Accelerated filer ☐

Non-accelerated filer ☒	Smaller Reporting Company ☒

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

State the number of shares outstanding of each of the issuer’s classes of common equity, as of the latest practicable date: 176,988,322 shares of common stock as of ~~March~~May 2015, 2023.

TABLE OF CONTENTS

		Page
Forward-Looking Statements
Part I Financial Information
Item 1.	Financial Statements	34
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures ~~about~~About Market Risk	2526
Item 4.	Controls and Procedures	2526
Part II Other Information
Item 1.	Legal Proceedings	2527
Item 1A.	Risk Factors	2729
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2829
Item 3.	Defaults Upon Senior Securities	2829
Item 4.	Mine Safety Disclosures	2829
Item 5.	Other Information	2829
Item 6.	~~Exhibits~~Exhibit Index	2829
SIGNATURES		2930
EXHIBIT INDEX		30

FORWARD-LOOKING STATEMENTS

This Report contains statements which, to the extent that they do not recite historical fact, constitute forward-looking statements. These statements can be identified by the fact that they do not relate strictly to historical or current facts and may include the words “may,” “will,” “could,” “should,” “would,” “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan” or other words or expressions of similar meaning. We have based these forward-looking statements on our current expectations about future events. The forward-looking statements include statements that reflect management’s beliefs, plans, objectives, goals, expectations, anticipations and intentions with respect to our financial condition, results of operations, future performance and business, including statements relating to our business strategy and our current and future development plans.

The potential risks and uncertainties that could cause our actual financial condition, results of operations and future performance to differ materially from those expressed or implied in this report include:

	●	The price of crude oil;
	●	The amount of production from oil wells in which we have an interest;
	●	Lease operating expenses;
	●	General economic conditions; and
	●	Other factors disclosed in this Report.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. Many factors discussed in this report, some of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from the forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this Report as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read the matters described in “Risk Factors” and the other cautionary statements made in this Report as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

PART I: Financial Information

Item 1. Financial Statements

PETROLIA ENERGY CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

	September 30, 2022			December 31, 2021
	March 31, 2023			December 31, 2022
	(unaudited)			(audited)
ASSETS
Current assets
Cash	$	1,~~619~~012,~~253~~859		$	141,~~058~~425,335
Accounts receivable		363			5,942
Held-for-trading securities		403,458			—
Other current assets		6,397			5,641
Accounts receivable		263			290
Total current assets		1,626,013			25,641
Other current assets		641			5,641
Property & equipment
Total current assets		1,417,221			1,431,266
Property and equipment
Oil and gas, on the basis of full cost accounting
Evaluated properties		6,~~609~~639,~~918~~933			6,~~797~~638,~~025~~037
Furniture, equipment & software		155,293			155,293
Less accumulated depreciation and depletion		(~~730~~852,~~320~~303	)		(~~603~~807,~~135~~047	)
Net property and equipment		65,~~034~~942,~~891~~923			65,~~349~~986,~~183~~283
Other assets
Operating lease right-of-use asset		421,~~715~~706			1223,~~821~~086
Other assets		1,293,503			1,450,841
Notes receivable		221,680			376,550
Total Assets	$	8,959,122		$	7,838,486
Other assets		966,010			956,928
LIABILITIES & STOCKHOLDERS DEFICIT
Total Assets	$	8,569,540		$	8,774,113
LIABILITIES & STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	2283,~~776,678~~791		$	~~320~~223,~~088~~453
Accounts payable – related parties		72,~~181~~839,950			572,~~363~~466,155
Operating lease liability – current		4,987			13,909
Accounts payable		2,839,950			2,466,155
Accrued liabilities		1,575,117			1,149,012
Operating lease liability – current		5,656			5,482
Accrued liabilities – related parties		930,084			862,158
Accrued liabilities		950,797			1,151,328
Notes payable, current portion		3,208,887			3,438,162
Accrued liabilities – related parties		1,892,584			1,536,247
Notes payable – related parties, current portion		774,560			779,373
Notes payable, current portion		272,231			398,837
Total current liabilities		9,277,494			6,620,065
Notes payable – related parties, current portion		3,280,702			3,460,815
Asset retirement obligations		2,290,757			2,257,027
Notes payable, current portion		3,280,702			3,460,815
Derivative liability		741			22,554
Total current liabilities		9,525,711			9,242,317
Total Liabilities	$	11,568,992		$	8,899,646
Asset retirement obligations		2,350,530			2,301,335
Operating lease liability		16,325			17,714
Total Liabilities	$	11,892,566		$	11,561,366
Stockholders’ Deficit
Preferred stock, $0.001 par value, 1,000,000 shares authorized; 199,100 shares issued and outstanding	$	199		$	199
Preferred Series B stock, no par value; 3 shares authorized; 3 and 0 shares issued and outstanding		152,397			152,397
Preferred Series B stock, no par value; 3 shares authorized; 3 and 3 shares issued and outstanding		152,397			152,397
Preferred Series C stock, $0.10 par value, 11,000 shares authorized, 11,000 and 8,500 shares issued and outstanding		1,100			850
Preferred Series C stock, $0.10 par value, 50,000 shares authorized, 11,000 and 11,000 shares issued and outstanding		1,100			1,100
Preferred stock, value		1,100			~~850~~1,100
Common stock, $0.001 par value; 400,000,000 shares authorized; 176,988,322 and 176,988,322 shares issued and outstanding		176,988			176,988
Additional paid in capital		60,~~243~~244,~~573~~913			60,~~216~~244,~~722~~255
Accumulated other comprehensive income		(~~342~~354,~~396~~102	)		(~~269~~349,~~155~~065	)
Accumulated deficit		(6263,~~841~~544,~~731~~521	)		(6163,~~339~~013,~~161~~127	)
Total Stockholders’ Deficit		(23,~~609~~323,~~870~~026	)		(12,~~061~~787,~~160~~253	)
Total Liabilities and Stockholders’ Deficit	$	8,~~959~~569,~~122~~540		$	78,~~838~~774,~~486~~113

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PETROLIA ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)

	Three months ended September 30, 2022			Three months ended September 30, 2021			Nine months ended September 30, 2022			Nine months ended September 30, 2021
	Three months ended March 31, 2023			Three months ended March 31, 2022
Oil and gas sales
Oil and gas sales	$	21,~~158~~376,~~110~~317		$	1,~~723~~836,~~706~~360		$	~~5,132,360~~		$	~~4,054,313~~
Total Revenue		21,~~158~~376,~~110~~317			1,~~723~~836,~~706~~360			~~5,132,360~~			~~4,054,313~~
Operating expenses
Lease operating expense		21,~~455~~659,~~765~~480			1,~~578~~275,~~290~~837			~~5,354,001~~			~~3,726,759~~
Production tax		—			1438			~~438~~			~~1,164~~
General and administrative expenses		~~192~~260,~~886~~837			~~154~~147,~~554~~846			~~490,489~~			~~676,510~~
Depreciation, depletion and amortization		5344,~~755~~806			~~142~~52,~~456~~516			~~166,953~~			~~578,880~~
Asset retirement obligation accretion		4348,~~895~~205			9342,~~787~~478			~~129,793~~			~~275,511~~
Total operating expenses		2,~~746~~013,~~301~~328			1,~~969~~519,~~088~~115			~~6,141,674~~			~~5,258,824~~
Loss from operations		(588,191	)		(245,382	)		(1,009,314	)		(1,204,511	)
Gain (loss) from operations		(637,011	)		317,245
Other income (expenses)
Interest expense		(~~131~~109,~~703~~885	)		(~~148~~124,~~576~~937	)		~~(379,720~~	)		~~(478,526~~	)
Other income (expense)		—			56,680			5,521			56,680
Other income		14,019			5,521
Change in fair value of derivative liabilities		4,474			264,794			21,813			160,189
Unrealized gain (loss)		248,451			—
Total other income (expenses)		(127,229	)		172,898			(352,386	)		(261,657	)
Change in fair value of derivative liabilities		—			17,485
Net loss before taxes		(715,420	)		(72,484	)		(1,361,700	)		(1,466,168	)
Total other income (expenses)		152,585			(101,931	)
Series A Preferred Dividends		(44,797	)		(44,825	)		(134,392	)		(134,393	)
Net income (loss) before taxes		(484,426	)		215,314
Series C Preferred Dividends		(2,218	)		—			(6,478	)		—
Series A Preferred Dividends		(44,798	)		(44,797	)
Net Loss Attributable to Common Stockholders		(762,435	)		(117,309	)		(1,502,570	)		(1,600,561	)
Series C Preferred Dividends		(2,170	)		(2,066	)
Loss per share
Net income (loss) attributable to common stockholders		(531,394	)		168,451
(Basic and fully diluted)	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.01	)
Other comprehensive income, net of tax
Weighted average number of common shares outstanding, basic & diluted		176,988,322			176,988,322			176,988,322			174,910,384
Foreign currency translation adjustments		(5,037	)		29,857
Other comprehensive income, net of tax
Comprehensive income (loss)		(536,431	)		198,308
Foreign currency translation adjustments		(40,339	)		48,814			(73,241	)		11,409
Gain (loss) per share
Comprehensive income (loss)	$	(802,774	)	$	(68,495	)	$	(1,575,811	)	$	(1,589,152	)
(Basic & diluted)		(0.00	)		0.00
Weighted average number of common shares outstanding, basic & diluted		176,988,322			176,988,322

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PETROLIA ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(Unaudited)

	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		capital		Issued		income			deficit			(deficit)
	Preferred stock Series A				Preferred stock Series B				Preferred stock Series C				Common stock				Additional paid-in		Shares to be		Accumulated Other Comprehensive			Accumulated			Stockholders’ equity
	Shares		Amount		Shares		Amount		Shares		Amount		Shares		Amount		capital		Issued		income			deficit			(deficit)
Balance at December 31, 2020		199,100	$	199		—	$	—		—	$	—		168,696,226	$	168,696	$	59,044,519	$	—	$	(266,432	)	$	(63,088,096	)	$	(4,141,114	)
Stock based compensation		—		—		—		—		—		—		—		—		57,047		—		—			—			57,047
Series A preferred dividends		—		—		—		—		—		—		—		—		—		—		—			(134,393	)		(134,393	)
Warrants issued as financing fee		—		—		—		—		—		—		—		—		17,338		—		—			—			17,338
Common shares issued for conversion of debt		—		—		—		—		—		—		2,700,000		2,700		86,400		—		—			—			89,100
Common shares issued for settlement of related party fee		—		—		—		—		—		—		5,592,096		5,592		158,895		—		—			—			164,487
Warrants issued for settlement of loans		—		—		—		—		—		—		—		—		200,378		—		—			—			200,378
Gain on modification of related party debt		—		—		—		—		—		—		—		—		181,791		—		—			—			181,791
Gain on issuance of shares for settlement of accrued related party fees		—		—		—		—		—		—		—		—		373,556		—		—			—			373,556
Other comprehensive income (loss)		—		—		—		—		—		—		—		—		—		—		11,409			—			11,409
Net loss		—		—		—		—		—		—		—		—		—		—		—			(1,466,168	)		(1,466,168	)
Balance at September 30, 2021		199,100	$	199		—	$	—		—	$	—		176,988,322	$	176,988	$	60,119,924	$	—	$	(255,023	)	$	(64,688,657	)	$	(4,646,569	)
Balance at December 31, 2021		199,100	$	199		3	$	152,397		8,500	$	850	$	176,988,322	$	176,988	$	60,216,722	$	—	$	(269,155	)	$	(61,339,161	)	$	(1,061,160	)
Series A preferred dividends		—		—		—		—		—		—		—		—		—		—		—			(~~134~~44,~~392~~797	)		(~~134~~44,~~392~~797	)
Series C preferred dividends		—		—		—		—		—		—		—		—		—		—		—			(62,~~478~~066	)		(62,~~478~~066	)
Preferred Series C issued for cash		—		—		—		—		2,500		250		—		—		24,750		—		—			—			25,000
Warrants issued as financing fee		—		—		—		—		—		—		—		—		~~2,101~~717		—		—			—			~~2,101~~717
Other comprehensive income (loss)		—		—		—		—		—		—		—		—		—				~~(73~~29,~~241~~857	)		—			~~(73~~29,~~241~~857	)
Net loss		—		—		—		—		—		—		—		—		—		—		—			(1,361,700	)		(1,361,700	)
Net income		—		—		—		—		—		—		—		—		—		—		—			215,314			215,314
Balance at September 30, 2022		199,100	$	199		3	$	152,397		11,000	$	1,100	$	176,988,322	$	176,988	$	60,243,573	$	—	$	(342,396	)	$	(62,841,731	)	$	(2,609,870	)
Balance at March 31, 2022		199,100	$	199		3	$	152,397		11,000	$	1,100	$	176,988,322	$	176,988	$	60,242,189	$	—	$	(239,298	)	$	(61,170,710	)	$	(837,135	)
Balance at December 31, 2022		199,100	$	199		3	$	152,397		11,000	$	1,100	$	176,988,322	$	176,988	$	60,244,255	$	—	$	(349,065	)	$	(63,013,127	)	$	(2,787,253	)
Series A preferred dividends		—		—		—		—		—		—		—		—		—		—		—			(44,798	)		(44,798	)
Series C preferred dividends		—		—		—		—		—		—		—		—		—		—		—			(2,170	)		(2,170	)
Warrants issued as financing fee		—		—		—		—		—		—		—		—		658		—		—			—			658
Other comprehensive income (loss)		—		—		—		—		—		—		—		—		—				(5,037	)		—			(5,307	)
Net income		—		—		—		—		—		—		—		—		—		—		—			(484,426	)		(484,426	)
Balance at March 31, 2023		199,100	$	199		3	$	152,397		11,000	$	1,100	$	176,988,322	$	176,988	$	60,244,913	$	—	$	(354,102	)	$	(63,544,521	)	$	(3,323,026	)

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PETROLIA ENERGY CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine months ended September 30, 2022			Nine months ended September 30, 2021
	Three months ended March 31, 2023			Three months ended March 31, 2022
Cash Flows from Operating Activities
Net gain (loss)	$	(1484,~~361,700~~426	)	$	(1215,~~466,168~~314	)
Adjustment to reconcile net gain (loss) to net cash provided by (used in) operating activities:
Depletion, depreciation and amortization		~~166~~44,~~953~~806			~~578~~52,~~880~~516
Asset retirement obligation accretion		~~129~~48,~~793~~205			~~275~~42,~~511~~478
Operating lease		~~(816~~165	)		(~~2,791~~272	)
Amortization of debt discount		4113,~~572~~857			~~170~~13,~~507~~857
Change in fair value of derivative liabilities		(21,813	)		(160,189	)
Unrealized (gain) loss		(248,451	)
Stock-based compensation expense		—			57,047
Change in fair value of derivative liabilities		—			(17,485	)
Warrants issued as financing fees		~~2,101~~658			~~17,338~~717
Forgiveness of PPP loan		—			(56,680	)
Changes in operating assets and liabilities
Accounts receivable		~~5,565~~27			(~~801~~223,688	)
Other current assets		~~(756~~374	)		~~24,779~~(756	)
Other assets		48(7,~~422~~022	)		—11,419
Accounts payable		260,~~482,829~~295			1(68,~~029,530~~892	)
Accounts payable – related parties		(1371,~~407~~796	)		~~(787~~2,~~837~~331	)
Accrued liabilities		~~230~~(18,~~870~~466	)		(36,~~048~~568	)
Accrued liabilities – related parties		~~130~~125,~~417~~225			~~320~~54,~~342~~525
Net cash flows from operating activities		1,852,030			(3,580	)
Net cash flows provided by (used in) operating activities		(92,957	)		75,496
Cash Flows from Investing Activities
Cash flows from investing activities		—			—
Cash flows provided by (used in) investing activities		—			—
Cash Flows from Financing Activities
Repayments on notes payable		(~~266~~140,~~826~~463	)		(~~116~~9,~~935~~456	)
Repayments on related party notes payable		(4180,~~813~~113	)		—
Series C preferred stock		~~25,000~~—			—25,000
Cash flows from financing activities		(246,639	)		(116,935	)
Cash flows provided by (used in) financing activities		(320,576	)		15,544
Changes in foreign exchange rate		~~(196~~1,057	)		~~(76~~38	)
Net change in cash		1(412,~~605,195~~476	)		~~(120~~91,~~591~~078	)
Cash at beginning of period		141,~~058~~425,335			~~155~~14,~~045~~058
Cash at end of period	$	1,~~619~~012,~~253~~859		$	34105,~~454~~136

SUPPLEMENTAL DISCLOSURES

	Nine months ended September 30, 2022			Nine months ended September 30, 2021
	Three months ended March 31, 2023			Three months ended March 31, 2022
SUPPLEMENTAL DISCLOSURES
Interest paid	$	~~115~~25,~~861~~768		$	~~239~~40,~~389~~544
Income taxes paid		—			—
NON-CASH INVESTING AND FINANCIAL DISCLOSURES
Series A preferred dividends accrued		~~134~~44,~~392~~798			~~134~~44,~~393~~797
Series C preferred dividends accrued		62,~~478~~170			—2,066
Conversion of related party debt and payables		—			527,520
Accrued dividends moved from accrued liabilities related party to accrued liabilities		212,444			—
Modification of related party debt		—			181,250
Debt converted to marketable securities		(157,315	)		—
Capitalized interest payable		—			204,488
Settlement of notes payable related party for common shares		—			135,000
Utikuma acquisition – extra cost triggered by WTI		—			787,250

The accompanying notes are an integral part of these condensed consolidated interim financial statements.

PETROLIA ENERGY CORPORATION

NOTES TO CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE ~~NINE~~THREE MONTHS ENDED ~~SEPTEMBER~~MARCH 3031, ~~2022~~2023 AND ~~2021~~2022

(Unaudited)

NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION:

Petrolia Energy Corporation (the “Company”, Petrolia” or “PEC”) is in the business of oil and gas exploration, development, and production.

Basis of Presentation

The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements for the year ended December 31, ~~2021~~2022, as reported in the Form 10-K, have been omitted.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

~~Leases~~Principles of consolidation

~~Leases~~The ~~are~~consolidated ~~classified~~financial asstatements ~~operating~~include ~~leases~~the oraccounts ~~financing~~of ~~leases based on~~ the ~~lease~~Company ~~term~~ and ~~fair~~its ~~value~~wholly-owned ~~associated~~subsidiaries, ~~with~~Askarii ~~the~~Resources ~~lease.~~and ~~The assessment~~Petrolia isCanada ~~done~~Corporation. atAll ~~lease~~significant ~~commencement~~intercompany balances and ~~reassessed~~transactions ~~only~~have ~~when~~been aeliminated ~~modification~~upon ~~occurs that is not considered a separate contract~~consolidation.

~~Lessee~~The ~~arrangements~~Company accounts for its investment in companies in which it has significant influence by the equity method. The Company’s proportionate share of earnings is included in earnings and added to or deducted from the cost of the investment.

~~Where~~Foreign ~~the~~currency Company is the lessee, leases classified as operating leases are recorded as lease liabilities based on the present value of minimum lease payments over the lease term, discounted using the lessor’s rate implicit in the lease or the Company’s incremental borrowing rate, if the lessor’s implicit rate is not readily determinable. The lease term includes all periods covered by renewal and termination options where the Company is reasonably certain to exercise the renewal options or not to exercise the termination options. Corresponding right-of-use assets are recognized consisting of the lease liabilities, initial direct costs and any lease incentive payments.translation

~~Lease~~The ~~liabilities~~functional ~~are~~and ~~drawn~~reporting ~~down~~currency asof ~~lease~~the ~~payments~~Company ~~are~~is ~~made~~the ~~and~~United ~~right-~~States dollar. The functional currencies of the Company’s wholly-~~use~~owned subsidiaries, ~~assets~~Askarii ~~are~~Resources ~~depreciated~~and ~~over~~Petrolia Canada Corporation are the ~~term~~United ofStates dollar and the ~~lease.~~Canadian ~~Operating~~dollar, ~~lease~~respectively. Transactions ~~expenses~~involving foreign currencies are ~~recognized~~converted oninto athe ~~straight-line~~Company’s ~~basis~~functional ~~over~~currency using the ~~term~~exchange rates in effect at the time of the ~~lease~~transactions. At the balance sheet date, ~~consisting~~monetary ofassets ~~interest~~and ~~accrued~~liabilities onthat are denominated in currencies other than the ~~lease~~Company’s functional ~~liability~~currency are translated using exchange rates at that date. Exchange gains and ~~depreciation~~ oflosses ~~the~~are ~~right-of-use~~included ~~asset~~in net earnings. On consolidation, Petrolia ~~adjusted~~Canada Corporation’s income statement amounts are translated at average exchange rates for ~~changes~~the inyear, ~~index~~while the assets and liabilities are translated at year-~~based~~end ~~variable~~exchange ~~lease~~rates. ~~payments~~Translation inadjustments ~~the~~are ~~period~~accumulated as a separate component of ~~change~~stockholders’ equity in other comprehensive income.

~~Lease payments on short-term operating leases with lease terms twelve months or less are expensed as incurred.~~8

7Management estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing these financial statements include depreciation of furniture, equipment and software, asset retirement obligations (“AROs”) (Note 10), income taxes, and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom.

Cash and cash equivalents

The Company considers all highly liquid instruments purchased with an original maturity date of three months or less to be cash equivalents. As of December 31, 2022, the Company did not hold any cash equivalents.

Oil and gas properties

The Company follows the full cost accounting method to account for oil and natural gas properties, whereby costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on nonproducing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to operations.

The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves.

The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful.

All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization.

Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the “cost ceiling”) equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the un-weighted arithmetic average of the first day of the month price for each month within the 12 -month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period.

Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that impairments of oil and gas properties could occur. In addition, it is reasonably possible that impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves.

Furniture, equipment, and software

Furniture, equipment, and software are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related asset, generally three to five years. Fully depreciated assets are retained in property and accumulated depreciation accounts until they are removed from service. Management performs ongoing evaluations of the estimated useful lives of the property and equipment for depreciation purposes. Maintenance and repairs are expensed as incurred. Management periodically reviews long-lived assets, other than oil and gas property, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value.

Derivative financial instruments

The Company’s derivative financial instruments consist of warrants with an exercise price denominated in the Company’s functional currency. These derivative financial instruments are measured at their fair value at the end of each reporting period. Changes in fair value are recorded in net income.

Asset retirement obligations

The Company records a liability for Asset Retirement Obligations (“AROs”) associated with its oil and gas wells when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of oil and gas properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value.

Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement.

Debt issuance costs

Costs incurred in connection with the issuance of long-term debt are presented as a direct deduction from the carrying value of the related debt and amortized over the term of the related debt.

Revenue recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers. This update creates a five-step model that requires entities to exercise judgment when considering the terms of the contract(s) which includes (i) identifying the contract(s) with the customer, (ii) identifying the separate performance obligations in the contract, (iii) determining the transaction price, (iv) allocating the transaction price to the separate performance obligations, and (v) recognizing revenue as each performance obligation is satisfied. The Company adopted this standard on a modified retroactive basis on January 1, 2018. No financial statement impact occurred upon adoption.

Revenue from contracts with customers

The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company expects to receive in exchange for those products.

Performance obligations and significant judgments

The Company sells oil and natural gas products in the United States through a single reportable segment. The Company enters into contracts that generally include one type of distinct product in variable quantities and priced based on a specific index related to the type of product.

The oil and natural gas is typically sold in an unprocessed state to processors and other third parties for processing and sale to customers. The Company recognizes revenue at a point in time when control of the oil or natural gas passes to the customer or processor, as applicable, discussed below. For oil sales, control is typically transferred to the customer upon receipt at the wellhead or a contractually agreed upon delivery point. Under our natural gas contracts with processors, control transfers upon delivery at the wellhead or the inlet of the processing entity’s system. For our other natural gas contracts, control transfers upon delivery to the inlet or to a contractually agreed upon delivery point. In the cases where the Company sells to a processor, management has determined that the Company is the principal in the arrangement and the processors are customers. The Company recognizes the revenue in these contracts based on the net proceeds received from the processor.

Transfer of control drives the presentation of transportation and gathering costs within the accompanying consolidated statements of operations. Transportation and gathering costs incurred prior to control transfer are recorded within the transportation and gathering expense line item on the accompanying consolidated statements of operations, while transportation and gathering costs incurred subsequent to control transfer are recorded as a reduction to the related revenue.

A portion of our product sales are short-term in nature. For those contracts, the Company uses the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 exempting us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less.

For our product sales that have a contract term greater than one year, the Company has utilized the practical expedient in ASC 606-10-50-14(a) which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to an unsatisfied performance obligation. Under these sales contracts, each unit of product represents a separate performance obligation; therefore, future volumes are unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required. The Company has no unsatisfied performance obligations at the end of each reporting period.

Management does not believe that significant judgments are required with respect to the determination of the transaction price, including any variable consideration identified. There is a low level of uncertainty due to the precision of measurement and use of index-based pricing with predictable differentials. Additionally, any variable consideration identified is not constrained.

Stock-based compensation

The Company accounts for stock-based compensation to employees in accordance with FASB ASC 718, Stock-based compensation. Stock-based compensation to employees is measured at the grant date, based on the fair value of the award, and is recognized as expense over the requisite employee service period. The Company accounts for stock-based compensation to other than employees in accordance with FASB ASC 505-50. Equity instruments issued to other than employees are valued at the earlier of a commitment date or upon completion of the services, based on the fair value of the equity instruments, and are recognized as expense over the service period. The Company estimates the fair value of stock-based payments using the Black-Sholes Option Pricing Model for common stock options and warrants and the closing price of the Company’s common stock for common share issuances. The Company may grant stock to employees and non-employees in exchange for goods, services or for settlement of liabilities. Shares granted to employees in exchange for goods, services or settlement of liabilities are measured based on the fair value of the shares issued. Shares granted to non-employees in exchange for goods or services are measured based on the fair value of the consideration received or the fair value of the shares issued, whichever is more reliably measurable.

Income taxes

Income taxes are accounted for pursuant to ASC 740, Income Taxes, which requires recognition of deferred income tax liabilities and assets for the expected future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. The Company provides for deferred taxes on temporary differences between the financial statements and tax basis of assets using the enacted tax rates that are expected to apply to taxable income when the temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized.

Uncertain tax positions are recognized in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in the income tax provision. There are currently no unrecognized tax benefits that if recognized would affect the tax rate. There was no interest or penalties recognized for the three months ended March 31, 2023 and 2022.

The Company is required to file federal income tax returns in the United States and Canada, and in various state and local jurisdictions. The Company’s tax returns are subject to examination by taxing authorities in the jurisdictions in which it operates in accordance with the normal statutes of limitations in the applicable jurisdiction.

Earnings (loss) per share

Basic earnings (loss) per share have been calculated based on the weighted-average number of common shares outstanding. The treasury stock method is used to compute the dilutive effect of the Company’s share-based compensation awards. Under this method, the incremental number of shares used in computing diluted earnings per share (“EPS”) is the difference between the number of shares assumed issued and purchased using assumed proceeds. Diluted EPS amounts would include the effect of outstanding stock options, warrants, and other convertible securities if including such potential shares of common stock is dilutive. Basic and diluted earnings per share are the same in all periods presented as all outstanding instruments are anti-dilutive.

Concentration of credit risk

The Company is subject to credit risk resulting from the concentration of its oil receivables with significant purchasers. Three purchasers accounted for all of the Company’s oil sales revenues for 2023 and 2022. The Company does not require collateral. While the Company believes its recorded receivables will be collected, in the event of default the Company would follow normal collection procedures. The Company does not believe the loss of a purchaser would materially impact its operating results as oil is a fungible product with a well-established market and numerous purchasers.

At times, the Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management monitors the credit ratings and concentration of risk with these financial institutions on a continuing basis to safeguard cash deposits.

Fair Value of Financial Instruments

Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of ~~September~~March 3031, ~~2022~~2023, the amounts reported for cash, accrued interest and other expenses, ~~notes~~ notes payable, convertible notes, and derivative liability approximate the fair value because of their short maturities.

We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements.

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows:

	●	Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment;
	●	Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and
	●	Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows as of ~~September~~March 3031, ~~2022~~2023, and December 31,~~2021~~2022.

September 30, 2022	Level 1		Level 2		Level 3		Total
March 31, 2023	Level 1		Level 2		Level 3		Total
Derivative liabilities		—		—		741		741
ARO liabilities		—		—		2,350,530		2,350,530
ARO liabilities		—		—		2,290,757		2,290,757
December 31, 2022
December 31, 2021
ARO liabilities		—		—		2,301,335		2,301,335
Derivative liabilities		—		—		22,554		22,554
ARO liabilities		—		—		2,257,027		2,257,027

~~Gain~~The ~~(loss)~~carrying ~~per~~value ~~share:~~of cash, accounts receivable, other current assets, accounts payable, accounts payable – related parties, accrued liabilities and accrued liabilities – related parties, as reflected in the consolidated balance sheets, approximate fair value, due to the short-term maturity of these instruments. The carrying value of notes payable approximates their fair value due to immaterial changes in market interest rates and the Company’s credit risk since issuance of the instruments or due to their short-term nature. Derivative liabilities are remeasured at fair value every reporting period. Our derivative liabilities are considered level 3 financial instruments.

~~The~~Related computation of basic income (loss) per share of common stock is based on the weighted average number of shares outstanding during the period. Basic and diluted average shares outstanding during the period are the same, because there are no dilutive warrants or other instruments outstanding.parties

The Audit Committee approves all material related party transactions. The Audit Committee is provided with the details of each new, existing or proposed related party transaction, including the terms of the transaction, the business purpose of the transaction, and the benefits to the Company and the relevant related party. In determining whether to approve a related party transaction, the following factors are considered: (1) if the terms are fair to the Company, (2) if there are business reasons to enter into the transaction, (3) if the transaction would impair independence of an outside Director, or (4) if the transaction would present an improper conflict of interest for any Director or executive officer. Any member of the Audit Committee who has an interest in the transaction will abstain from voting on the approval of the related party transaction.

Business combinations

In January 2017, the FASB issued ASU 2017-01 Business Combinations (Topic 805): Clarifying the Definition of a Business. The ASU provides an updated model for determining if acquired assets and liabilities constitute a business. In a business combination, the acquired assets and liabilities are recognized at fair value and goodwill could be recognized. In an asset acquisition, the assets are allocated value based on relative fair value and no goodwill is recognized. The ASU narrows the definition of a business. The Company adopted this standard on January 1, 2018. ASU 2017-01 did not have a material impact on our financial statements on adoption.

Reclassifications

Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net loss, working capital or equity previously reported.

Recent accounting pronouncements

The Company has evaluated all the recent accounting pronouncements through the filing date and believes that none of them will have a material effect on the Company.

NOTE 3. GOING CONCERN

The Company has suffered recurring losses from operations and currently has a working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company plans to generate profits by reducing overhead costs and reworking its existing oil or gas wells, as needed, funding permitting. The Company ~~also~~may ~~needs~~need to ~~resolve~~raise funds through either the sale of its ~~ongoing~~securities, ~~litigation~~issuance of corporate bonds, ~~particularly~~joint inventure ~~Canada~~agreements ~~with the~~and/or ~~Utikuma~~bank ~~asset~~financing to accomplish its goals.

If additional financing is not available when needed, we may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company ~~will~~may ~~need~~drill may be non-productive. Management believes that actions presently being taken to ~~raise~~secure ~~funds~~additional ~~through~~funding ~~either~~for the ~~sale~~reworking of its ~~securities,~~existing ~~issuance~~assets ofwill ~~corporate~~provide ~~bonds,~~the ~~joint~~opportunity for ~~venture~~the ~~agreements~~Company ~~and/or bank~~to ~~financing~~continue as a going concern. Since the Company has an oil producing asset, its goal is to ~~accomplish~~increase the production rate by optimizing its ~~goals~~current infrastructure. The ~~Company~~accompanying ~~does~~financial ~~not~~statements have ~~any~~been ~~commitments~~prepared orassuming ~~arrangements~~the ~~from~~Company ~~any~~will ~~person~~continue as toa ~~provide~~going concern; no adjustments to the ~~Company with~~financial ~~any~~statements ~~additional~~have ~~capital~~been made to account for this uncertainty.

~~If additional~~NOTE ~~financing is not available when needed, the company may need to cease operations~~4. ~~The~~NOTES Company may not be successful in raising the capital needed to drill and/or rework its existing wells. Any additional wells that the Company may drill may be non-productive. Management believes that actions presently being taken to secure additional funding for the reworking of its existing oilfield infrastructure will provide the opportunity for the Company to continue as a going concern. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure while minimizing associated lease operating expenses.RECEIVABLE

~~The~~On ~~Company~~February is16, ~~also~~2022, ~~actively~~Petrolia ~~working~~Canada toCorporation (PCC), ~~resolve~~a ~~its~~wholly-owned ~~ongoing~~subsidiary of Petrolia Energy Corporation (PEC), entered into a Purchase and Sale Agreement (PSA) and Debt Settlement ~~litigation~~Agreement in(DSA) ~~both~~with ~~the~~Prospera UEnergy, Inc.S. (Prospera) whereby PCC sold its 28% working interest in the Luseland, Hearts Hill and ~~Canada~~Cuthbert fields. The ~~accompanying~~PSA ~~financial~~and ~~statements~~DSA ~~have~~agreements ~~been~~were ~~prepared~~effective ~~assuming~~as ~~the~~of ~~Company~~October ~~will~~1, ~~continue~~2021. as The DSA included a ~~going~~convertible ~~concern.~~debenture Nofor ~~adjustments~~$510,000 to(CAD) ~~the~~with an ~~financial~~interest ~~statements~~rate ~~have~~of ~~been~~8% ~~made~~per toannum, ~~account~~compounded quarterly for ~~this~~a ~~uncertainty~~term of two years.

The debenture was convertible at PCC’s option into common shares of Prospera at a conversion price of $0.05 (CAD) per share in the first year, from March 1, 2022 to March 31, 2023 and $0.10 (CAD) in the second year from April 1, 2023 to March 31, 2024. Applicable interest will be payable in cash or shares of Prospera at the current market price. For more information, please see Form 8-K filed on February 28, 2022.

NOTE 4 5. ~~EVALUATED~~HELD ~~PROPERTIES~~FOR TRADING SECURITIES

We measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with the change in fair value included in net income. We use quoted market prices to determine the fair value of equity securities with readily determinable fair values.

As previously reported, on February 16, 2022, Petrolia Canada Corporation (PCC), a wholly-owned subsidiary of Petrolia Energy Corporation (PEC), entered into a Purchase and Sale Agreement (PSA) and Debt Settlement Agreement (DSA) with Prospera Energy, Inc. (Prospera) whereby PCC sold its 28% working interest in the Luseland, Hearts Hill and Cuthbert fields. The PSA and DSA agreements were effective as of October 1, 2021. In January of 2023, the Company converted $210,000 (CAD) ($157,315 USD using prevailing rates at that date) of our debenture from Prospera into shares of Prospera Common stock at a conversion rate of $0.05 (CAD) per share.

NOTE 6. EVALUATED PROPERTIES

The Company’s current properties can be summarized as follows.

Cost	Canadian properties			United States properties		Total
As of December 31, 2020	$	4,314,805		$	4,304,622	$	8,619,427
Additions		787,250			—		787,250
Dispositions		(2,563,434	)		—		(2,563,434	)
Foreign currency translation		(46,218	)		—		(46,218	)
As of December 31, 2021	$	2,492,403		$	4,304,622	$	6,797,025
Foreign currency translations		(187,107	)		—		(187,107	)
Dispositions		—			375		375
As of September 30, 2022	$	2,305,296		$	4,304,622	$	6,609,918
Foreign currency translation		(159,363	)		—		(159,363	)
As of December 31, 2022	$	2,333,040		$	4,304,997	$	6,638,037
Foreign currency translations		1,896			—		1,896
As of March 31, 2023	$	2,334,936		$	4,304,997	$	6,639,933
Accumulated depletion
As of December 31, 2020	$	2,631,749		$	61,551	$	2,693,300
Dispositions		(2,629,672	)		—		(2,629,672	)
Depletion		378,306			—		378,306
Foreign currency translation		7,026			—		7,026
As of December 31, 2021	$	387,409		$	61,551	$	448,960
Depletion		~~165~~237,~~835~~067			—		~~165~~237,~~835~~067
Foreign currency translation		(3934,~~768~~273	)		—		(3934,~~768~~273	)
As of September 30, 2022	$	513,476		$	61,551	$	575,027
As of December 31, 2022	$	590,203		$	61,551	$	651,754
Net book value as of December 31, 2021	$	2,104,994		$	4,243,071	$	6,348,065
Depletion		44,806			—		44,806
Net book value as of September 30, 2022	$	1,791,820		$	4,243,071	$	6,034,891
Foreign currency translation		450			—		450
As of March 31, 2023	$	635,459		$	61,551	$	697,010
Net book value as of December 31, 2022	$	1,742,837		$	4,243,446	$	5,986,283
Net book value as of March 31, 2023	$	1,699,477		$	4,243,446	$	5,942,923

On August 6, 2019, the Company entered into a Purchase and Sale Agreement (“PSA”) for the sale of the NOACK property with Flowtex Energy LLC (“FT”). The purchaser agreed to pay $400,000 for the NOACK Assets including a $20,000 deposit that was received on August 15, 2019, and the remaining balance of $380,000 to be received by September 30, 2019. By December 31, 2019, FT had made cumulative payments of $375,000, resulting in a $25,000 account receivable to the Company on June 30, 2021, which was included in other current assets. The $400,000 was recorded as a gain on sale of properties. On July 6, 2021, the remaining $25,000 accounts receivable was settled via the following: the purchaser remitted a cash payment of $8,995, as well as paying (on the Company’s behalf) $16,005 of outstanding property tax invoices previously incurred by the Company.14

~~On May 1, 2020, Petrolia Energy Corporation acquired a 50% working interest in approximately 28,000 net working interest acres located in the Utikuma Lake area in Alberta, Canada~~U. ~~The property is an oil-weighted asset currently producing approximately 500 bopd of light oil~~S. ~~The~~Properties ~~working~~– ~~interest~~Slick ~~was~~Unit ~~acquired~~Dutcher ~~from~~Sand Blue Sky Resources Ltd. in an affiliated party transaction as Zel C. Khan, the Company’s former Chief Executive Officer, is related to the CEO of Blue Sky. Blue Sky acquired a 100% working interest in the Canadian Property from Vermilion Energy Inc. via Vermilion’s subsidiary Vermilion Resources. The effective date of the acquisition was May 1, 2020. The total purchase price of the property was $2,000,000 (CND), with $1,000,000 of that total due initially. The additional $1,000,000 was contingent on the future price of WTI crude. At the time WTI price exceeded $50/bbl, the Company would pay an additional $750,000 (CND). In addition, at the time WTI price exceeded $57/bbl the Company would pay an additional $250,000 (CND) (for a cumulative contingent total of $1,000,000). The price of WTI crude exceeded $50/bbl on January 6, 2021 and exceeded $57/bbl on February 8, 2021. The additional payments due were netted with the accounts receivable balance from previous Joint Interest Billing statements from BSR. The total USD value of the addition was $787,250, using prevailing exchange rates on the respective dates. Included in the terms of the agreement, the Company also funded their portion of the Alberta Energy Regulator (“~~AER~~SUDS”) bond fund requirement ($557,199 USD), necessary for the wells to continue in production after the acquisition. Additional funds ($357,937 USD) remain in the other current asset balance for future payments from BSR, related to the acquisition.Field

9The Slick Unit Dutcher Sand (SUDS) field is located in Creek County, Oklahoma. Petrolia owns a 100% working interest (WI) with an approximately 76.5% net revenue interest (NRI) in the 2,530 acre field. The SUDS West unit is approximately 1,670 acres and the SUDS East unit is approximately 860 acres.

~~On July~~As ~~27,~~of ~~2020,~~December ~~the Company entered into a settlement agreement pursuant to which nine leases totaling approximately 3~~31,~~800~~ ~~acres of the 4~~2022,~~880-acre~~ ~~Twin~~SUDS ~~Lakes~~total ~~San~~estimated ~~Andres~~net ~~Unit~~proved reserves were ~~forfeited~~approximately as346 athousand ~~part~~barrels of ~~the settlement agreement. Consequently, the Company no longer has the right to produce~~ oil, ~~gas, or other hydrocarbons and any other minerals from the mineral estate encumbered by the leases and owned by~~equivalent ~~the Trustee. The company accounted for the forfeiture of the TLSAU properties, in accordance with Reg S-W.T.Rule 4-10~~(cMBoe)~~(6).~~ ~~Accordingly, an~~and ~~analysis~~total ofestimated ~~multi-period~~net ~~reserve~~probable ~~reports was performed to determine the percentage of the cumulative US full cost pool’s~~ reserves ~~that~~ were ~~forfeited~~approximately ~~(56%~~153 orthousand ~~943,820).~~barrels ~~Then that percentage was multiplied by the period end net property balance~~ of ~~$10,175,456.~~oil ~~This resulted~~equivalent ~~in a write down of $5,648,994~~ (~~$10,175,456 * 56%~~MBoe) ~~of the US cost pool, which was recorded as part of operating expenses for the year ended December 31, 2020~~. ~~Note that both TLSAU and SUDS make up the US full cost pool.~~

On ~~April~~ 8,January ~~2021~~13, 2023, the ~~State~~Company ofreceived ~~New~~an ~~Mexico~~Incident ~~Energy, Minerals~~ and ~~Natural~~Complaint ~~Resources~~Investigation ~~Oil~~Report ~~Conservation~~issued ~~Division~~by ~~(“OCD”) sent~~ the ~~Company~~ aOklahoma ~~Notice~~Corporation ofCommission ~~Violation~~(OCC) ~~alleging~~due ~~that~~to ~~the~~a ~~Company~~mineral owner ~~was~~complaint. ~~not~~The inOCC ~~compliance~~issued ~~with~~a ~~certain~~plug ~~New~~or ~~Mexico~~produce ~~Oil~~order ~~and~~for ~~Gas~~SUDS ~~Act~~West ~~regulations~~unit ~~associated with required reporting, inactive wells,~~ and ~~financial~~SUDS ~~assurance~~East ~~requirements~~unit. OnThe ~~December 30, 2021, the~~ Company ~~entered~~has areceived ~~Stipulated~~two extensions ~~Final~~of ~~Order~~time ~~to resolve the matter. The company agreed to submit appropriate forms for the identified wells, open an escrow account~~ and ~~deposit~~ ~~funds~~is ~~into~~working ~~it,~~with ~~and provide~~ the ~~OCD~~OCC ~~with~~to implement a ~~report~~production ~~proposing~~plan ~~deadlines~~to ~~for~~bring ~~bringing~~both ~~all~~units ~~remaining wells~~ into compliance. ~~The first two wells were plugged in June of 2022. See Form 8-K reference in Exhibits section below.~~

~~NOTE~~The SUDS field is currently shut-in 5while the Company completes a review of the land and lease records currently being conducted by a petroleum landman. ~~LEASES~~PEC has also initiated a detailed reservoir and historical waterflood sweeping pattern analysis. The Company is currently awaiting the outcome of the review of the SUDS subsurface geology. PEC is finalizing a SUDS capital budget with the intent to commence further field development in the third quarter of 2023.

~~Our~~U.S. ~~adoption~~Properties of– ~~Accounting~~Twin ~~Standards~~Lakes ~~Update~~San ~~2016-02,~~Andres ~~Leases~~Unit (~~Topic 842~~“TLSAU”), and subsequent Accounting Standards Updates related to Topic 842, requires us to recognize substantially all leases on the balance sheet as a Right of Use asset and a corresponding lease liability. The new guidance also requires additional disclosures as detailed below. We adopted this standard on the effective date of January 1, 2019 and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight.Field

The Twin Lakes San Andres Unit (TLSAU) field is located in Chaves County, New Mexico. As of December 31, 2022, it was determined that PEC does not own any TLSAU leases, and therefore has no reserves. It is estimated that PEC has 29 wells that need to be plugged and abandoned, plus surface remediated. The estimated cost of the TLSAU well plugging and abandonment, and surface remediation obligations are approximately $1.2 million.

Utikuma Field

On May 1, 2020, Petrolia Energy Corporation acquired a 50% working interest in approximately 28,000 acres located in the Utikuma Lake area in Alberta, Canada. The property is an oil-weighted asset historically producing approximately 500 barrels of oil per day (bpd) of light oil. The working interest was acquired from Blue Sky Resources Ltd (“Blue Sky”). in an affiliated party transaction as Zel C. Khan, the Company’s former Chief Executive Officer, is related to the ownership of Blue Sky.

Blue Sky acquired a 100% working interest in the Canadian Property from Vermilion Energy Inc. via Vermilion’s subsidiary Vermilion Resources. The effective date of the acquisition was May 1, 2020. The total purchase price of the property was $2,000,000 (CAD), with $1,000,000 of that total due initially. The additional $1,000,000 was contingent on the future price of West Texas Intermediate (WTI) crude. At the time the WTI price exceeded $50/bbl, the Company would pay an additional $750,000 CAD. In addition, at the time the WTI price exceeded $57/bbl the Company would pay an additional $250,000 CAD (for a cumulative contingent total of $1,000,000 CAD). The price of WTI crude exceeded $50 per barrel (bbl) on January 6, 2021 and exceeded $57/bbl on February 8, 2021. The additional payments due were netted with the accounts receivable balance from previous Joint Interest Billing statements from Blue Sky Resources (BSR). The total USD value of the addition was $787,250, using prevailing exchange rates on the respective dates. Included in the terms of the agreement, the Company also funded their portion of the Alberta Energy Regulator (“AER”) bond fund requirement $763,754 CAD ($564,363 USD), necessary for the wells to continue in production after the acquisition. Additional funds in the amount of $490,624 CAD ($362,539 USD) remain in the other current asset balance for future payments to BSR, related to the acquisition.

On May 5, 2023, the Company was notified by BSR, the operator of our Utikuma asset that the Province of Alberta has declared a state of emergency due to wildfires in Alberta. We were informed that because of wildfires in the vicinity of our oilfield assets, the field was shut in and all personnel were evacuated, and that the highway to the Slave Lake area has been closed. Early assessments of the situation indicate that our Utikuma facilities may have incurred some damage.

NOTE 7. LEASES

Our adoption of ASU 2016-02, Leases (Topic 842), and subsequent ASUs related to Topic 842, requires us to recognize substantially all leases on the balance sheet as a right-of-use (ROU) asset and a corresponding lease liability. The guidance also requires additional disclosures as detailed below. We adopted this standard on the effective date of January 1, 2019 and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight.

Lease ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term.

Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. As of September 30, 2022, we did not have any short-term leases.15

Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. As of March 31, 2023, we did not have any short-term leases.

The tables below present financial information associated with our lease.

SCHEDULE OF FINANCIAL INFORMATION LEASE

	Balance Sheet Classification	~~September~~March 3031, ~~2022~~2023		December 31, ~~2021~~2022
Right-of-use assets	Other long-term assets		421,~~715~~706		1223,~~821~~086
Current lease liabilities	Other current liabilities		45,~~987~~656		135,~~909~~482
Non-current lease liabilities	Other long-term liabilities		—16,325		—17,714

10As of March 31, 2023, the maturities of our lease liability are as follows:

As of September 30, 2022, the maturities of our lease liability are as follows:

SCHEDULE OF MATURITIES LEASE LIABILITY

2022	$	4,987
2023	$	3,808
Less: Imputed interest		(272	)
2024		5,714
Present value of lease liabilities	$	4,715
2025		6,472
2026		5,987
Total	$	21,981
Less imputed interest		(275	)
Present value of lease liabilities	$	21,706

NOTE 68. NOTES PAYABLE

The following table summarizes the Company’s notes payable ~~(i)~~:

SCHEDULE OF NOTES PAYABLE

	Interest rate			Date of maturity	~~September~~March 3031, ~~2022~~2023			December 31, ~~2021~~2022
Truck loan (ii)		5.49	%	January 20, 2022	$	—		$	4,021
Credit note I(ii)		10	%	January 1, 2020	$	286,446		$	426,909
Credit note IV (iii)		10	%	June 30, 2021		564,562			831,387
Discount on credit note I						(27,715	)		(41,572	)
Discount on credit note IV						(55,430	)		(97,001	)
Lee Lytton				On Demand		3,500			3,500
Credit note V(iv)		10	%	December 31, 2022		2,085,432			2,085,432
M. Hortwitz		10	%	October 14, 2016		10,000			10,000
Lee Lytton				On demand		3,500			3,500
					$	272,231	(i)	$	398,837
Credit note VI (v)		10	%	December 31, 2021		266,900			416,900
Credit note VII (vi)		10	%	December 31, 2021		150,000			—
Quinten Beasley		10	%	October 14, 2016		5,000			5,000
Jovian Petroleum Corporation (vii)		3.5	%	December 31, 2021		178,923			178,923
M. Horowitz		10	%	October 14, 2016		10,000			10,000
					$	3,208,887		$	3,438,162

(i) All notes are current liabilities (due within one year or less from September 30, 2022.) (ii) On January 6, 2017, the Company purchased a truck and entered into an installment note in the amount of $35,677 for a term of five years and interest at 5.49% per annum. Payments of principal and interest in the amount of $683 are due monthly. The note was paid off in January of 2022. (iii) On January 2, 2020, the Company entered into a loan agreement in the amount of $1,000,000 with a third party (including a $120,000 origination fee). The note bore interest at an interest rate of $10% per annum and matures on June 30, 2020, with warrants to purchase 5,000,000 shares of common stock (the “Loan Warrants”), at an exercise price of $0.10 per share in Canadian dollars and expired on January 2, 2023. The fair value of issued warrants were recorded as a debt discount of $266,674 and monthly amortization of $11,111. These funds were initially placed in escrow, then in May of 2020 they were used for the purchase of the Utikuma oil field. Pursuant to a loan extension agreement, on October 30, 2020, the Company issued warrants to purchase 5,000,000 of common stock, at an exercise price of $0.05 per share, which expired on January 6, 2023. The fair value of the issued warrants was recorded as a debt discount of $166,289 and monthly amortization of $4,619.14. The maturity date of the loan was extended to June 30, 2021.

	(i)	All notes are current liabilities (due within one year or less from March 31, 2023).

	(ii)	On January 2, 2020, the Company entered into a loan agreement in the amount of $1,000,000 with a third party (including a $120,000 origination fee). The note bore interest at an interest rate of $10% per annum and matured on June 30, 2020, and included (as discussed below) warrants to purchase 5,000,000 shares of common stock (the “Loan Warrants”), at an exercise price of $0.10 per share in Canadian dollars which expired on January 2, 2023. The fair value of issued warrants were recorded as a debt discount of $266,674 and monthly amortization of $11,111. These funds were initially placed in escrow, then on May 29, 2020, they were used for the purchase of the Utikuma oil field. Pursuant to a loan extension agreement, on October 30, 2020, the Company issued warrants to purchase 5,000,000 shares of common stock, at an exercise price of $0.05 per share which expired on January 6, 2023. The fair value of the issued warrants was recorded as a debt discount of $166,289 and monthly amortization of $4,614. Payments totaling $150,000 were made on this note during the first quarter of 2023, applied to accrued interest first and then principal.

1116

	(iv)	On May 9, 2018, Bow entered into an Amended and Restated Loan Agreement with a third party. The Loan Agreement increased by $800,000 the amount of a previous loan agreement entered into between Bow and the Lender, to $1,530,000. The amount owed under the Loan Agreement accrues interest at the rate of 12% per annum (19% upon the occurrence of an event of default) and is due and payable on May 11, 2021, provided that the amount owed can be prepaid prior to maturity, beginning 60 days after the date of the Loan Agreement, provided that the Company gives the Lender 10 days’ notice of our intent to repay and pays the Lender the interest which would have been due through the maturity date at the time of repayment. The Loan Agreement contains standard and customary events of default, including cross defaults under other indebtedness obligations of us and Bow, and the occurrence of any event which would have a material adverse effect on us or Bow. The Company is required to make principal payments of $10,000 per month from January through September 2019 with the remaining balance of $710,000 due at maturity on May 11, 2021. The additional $800,000 borrowed in connection with the entry into the Loan Agreement was used by the Company to acquire a 25% working interest in approximately 41,526 acres located in the Luseland, Hearts Hill, and Cuthbert fields, located in Southwest Saskatchewan and Eastern Alberta, Canada (collectively, the “Canadian Properties” and the “Working Interest”). Upon the disposition of Bow, a total of $730,000 of the obligations owed under the Loan Agreement were transferred to Blue Sky Resources Ltd. (“Blue Sky”).
		In order to induce the Lender to enter into the Loan Agreement, the Company agreed to issue the Lender 500,000 shares of restricted common stock (the “Loan Shares”), which were issued on May 18, 2018, and warrants to purchase 2,320,000 shares of common stock (the “Loan Warrants”), of which warrants to purchase (a) 320,000 shares of common stock have an exercise price of $0.10 per share in Canadian dollars and expired on May 15, 2021, (b) 500,000 shares of common stock have an exercise price of $0.12 per share in U.S. dollars, and expired on May 15, 2021; and (c) 1,500,000 shares of common stock have an exercise price of $0.10 per share in U.S. dollars and expire on May 15, 2020. The fair value of the 500,000 common shares issued were assessed at the market price of the stock on the date of issuance and valued at $47,500. The fair value of the Canadian dollar denominated warrants issued were assessed at $30,012 using the Black Scholes Option Pricing Model. The fair value of the U.S. dollar denominated warrants issued were assessed at $182,650 using the Black Scholes Option Pricing Model. The Company determined the debt modification to be an extinguishment of debt and recorded a total loss on extinguishment of debt of $260,162.
		On September 17, 2018, the Company entered into a loan agreement with a third party for $200,000 to acquire an additional 3% working interest in the Canadian Properties. The loan bears interest at 12% per annum and has a maturity date of October 17, 2019. Payments of principal and interest in the amount of $6,000 are due monthly. The loan is secured against the Company’s 3% working interest in the Canadian Properties and has no financial covenants. During 2020, the balance increased by $146,000 resulting in a $346,038 ending balance. On January 1, 2021, the Lender signed amended loan agreements, which moved the balance of this note to new credit notes.
		On April 25, 2019, the Company entered into a promissory note (an “Acquisition Note”) with a third-party in the amount of $750,000 to acquire working interests in the Utikuma oil field in Alberta Canada. The Note bears interest at 9% per annum and is due in full at maturity on April 25, 2021. No payments are required on the note until maturity while interest is accrued. In addition, warrants to purchase 500,000 shares of common stock with an exercise price of $0.12 per share expiring on May 1, 2021, were issued associated with the note. The fair value of issued warrants were recorded as a debt discount of $38,249 and amortization of $8,366. The notes hold a security guarantee of working interest in the Utikuma oil field and a working interest in the TLSAU field. On January 1, 2021, the Lender signed an amended loan agreement consolidating this loan with $146,038 of another credit note and accrued interest on those amounts.
		On December 1, 2021, the Company signed an amended loan agreement with a third party for $2,085,432, which combined all notes described above and accrued interest on those amounts. The loan bears interest at 10% per annum and has maturity date of December 31, 2022. The note holds a security interest against the 25% Working Interest in the Cona assets and a security guarantee of a working interest in the Utikuma oil field and a working interest in the TLSAU field. On January 1, 2022, this note was assigned to Blue Sky Resources.
	(v)	Various shareholder advances provided by a lender during 2018 and 2019. There were no formal documents drawn. Interest rates were applied based on other similar loan agreements entered into by the Company during that period. On February 12, 2021, the Company entered into an amended loan agreement in the amount of $416,900 that consolidated these amounts. The loan bears interest at 10% per annum and has a maturity date of December 31, 2021. On August 31, 2021, this loan was in default due to missed interest payments, and a default interest rate was applied to the principal balance. On February 3, 2022, $150,000 of this note was assigned by the holder to Blue Sky Resources, as reflected in Credit note VII.

The following is a schedule of future minimum repayments of notes payable as of March 31, 2023:

	(vi)	On February 3, 2022, $150,000 of Credit Note VI was assigned by the holder to Blue Sky Resources
	(vii)	On February 9, 2018, the Company entered into a Revolving Line of Credit Agreement (“LOC”) for $200,000 (subsequently increased to $500,000 on April 12, 2018) with Jovian Petroleum Corporation (“Jovian”). The initial agreement was for a period of 6 months, and it can be extended for up to 5 additional terms of 6 months each. All amounts advanced pursuant to the LOC will bear interest from the date of advance until paid in full at 3.5% simple interest per annum. Interest will be calculated on a basis of a 360-day year and charged for the actual number of days elapsed. Subsequent to period-end this LOC was extended until December 31, 2021. As of September 1, 2021, Zel Khan and Quinten Beasley resigned from their positions at Petrolia Energy, so this note has been removed from the related party section. Also, see Note 13. Subsequent Events regarding the dispute of this value.

The following is a schedule of future minimum repayments of notes payable as of September 30, 2022:

2022	$	3,264,317
2023	$	272,231
Thereafter		—
Total	$	3272,~~264,317~~231

NOTE 79. RELATED PARTY NOTES PAYABLE

The following table summarizes the Company’s related party notes payable:

SCHEDULE OF RELATED PARTY NOTES PAYABLE

	Interest rate			Date of maturity		March 31, 2023		~~September 30, 2022~~		December 31, 2022		~~December 31, 2021~~
Ivar Siem (i)		9	%		December 31, 2021				278,435				278,435
Quinten Beasley		10	%	October 14, 2016			5,000				5,000
Mark M. Allen (ii)		9	%		August 15, 2021				55,000				55,000
Blue Sky Resources (ii)		3.5	%	December 31, 2021			178,923				178,923
Mark M. Allen (iii)		12	%		June 30, 2020				200,000				200,000
Blue Sky Resources (iii)		10	%	December 31, 2021			150,000				150,000
Mark M. Allen (iv)		9	%		September 30, 2021				241,125				245,938
Blue Sky Resources (iv)		10	%	December 31, 2022			2,085,432				2,085,432
								$	774,560			$	779,373
Ivar Siem (v)		9	%	December 31, 2021			278,435				278,435
Mark Allen (vi)		9	%	September 2, 2021			55,000				55,000
Mark Allen (vii)		12	%	June 30, 2020			200,000				200,000
Mark Allen (viii)		9	%	June 30, 2021			61,012				241,125
Joel Oppenheim (ix)		10	%	December 31, 2021			266,900				266,900
						$	3,280,702	(i)		$	3,460,815

	(i)	On August 15, 2019, the Company entered into a loan agreement in the amount of $75,000 with Ivar Siem. The note bears interest at an interest rate of 12% per annum with a four (4) month maturity. On December 4, 2019, the Company entered into a loan agreement in the amount of $100,000 with Ivar Siem. The note bears interest at an interest rate of 12% per annum with a six (6) month maturity. At the maturity date, the note holder has the right to collect the principal plus interest or convert into 1,250,000 shares of common stock at $0.08 per share. In addition, if converted, the note holder will also receive 5,000,000 warrants at an exercise price of $0.10 per share, vesting immediately with a 36-month expiration period. On February 28, 2020, the Company entered into a $50,000 loan agreement with Ivar Siem. The note does not bear any interest (0% interest rate) and is due on demand. The note includes warrants to purchase 200,000 shares of common stock (the “Loan Warrants”), at an exercise price of $0.10 per share in Canadian dollars and expire on March 1, 2022. On January 1, 2021, the Company entered into an amended loan agreement in the amount of $278,435, which combined the three previous loans, along with accrued interest. The note bears an interest rate of 9% and matured on December 21, 2021.
	(ii)	On April 15, 2020, the Company entered into an agreement, with Mark M. Allen, that included a funding clause where the Company borrowed $55,000 from Mr. Allen. The note bears interest at an interest rate of 9% per annum and matured on August 15, 2021.

	(i)	All notes are current liabilities (due within one year or less from March 31, 2023.)

	(ii)	On February 9, 2018, the Company entered into a Revolving Line of Credit Agreement (“LOC”) for $200,000 (subsequently increased to $500,000 on April 12, 2018) with Jovian Petroleum Corporation (“Jovian”). The CEO of Jovian is Quinten Beasley, our former director (resigned October 31, 2018), and 25% of Jovian is owned by Zel C. Khan, our former CEO and director. The initial agreement was for a period of 6 months, and it previously could be extended for up to 5 additional terms of 6 months each. All amounts advanced pursuant to the LOC will bear interest from the date of advance until paid in full at 3.5% simple interest per annum. Interest will be calculated on a basis of a 360-day year and charged for the actual number of days elapsed. This LOC was subsequently extended until December 31, 2021. On February 2, 2022, the LOC was assigned to Blue Sky Resources.

	(iii)	On February 3, 2022, Joel Oppenheim, a former Board member, assigned $150,000 of his note to Blue Sky Resources.

	(iv)	On December 1, 2021, the Company signed an amended loan agreement with a third party for $2,085,432, which combined prior credit notes and accrued interest on those amounts. The loan bears interest at 10% per annum and had a maturity date of December 31, 2022. The note was secured by a security interest against the 25% Working Interest in the Cona assets, a security guarantee of a working interest in the Utikuma oil field and a working interest in the TLSAU field. The note was assigned to Blue Sky Resources on February 11, 2022, and moved to Related Party Notes Payable.

	(v)	On August 15, 2019, the Company entered into a loan agreement in the amount of $75,000 with Ivar Siem, a member of the Board of Directors. The note bears interest at an interest rate of 12% per annum with a four (4) month maturity. On December 4, 2019, the Company entered into a loan agreement in the amount of $100,000 with Ivar Siem. The note bears interest at an interest rate of 12% per annum with a six (6) month maturity. At the maturity date, the noteholder has the right to collect the principal plus interest or convert into 1,250,000 shares of common stock at $0.08 per share. In addition, if converted, the noteholder will also receive 5,000,000 warrants at an exercise price of $0.10 per share, vesting immediately with a 36-month expiration period. On February 28, 2020, the Company entered into a $50,000 loan agreement with Ivar Siem. The note does not bear any interest (0% interest rate) and is due on demand. The note includes warrants to purchase 200,000 shares of common stock (the “Loan Warrants”), at an exercise price of $0.10 per share in Canadian dollars and expired on March 1, 2022. The warrants were issued on January 1, 2021. On January 1, 2021, the Company entered into an amended loan agreement in the amount of $278,435, which combined the three previous loans, along with accrued interest. The note bears an interest rate of 9% per annum and matured on December 21, 2021.

1317

	(iii)	During 2019, the Company entered into a loan agreement in the amount of $200,000 with Mark M. Allen. The note bears interest at an interest rate of 12% per annum and matured on June 30, 2020. At the maturity date, the note holder has the right to collect the principal plus interest or convert into 2,500,000 shares of common stock at $0.08 per share. In addition, upon conversion, the note holder will also receive 10,000,000 warrants at an exercise price of $0.10 per share, vesting immediately with a 36-month expiration period.
	(vi)	On April 15, 2020, the Company entered into an agreement with Mark Allen, that included a funding clause where the Company borrowed $55,000 from Mr. Allen, the Company’s Chief Executive Officer. The note bears interest at an interest rate of 9% per annum and matured on September 2, 2021.
	(iv)	On January 3, 2020, the Company entered into a loan agreement in the amount of $100,000 with Mark M. Allen. The note bears interest at an interest rate of 10% per annum and matures on June 1, 2020, with warrants to purchase 400,000 shares of common stock (the “Loan Warrants”), at an exercise price of $0.10 per share in Canadian dollars and expire on January 3, 2023. The fair value of issued warrants were recorded as a debt discount of $31,946 and monthly amortization of $1,775. On February 14, 2020, the Company entered into a loan agreement in the amount of $125,000 with Mark M. Allen. The note bears interest at an interest rate of 10% per annum and matures on June 1, 2020, with warrants to purchase 750,000 shares of common stock (the “Loan Warrants”), at an exercise price of $0.10 per share in Canadian dollars and expire on February 14, 2022. The fair value of issued warrants were recorded as a debt discount of $38,249 and monthly amortization of $1,903. On January 1, 2021, the Company entered into an amended loan agreement in the amount of $245,938, which combined the two previous loans, along with accrued interest. The note bears an interest rate of 9% and matured on June 30, 2021.
	(vii)	During 2019, the Company entered into a loan agreement in the amount of $200,000 with Mark Allen. The note bears interest at an interest rate of 12% per annum and matured on June 30, 2020. At the maturity date, the note holder has the right to collect the principal plus interest or convert into 2,500,000 shares of common stock at $0.08 per share. In addition, upon conversion, the note holder will also receive 10,000,000 warrants at an exercise price of $0.10 per share, vesting immediately with a 36-month expiration period.
	(viii)	On January 3, 2020, the Company entered into a loan agreement in the amount of $100,000 with Mark Allen. The note bears interest at an interest rate of 10% per annum and matured on June 1, 2020, with warrants to purchase 400,000 shares of common stock (the “Loan Warrants”), at an exercise price of $0.10 per share in Canadian dollars and expire on January 3, 2023. The fair value of issued warrants were recorded as a debt discount of $31,946 and monthly amortization of $1,775. On February 14, 2020, the Company entered into a loan agreement in the amount of $125,000 with Mark Allen. The note bears interest at an interest rate of 10% per annum and matures on June 1, 2020, with warrants to purchase 750,000 shares of common stock (the “Loan Warrants”), at an exercise price of $0.10 per share in Canadian dollars and expired on February 14, 2022. The fair value of issued warrants were recorded as a debt discount of $38,249 and monthly amortization of $1,903. On January 1, 2021, the Company entered into an amended loan agreement in the amount of $245,938, which combined the two previous loans, along with accrued interest. The note bears an interest rate of 9% and matured on June 30, 2021. A payment of $196,344 was made on this note in the first quarter of 2023, applied to accrued interest first and then principal.
	(ix)	Various shareholder advances were provided by Joel Oppenheim during 2018 and 2019. There were no formal documents drawn. Interest rates were applied based on other similar loan agreements entered into by the Company during that period. On February 12, 2021, the Company entered into an amended loan agreement in the amount of $416,900 that consolidated these amounts. The loan bears interest at 10% per annum and matured on December 31, 2021. On August 31, 2021, this loan was in default due to missed interest payments, and a default interest rate was applied to the principal balance. On February 3, 2022, $150,000 of this note was assigned to Blue Sky Resources.

The following is a schedule of future minimum repayments of related party notes payable as of ~~September~~March 3031, ~~2022~~2023:

2022	$	774,560
2023	$	3,280,702
Thereafter		—
Total	$	~~774~~3,~~560~~280,702

NOTE 810. ~~DERIVATIVE~~ASSET ~~FINANCIAL~~RETIREMENT ~~INSTRUMENTS~~OBLIGATIONS

On May 18, 2018, as an inducement to enter into an Amended and Restated Loan Agreement, the Company issued, among other instruments, warrants to acquire 320,000 shares of common stock with an exercise price of $0.10 per share in Canadian dollars. The warrants are valued using the Black Scholes Option Pricing Model and the derivative is fair valued at the end of each reporting period. The Company valued the derivative liability at initial recognition as $30,012. These warrants expired on May 11, 2021.

On January 06, 2020, as an inducement to enter into a Loan Agreement, the Company issued, among other instruments, warrants to acquire 5,000,000 shares of common stock with an exercise price of $0.10 per share. The warrants are valued using the Black Scholes Option Pricing Model and the derivative is fair valued at the end of each reporting period. The Company valued the derivative liability at initial recognition as $144,259.

On October 30, 2020, as an inducement to extend the principal payment deadline from the previously issued Loan Agreement, the Company issued additional warrants to acquire 5,000,000 shares of common stock with an exercise price of $0.10 per share. The warrants are valued using the Black Scholes Option Pricing Model and the derivative is fair valued at the end of each reporting period. The Company valued the derivative liability at initial recognition as $95,352.

A summary of the activity of the derivative liabilities is shown below:

SCHEDULE OF DERIVATIVE LIABILITIES

As of December 31, 2021		22,554
Additions		—
Fair value adjustment		(21,813	)
As of September 30, 2022	$	741

Derivative liability classified warrants were valued using the Black Scholes Option Pricing Model with the range of assumptions outlined below. Expected life was determined based on historical exercise data of the Company.

SCHEDULE OF DERIVATIVE LIABILITY OF FAIR VALUE ASSUMPTION

	September 30, 2022
Risk-free interest rate		3.33	%
Expected life		0.25 years
Expected dividend rate		0	%
Expected volatility		269	%

NOTE 9. ASSET RETIREMENT OBLIGATIONS

The Company has a number of oil and gas wells in production and will have AROs once the wells are permanently removed from service. The primary obligations involve the removal and disposal of surface equipment, plugging and abandoning the wells and site restoration.

~~Petrolia Energy~~The ~~Corporation (“Petrolia” or the “~~Company”) is the operator of certain wells located in New Mexico, at the Twin Lakes San Andres Unit (“TLSAU”) Field. TLSAU is located 45 miles from Roswell, Chaves County, New Mexico.

On March 4, 2021, the Company received a letter from the Commissioner of Public Lands of the State of New Mexico, which was sent to us and certain other parties notifying such parties of certain non-compliance with the laws and regulations that it administers. The deficiencies are currently in the process of being settled by a third party agreeing to plug six wells, including at least two Company operated wells (TLSAU wells #316 and #037). The scope of the matter above included only 240 acres of the 640 acres of The New Mexico State Land Office (SLO) lease. The Commissioner of Public Lands of the State of New Mexico could still file suit and require the plugging and surface remediation of all wells in section 36.

On April 8, 2021, the State of New Mexico Energy, Minerals and Natural Resources Department Oil Conservation Division (“OCD”) sent the Company a Notice of Violation alleging that the Company was not in compliance with certain New Mexico Oil and Gas Act regulations (the “NMAC”), associated with required reporting, inactive wells and financial assurance requirements, plugging certain abandoned wells, providing required financial assurance in connection with plugging expenses, and proposing to assess certain civil penalties in the amount of an aggregate of approximately $35,100.

~~As previously~~On ~~reported and in Petrolia’s Form 8-K dated October 25, 2021 (reference to which is hereby made), on~~ April 8, 2021, the State of New Mexico Energy, Minerals and Natural Resources Department, Oil Conservation Division (the “OCD”) issued a Notice of Violation (the “NOV”) to Petrolia alleging that the Company violated four regulations under Title 19, Chapter 15 of the New Mexico Administrative Code (the “NMAC”) by: (i) failing to file production reports for certain wells, (ii) exceeding the number of inactive wells allowed, (iii) failing to provide financial assurance in the amount required, and (iv) failing to provide additional financial assurance in the amount required.

The Company acknowledged the violations alleged in the NOV and requested an informal resolution. On December 30, 2021, to resolve this matter, Petrolia entered into a Stipulated Final Order ( the “SFO”) in Case No. 21982 with the OCD whereby Petrolia among other things agreed to: (i) submit appropriate forms for wells identified on the SFO Inactive Well List, (ii) plug the specific TLSAU wells listed in section 8 (c) and (d) of the SFO, as well as submit all required information and forms specified in the SFO, (iii) open an escrow account meeting the terms listed in the SFO, (iv) deposit funds into an escrow account within the timeframe described in the SFO, and (v) provide the OCD with a report proposing deadlines for bringing all remaining wells into compliance. The Company recognized an additional liability of $792,000 to plug these wells in 2020.

The Company entered into a settlement agreement on July 27, 2020 with Moon Company, Trustee of the O’Brien Mineral Trust pursuant to which nine leases totaling approximately 3,800 acres of the 4,880 acre Twin Lakes San Andres Unit were terminated as a part of the settlement agreement. Pursuant to this settlement agreement, the Company no longer has the right to produce oil, gas, or other hydrocarbons and any other minerals from the mineral estate encumbered by the leases and owned by the trustee of the O’Brien Mineral Trust.

AROs associated with the retirement of tangible long-lived assets are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets in the period incurred. The fair value of AROs is recognized as of the acquisition date of the working interest. The cost of the tangible asset, including the asset retirement cost, is depleted over the life of the asset. AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations discounted at the Company’s credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value. If estimated future costs of AROs change, an adjustment is recorded to both the ARO and the long-lived asset. Revisions to estimated AROs can result from changes in retirement cost estimates, revisions to estimated discount rates and changes in the estimated timing of abandonment.

For the purpose of determining the fair value of AROs incurred during the years presented, the Company used the following assumptions:

	September 30, 2022
	March 31, 2023
Inflation rate		1.92 - 2.15	%
Estimated asset life		12-21 years

The following table shows the change in the Company’s ARO liability:

	Canadian properties			United States properties			Total
Asset retirement obligations, December 31, 2020	$	2,711,909		$	912,224		$	3,624,133
Plugging liability at Twin Lakes		—			132,000			132,000
Accretion expense		290,367			26,506			316,873
Disposition		(1,824,339	)		—			(1,824,339	)
Foreign currency translation		8,360			—			8,360
Asset retirement obligations, December 31, 2021	$	1,186,297		$	1,070,730		$	2,257,027
Accretion expense		~~108~~145,~~751~~191			2128,~~403~~412			~~129~~173,~~793~~603
Foreign currency translation		(96,064	)		—			(96,064	)
Disposition		—			(47,624	)		(47,624	)
Asset retirement obligations, September 30, 2022	$	1,198,984		$	1,091,773		$	2,290,757
Foreign currency translation		(81,671	)		—			(81,671	)
Asset retirement obligations, December 31, 2022	$	1,249,816		$	1,051,518		$	2,301,335
Accretion expense		37,550			10,655			48,205
Foreign currency translation		991			—			991
Asset retirement obligations, March 31, 2023	$	1,288,357		$	1,062,173		$	2,350,530

NOTE 1011. EQUITY

Preferred stock

The holders of Series A Preferred Stock are entitled to receive cumulative dividends at a rate of 9% per annum. The Preferred Stock will automatically convert into common stock when the Company’s common stock market price equals or exceeds $0.28 per share for 30 consecutive days. At conversion, the value of each dollar of preferred stock (based on a $10 per share price) will convert into 7.1429 common shares (which results in a $0.14 per common share conversion rate).

In accordance with the terms of the Preferred Stock, cumulative dividends of $~~134~~44,~~392 were~~798 were declared for the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, and $~~134~~44,~~393~~797 for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022.

The holders of Series B Preferred Stock do not accrue dividends and have no conversion rights. For so long as any shares of Series B Preferred Stock remain issued and outstanding, the holders thereof, voting separately as a class, have the right to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders of the Company and upon any action taken by stockholders of the Company with or without a meeting) equal to sixty percent (60%) of the total vote. No shares of Series B Preferred Stock held by any person who is not then a member of the Board of Directors of the Company shall have any voting rights.

The holders of Series C Preferred Stock are entitled to receive cumulative dividends at a rate of 8% per annum. If any shares of Series C Preferred Stock remain outstanding as of December 31, 2023, the dividend rate will increase to 11% per annum. The Series C Preferred Stock will automatically convert into common stock upon any registered public offering of the Company’s common stock. At conversion, the value of each dollar of Series C Preferred Stock (based on a $10 per share price) will convert into 100 common shares (which results in a $0.01 per common share conversion rate).

In accordance with the terms of the Series C Preferred Stock, cumulative dividends of $62,~~478~~170 and $02,066 were declared for the ~~nine~~three months ~~ended~~ ~~September~~ended 30March 31, ~~2022~~2023, and ~~September~~March 3031, ~~2021~~2022, respectively.

Common stock

OnThe ~~January~~common ~~25,~~stock ~~2021, the Company signed an Executive Salary Payable Agreement with Zel Khan as the Chief Executive Officer. All~~ of ~~Mr.~~Petrolia ~~Khan’s previous~~Energy ~~salary~~Corporation ~~obligation~~is ~~was~~currently ~~satisfied~~not bypublicly ~~the issuance of 1,992,272 shares of the Company on January 25, 2021~~traded.

Joel Oppenheim, former Director, was issued 316,491 shares on January 25, 2021, pursuant to a Director’s Fees Payable Agreement. The agreement stated that the shares were issued in full satisfaction of all outstanding director fees payable.

Paul Deputy was reinstated Interim Chief Financial Officer and signed a Settlement and Mutual Release Agreement. In exchange for releasing the Company for any current, outstanding payroll and/or service-related liability on January 29, 2021, the Company agreed to pay Mr. Deputy $50,000, to be paid in $2,500 monthly increments, starting April 1, 2021. In addition, Mr. Deputy was issued 250,000 shares of Petrolia common stock on January 29, 2021. The shares were issued at the price on that date of $0.033. This created a gain of $134,270 that was recorded as additional paid in capital, due to the related party nature of the transaction.

On March 30, 2021, Mark M. Allen converted $30,000 of unpaid contract wages from early 2020 into 333,333 common shares of common stock. A conversion price of $0.09 per share was used to determine the number of shares.

On March 30, 2021, Mark M. Allen converted a defaulted secured loan of $135,000 and $9,888 of accrued interest as well as $135,000 of guaranteed return that was due on December 15, 2019. The conversion consisted of 5,400,000 shares of common stock and 5,400,000 warrants to purchase common stock. The warrants have a strike price of $0.08 per share and expire in 36 months.

More details on the transactions above can be found in Note 11. Related Party Transactions.

The common stock of Petrolia Energy Corporation is currently not traded. On September 27, 2022, the Financial Industry Regulatory Authority (“FINRA”) pulled the Company’s stock symbol due to inactivity in the Company’s security for a year. The Company is taking steps to become current in its filings with the Securities and Exchange Commission and upon becoming current in its filings with the Securities and Exchange Commission, it plans to engage a market maker to file a Form 15c2-11 with FINRA and obtain a stock symbol.

Warrants

On September 24, 2015, the Board of Directors of the Company approved the adoption of the 2015 Stock Incentive Plan (the “Plan”). The Plan provides an opportunity, subject to approval of our Board of Directors, of individual grants and awards, for any employee, officer, director or consultant of the Company. The maximum aggregate number of shares of common stock which may be issued pursuant to awards under the Plan, as amended on November 7, 2017, was 40,000,000 shares. The plan was ratified by the stockholders of the Company on April 14, 2016.

Continuity of the Company’s common stock purchase warrants issued and outstanding is as follows:

	Warrants			Weighted Average Exercise Price
Outstanding at year ended December 31, 2020		40,764,666		$	0.13
Outstanding at year ended December 31, 2021		29,700,000			0.13
Granted		91,~~400~~000,000			0.0910
Expired		(206,~~464~~730,~~666~~000	)		0.11
Outstanding at December 31, 2021		29,700,000		$	0.13
Outstanding at year ended December 31, 2022		23,970,000			0.13
Granted		~~750~~250,000			0.10
Expired		(56,~~730~~000,000	)		0.1112
Outstanding at September 30, 2022		24,720,000		$	0.13
Outstanding at March 31, 2023		18,220,000		$	0.14

As of ~~September~~March 3031, ~~2022~~2023, the weighted-average remaining contractual life of warrants outstanding was 10.0084 ~~year~~years (December 31, ~~2021~~2022 – 10.7181 years).

As of ~~September~~March 3031, ~~2022~~2023, the intrinsic value of warrants outstanding is $0.00 (December 31, ~~2021~~2022 - $0.00).

17The table below summarizes warrant issuances during the three months ended March 31, 2023, and year ended December 31, 2022:

The table below summarizes warrant issuances during the nine months ended September 30, 2022, and year ended December 31, 2021:

	September 30, 2022		December 31, 2021
	March 31, 2023		December 31, 2022
Warrants granted:
Board of Directors and Advisory Board service		—		3,000,000
Pursuant to financing arrangements		250,000		1,000,000
Pursuant to financing arrangements		750,000		1,000,000
Total		250,000		1,000,000
Pursuant to loan agreements		—		5,400,000
Total		750,000		9,400,000

The warrants were valued using the Black Scholes Option Pricing Model with the range of assumptions outlined below. Expected life was determined based on historical data of the Company.

	September 30, 2022			December 31, 2021
	March 31, 2023			December 31, 2022
Risk-free interest rate		43.2581	%		02.1649% to– 04.9722	%
Expected life		3.0 years			~~2.0 –~~ 3.0 years
Expected dividend rate		0	%		0	%
Expected volatility		~~269~~253	%		~~277~~267% to ~~356~~299 %	%

NOTE 1112. RELATED PARTY TRANSACTIONS

On January 731, ~~2021~~2022, ~~prior~~ Board Member ~~Joel~~Leo ~~Oppenheim~~Womack ~~was~~purchased ~~issued 316~~2,~~491~~500 shares of ~~common~~Series ~~stock.~~C ~~These~~Preferred ~~shares~~Stock ~~were in exchange~~ for ~~Mr.~~cash ~~Oppenheim releasing the Company~~ of ~~his remaining board compensation balance of~~ $6025,000. ~~The shares were issued at the price on that date of $0.02. This created a gain of $53,670 that was recorded as additional paid in capital, due to the related party nature of the transaction.~~

OnNOTE ~~January 11, 2021, prior CEO Zel Khan was issued 1,992,272 shares of common stock~~13. ~~These~~SEGMENT shares were in exchange for Mr. Khan releasing the Company of his remaining deferred outstanding salary balance of $325,000. The shares were issued at the price on that date of $0.025. This created a gain of $275,193 that was recorded as additional paid in capital, due to the related party nature of the transaction.REPORTING

On January 29, 2021, prior CFO Paul Deputy was reinstated as Interim Chief Financial Officer and signed an agreement that in exchange for 250,000 shares of common stock and 20 monthly payments of $2,500 starting in April 2021, he would release the Company of his remaining deferred outstanding salary balance of $192,520.04. The shares were issued at the price on that date of $0.033. This created a gain of $134,270 that was recorded as additional paid in capital, due to the related party nature of the transaction.

On March 30, 2021, prior President Mark M. Allen was issued 333,333 shares of common stock. A conversion price of $0.09 per share was used to determine the number of shares. These shares were in exchange for Mr. Allen releasing the company of an outstanding consulting fee balance of $30,000. The shares were issued at the price on that date of $0.033. This created a gain of $19,001 that was recorded as additional paid in capital, due to the related party nature of the transaction.

On March 31, 2021, prior President Mark M. Allen was issued 5,400,000 shares of common stock. These shares were in exchange for Mr. Allen releasing the company of an outstanding loan of $135,000 with $9,888 of accrued interest and outstanding guaranteed return on that loan of $135,000. The shares were issued at the price on that date of $0.033. In addition, Mr. Allen was granted warrants to purchase 5,400,000 shares of common stock at $0.08, vesting immediately. The warrants expire in 36 months. The warrants were valued at $200,378 using the Black Scholes method. This created a loss of $98,690 that was recorded as a reduction to additional paid in capital, due to the related party nature of the transaction.

On August 21,2021, the Company signed a Letter Agreement to divest the Company’s wholly owned Canada subsidiary, Petrolia Canada Corporation (PCC) and its assets in consideration for $6,500,000 in Canadian dollars (approximately $5,150,000 in U.S. dollars) less any contingent liabilities. The buyer is Blue Sky Resources Ltd. (“Blue Sky”), an affiliated party to Zel C. Khan, the Company’s former Chief Executive Officer. Petrolia Canada Corporation assets include a 50% working interest in approximately 28,000 acres located in the Utikuma Lake area in Alberta, Canada, and a 28% working interest in the Luseland, Hearts Hill, and Cuthbert fields located in Southwest Saskatchewan and Eastern Alberta. The Company received a non-refundable deposit of $200,000 CAD on August 31, 2021. The remaining payment schedule was follows: $2,000,000 CAD on the Closing Date (scheduled for September 30, 2021), $1,000,000 CAD on October 31, 2021, less Petrolia’s contingent liabilities associated with the acquisition of Utikuma, and $3,300,000 CAD on December 31, 2021. See Form 8-K reference in Exhibits section. This transaction did not close, and the $200,000 CAD was added to other payables due to Blue Sky Resources in the fourth quarter of 2021.

On October 25, 2021, Petrolia Energy Corporation issued one share of its newly designated shares of Series B Preferred Stock to each of the three members of its then Board of Directors, (1) James E. Burns, (2) Leo Womack and (3) Ivar Siem, in consideration for services rendered to the Company as members of the Board of Directors. Such shares of Series B Preferred Stock vote in aggregate sixty percent (60%) of the total vote on all shareholder matters, voting separately as a class. This stock was valued by an independent party at $50,799 per share. For further information, see Form 8-K reference in Exhibits section.

In October and November of 2021, Board Member Leo Womack purchased an aggregate of 2,500 shares of Series C Preferred Stock for cash of $25,000.

On January 31, 2022, Board Member Leo Womack purchased 2,500 more shares of Series C Preferred Stock for cash of $25,000.

NOTE 12. SEGMENT REPORTING

The Company has a single reportable operating segment, Oil and Gas Exploration and Production, which includes exploration, development, and production of current and potential oil and gas properties. Results of operations from producing activities were as follows:

SCHEDULE OF LONG-LIVED ASSETS

	Canada			United States			Total
Nine months ended September 30, 2021
Three months ended March 31, 2022
Revenue	$	41,~~042~~830,~~138~~281		$	126,~~175~~079		$	41,~~054~~836,~~313~~360
Production costs		(31,~~670~~263,~~999~~889	)		(5612,~~924~~386	)		(31,~~727~~276,~~923~~275	)
Depreciation, depletion, amortization and accretion		(815,521	)		(38,870	)		(854,391	)
Depreciation, depletion, amortization, and accretion		(87,190	)		(7,804	)		(94,994	)
Results of operations from producing activities	$	~~(444~~479,~~382~~202	)	$	(8314,~~619~~111	)	$	(~~528~~465,~~001~~091	)
Total long-lived assets, September 30, 2021	$	1,917,164		$	4,249,789		$	6,166,953
Total long-lived assets, March 31, 2022	$	2,083,418		$	4,243,225		$	6,326,643
Nine months ended September 30, 2022
Three months ended March 31, 2023
Revenue	$	51,~~126~~376,~~281~~317		$	~~6,079~~—		$	51,~~132~~376,~~360~~317
Production costs		(51,~~198~~651,~~789~~335	)		(~~155~~8,~~650~~145	)		(51,~~354~~659,~~439~~480	)
Depreciation, depletion, amortization, and accretion		(~~274~~82,~~587~~356	)		(2210,~~159~~655	)		(~~296~~93,~~746~~011	)
Results of operations from producing activities	$	(~~347~~357,~~095~~374	)	$	(~~171~~18,~~730~~800	)	$	(~~518~~376,~~825~~174	)
Total long-lived assets, September 30, 2022	$	1,791,820		$	4,243,071		$	6,034,891
Total long-lived assets, March 31, 2023	$	1,699,477		$	4,243,446		$	5,942,923

19NOTE 14. SUBSEQUENT EVENTS

~~NOTE~~On April 3, 2023, the Company converted the remaining 13$300,000 (CAD) ($223,248 USD using prevailing rates at that date) of our debenture from Prospera into shares of Prospera Common stock at a conversion rate of $0.05 ~~SUBSEQUENT~~(CAD) ~~EVENTS~~per share.

On ~~March~~April 1120, ~~2022~~2023, Petrolia ~~Energy Corporation (PEC) and Petrolia~~ Canada Corporation ~~(PCC)~~ filed a ~~lawsuit~~Statement ~~against~~of ~~Jovian~~Defense ~~Petroleum~~to ~~Corporation~~Counterclaim, ~~Zel~~ ~~Khan~~Reply ~~and~~to ~~Quinten Beasley alleging fraud~~Defense, ~~breach of contract~~ and ~~breach~~Amended ofStatement ~~fiduciary duty. On April 18, 2022, Jovian Petroleum Corporation~~of ~~filed an answer and general denial. On May 12~~Claim, ~~2022,~~adding Zel Khan and Quinten Beasley ~~filed~~as andefendants ~~answer~~in ~~and~~the ~~general~~Court ~~denial.~~File OnNumber ~~September~~2301-01310 ~~16, 2022,~~matter ~~Zel Khan and Quinten Beasley~~ filed ain ~~counterclaim against PEC and PCC claiming indemnification under~~ the ~~provisions~~Calgary ofCourt ~~the organizing and governing documents~~ of ~~PEC and PCC and the applicable statutory provisions. Additionally, Quinten Beasley filed a counter claim for~~King’s ~~breach~~Bench of ~~contract for the outstanding principal balance of $5,000 from a prior loan agreement~~Alberta.

On ~~September~~May 165, ~~2022~~2023, ~~Joel~~the ~~Oppenheim~~Company ~~and~~was ~~Critical~~notified ~~Update~~by Blue Sky Resources (BSR), ~~Inc.~~the ~~filed~~operator of our Utikuma asset that the Province of Alberta has declared a ~~petition~~state of emergency due to wildfires in ~~intervention~~Alberta. OnWe ~~January~~were ~~11,~~informed ~~2023~~that because of wildfires in the vicinity of our oilfield assets, ~~PEC~~the field was shut in and ~~PCC~~all ~~filed a~~personnel ~~motion~~were toevacuated, ~~strike~~and that the ~~petition~~highway into ~~intervention~~the bySlave ~~Joel~~Lake ~~Oppenheim~~area has been closed. OnEarly ~~February~~assessments of 3,the ~~2023,~~situation ~~Joel~~indicate ~~Oppenheim~~that ~~filed~~our anUtikuma ~~opposition~~facilities tomay ~~the~~have ~~motion to~~incurred ~~strike~~some damage.

~~On November 4, 2022, forty acres at SUDS was acquired by Flying M. Real Estate, and Petrolia signed a new lease.~~21

OnItem ~~January~~2 ~~31,~~Management’s ~~2023,~~Discussion ~~Petrolia~~and ~~Canada~~Analysis ~~Corporation filed a Statement~~ of ~~Claim~~Financial inCondition ~~the~~and ~~Calgary~~Results ~~Court~~ of ~~King’s Bench of Alberta naming Blue Sky Resources, Ltd. As a defendant in a lawsuit.~~Operations

On February 9, 2023, Edna Meyer-Nelson, Suzanne Klein, and Laura S. Ward (the “Additional Intervenors”), each a shareholder of the Company, filed a separate Petition in Intervention to join in Oppenheim’s derivative suit against the Company.Introduction

OnPlease see ~~March~~the 2“Glossary of Oil and Gas Terms” in our Annual Report on Form 10-K for the year ended December 31, ~~2023~~2022, ~~Dr.~~filed ~~Marvin~~with the ~~Chasen~~SEC ~~and~~on ~~Billie~~May ~~Mae~~12, ~~Chasen~~2023 (the “~~Additional Intervenors~~2022 Annual Report”), ~~filed~~for a ~~separate~~list ~~Petition~~of inabbreviations ~~Intervention~~and todefinitions ~~join~~used inthroughout ~~Oppenheim’s~~this ~~derivative suit against the Company~~Report.

~~FORWARD~~This ~~LOOKING~~information ~~STATEMENTS~~should be read in conjunction with the unaudited condensed consolidated interim financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2022 Annual Report.

● The sale prices of crude oil; ● The amount of production from oil wells in which we have an interest; ● Lease operating expenses; ● Ongoing litigation; ● General economic conditions; and ● Other factors disclosed in this report.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Many factors discussed in this report, some of which are beyond our control, will be important in determining our future performance. Consequently, actual results may differ materially from those that might be anticipated from the forward-looking statements. In light of these and other uncertainties, you should not regard the inclusion of a forward-looking statement in this Report as a representation by us that our plans and objectives will be achieved, and you should not place undue reliance on such forward-looking statements. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

You should read the matters described in “Risk Factors” and the other cautionary statements made in, and incorporated by reference in, this Report as being applicable to all related forward-looking statements wherever they appear in this Report. We cannot assure you that the forward-looking statements in this Report will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

Please see the “Glossary of Oil and Gas Terms” in our Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on December 9, 2022 (the “2021 Annual Report”) for a list of abbreviations and definitions used throughout this Report.

This information should be read in conjunction with the unaudited condensed consolidated interim financial statements and the notes thereto included in this Quarterly Report on Form 10-Q and Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our 2021 Annual Report.

Certain capitalized terms used below and otherwise defined below, have the meanings given to such terms in the footnotes to our consolidated financial statements included above under “Part I – Financial Information” – “Item 1. Consolidated Financial Statements”.

Unless the context requires otherwise, references to the “Company,” “we,” “us,” “our,” “Petrolia”, “PEC” and “Petrolia Energy Corp.” refer specifically to Petrolia Energy Corp. and its wholly -owned subsidiaries.

In addition, unless the context otherwise requires and for the purposes of this Report only:

	●	“Bbl” refers to one stock tank barrel, or 42 U.S. gallons liquid volume, used in this Report in reference to crude oil or other liquid hydrocarbons;

	●	“Boe” refers to barrels of oil equivalent, determined using the ratio of one Bbl of crude oil, condensate, or natural gas liquids, to six Mcf of natural gas;

	●	“Mcf” refers to a thousand cubic feet of natural gas;

	●	“SEC” or the “Commission” refers to the United States Securities and Exchange Commission; and

	●	“Securities Act” refers to the Securities Act of 1933, as amended.

Item 2 Management’s Discussion and Analysis of Financial Condition and Results of Operations

Background

~~We were~~The Company was incorporated in Colorado onin ~~January 16,~~ 2002. In ~~April 2012~~2015, wethe Company became active in the exploration and ~~development~~production of oil and gas properties. In ~~Effective September 2,~~ 2016, wethe Company formally changed ~~our~~its name to Petrolia Energy Corporation and ~~moved~~redomiciled ~~the corporation~~ from Colorado to Texas.

Petrolia Energy Corporation explores for, develops, and produces crude oil, natural gas liquids (NGLs) and natural gas in producing basins in the United States of America and Canada. PEC’s principal oil and gas assets are further described in the “Plan of Operation” below. As of December 31, 2022, PEC’s total estimated net proved reserves were 1,065 thousand barrels of oil equivalent (MBoe), of which approximately 1,060 thousand barrels (MBbl) were crude oil and condensate reserves and approximately 29 million cubic feet (MMcf), or 5 MBoe, were natural gas reserves.

As of December 31, 2022, approximately 32% of PEC’s net proved reserves, on a crude oil equivalent basis, were located in the United States of America, and approximately 68% were located in Canada. Crude oil equivalent volumes are determined using a ratio of 1.0 barrel of crude oil and condensate to 6.0 thousand cubic feet (Mcf) of natural gas. PEC’s operations are crude oil and natural gas exploration and production related. For information regarding the risks associated with PEC’s oil and gas operations, See ITEM 1A, Risk Factors.

Plan of Operation

Since 2015, wePEC ~~have~~has established a clearly defined strategy to acquire, enhance and redevelop high-quality, ~~resource in place~~ oil and gas assets. The Company ~~has~~ has been focusing on ~~producing~~ assets in the United States and Canada while actively pursuing ~~our~~its strategy to offer low-cost operational ~~solutions~~ solutions in established oil and gas regions. We believe our mix of oil-in-place conventional plays, low-risk resource plays and the ~~redevelopment~~ redevelopment of our late-stage plays is a solid foundation for ~~continued~~ growth. Maintaining the lowest possible operating cost structure, coupled with efficient and ~~future~~safe ~~revenue~~operations, ~~growth~~is integral in the implementation of PEC’s strategy.

~~Slick~~With ~~Unit~~respect ~~Dutcher~~to ~~Sands~~information (on PEC’s working interest in wells or acreage, “~~SUDS~~net”) ~~Field~~oil and gas wells or acreage are determined by multiplying “gross” oil and gas wells or acreage by PEC’s working interest in the wells or acreage.

~~The~~Slick ~~SUDS~~Unit ~~oilfield~~Dutcher ~~consists~~Sand ~~of approximately 2,604 acres located in Creek County, Oklahoma and Petrolia owns a 100% Working Interest~~ (“WISUDS”) ~~with~~ ~~a 76.5% net revenue interest (NRI). Our engineering reports and analysis indicate there is still considerable recoverable reserves remaining.~~Field

The Slick Unit Dutcher Sand (SUDS) field is ~~currently~~located ~~shut-~~in ~~while~~Creek ~~awaiting~~County, ~~sufficient~~Oklahoma. ~~capital~~Petrolia toowns ~~recomplete~~a ~~the~~100% ~~wells~~working ~~and~~interest ~~repair~~(WI) ~~the~~with ~~flow~~an ~~lines~~approximately 76.5% ~~that~~net ~~were~~revenue ~~damaged~~ interest (NRI) in athe ~~grass~~2,530 ~~fire~~acre field. The SUDS West unit is approximately 1,670 acres and the SUDS East unit is approximately 860 acres.

As of December 31, 2022, SUDS total estimated net proved reserves were approximately 346 thousand barrels of oil equivalent (MBoe) and total estimated net probable reserves were approximately 153 thousand barrels of oil equivalent (MBoe).

On January 13, 2023, the Company received an Incident and Complaint Investigation Report issued by the Oklahoma Corporation Commission (OCC) due to a mineral owner complaint. The OCC issued a plug or produce order for SUDS West unit and SUDS East unit. The Company has received two extensions of time and is working with the OCC to implement a production plan to bring both units into compliance.

The SUDS field is currently shut-in while the Company completes a review of the land and lease records currently being conducted by a petroleum landman. PEC has also initiated a detailed reservoir and historical waterflood sweeping pattern analysis. The Company is awaiting the outcome of an integrated review of the SUDS subsurface geology. PEC is finalizing a SUDS capital budget with the intent to commence further field development in the third quarter of 2023.

Twin Lakes San Andres Unit (“TLSAU”) Field

~~TLSAU~~The isTwin ~~located~~Lakes 45San ~~miles~~Andres ~~from~~Unit ~~Roswell,~~(TLSAU) field is located in Chaves County, New Mexico. ~~TLSAU~~As ~~is currently shut-in awaiting confirmation~~ of ~~lease~~December ~~acreage~~31, ~~held~~2022, ~~then~~ ~~capital~~it ~~allocation~~was todetermined ~~complete~~that ~~some~~PEC does ~~regulatory~~not ~~plugging~~own ~~requirements.~~any ~~The~~TLSAU ~~Company~~leases, ~~plugged two wells at Twin Lakes in June 2022~~ and is ~~currently~~therefore ~~working~~has onno ~~surface remediation activities~~reserves.

~~The~~It ~~Company~~ is ~~reviewing~~estimated ~~strategic~~that ~~options~~PEC ~~with~~has 29 wells that need to be plugged and abandoned, plus surface remediated. The estimated cost of the TLSAU ~~asset~~well plugging and abandonment, ~~with~~and asurface ~~bias~~remediation ~~toward~~obligations ~~divesting~~are ~~the~~approximately ~~asset~~$1.2 million.

The majority of the TLSAU leases were terminated through the Stipulated Declaratory Judgement dated July 27, 2020 in the litigation between Moon Company, Trustee of the O’Brien Mineral Trust (Plaintiff) vs. Petrolia Energy Corporation (Defendant). Additional lease acreage was lost through the Stephanie Garcia Richard, Commissioner of Public Lands of the State of New Mexico (Plaintiff) vs. Oxy USA WTP, LP; Petrolia Energy Corp.; and Blue Sky NM Inc. (Defendants) litigation (Case No. D-101-CV-2021-00462).

The Twin Lakes San Andres Unit was terminated by the State of New Mexico Commissioner of Public Lands on August 28, 2019.

Askarii Resources, LLC

Effective February 1, 2016, the Company acquired 100% of the issued and outstanding interests of Askarii Resources LLC, a private Texas based oil &and gas service company for the aggregate value of $50,000. The Company ~~currently~~does ~~has~~not nointend ~~intent~~to of further ~~investing~~invest in the Askarii Resources, LLC acquisition.

Luseland, Hearts Hill and Cuthbert fields

On June 29, 2018, the Company acquired a 25% working interest in approximately 41,526 acres in the Luseland, Hearts Hill, and Cuthbert fields, located in Southwest Saskatchewan and Eastern Alberta, Canada. The working interest was acquired from Blue Sky Resources (a related party). Blue Sky Resources had previously acquired an 80% working interest from Georox Resources Inc., who had acquired the Canadian Properties from Cona Resources Ltd.

On September 17, 2018, the Company entered into a Memorandum of Understanding (“MOU”) with Blue Sky Resources to obtain the rights to acquire an additional 3% working interest, increasing our working interest to 28%. Total consideration paid from the Company to Blue Sky Resources for the additional 3% Working Interest was $150,000.

On February 16, 2022, Petrolia Canada Corporation (PCC), a wholly owned subsidiary of Petrolia Energy Corporation (PEC), entered into a Purchase and Sale Agreement (PSA) and Debt Settlement Agreement (DSA) with Prospera Energy, Inc. whereby PCC sold its 28% working interest in the Luseland, Hearts Hill and Cuthbert fields. The agreements were effective as of October 1, 2021.

Utikuma Lake field

On May 1, 2020, Petrolia Energy Corporation acquired a 50% working interest in approximately 28,000 acres located in the Utikuma Lake area in Alberta, Canada. The property is an oil-weighted asset ~~currently~~historically producing a total of approximately 500 bpd of light oil. The working interest was acquired from Blue Sky Resources in an affiliated party transaction as Zel C. Khan, the Company’s former Chief Executive Officer, is related to the CEO of Blue Sky Resources.

22The working interest was acquired from Blue Sky Resources Ltd. in an affiliated party transaction as Zel C. Khan, the Company’s former Chief Executive Officer, is related to the ownership of Blue Sky. Blue Sky acquired a 100% working interest in the Canadian Property from Vermilion Energy Inc. via Vermilion’s subsidiary Vermilion Resources. The effective date of the acquisition was May 1, 2020. The total purchase price of the property was $2,000,000 (CAD), with $1,000,000 of that total due initially. The additional $1,000,000 was contingent on the future price of WTI crude. At the time WTI price exceeded $50/bbl, the Company would pay an additional $750,000 CAD. In addition, at the time WTI price exceeded $57/bbl the Company would pay an additional $250,000 CAD (for a cumulative contingent total of $1,000,000 CAD). The price of WTI crude exceeded $50/bbl on January 6, 2021 and exceeded $57/bbl on February 8, 2021. The additional payments due were netted with the accounts receivable balance from previous Joint Interest Billing statements from BSR. The total USD value of the addition was $787,250, using prevailing exchange rates on the respective dates. Included in the terms of the agreement, the Company also funded their portion of the Alberta Energy Regulator (“AER”) bond fund requirement $763,754 CAD ($564,363 USD), necessary for the wells to continue in production after the acquisition. Additional funds in the amount of $490,624 CAD ($362,539 USD) remain in the other current asset balance for future payments to BSR, related to the acquisition.

~~Blue~~As ~~Sky Resources acquired a 100% working interest in the Canadian Property from Vermilion Energy Inc. via Vermilion’s subsidiary Vermilion Resources. The effective date~~ of ~~the~~December ~~acquisition was May 1~~31, ~~2020. The total purchase price of the property was $2~~2022,~~000,000~~ ~~(CAD),~~Utikuma ~~with $1,000,000 (CAD) of that~~ total ~~due~~estimated ~~initially.~~net ~~The~~proved ~~additional~~reserves ~~$1,000,000~~were ~~(CAD)~~approximately ~~was~~719 ~~contingent~~thousand onbarrels ~~the future price~~ of ~~WTI~~oil ~~crude.~~equivalent ~~At the time WTI price exceeded $50/bbl, the Company would pay an additional $750,000~~ (~~CAD~~MBoe). ~~In addition, at the time WTI price exceeded $57/bbl~~and ~~the Company would pay an additional $250,000 (CAD) (for a cumulative contingent~~ total ofestimated ~~$1,000,000~~net ~~(CAD)).~~probable ~~The~~reserves ~~price of WTI crude exceeded $50/bbl on January 6, 2021 and exceeded $57/bbl on February 8, 2021. The additional payments due~~ were ~~netted~~approximately ~~with~~177 ~~the~~thousand ~~accounts~~barrels ~~receivable balance from previous Joint Interest Billing statements from BSR. The total USD value~~ of ~~the~~oil ~~addition~~equivalent ~~was $787,250, using prevailing exchange rates on the respective dates. Included in the terms of the agreement, the Company also funded their portion of the Alberta Energy Regulator~~ (~~“AER”~~MBoe) ~~bond fund requirement ($557,199 USD), necessary for the wells to continue in production after the acquisition~~. ~~Additional funds ($357,938 USD) remain in the other current asset balance for future payments from BSR, related to the acquisition.~~

On May 5, 2023, the Company was notified by Blue Sky Resources (BSR), the operator of our Utikuma asset that the Province of Alberta has declared a state of emergency due to wildfires in Alberta. We were informed that because of wildfires in the vicinity of our Utikuma oilfield assets, the field was shut in and all personnel were evacuated, and that the highway to the Slave Lake area has been closed. Early assessments of the situation indicate that our Utikuma facilities may have incurred some damage.

Results of Operations

Revenues

Our oil and gas revenue reported for the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023 was 5$1,~~132~~376,~~360~~317, ana ~~increase~~decrease of $1460,~~078,047~~043 from the ~~nine~~ three months ended ~~September~~March 3031, ~~2021~~2022. The ~~increase~~decrease was due to ~~revenue~~decreased production ~~from~~at the Utikuma field, ~~and~~as ~~was~~well ~~offset~~as bylower ~~the~~sales ~~sale~~prices offor the ~~CONA asset~~oil ~~in the third quarter of 2021~~sold. ~~Revenues associated with our US properties totaled $6,079.~~

Operating Expenses

Operating expenses increased by $~~882~~494,~~850~~213, to $62,~~141~~013,~~674~~ 328 for the ~~nine~~three-month period ended ~~September~~March 3031, ~~2022~~2023, compared to $51,~~258~~519,~~824~~115 for the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2022. ~~The~~Operating ~~operating expense increase was~~expenses ~~primarily due to increased production~~ at Utikuma ~~Field.~~were ~~Lease operating expense for the nine months ended September 30~~higher, ~~2022~~and ~~was~~increased ~~$5,354,001, compared~~funds towere ~~$3,726,759~~spent ~~for~~on ~~the~~repairs ~~nine~~and ~~months~~maintenance ~~ended~~as ~~September 30, 2021~~well. ~~Operating~~General ~~expense~~and ~~was~~administrative ~~partially~~expenses ~~reduced~~were ~~by the sale of the CONA asset.~~also ~~Depreciation~~higher, ~~depletion~~due ~~and~~to ~~amortization~~payments ~~and~~to ~~the~~our ~~accretion~~auditors ofas ~~asset~~we ~~retirement~~caught ~~obligations~~up ~~were~~on ~~reduced~~our ~~because~~SEC offilings, ~~the smaller base for these items after the sale of CONA. The reduction in general~~ and ~~administrative~~payments ~~costs~~to bylawyers ~~$186,021~~related to ~~$490,489~~our ~~for~~ongoing ~~the nine months ended~~litigation, ~~September~~described ~~30, 2022, compared to $676,510 was caused by the decrease~~ in ~~employees~~Item ~~and~~1 ~~contractor~~of ~~and~~Part ~~related~~II ~~overhead~~of ~~expenses~~this report.

Other income (expense)

The Company had net other ~~expense~~income of $~~352~~152,~~386~~585 for the ~~nine~~ three-month period ended ~~September~~March 3031, ~~2022~~2023, compared to a net other expense of $~~261~~101,~~657~~ 931 for the ~~nine~~three-month ~~months~~ ended ~~September~~March 3031, ~~2021~~2022. ~~This~~The ~~difference~~main driver of this change was ~~caused~~the byunrealized ~~changes~~gain on held-for-trading securities, described in ~~the~~more ~~fair~~detail ~~market~~in ~~value~~Note of5. Our interest expense was lower, as debt has been paid down. We also sold scrap tubing at our ~~derivatives~~Twin Lakes field, ~~and a~~as ~~decrease~~we inworked ~~interest~~on ~~expense~~plugging two wells.

Foreign exchange loss was $735,~~241~~037 for the ~~nine~~three-month period ended ~~September~~March 3031, ~~2022~~2023, compared to a gain of $1129,~~409~~857 for the ~~nine~~three-month period ended ~~September~~March 3031, ~~2021~~2022. The ~~change~~increase isresulted from fluctuations in the value of the United States dollar against the Canadian dollar.

Net Income (Loss)

Net loss for the ~~nine~~three months ended ~~September~~March 3031, ~~2022~~2023, was $1484,~~502~~426,~~570,~~ compared to a net ~~loss~~income of $1215,~~600,561~~314 for the ~~nine~~three months ended ~~September 30~~March 31, ~~2021~~2022. The primary reasons for the change ~~was~~were decreased production and increased ~~production~~operating ~~from~~expenses at the Utikuma field, ~~the~~and ~~reduced~~our increased general and administrative ~~expense,~~ ~~and~~expenses ~~the~~described ~~change in the fair value of our derivative liabilities~~above.

Liquidity and Capital Resources

~~The~~As of March 31, 2023, we had total current ~~financial~~assets ~~condition~~of $1,417,221 and total assets of ~~the~~$8,569,540. ~~Company~~Our ~~has~~total ~~improved~~current ~~slightly~~liabilities ~~throughout~~as ~~the~~of ~~period~~March ~~from~~31, ~~December~~2023 were $9,525,711 and total liabilities of $11,892,566. We had negative working capital of $8,108,490 as of March 31, ~~2021~~2023. toAll ~~September~~of 30our notes payable are past their maturity dates, ~~2022~~and we owe a balance to the operator of the Utikuma asset.

AsOur material asset balances are made up of ~~September~~oil ~~30,~~and gas ~~2022,~~properties weand ~~had~~related ~~total~~equipment. ~~current~~We ~~assets~~also ofheld $1,~~626~~012,~~013~~859 ~~and total~~of ~~assets~~cash, ofand $8403,~~959,122~~458 of held-for-trading securities. Our ~~total~~most ~~current~~ significant liabilities asare ofnotes ~~September~~payable ~~30,~~and ~~2022~~notes ~~were~~payable related party of $93,~~277~~552,~~494~~933 ~~and~~along ~~our~~with ~~total~~accounts ~~liabilities~~payable asand ofaccrued ~~September 30,~~liabilities ~~2022 were~~ totaling $115,~~568~~967,~~992~~122. WeOur ~~had~~largest ~~negative~~accounts ~~working~~payable ~~capital~~balance is with the operator of the Utikuma asset. The largest accrued liabilities are $71,~~651~~045,~~481~~488 of asaccrued ofdividends ~~September~~on 30our preferred stock and $980,677 ~~2022~~owed to related parties for board fees and other compensation.

Our material asset balances are made up of oil and gas properties and related equipment. Our most significant liabilities are notes payable and notes payable related party of $3,983,447 along with accounts payable and accrued liabilities. Our largest accounts payable balances are with administrative and operations contractors. The largest accrued liabilities are $951,505 of accrued dividends on our preferred stock and $807,985 owed to related parties for board fees and other compensation.24

23Net cash generated (used) by operating activities was $(92,957) and $75,496 for the three months ended March 31, 2023, and 2022, respectively. The primary cause for the change was payment of fees to outside parties for legal and auditing services.

Net cash ~~generated~~from ~~(used)~~investing ~~by operating~~ activities was $~~1,852,030~~0.00 ~~and $(3,580)~~ for the three ~~nine~~ months ended ~~September~~March 3031, ~~2022~~2023, and ~~2021, respectively. The primary cause for~~ the ~~change~~three ~~was~~months aended ~~reduction~~March ~~in general and administrative expenses~~31, ~~and the receipt of revenue from oil sales, along with increased payables to the operator~~2022.

Net cash used by financing activities was $320,576 for the three months ended March 31, 2023; net cash ~~from~~provided ~~investing~~by financing activities was $~~0.00~~15,544 for the ~~nine~~three months ended ~~September~~March 3031, 2022. We paid down $320,576 ~~and~~in debt during the ~~nine~~three months ended ~~September~~March 3031, ~~2021~~2023. The cash provided in 2022 was proceeds from issuance of preferred stock, offset by payments of $9,456 to notes payable.

~~Net cash~~During ~~used by financing activities was $246,639 for~~ the ~~nine~~three months ended ~~September~~March 3031, ~~2022; net cash used by financing activities was $116~~2023,~~935~~ ~~for~~ the Company ~~nine~~operated ~~months~~at ~~ended~~a ~~September~~negative ~~30,~~cash ~~2021.~~flow ~~The change was caused by proceeds~~ from ~~issuance~~operations of ~~preferred~~approximately ~~stock~~$31,000 inper ~~2022~~month, and ~~increased~~ ~~payments~~our toauditors ~~debt~~have ~~holders~~raised a going concern.

During the nine months ended September 30, 2022, the Company operated at a positive cash flow from operations of approximately $200,000 per month however our auditors have raised a going concern in their audit report published with our 10K for 2021.

The Company has suffered recurring losses from operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. We plan to generate profits by working over existing wells, reducing general and administrative expenses and resolving ongoing litigation. However, we may need to raise additional funds to workover wells through the sale of our securities, through loans from third parties or from third parties willing to pay our share of drilling and completing the wells. We do not have any commitments or arrangements from any person to provide us with any additional capital.

If additional financing is not available when needed, we may need to cease operations. There can be no assurance that we will be successful in raising the capital needed to recomplete oil or gas wells nor that any such additional financing will be available to us on acceptable terms or at all.

Management believes that actions presently being taken to obtain additional funding provide the opportunity for the Company to continue as a going concern. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty.

Trends Affecting Future Operations

The factors that will most significantly affect our results of operations will be (i) the sale prices of crude oil and natural gas, (ii) the amount of production sold from oil or gas wells in which we have an interest, and (iii) lease operating expenses. Our revenues will ~~also~~ also be significantly impacted by our ability to maintain or increase oil or gas production through exploration and development activities, and the availability of funding to complete such activities.

It is expected that our principal source of cash flow will be from the production and sale of crude oil and natural gas reserves which are depleting assets. Cash flow from the sale of oil and gas production depends upon the quantity of production and the price obtained for the production. An increase in prices will permit us to finance our operations to a greater extent with internally generated funds, may allow us to obtain equity financing more easily or on better terms, and ~~lessens~~lessen the difficulty of obtaining financing. However, price increases may heighten the competition for oil and gas prospects, and may increase the costs of exploration and development~~, and because of potential price declines, increase the risks associated with the purchase of producing properties during times that prices are at higher levels~~.

A decline in oil and gas prices (i) will reduce the cash flow internally generated by the Company which in turn will reduce the funds available for exploring for and replacing oil and gas reserves, (ii) will increase the difficulty of obtaining equity and debt financing and worsen the terms on which such financing may be obtained, (iii) will reduce the number of oil and gas prospects which have reasonable economic terms, (iv) may cause us to permit leases to expire based upon the value of potential oil and gas reserves in relation to the costs of exploration, (v) may result in marginally productive oil and gas wells being abandoned as non-commercial, and (vi) may increase the difficulty of obtaining financing. However, price declines reduce the competition for oil and gas properties and correspondingly reduce the prices paid for leases and prospects.

~~The Company is actively working to resolve ongoing litigation in the U.S. and Canada.~~25

Critical Accounting Policies and New Accounting Pronouncements

In December 2001, the SEC requested that all registrants list their most “critical accounting polices” in the Management Discussion and Analysis. The SEC indicated that a “critical accounting policy” is one which is both important to the portrayal of a company’s financial condition and results, and requires management’s most difficult, subjective, or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

Going concern – The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses of $6263,~~841~~544,~~731~~521 since its inception and requires capital for its contemplated operational and marketing activities to take place. The Company’s ability to raise additional capital through the future sales of common stock is unknown. The obtainment of additional financing, the successful development of the Company’s contemplated plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company’s ability to continue as a going concern. The consolidated financial statements of the Company do not include any adjustments that may result from the outcome of these aforementioned uncertainties.

Item 3 Quantitative and Qualitative Disclosures about Market Risk

Pursuant to Item ~~305I~~305(e) of Regulation S-K (§ 229.305(e)), the Company is not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

Item 4 Controls and Procedures

(a) Disclosure Controls and Procedures. The Company’s Chief Executive Officer (the principal executive officer) and Interim Chief Financial Officer (principal financial/accounting officer) have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of ~~September~~March 3031, ~~2022~~2023. Based upon such evaluation, the Chief Executive Officer and the ~~Chief~~interim Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective to provide reasonable assurance that information required to be disclosed in our reports filed with the Commission pursuant to the Exchange Act, is recorded properly, processed, summarized and reported within the time periods specified in the rules and forms of the Commission and that such information is accumulated and communicated to our management, including our CEO and CFO, to allow timely decisions regarding required disclosures.

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and that management is required to apply its judgment in evaluating the benefits of possible controls and procedures relative to their costs.

(b) Changes in Internal Controls. There were no changes in our internal controls over financial reporting during the quarter ended ~~September~~March 3031, ~~2022~~2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II: OTHER INFORMATION

Item 1 Legal Proceedings

On ~~December~~January 3028, ~~2021~~2022, the ~~Company~~Securities ~~reached~~and Exchange Commission filed an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934 to suspend for a ~~settlement~~period ~~with~~not ~~Argonaut~~exceeding ~~Insurance~~twelve months or revoke the registration of each class of securities registered pursuant to Section 12 of the Exchange Act of the Company. The Division of Enforcement at the Securities and Exchange Commission (~~Argo~~the “Division”), ~~regarding~~filed a ~~final~~Motion ~~judgement~~for ofSummary ~~$52~~Disposition in this matter and the Company filed a Response to the Motion for Summary Disposition in April 2022. On May 5,~~749~~ ~~that~~2022, the Division filed its Response in Support of its ~~had~~Motion ~~been~~for ~~issued~~Summary onDisposition. ~~March~~On 6April 18, ~~2018~~2023, the Company was ordered to submit a brief by May 16, 2023, regarding the Company’s remedial efforts since these proceedings were instituted. The Company ~~paid~~plans ~~Argo~~to asubmit ~~lump~~such ~~sum~~brief ofby ~~$15~~May 16,~~000~~ 2023. The ultimate outcome of the proceeding is unknown and could result in ~~full~~the ~~satisfaction~~termination of the ~~original~~Exchange ~~judgement~~Act registration of the Company’s common stock pursuant to Section 12(j) of the Exchange Act.

OnThe ~~January~~Company ~~28, 2022, the Securities~~ and ~~Exchange~~Petrolia ~~Commission~~Canada ~~filed~~Corporation ~~an Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12~~(j“Petrolia Canada”), ofan ~~the~~affiliate ~~Securities Exchange Act~~ of ~~1934~~Petrolia, tofiled ~~suspend for~~ a ~~period~~lawsuit ~~not~~in ~~exceeding twelve months or revoke~~ the ~~registration~~133rd ofJudicial ~~each~~District ~~class~~Court, ofHarris ~~securities~~County ~~registered~~Texas ~~pursuant~~(Cause toNo. ~~Section~~2022-15278), 12against ofJovian ~~the~~Petroleum ~~Exchange~~Corporation, ~~Act~~Zel ofKhan ~~the Company. The Division of Enforcement at the~~(“Khan”) ~~Securities~~ and ~~Exchange~~Quinten ~~Commission~~Beasley (~~the~~ “~~Division~~Beasley”) ~~filed a Motion for Summary Disposition in this matter and the Company filed a Response to the Motion for Summary Disposition in April 2022. On May 5~~(collectively, ~~2022,~~ the ~~Division filed its Response in Support of its Motion for Summary Disposition~~“Defendants”).

As previously disclosed, the Company and Petrolia Canada Corporation (“Petrolia Canada”), an affiliate of Petrolia, filed a lawsuit in the 133rd Judicial District Court, Harris County Texas (Cause No. 2022-15278), against Jovian Petroleum Corporation, Zel Khan (“Khan”) and Quinten Beasley (“Beasley”) (collectively, the “Defendants”).

In the petition against the Defendants, Petrolia and Petrolia Canada alleged causes of action for fraud and breach of contract against all the named Defendants and breach of fiduciary duty claims against Defendants Zel Khan and Quinten Beasley. Defendant Zel Khan was a former CEO and Director of Petrolia, and Defendant Quinten Beasley was a former Senior Vice President and Director of Petrolia Canada.

Petrolia and Petrolia Canada demanded a jury trial and are seeking monetary relief of more than $1 million against the Defendants.

In April and May 2022, each of the Defendants filed an Original Answer, generally denying all of the allegations of Petrolia and Petrolia Canada.

Subsequently, in September 2022, Defendants filed an amended answer and counterclaims. Pursuant to the amended answer, Defendants generally denied the allegations of Petrolia and Petrolia Canada and are seeking indemnification under the Company’s governing documents and statutory provisions.

Beasley is seeking repayment of the outstanding balance of $5,000 plus accrued interest ($4,710) alleged owed to him by the Company in connection with a promissory note entered into with the Company on July 14, 2016.27

Beasley is seeking repayment of the outstanding balance of $5,000 plus accrued interest ($4,710) allegedly owed to him by the Company in connection with a promissory note entered into with the Company on July 14, 2016

In September 2022, Joel Oppenheim (“Oppenheim”) and Critical Update, Inc., owned by Beasley (“Critical Update” and collectively with Oppenheim, the “Intervenors”), filed a Petition in Intervention. Oppenheim alleges that he advanced at least $797,000 to the Company from 2015 to 2019 (including $416,900 alleged owed under a loan agreement) and that he also provided various certificates of deposit to the Company in the aggregate amount of $258,251. Oppenheim is seeking return of amounts advanced with interest, a declaratory judgment establishing the amount of Company stock and warrants owed to him, and attorney’s fees. Separately, Critical Update is seeking $120,000 CAD alleged owed to it in consideration for services rendered to Petrolia Canada, plus interest and attorney’s fees.

On October 11, 2022, Petrolia and Petrolia Canada filed a general denial of all the Defendants’ counterclaims.

Subsequently, on December 6, 2022, Oppenheim filed a motion for severance asking the court to sever his breach of loan agreement claim from the other claims in this lawsuit and adjudicate the claim as Cause No. 2022-15278-B. The same day, Oppenheim also filed a motion for partial summary judgment on his breach of loan agreement claim. On December 22, 2022, Oppenheim filed a separate lawsuit and application for temporary injunction (Cause No. 2022-83054) in the 157^th Judicial District Court, Harris County Texas against the Company and Petrolia Canada and their individual board members. That action is a shareholder derivative lawsuit filed against the Company alleging, among other things, breach of duty of loyalty and breach of duty of obedience, as well as seeking to compel a shareholder meeting and seeking expedited discovery. On December 30, 2022, Jovian Petroleum Corporation filed a petition in intervention to join this newly filed lawsuit.

In January 2023, Petrolia and Petrolia Canada filed a motion to strike the intervention of Oppenheim and on February 3, 2023, Oppenheim filed a response to that motion arguing that such intervention is proper. Such motions are still pending with the court.

On February 9, 2023, Edna Meyer-Nelson, Suzanne Klein, and Laura S. Ward (the “First Additional Intervenors”), each a ~~shareholder~~ shareholder of the Company, filed a separate Petition in Intervention to join in Oppenheim’s derivative suit against the Company.

On March 2, 2023, Dr. Marvin Chasen and Billie Mae Chasen (the “Second Additional Intervenors”, and together with the First Additional Intervenor), filed a separate Petition in Intervention to join in Oppenheim’s derivative suit against the Company.

The Additional Intervenors are seeking an order compelling an annual shareholder meeting of the Company; a temporary injunction requiring the Defendants to hold an annual and special meeting of the shareholders of the Company within 30 days to elect directors of the Company and conduct such other proper business as may come before it; a temporary injunction enjoining the Defendant Directors from voting their Series B Preferred Shares; an order combining the hearing on the temporary injunction with a trial on the merits; expedited discovery; and upon final trial, the Additional Intervenors are requesting: (i) rescission of the Series B Preferred Stock; (ii) forfeiture of all compensation paid to the Defendant Directors by the Company after the Series B Preferred Stock issuance; (iii) actual damages in an amount to be proven at trial; (iv) exemplary damages sufficient to deter the directors of other Texas corporations from disenfranchising a corporation’s shareholders, as alleged by the Additional Intervenors; (v) attorneys’ fees and expenses; and (vi) such other and further relief to which Additional Intervenors are entitled.

The outcome of the above litigation is currently unknown; however, the Company disputes the Defendants’ counterclaims and the allegations of the Intervenors and intends to defend the matter vigorously, while also continuing to seek all damages which it is due.

On March 16, 2022, Petrolia Canada Corporation received a Notice of Intention to Retain Collateral Pursuant to Section 62 of the Personal Property Security Act (Alberta) from the counsel of Blue Sky Resources Ltd. related to a Loan Agreement and General Security Agreement between Petrolia Canada Corporation and Emmett Lescroart. Petrolia Canada Corporation was notified that Blue Sky Resources Ltd., as assignee of the Emmet Lescroart loan, intends to retain the Utikuma loan collateral pursuant to the General Security Agreement with Petrolia Canada Corporation. On March 30, 2022, Petrolia Canada Corporation’s counsel responded to Blue Sky Resources, Ltd. with a Notice of Objection.

~~On January 31, 2023, Petrolia Canada Corporation filed a Statement of Claim in the Calgary Court of King’s Bench of Alberta naming Blue Sky Resources, Ltd. as a defendant in a lawsuit.~~28

Item 1A Risk Factors

There have been no material changes from the risk factors previously disclosed in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022, filed with the Commission on ~~December~~May 912, ~~2022~~2023 under the heading “Risk Factors”, except as set forth below and investors should review the risks provided in the Form 10-K and below, prior to making an investment in the Company. The business, financial condition and operating results of the Company can be affected by a number of factors, whether currently known or unknown, including but not limited to those described in the Form 10-K for the year ended December 31, ~~2021~~2022 under “Risk Factors” and below, any one or more of which could, directly or indirectly, cause the Company’s actual financial condition and operating results to vary materially from past, or from anticipated future, financial condition and operating results. Any of these factors, in whole or in part, could materially and adversely affect the Company’s business, financial condition, operating results and stock price.

~~We are~~Unanticipated ~~currently~~problems ~~behind~~at, inor downtime affecting, our ~~SEC~~facilities ~~filing~~and ~~obligations~~those operated by third parties on which we rely could have a material adverse effect on our results of operations.

~~This Form~~The ~~10-Q~~occurrence ~~filing~~of issignificant ~~being~~unforeseen ~~filed~~conditions or ~~past~~events in connection with the ~~due~~operation ~~date.~~or Asmaintenance of our facilities, such as the ~~date~~need to refurbish such facilities, complete capital projects at such facilities, shortages of ~~this~~workers ~~filing~~or materials, weadverse ~~are~~weather, ~~current~~including, inbut ~~filing~~not ~~our~~limited ~~quarterly~~to ~~reports~~lightning onstrikes, floods, ~~Form~~hurricanes, ~~10-Q~~tornadoes ~~for~~and ~~the~~earthquakes, ~~calendar~~equipment ~~year~~failures, ~~2022.~~fires, ~~Shareholders~~explosions, ~~may~~oil ~~have~~or ~~less~~other ~~information~~leaks, damage to ~~determine~~or destruction of property and equipment associated therewith, environmental releases and/or damage, government regulation changes affecting the ~~value~~use of ~~our~~such ~~common~~facilities, terrorist ~~stock~~attacks, ifmechanical weor ~~fail~~physical failures of equipment, acts of God, or other conditions or events, could prevent us from operating toour ~~timely~~facilities, ~~make~~or ~~filings~~prevent ~~with~~such ~~the~~third ~~SEC~~parties ~~and/~~from operating their facilities, or ~~fail~~could force us or such third parties to ~~make~~shut such ~~filings~~facilities down ~~with~~for ~~the~~repairs, ~~SEC~~maintenance, refurbishment or upgrades for a significant period of time.

~~Administrative~~For example, on May 5, 2023, the Company was notified ~~Proceedings~~by BSR, the operator of our Utikuma asset that the Province of Alberta has declared a state of emergency due to wildfires in Alberta. We were informed that because of wildfires in the vicinity of our oilfield assets, the field was shut in and all personnel were evacuated, and that the highway to the Slave Lake area has been closed. Early assessments of the situation indicate that our Utikuma facilities may have incurred some damage.

File No. 3-20724 was filed by the SEC seeking to revoke the registration of each class of securities registered pursuant to Section 12 of the Exchange Act. The Company has filed a response to the SEC’s motion, but there is no assurance that the Company will be successful, and that the registration of the Company’s securities will not be revoked.

Item 2 Unregistered Sales of Equity Securities and Use of Proceeds

~~Recent~~There were ~~Sales~~no securities sold by the Company during and through the date of ~~Unregistered~~filing ~~Securities~~of this report.

There were no securities sold by the Company during the period covered by this report and through the date of filing of this report, that were not registered under the Securities Act, which has not previously been included in a Current Report on Form 8-K or the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

We claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, and the rules and regulations promulgated thereunder in connection with the sales, grants and issuances described above since the foregoing issuances and grants did not involve a public offering, the recipients were (a) “accredited investors”, and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities Act. With respect to the transactions described above, no general solicitation was made either by us or by any person acting on our behalf. The transactions were privately negotiated and did not involve any kind of public solicitation. No underwriters or agents were involved in the foregoing issuances, and we paid no underwriting discounts or commissions. The securities sold are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.

Purchases of equity securities by the issue and affiliated purchasers

None.

Item 3 Defaults Upon Senior Securities

None.

Item 4 Mine Safety Disclosures

Not Applicable.

Item 5 Other Information

We claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506(b) of Regulation D of the Securities Act, and the rules and regulations promulgated thereunder in connection with the sales, grants and issuances described above since the foregoing issuances and grants did not involve a public offering, the recipients were (a) “accredited investors”, and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Securities ActNone. With respect to the transactions described above, no general solicitation was made either by us or by any person acting on our behalf. The transactions were privately negotiated and did not involve any kind of public solicitation. No underwriters or agents were involved in the foregoing issuances, and we paid no underwriting discounts or commissions. The securities sold are subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom.

Item 6 Exhibits

See the Exhibit Index following the signature page to this Quarterly Report on Form 10-Q for a list of exhibits filed or furnished with this report, which Exhibit Index is incorporated herein by reference.

Incorporated by Reference

Exhibit

Number

Filed or

Furnished

Herewith

Form

Exhibit Number

Filing Date/ Period End Date

File No.

31.1*

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*

Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**

Certification pursuant to Section 906 of the Sarbanes-Oxley Act

32.2**

Certification pursuant to Section 906 of the Sarbanes-Oxley Act

101.INS

Inline XBRL Instance Document*

101.SCH

Inline XBRL Taxonomy Extension Schema Document*

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document*

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document*

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document*

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document*

104

Cover Page Interactive Data File (embedded within the Inline XBRL document)

28* Filed herewith.

** Furnished herewith.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	PETROLIA ENERGY CORPORATION
March 20, 2023	By:	/s/ Mark M. Allen
May 15, 2023	By:	/s/ Mark M Allen
		Mark M. Allen
		Chief Executive Officer
		(Principal Executive Officer)
		(Principal Executive)

March 20, 2023	By:	/s/ Heather M. Monk
May 15, 2023	By:	/s/ Heather M Monk
		Heather M. Monk
		Interim Chief Financial Officer
		(Principal Financial and Accounting Officer)

EXHIBIT INDEX

			Incorporated by Reference
Exhibit Number		Filed or Furnished Herewith	Form	Exhibit Number	Filing Date/ Period End Date	File No.
04.01	Exhibit 4–1 - Description of Company’s Capital Stock		10-Q	04.01	06/30/2019	000-52690
10.01	Purchase and Sale Agreement dated and effective November 1, 2018, by and between Petrolia Energy Corporation and Crossroads Petroleum L.L.C.		10-Q	10.01	09/30/2018	000-52690
10.02	$240,000 Promissory Note dated November 2, 2018, by Crossroads Petroleum L.L.C. in favor of Petrolia Energy Corporation		10-Q	10.02	09/30/2018	000-52690
10.03	Loan Agreement dated September 17, 2018 with Emmett Lescroart		10-Q	10.03	09/30/2018	000-52690
10.04	Purchase and Sale Agreement dated and effective August 6, 2019, by and between Petrolia Energy Corporation and FlowTex Energy LLC		10-Q	10.04	06/30/2019	000-52690
10.05	Jovian Petroleum Corporation Line of Credit Extension, dated December 31, 2019		10-Q	10.05	06/30/2019	000-52690
10.06	Employment Agreement - Mark M. Allen dated September 1, 2020		8-K	10.06	09/01/2020	000-52690
10.07	Executive Salary Payment Agreement – Zel Khan dated January 11, 2021		10-Q	10.07	06/30/2019	000-52690
10.08	Utikuma Letter Agreement between BSR and Petrolia dated June 29, 2020		10-Q	10.08	06/30/2019	000-52690
10.09	Executive Salary Payable Agreement – Mark M. Allen dated March 30, 2021		10-Q	10.09	06/30/2019	000-52690
10.10	Debt to Equity Conversion Agreement – Mark M. Allen dated March 30, 2021		10-Q	10.10	06/30/2019	000-52690
10.11	Settlement and Mutual Release Agreement – Paul Deputy dated January 29, 2021		10-Q	10.11	06/30/2019	000-52690
10.12	M Allen $120,000 Loan Agreement @ 10% – dated 1/3/20		10-Q	10.12	03/31/2020	000-52690
10.13	M Allen $125,000 Loan Agreement @10% - dated February 14, 2020		10-Q	10.13	03/31/2020	000-52690
10.14	Reinhart $1,000,000 Loan Agreement @ 10% - dated January 6, 2020		10-Q	10.14	03/31/2020	000-52690
10.15	SUDS Consulting Agreement (Funding)– M Allen $62,000 @ 10% - dated 2/29/20		10-Q	10.15	03/31/2020	000-52690
10.16	American Resources Loan Agreement $50,000 – non interest bearing dated 02/28/20		10-Q	10.16	03/31/2020	000-52690
10.17	SUDS Development Funding-Allen $25K		10-Q	10.17	06/30/2020	000-52690
10.18	PPP Loan Agreement-$56K-04/23/20		10-Q	10.18	06/30/2020	000-52690
10.19	Letter Agreement for sale of PCC to BSR for $6.5M, effective 08/31/21		8-K	10.19	09/02/2021	000-52690
10.20	Resignation of Z Khan as CEO effective 09/01/21		8-K	10.20	09/03/2021	000-52690
10.21	Promotion of M Allen from President to CEO effective 09/01/21		8-K	10.21	09/03/2021	000-52690
10.22	Lazy D Ranch Loan Agreement 09/02/20 - $75K		10-Q	10.22	09/30/2021	000-52690
10.23	8-K Lazy D Ranch Settlement (SUDS)		8-K	10.23	11/21/2021	000-52690

10.24	TLSAU Notice of Violation from the New Mexico OCD		8-K	10.24	10/25/2021	000-52690
10.25	Series B Preferred Stock		8-K	10.25	10/25/2021	000-52690
10.26	TLSAU Stipulated Final Order		8-K	10.26	01/14/2022	000-52690
10.27	Settlement with Argonaut Insurance Company		8-K	10.27	01/14/2022	000-52690
10.28	Purchase and Sale Agreement and Debt Settlement with Prospera Energy		8-K	10.28	02/28/2022	000-52690
10.29	Series C Convertible Preferred Stock		8-K	10.29	03/03/2022	000-52690
10.30	Lawsuit against Jovian Petroleum, Zel Khan and Quinten Beasley		8-K	10.30	03/18/2022	000-52690
10.31	Notice of Assignment - Emmett Lescroart loan to Petrolia Canada Corporation		10-Q	10.31	03/31/2021	000-52690
10.32	Amended Loan Agreement – Emmett Lescroart – The Prospera/Cona Assets – dated January 27, 2021		10-Q	10.32	03/31/2021	000-52690
10.33	Amended Loan Agreement – Emmett Lesroart – The Utikuma Asset – dated January 27, 2021		10-Q	10.33	03/31/2021	000-52690
10.34	Amended Loan Agreement – Joel Oppenheim – dated February 12, 2021		10-Q	10.34	03/31/2021	000-52690
10.35	Amended Loan Agreement – Ivar Siem/American Resources/Drillmar – dated January 1, 2021		10-Q	10.35	03/31/2021	000-52690
10.36	Amended Loan Agreement – Mark M. Allen – dated January 1, 2021		10-Q	10.36	03/31/2021	000-52690
10.37	Letter Agreement entered on June 11, 2022, by and between Blue Sky Resources Ltd. an Petrolia Energy Corporation		8-K	10.37	06/24/2022	000-52690
10.38	Update to Lawsuit against Jovian Petroleum, Zel Khan and Quentin Beasley		8-K	10.38	11/08/2022	000-52690
10.39	Update on Pending Litigation Matters		8-K	10.39	02/10/2023	000-52690
10.40	Letter to Shareholders		8-K	10.40	03/15/2023	000-52690
14.1	Code of Ethical Business Conduct		10-Q	14.1	09/30/2015	000-52690
14.2	Whistleblower Protection Policy		8-K	14.2	05/24/2018	000-52690
14.3	Insider Trading Policy		10-Q	14.3	06/30/2019	000-52690
14.4	Related Party Transaction Policy		10-Q	14.4	06/30/2019	000-52690
16.1	Letter to Securities and Exchange Commission from MaloneBailey, LLP, LLP, dated February 22, 2019		8-K	16.1	02/25/2019	000-52690
31.1	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*	X
31.2	Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*	X
32.1	Certification pursuant to Section 906 of the Sarbanes-Oxley Act*	X
32.2	Certification pursuant to Section 906 of the Sarbanes-Oxley Act*	X
101.INS	Inline XBRL Instance Document**	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document**	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document**	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document**	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document**	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document**	X
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)	X

* Filed herewith.

** Furnished herewith

Filing Compare · Petrolia Energy Corp