Prairie Operating Co. (PROP)

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

The
following discussion and analysis of our financial condition and results of operations for the year ended December 31, 2024 and 2023
should be read in conjunction with our consolidated financial statements and related notes to those financial statements and other financial
information appearing in this Annual Report.

Our
discussion includes forward–looking statements based upon current expectations that involve risks and uncertainties, such as our
plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated
in these forward–looking statements as a result of a number of factors, including those described under the headings “Risk
Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing elsewhere in the Annual Report.
Except as otherwise indicated or required by the context, references to the “Company,” “we,” “us,”
“our” or similar terms refer to Prairie Operating Co.

Overview

We
are an independent oil and gas company focused on the acquisition and development of crude oil, natural gas, and NGLs. Our assets
and operations are strategically located in the oil region of rural Weld County, within the DJ Basin. We believe the DJ Basin to be one
of the premier resource plays in the U.S. Weld County boasts some of the lowest break-even prices in the U.S., and has a long production
history that has proven and consistent results. The productivity of this resource is demonstrated by the integral role that Weld County
holds in Colorado’s energy economy, having produced 82% of Colorado’s oil production as of December 2024.

We seek to deliver energy in an environmentally efficient manner by deploying
next-generation technology and techniques. In addition to growing
production through our drilling operations, we also seek to grow our business through accretive acquisitions, focusing on assets with
the following criteria: (i) producing reserves, with opportunities to add accretive, undeveloped bolt–on acreage; (ii) ample, high
rate–of–return inventory of drilling locations that can be developed with cash flow reinvestment; (iii) strong well–level
economics; (iv) liquids–rich assets; and (v) accretive valuation.

As
of December 31, 2024, our E&P assets consist of our Central Weld Assets, Genesis and Genesis Bolt–on Assets, and the Exok
Option Purchase assets. Our Central Weld Assets were acquired from NRO in October 2024 and included 26 revenue producing oil and
natural gas wells. Our total Genesis Assets include approximately 18,100 net leasehold acres in, on and under approximately 31,000 gross
acres and our Central Weld Assets include approximately 5,640 net leasehold acres, on and under approximately 6,000 gross
acres. We commenced drilling wells on our Genesis Bolt-on Assets in the third quarter of 2024 and all eight wells began producing in
February 2025.

Recent
Developments

Bayswater Acquisition

On
February 6, 2025, we and certain of our subsidiaries entered into the Bayswater PSA with Bayswater, pursuant to which we agreed to acquire
the Bayswater Assets from Bayswater for a purchase price of $602.8 million, subject to certain closing price adjustments.

The Bayswater Acquisition has an outside closing date of March 15, 2025,
subject to customary closing conditions, with an economic effective date of December 1, 2024. However, there can be no assurance that a closing will occur.
The Bayswater PSA contains customary representations, warranties and covenants of us and Bayswater for a transaction of this nature.

Development
Program Launch

During
the third quarter of 2024, we commenced our initial drilling program, starting with an 8-well pad on Shelduck South, part of the
Genesis Bolt–on Assets acquired in February 2024. The Shelduck South development consists of eight two-mile lateral wells
across 1,115 gross leasehold acres, targeting the Niobrara B and C formations. We spud our first well on September 5, 2024 and all
eight wells began producing in February 2025.

NRO
Acquisition

On
January 11, 2024, we entered into the NRO Agreement to acquire the Central Weld Assets, located in the DJ Basin in Weld County, Colorado
for total consideration of $94.5 million, subject to certain closing price adjustments and other customary closing conditions. The Purchase
Price consisted of $83.0 million in cash and $11.5 million in deferred cash payments. Pursuant to the NRO Agreement, we deposited $9.0
million of the Purchase Price into an escrow account on January 11, 2024.

On
August 15, 2024, we and NRO agreed to amend certain terms of the NRO Agreement, pursuant to which, total consideration of the NRO
Acquisition was reduced to $84.5 million in cash, subject to certain closing price adjustments and other customary closing
conditions, and the parties agreed to remove the deferred cash payments. Additionally on August 15, 2024, $6.0 million of the
Deposit was released to NRO and the remaining $3.0 million was returned to us.

On October 1, 2024, we closed the NRO Acquisition and paid $49.6 million
to the sellers in cash, using cash on hand, the proceeds from the issuance of Common Stock, and a portion of the proceeds from the issuance
of the Senior Convertible Note. We completed the final settlement with NRO in December 2024, which resulted in a final purchase price
of $55.5 million.

Credit
Facility

On December 16, 2024, we, as borrower, entered into a reserve-based credit
agreement with Citibank, N.A. (“Citi”), as administrative agent and the financial institutions party thereto (the “Credit
Facility Agreement”), which has a maximum credit commitment of $1.0 billion and is set to mature on December 16, 2026 (collectively,
the “Credit Facility”). The Credit Facility is guaranteed by all of our restricted subsidiaries and is secured by a first-priority
security interest on substantially all of our oil and natural gas properties and substantially all of our personal property assets, subject
to customary exceptions. As of December 31, 2024, the Credit Facility had a borrowing base and an aggregate elected commitment of $44.0
million and a $5.0 million sublimit for the issuance of letters of credit. The borrowing base is subject to semi-annual redeterminations
based upon the value of our oil and gas properties as determined in a reserve report dated as of January and July of each year, subject
to certain interim redeterminations.

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As
of December 31, 2024, we had $28.0 million of revolving borrowings and no letters of credit outstanding under the Credit Facility,
resulting in $7.2 million of availability for future borrowings and letters of credit. Refer to Liquidity and Capital Resources -
Significant Sources of Liquidity below for a further discussion of the Credit Facility. On February 3, 2025, we entered into the
First Amendment to the Credit Facility Agreement (the “First Amendment”), which among other things, increased the
borrowing base and the aggregate elected commitments to $60.0 million.

Standby
Equity Purchase Agreement

On
September 30, 2024, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, LTD., a Cayman
Islands exempt limited company (“Yorkville”), whereby, subject to certain conditions, we have the right, not the
obligation, to sell to Yorkville up to $40.0 million shares of Common Stock, at any time and in the amount as specified in the
Company’s request (“Advance Notice”), during the commitment period commencing on September 30, 2024 (the
“SEPA Effective Date”) and terminating on September 30, 2026. Each issuance and sale of shares by us to Yorkville
pursuant to the SEPA (“Advance”) is subject to a maximum limit equal to 100% of the aggregate volume traded of our
Common Stock on the Nasdaq Stock Market during the five trading days immediately prior to the date of the Advance Notice. The shares
will be issued and sold to Yorkville at a per share price equal to 97% of the lowest daily volume weighted average price of Common
Stock for three consecutive trading days commencing on the trading day immediately following Yorkville’s receipt of an Advance
Notice. On September 30, 2024, pursuant to the SEPA, we paid Yorkville a structuring fee of $25,000 and a Commitment Fee by issuing
Yorkville 100,000 shares of Common Stock. Our right to sell shares to Yorkville under the SEPA was contingent upon us having an
effective registration statement, which was declared effective by the SEC on December 20, 2024. Refer to Liquidity and Capital
Resources - Significant Sources of Liquidity below for a further discussion of the SEPA.

Senior
Convertible Note

On
September 30, 2024, Yorkville advanced an initial $15.0 million (the “Pre-Paid Advance”) to us and we issued a
convertible promissory note (the “Senior Convertible Note”), with an interest rate of 8.00% and a maturity date of
September 30, 2025. Our obligations with respect to the Pre-Paid Advance and under the Senior Convertible Note are guaranteed by
Prairie LLC, a subsidiary of the Company, and Prairie Holdco, a subsidiary of the Company, pursuant to a global guaranty agreement
entered into by Prairie LLC and Prairie Holdco in favor of Yorkville on September 30, 2024. Yorkville may convert the Pre-Paid
Advance into shares of Common Stock at any time at the Conversion Price. We may, at any time, redeem all or a portion of the amounts
outstanding under the Senior Convertible Note at 105% of the principal amount thereof, plus accrued and unpaid interest.

In December 2024, and in conjunction with the
Credit Facility Agreement, we made a $3.7 million payment on the Senior Convertible Note, resulting in a principal balance of $11.3
million as of December 31, 2024. Additionally, in January and February 2025, Yorkville converted the remaining $11.3 million of the Senior
Convertible Note in exchange for 2.1 million shares of Common Stock. Refer to Liquidity and Capital Resources - Significant
Sources of Liquidity below for a further discussion of the Senior Convertible Note.

Subordinated
Promissory Note and Subordinated Note Warrants

On September 30, 2024, we entered into a subordinated promissory note (the
“Subordinated Note”) with First Idea Ventures LLC and The Hideaway Entertainment LLC (together, the “Noteholders”),
in a principal amount of $5.0 million, with a maturity of December 31, 2025. The Subordinated Note has an interest rate of 10.00% and
the Noteholders are entitled to a minimum return on capital of up to 2.0x upon the repayment, prepayment or acceleration of the obligations,
or the occurrence of certain other triggering events under the Subordinated Note. Pursuant to the terms of the Subordinated Note, we issued
to the Noteholders warrants (the “Subordinated Note Warrants”) to purchase up to 1,141,552 shares of Common Stock, vesting
in tranches based on the date of repayment of the Subordinated Note.

In
December 2024, and in conjunction with the Credit Facility Agreement, we made a $1.8 million payment on the Subordinated Note,
resulting in a principal balance of $3.2 million as of December 31, 2024. Refer to Liquidity and Capital Resources - Significant Sources of Liquidity below
for a further discussion of the Subordinated Note and Subordinated Note Warrants.

Factors
Affecting the Comparability of Financial Results

NRO
Acquisition

As
discussed above, on January 11, 2024, we entered into the NRO Agreement to acquire the Central Weld Assets, located in the DJ Basin in
Weld County, Colorado for total consideration of $94.5 million, subject to certain closing price adjustments and other customary closing
conditions. Pursuant to the NRO Agreement, we deposited $9.0 million of the Purchase Price into an escrow account on January 11, 2024.

On
August 15, 2024, we and NRO agreed to amend certain terms of the NRO Agreement, pursuant to which, total consideration of the NRO
Acquisition was reduced to $84.5 million in cash, subject to certain closing price adjustments and other customary closing
conditions. Additionally on August 15, 2024, $6.0 million of the Deposit was released to NRO and the remaining $3.0 million was
returned to us.

On
October 1, 2024, we closed the NRO Acquisition and paid $49.6 million to the sellers in cash, using cash on hand, the proceeds from the
issuance of Common Stock, and a portion of the proceeds from the issuance of the Senior Convertible Note. We completed the final settlement
with NRO in December 2024, which resulted in a final purchase price of $55.5 million.

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Crypto
Sale

As previously discussed, we acquired our cryptocurrency mining operations
in May 2023, concurrent with the Merger. On January 23, 2024, we sold all of our Mining Equipment for consideration consisting of (i)
$1.0 million in cash and (ii) $1.0 million in deferred cash payments, to be paid out of (a) 20% of the monthly net revenues received by
the buyer associated with or otherwise attributable to the Mining Equipment until the aggregate amount of such payments equals $250,000
and (b) thereafter, 50% of the monthly net revenues received by the buyer associated with or otherwise attributable to the Mining Equipment
until the aggregate amount of such payments equals the Deferred Purchase Price, plus accrued interest. As of December 31, 2024, we have
received $0.3 million of the Deferred Purchase Price.

Commodity
Prices

Since
oil, natural gas, and NGL prices are the most significant factors impacting our results of operations, continued price variations can
have a material impact on our financial results and capital expenditures. In an effort to reduce the impact of price volatility, and
in compliance with requirements under our Credit Facility Agreement, we enter into derivative contracts to economically hedge a portion
of our estimated production from our proved, developed, producing oil and natural gas properties against adverse fluctuations in commodity
prices. By doing so, we believe we can mitigate, but not eliminate, the potential negative effects of decreases in oil and natural gas
prices on our cash flows from operations. However, our hedging activity could reduce our ability to benefit from increases in oil and
natural gas prices. Further, we could sustain losses to the extent our oil and natural gas derivative contract prices are lower than
market prices and, conversely, we could recognize gains to the extent our oil and natural gas derivative contract prices are higher than
market prices. Refer to Results of Operations - Other income and expenses below for a discussion of our recognized gains or losses
on derivative contracts.

As
of December 31, 2024, we had the following outstanding crude oil and natural gas derivative contracts in place, which settle monthly
and are indexed to NYMEX West Texas Intermediate and NYMEX Henry Hub, respectively:

Results
of Operations

Revenue,
Production, and Average Realized Price

The
following table presents the components of our revenue, production, and average realized sales price for the periods indicated:

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Oil
revenue and production. For the year ended December 31, 2024, our oil production was 96.1 MBbls resulting in oil revenue of $6.6
million and an average realized price of $68.60 per barrel. All of our oil revenue for the year ended December 31, 2024 was derived from
the assets acquired in the NRO Acquisition, which closed on October 1, 2024. We did not have any oil revenue prior to the NRO Acquisition.

Natural
gas revenue and production. For the year ended December 31, 2024, our natural gas production was 245.1 MMcf resulting in natural
gas revenue of $0.6 million and an average realized price of $2.25 per MMcf. All of our natural gas revenue for the year ended December
31, 2024 was derived from the assets acquired in the NRO Acquisition, which closed on October 1, 2024. We did not have any natural gas
revenue prior to the NRO Acquisition.

NGL
revenue and production. For the year ended December 31, 2024, our NGL production was 33.0 MBbls resulting in NGL revenue of $0.8
million and an average realized price of $24.03 per MBbl. All of our NGL revenue for the year ended December 31, 2024 was derived from
the assets acquired in the NRO Acquisition, which closed on October 1, 2024. We did not have any NGL revenue prior to the NRO Acquisition.

Operating
expenses

The following table presents the components of our operating expenses for
the periods indicated:

NM: A per Boe calculation is not meaningful due
to a zero-value denominator.

Lease
operating expenses. For the year ended December 31, 2024, lease operating expenses (“LOE”)
increased $1.3 million compared to the year ended December 31, 2023, fully driven by LOE recognized for the properties acquired in the
NRO Acquisition, which closed on October 1, 2024.

Gathering, transportation, and processing expenses.
For the year ended December 31, 2024, gathering, transportation, and processing expenses increased $0.9 million compared to the year ended
December 31, 2023, fully driven by the gathering, transportation, and processing expenses recognized for the properties acquired in the
NRO Acquisition, which closed on October 1, 2024.

Ad
valorem and production taxes. For the year ended December 31, 2024, ad valorem and production taxes increased $0.6 million compared
to the year ended December 31, 2023, fully driven by the ad valorem and production taxes recognized for the properties acquired in the
NRO Acquisition, which closed on October 1, 2024.

Depreciation,
depletion, and amortization. For the year ended December 31, 2024, depreciation, depletion, and amortization (“DD&A”) expenses were $0.4 million, the majority of which related
to DD&A for the NRO Acquisition wells.

Exploration
expenses. For the year ended December 31, 2024, exploration expenses increased $0.5 million compared to the year ended December 31,
2023. These increases were driven by delay rental costs incurred on oil and gas leases during the year ended December 31, 2024, which
were not incurred during the same periods of 2023.

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General
and administrative expenses. For the year ended December 31, 2024, general and administrative expenses increased $14.3 million compared
to the year ended December 31, 2023. This increase aligns with the growth of our E&P business during the year ended December
31, 2024 and was primarily driven by incremental stock–based compensation of $5.7 million,
employee and benefit expenses of $4.0 million, legal and accounting costs of $2.4 million, financing commitment fees of $0.6 million,
investor relations costs of $0.4 million, and insurance and rent costs of $0.4 million.

Other expenses

The following table presents the components of our other expenses for the periods indicated:

Interest
expense. For the year ended December 31, 2024, interest expense increased $1.0 million
compared to the year ended December 31, 2023, primarily driven by the interest and premium paid for the partial
redemption of the Senior Convertible Note and the interest and premium paid for the partial redemption of the
Subordinated Note. Refer to Liquidity and Capital Resources - Significant Sources of Liquidity below for a further discussion of
the Senior Convertible Note and the Subordinated Note.

Loss
on derivatives, net. For the year ended December 31, 2024, we recognized a $4.4 million unrealized
loss, net on derivatives related to the change in fair value of our derivative contracts, which we entered into in December 2024 pursuant
to our Credit Facility Agreement. We did not have any outstanding derivative contracts during the year ended December 31, 2023, therefore,
we did not recognize a loss on derivatives for the period. Refer to Factors Affecting the Comparability of Financial Results –
Commodity Prices above for a further discussion of our derivative contracts.

Loss
on adjustment to fair value – debt and warrants. We have multiple financial instruments that are valued at fair value on a recurring basis; therefore, we recognize
the changes in fair value at each remeasurement period as a loss on adjustment to fair value – debt and warrants on our consolidated
statement of operations for the period. For the year ended December 31, 2024, the loss on adjustment to fair value – debt and warrants
reflects the fair value adjustments of $0.8 million for the SEPA, $2.1 million for the Senior Convertible Note, $1.1 million for the Subordinated
Note, and $1.4 million for the Subordinated Note Warrants recognized during the period. Refer to Liquidity and Capital Resources -
Significant Sources of Liquidity below for a further discussion of the SEPA, the Senior Convertible Note and the Subordinated Note.

For the year ended December 31, 2023, the loss
on adjustment to fair value – debt and warrants reflects the fair value adjustments of $39.8 million for the portion of the Series
D A Warrants, $3.8 million for the senior secured convertible debentures, which were converted into Common Stock in October 2023, and $1.5 million for the shares of Common Stock which we were obligated to issue as a result of
the Merger and related transactions, which were fully issued in September 2023.

Loss
on debt issuance. For the year ended December 31, 2024, the loss on debt issuance of $3.0 million reflects the loss recognized for
the issuance of the Subordinated Note and the Subordinated Note Warrants. As discussed above, we have elected the fair value option to
account for both the Subordinated Note and the Subordinated Note Warrants and engaged a third-party to determine the fair value of both
instruments at issuance. As of December 31, 2024, the total fair value of the Subordinated Note and the Subordinated Note Warrants exceeded
the proceeds of $5.0 million, as a result, we have recognized a loss on debt issuance of $3.0 million on our consolidated statements
of operations for the year ended December 31, 2024.

Interest income and other. For the year ended
December 31, 2024, interest income and other increased $0.3 million compared to the year ended December 31, 2023, primarily driven by
higher average cash balances in the current period.

Liquidated
damages. For the year ended December 31, 2023, we recognized liquidated damages expense of $0.5 million due to the registration statement
registering the resale of certain shares of our Common Stock and the shares of Common Stock underlying the Series D Preferred Stock and
Series D PIPE Warrants not being declared effective within the timeframe required under the related registration rights agreement. We
did not recognize any liquidated damage expense during the year ended December 31, 2024.

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Discontinued
operations

The following table presents the components of our net loss from discontinued
operations for the periods indicated:

For
the year ended December 31, 2024, the net loss from discontinued operations decreased $16.0 million compared to the year ended
December 31, 2023. As discussed above, we completed the Crypto Sale in January 2024; therefore, we did not have any cryptocurrency
mining revenue or related expenses during the majority of the year ended December 31, 2024. However, we did recognize a $1.1 million
loss on the sale of cryptocurrency mining equipment. Additionally, during the year ended December 31, 2023, we recognized $17.1
million of impairment of cryptocurrency mining equipment to write off the excess of the allocated purchase price to the
cryptocurrency assets which were over the fair value of the acquired net assets and to subsequently write off shipping and customs
fees incurred on miners after the Merger. Refer to Factors Affecting the Comparability of Financial Results – Crypto Sale above for a further
discussion of the Crypto Sale.

Non-GAAP
Financial Measures

Adjusted
EBITDA and PV-10 are financial measures not calculated or presented in accordance with generally accepted accounting principles (“GAAP”).
These supplemental non-GAAP financial measures are used by management and external users of our financial statements, such as investors,
lenders, and rating agencies and may not be comparable to similarly-titled measures reported by other companies.

Adjusted
EBITDA

Adjusted EBITDA is used by management to evaluate the performance of our
business, make operational decisions, and assess our ability to generate cashflows. Management believes Adjusted EBITDA provides investors
with helpful information to better understand the underlying performance trends of our business, facilitate period-to-period comparisons,
and assess the company’s operating results.

Adjusted EBITDA is derived from net loss from
continuing operations and is adjusted for income tax expense, depreciation, depletion, and amortization, accretion of asset
retirement obligations, non-cash stock-based compensation, interest expense (income), net, non-cash loss on issuance of debt,
non-cash loss on adjustment to fair value – debt and warrants, and loss on unrealized derivatives, all as applicable. We
adjust net loss from continuing operations for the items listed above to arrive at Adjusted EBITDA because these amounts can vary
substantially between periods and companies within our industry depending upon accounting methods, book values of assets, capital
structures, and the method by which assets were acquired. Adjusted EBITDA has limitations as an analytical tool, including that it
excludes certain items that affect our reported financial results. Adjusted EBITDA should not be considered as an alternative to, or
more meaningful than, net income calculated in accordance with GAAP or as an indicator of our operating performance or liquidity.
Additionally, our calculation of Adjusted EBITDA may not be comparable to similarly titled measures used by other companies.

The
following table presents the reconciliation of Net loss from continuing operations to Adjusted EBITDA for the periods
indicated:

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PV-10

PV-10 is a financial measure not presented in accordance
with U.S. GAAP. PV-10 is derived from the Standardized Measure, which is the most directly comparable GAAP financial measure for proved
reserves. PV-10 is a computation of the Standardized Measure on a pre-tax basis and is equal to the Standardized Measure at the applicable
date, before deducting future income taxes discounted at 10%. Neither PV-10 nor Standardized Measure represents an estimate of the fair
market value of the applicable crude oil, natural gas, and NGLs properties.

We believe that the presentation of PV-10 is
relevant and useful to our investors as a supplemental disclosure to the Standardized Measure, or after-tax amount, because it
presents the discounted future net cash flows attributable to our reserves before considering future corporate income taxes and our
current tax structure. While the standardized measure is dependent on the unique tax situation of each company, PV-10 is based on
prices and discount factors that are consistent for all companies.

The
following table presents the reconciliation of the Standardized Measure to the PV-10 of our estimated proved reserves for the periods
indicated:

Liquidity
and Capital Resources

Overview

Our
E&P activities will require us to make significant operating and capital expenditures. In 2023, our primary sources of liquidity
were the proceeds from the Series D PIPE and the Series E PIPE, which funded the purchase of the initial Genesis Assets and working
capital, as well as proceeds from the exercise of warrants, which funded, among other things, working capital and the deposit for
the NRO Acquisition in 2024. We commenced drilling wells on our Genesis Bolt-on Assets in the third quarter of 2024 and those wells
began producing in February 2025.

Additionally,
during the third quarter of 2024, we raised approximately $35.0 million in cash by issuing Common Stock, the Senior Convertible
Note, and the Subordinated Note. On October 1, 2024, we used cash on hand, the proceeds from the issuance of Common Stock, and a
portion of the proceeds from the issuance of the Senior Convertible Note to fund the closing of the NRO Acquisition. On December 16,
2024, we entered into a reserve-based Credit Facility with Citi and borrowed $28.0 million to help fund our working capital needs.
Management expects that our cash balance, expected revenues from the producing NRO wells and newly producing Shelduck wells, and
liquidity available under the SEPA and Credit Facility and potential offerings under the effective Form S-3 registration statement
will be sufficient to fund our development program and operations.

Our
development program is dependent upon our cash flow from operations generated from our assets and
our ability to obtain additional financing through our SEPA and Credit Facility. Additionally, we could obtain additional financing through public and private capital markets; however,
the availability of additional capital would be subject to numerous factors
outside of our control including prices of oil and natural gas and the overall health of the U.S. and global economic environments.
There can be no assurance that we will be able to obtain such additional capital. The amount and allocation of future capital
expenditures will depend upon a number of factors, including the amount and timing of cash flows from operations, investing and
financing activities, and the timing and cost of additional capital sources.

We
currently plan to be the operator on substantially all of our acreage. As a result, we anticipate that the timing and level of our capital spending
will largely be discretionary and within our control. We could choose to defer a portion of our planned capital expenditures depending
on a variety of factors, including, but not limited to, the receipt and timing of required regulatory permits and approvals, seasonal
conditions, drilling and acquisition costs, the level of participation by other working interest owners, the success of our drilling
activities, prevailing and anticipated prices for oil, natural gas, and NGLs, the availability of necessary equipment, infrastructure
and capital.

Working
Capital

We
define working capital as current assets less current liabilities. As of December 31, 2024, we had a working capital deficit of
$44.7 million and cash and cash equivalents of $5.2 million and as of December 31, 2023, we had working capital of $8.1 million and cash
and cash equivalents of $13.0 million.

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Cash
Flows from Operating, Investing, and Financing Activities

The
following table summarizes our cash flows for the years indicated:

Operating
activities. Net cash used in operating activities totaled $9.3 million and $11.9 million during the years ended December 31, 2024
and 2023, respectively. The $2.6 million change in our net cash used in operating activities was largely due to an increase in revenue
recognized during the current period, partially offset by increased operating costs during the current period.

Investing
activities. Net cash used in investing activities totaled $83.4 million and $23.7
million during the years ended December 31, 2024 and 2023, respectively. The $59.7 million increase in our net cash used in investing
activities was largely driven by the NRO Acquisition, with a final purchase price of $55.5 million, and a $28.3 million increase in capital investments in oil and natural
gas properties during the year ended December 31, 2024. These increases were partially offset by the $21.2 million invested in connection
with the Exok Option Purchase during the year ended December 31, 2023.

Financing
activities. Net cash provided by financing activities totaled $84.9 million for the year ended December 31, 2024, driven by proceeds
of $33.5 million from the exercise of Series D B and Series E B Warrants, $28.0 million from borrowings under the Credit Facility, net
of related issuance costs of $0.3 million, $15.0 million of proceeds from the issuance of Common Stock, net of related issuance costs
of $5.0 million, $14.3 million of proceeds from the issuance of the Senior Convertible Note, partially offset by a repayment of $3.8 million,
and $5.0 million of proceeds from the issuance of the Subordinated Note, partially offset by a repayment of $1.8 million. Net cash provided
by financing activities totaled $48.6 million for the year ended December 31, 2023, which was comprised of proceeds from the issuance
of the Series D PIPE of $17.4 million, net of related financing costs of $0.9 million, the issuance of the Series E PIPE of $20.0 million,
net of related financing costs of $0.2 million, and proceeds of $12.5 million from the exercise of Series D B Warrants.

Significant
Sources of Liquidity

Credit
Facility. On December 16, 2024, we, as borrower, entered into the Credit Facility Agreement with Citi, as administrative agent
and the financial institution party, which has a maximum credit commitment of $1.0 billion and is set to mature on December 16,
2026. The Credit Facility is guaranteed by all of our restricted subsidiaries and is secured by a first-priority security interest
on substantially all of our oil and natural gas properties and substantially all of our personal property assets, subject to
customary exceptions. The borrowing base is subject to semi-annual redeterminations based upon
the value of our oil and gas properties as determined in a reserve report dated as of January and July of each year, subject to certain
interim redeterminations.

We are subject to certain financial covenants
and customary restrictive covenants under the Credit Facility. The financial covenants require us to maintain, for each fiscal
quarter commencing with the fiscal quarter ending March 31, 2025, a Net Leverage Ratio (as defined in the Credit Facility Agreement)
of no greater than 2.50 to 1.00 and a Current Ratio (as defined in the Credit Facility Agreement) of at least 1.00 to 1.00.

As of December 31, 2024, the Credit Facility had a borrowing base and an
aggregate elected commitment of $44.0 million and a $5.0 million sublimit for the issuance of letters of credit. As of December 31, 2024,
we had $28.0 million of revolving borrowings and no letters of credit outstanding under the Credit Facility, resulting in $7.2 million
of availability for future borrowings and letters of credit. On February 3, 2025, we entered into the First Amendment to the Credit Facility Agreement, which, among other things, increased the borrowing base and the aggregate elected commitments to $60.0 million.

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Standby
Equity Purchase Agreement. On September 30, 2024, we entered into the SEPA with Yorkville, whereby, subject to certain conditions,
we have the right, not the obligation, to sell to Yorkville up to $40.0 million shares of Common Stock, at any time and in an amount
as specified in the applicable Advance Notice, during the commitment period commencing on the SEPA Effective Date and terminating on
September 30, 2026. Each Advance by us under the SEPA is subject to a maximum limit equal to 100% of the aggregate volume traded of our
Common Stock on the Nasdaq Stock Market during the five trading days immediately prior to the date of the Advance Notice. The shares
will be issued and sold to Yorkville at a per share price equal to 97% of the lowest daily volume weighted average price of Common Stock
for three consecutive trading days commencing on the trading day immediately following the Yorkville’s receipt of an Advance Notice.
On September 30, 2024, pursuant to the SEPA, we paid Yorkville a structuring fee of $25,000 and a Commitment Fee by issuing Yorkville
100,000 shares of Common Stock.

Our right to sell shares to Yorkville under the SEPA was contingent upon
us having an effective registration statement, which was declared effective by the SEC on December 20, 2024. Pursuant
to the SEPA, we may issue up to a total of 4,198,343 shares of Common Stock within the cap of 19.99% of our issued and outstanding Common Stock as of the SEPA
Effective Date through Advances under the SEPA,
upon conversion of the Senior Convertible Note or through any other issuances of Common Stock thereunder. However, per the SEPA, we do not have access to issue an Advance Notice until the Pre-Paid Advance of $15.0 million
(the Senior Convertible Note) is fully repaid. In December 2024, and in conjunction with the Credit Facility Agreement,
we made a $3.7 million payment on the Senior Convertible Note, resulting in a principal balance of $11.3 million as of December 31, 2024.
Additionally, in January and February 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange
for 2.1 million shares of Common Stock.

We
have determined that the SEPA represents a derivative instrument pursuant to ASC 815, which should be recorded at fair value at
inception and remeasured at fair value each reporting period with changes in the fair value recognized in earnings. Additionally,
the Commitment Fees and any issuance costs associated with the SEPA have been expensed to general and administrative expenses. As
such, we have recorded the SEPA at its fair value of $0.8 million as of December 31, 2024 and recorded the corresponding $0.8
million loss on adjustment to fair value – debt and warrants for the year ended December 31, 2024.

Senior
Convertible Note. On September 30, 2024, Yorkville advanced the Pre-Paid Advance of $15.0
million to us and we issued the Senior Convertible Note, with an interest rate of 8.00% and a maturity date of September 30, 2025. Yorkville
may convert the Pre-Paid Advance into shares of Common Stock at any time at the Conversion Price. We may, at any time, redeem all or a
portion of the amounts outstanding under the Senior Convertible Note at 105% of the principal amount thereof, plus accrued and unpaid
interest. Additionally, we may also convert the Pre-Paid Advance into shares of Common Stock at any time at the Conversion Price, however,
a conversion requested by us would not result in us receiving cash but instead would be applied towards reducing the outstanding balance
of the Senior Convertible Note.

In December 2024, and in conjunction with the Credit Facility Agreement,
we made a $3.7 million payment on the Senior Convertible Note, resulting in a principal balance of $11.3 million as of December 31, 2024.
Additionally, in January and February 2025, Yorkville converted the remaining $11.3 million of the Senior Convertible Note in exchange
for 2.1 million shares of Common Stock.

We have determined that certain features of the Senior Convertible Note
require bifurcation and separate accounting as embedded derivatives and have elected the fair value option to account for the Senior Convertible
Note; therefore, in accordance with ASC 815, we have recorded the Senior Convertible Note at fair value. As of December 31, 2024, the
fair value of the Senior Convertible Note was $12.6 million, which resulted in a loss on adjustment to fair value – debt and warrants
of $2.1 million for the year ended December 31, 2024.

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Subordinated
Promissory Note and Subordinated Note Warrants. On September 30, 2024, we entered into the Subordinated Note with the Noteholders,
First Idea Ventures LLC and The Hideaway Entertainment LLC, in a principal amount of $5.0 million, with a maturity of December 31, 2025.
The Noteholders are entities controlled by Jonathan H. Gray, who is a director of the Company, therefore the Subordinated Note and Subordinated
Note Warrants are presented as related-party on our consolidated balance sheet as of December 31, 2024. The Subordinated Note has an interest
rate of 10.00% and the Noteholders are entitled to a minimum return on capital of up to 2.0x upon the repayment, prepayment or acceleration
of the obligations, or the occurrence of certain other triggering events under the Subordinated Note. In December 2024, and in conjunction with the Credit Facility Agreement,
we made a $1.8 million payment on the Subordinated Note, resulting in a principal balance of $3.2 million as of December 31, 2024.

Pursuant to the terms of the Subordinated Note,
we issued the Subordinated Note Warrants to purchase up to 1,141,552 shares of Common Stock to the Noteholders, vesting in tranches based
on the date of repayment of the Subordinated Note. As of December 31, 2024, Subordinated Note Warrants providing the right to purchase
570,778 shares of Common Stock had vested and were outstanding.

We have determined that certain features of the Subordinated Note require
bifurcation and separate accounting as embedded derivatives and have elected the fair value option to account for the Subordinated Note;
therefore, in accordance with ASC 815, we have recorded the Subordinated Note at fair value and will remeasure the fair value each reporting
period with changes in fair value recognized in earnings. As of December 31, 2024, the fair value of the Subordinated Note is $4.6 million,
which resulted in a loss on adjustment to fair value – debt and warrants of $1.1 million for the year ended December 31, 2024.

Liquidity
Analysis

For
the year ended December 31, 2024, we had a net loss of $40.9 million. We cannot predict if or when we will be profitable, and we may continue to incur losses for an indeterminate
period of time. Additionally, we may be unable to achieve or sustain profitability on a quarterly or annual basis and extended periods
of losses and negative cash flow may prevent us from successfully operating and expanding our business. As of December 31, 2024, we had
cash and cash equivalents of $5.2 million, a working capital deficit of $44.7 million, and an accumulated deficit of $119.8 million.

The
assessment of liquidity requires management to make estimates of future activity and judgments about whether we can meet our
obligations, have adequate liquidity to operate, and maintain compliance with the applicable financial covenants of our Credit
Facility Agreement, as discussed above. Significant assumptions used in our forecasted model of liquidity in the next 12 months
include our current cash position and our ability to manage spending. Based on an assessment of these factors, management expects
that our cash balance, expected revenues from our existing producing wells and newly producing Shelduck wells, and liquidity
available under the SEPA and Credit Facility and potential offerings under the effective Form S-3 registration statement will be
sufficient to meet our obligations over the next 12 months and fulfil the financial covenant requirements under our Credit Facility
Agreement, as discussed above.

Since
entering into the SEPA in September 2024 and the Credit Facility Agreement in December 2024 and with the Form S-3 registration
statement becoming effective in December 2024, we have the ability to access funds to meet our working capital needs. Since our
ability to request an Advance under the SEPA does not require action on the part of management, other than requesting the Advance,
and the maximum Advance amount is less or equal to our liquidity needs, substantial doubt about our ability to continue as a going
concern does not exist.

Critical
Accounting Policies and Estimates

The
discussion and analysis of our financial condition and results of operations is based upon the accompanying consolidated financial
statements. These financial statements have been prepared in conformity with GAAP, which requires management to make estimates and
assumptions that affect the amounts reports for assets, liabilities, revenues, and expenses and the disclosure of contingent assets
and liabilities. Management believes its estimates and assumptions to be reasonable under these circumstances. Certain estimates and
assumptions are inherently unpredictable and actual results could differ from those estimates. Described below are the most
significant policies and the related estimates and assumptions used by management in the preparation of our financial statements.
Refer to Item 8. Financial Statements and Supplementary Data – Note 2 – Summary of Significant Accounting Policies for
a further discussion of our accounting policies.

Oil,
Natural Gas, and NGL Reserves and the Standardized Measure of Discounted Net Future Cash Flows

Our
proved oil, natural gas, and NGL reserve estimates as of December 31, 2024 and associated future net cash flows included in this Annual
Report have been prepared by CG&A, independent third-party reserve engineers, in accordance with the rules and regulations of the
SEC in Regulation S-X, Rule 4-10.

Reserve
engineering is a subjective process of estimating volumes of economically recoverable oil and natural gas that cannot be measured in
an exact manner. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological
interpretation. To achieve reasonable certainty, our internal reserve engineers and CG&A employed technologies that have been demonstrated
to yield results with consistency and repeatability. The technologies and economic data used in the estimation of our proved reserves
include, but are not limited to, technical and economic data including well logs, geologic maps, seismic data, well test data, production
data, historical price and cost information, and property ownership interests. Estimates of economically recoverable oil and natural
gas and of future net revenues are based on a number of variables and assumptions, all of which may vary from actual results, including
geologic interpretation, prices and future production rates and costs. Periodic revisions to the estimated reserves and future cash flows
may be necessary as a result of a number of factors, including reservoir performance, new drilling, oil, natural gas, and NGL prices,
changes in costs, technological advances, new geological or geophysical data, or other economic factors. Accordingly, reserve estimates
may differ significantly from the quantities of oil and natural gas ultimately recovered.

67

The
Standardized Measure is the present value, discounted at 10%, of estimated future net cash flows to be generated from the production
of proved reserves calculated by using the 12-month unweighted arithmetic average of the first-day-of-the-month price for each month
in the period January through December (with consideration of price changes only to the extent provided by contractual arrangements).
The estimated future net cash flows are reduced by projected future development, production (excluding DD&A and any impairments of
oil and natural gas properties), plug and abandon (“P&A”) costs, and estimated future income tax expenses. The Standardized Measure is calculated per
ASC Topic 932, Extractive Activities - Oil and Gas and in accordance with SEC pricing guidelines.

Although
our estimates of total proved reserves, development costs, and production rates were based on the best available information, the development
and production of the oil and natural gas reserves may not occur in the periods assumed. Actual prices realized, costs incurred and production
quantities may vary significantly from our estimates. Therefore, the Standardized Measure should not be considered to represent our estimate
of expected revenues or the fair value of our proved oil, natural gas, and NGL reserves.

As
discussed further below, our estimates of proved reserves materially impact calculated depletion expense each period; therefore, if our
estimates of total proved reserves decrease, the rate at which we record depletion expense will increase, reducing earnings.

Oil
and Natural Gas Properties

We
follow the successful efforts method of accounting for our oil and natural gas properties. Under this method, exploration costs such
as exploratory geological and geophysical costs, expiration of unproved leasehold, delay rentals, and exploration overhead are expensed
as incurred. All costs related to production, general corporate overhead, and similar activities are also expensed as incurred. All property
acquisition costs and development costs are capitalized when incurred.

In
successful efforts accounting, exploratory drilling costs are initially capitalized, or suspended, pending the determination of proved
reserves. If proved reserves are found, drilling costs remain capitalized and are classified as proved properties. If proved reserves
are not found, the costs related to unsuccessful wells are charged to exploration expense. For exploratory wells that find reserves that
cannot be classified as proved when drilling is completed, costs continue to be capitalized as suspended exploratory drilling costs if
there have been sufficient reserves found to justify completion as a producing well and sufficient progress is being made in assessing
the reserves and the economic and operational viability of the project. If we determine that future appraisal drilling or development
activities are unlikely to occur, associated suspended exploratory well costs are expensed. In some instances, this determination may
take longer than one year. We review the status of all suspended exploratory drilling costs quarterly. Costs to develop proved reserves,
including the costs of all development wells and related equipment used in the production of natural gas and oil, are capitalized.

The
costs of drilling and equipping successful wells, costs to construct or acquire facilities, and associated asset retirement costs are
depreciated using the UOP method based on total estimated proved developed oil and natural gas reserves. Costs for wells in the process
of being drilled, significant nonproducing properties, and in-process development projects are excluded from depletion until the related
project is completed and proved producing reserves are established or, if unsuccessful, abandonments expense is recognized. The costs
of acquiring proved properties, including leasehold acquisition costs transferred from unproved properties, are depleted using the UOP
method based on total estimated proved developed and undeveloped reserves.

Proceeds
from the sales of individual oil and natural gas properties and the capitalized costs of individual properties sold or abandoned are
credited and charged, respectively, to accumulated depreciation, depletion and amortization, if doing so does not materially impact the
depletion rate of an amortization base. Generally, no gain or loss is recognized until an entire amortization base is sold. However,
a gain or loss is recognized from the sale of less than an entire amortization base if the disposition is significant enough to materially
impact the depletion rate of the remaining properties in the amortization base.

When
circumstances indicate that the carrying value of proved oil and natural gas properties may not be recoverable, we compare unamortized
capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which
identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based
on our estimate of future crude oil and natural gas prices, operating costs, anticipated production from proved reserves and other relevant
data, are lower than the unamortized capitalized costs, the capitalized costs are reduced to fair value. Fair value is generally estimated
using the income approach described in ASC 820. If applicable, we utilize prices and other relevant information generated by market transactions
involving assets and liabilities that are identical or comparable to the item being measured as the basis for determining fair value.
The expected future cash flows used for impairment reviews and related fair value measurements are typically based on judgmental assessments
of commodity prices, pricing adjustments for differentials, operating costs, capital investment plans, future production volumes, and
estimated proved reserves, considering all available information at the date of review. These assumptions are applied to develop future
cash flow projections that are then discounted to estimated fair value, using a market-based weighted average cost of capital.

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Derivative
Instruments

We
utilize commodity derivative instruments to reduce our exposure to crude oil and natural gas price volatility for a portion of our estimated
production from its proved, developed, producing oil and natural gas properties. The fair values of our derivative instruments are measured
on a recurring basis using a third-party industry-standard pricing model.

We
have not designated any of its derivative instruments as hedges for accounting purposes; therefore, the aggregate net gains and losses
resulting from changes in the fair values of its outstanding derivatives, the settlement of derivative instruments, and any net proceeds
or payments related to the early termination of derivative contracts during the period are recognized as net gain or loss on derivatives,
as applicable, in the consolidated statements of operations.

Asset
Retirement Obligations

Our
oil and natural gas properties include estimates of future expenditures to P&A wells, pipelines, platforms, and other related facilities
after the reserves have been depleted. We recognize the present value of the asset retirement obligation costs as a liability when it
is incurred or assumed (acquired) and an increase to its capitalized oil and natural gas properties. The capitalized asset retirement
obligation costs are depleted over the productive lives of the oil and natural gas properties while the asset retirement obligation liability
is accreted to the expected settlement value over the productive lives of the oil and natural gas properties. Upon settlement, the difference
between the recorded liability amount and the amount of costs incurred will be recognized as an adjustment to the capitalized cost of
oil and natural gas properties.

The
determination of future asset retirement obligations requires estimates of the future costs of removal and restoration, productive lives
of the oil and natural gas properties based on reserve estimates, and future inflation rates. Estimated costs consider historical experience,
third-party estimates, and government regulatory requirements but do not consider salvage values. These costs could be subject to revisions
in subsequent years due to changes in regulatory requirements, the estimated P&A cost, and the estimated timing of the oil and natural
gas property retirement. In subsequent periods, if the estimate of the asset retirement obligation liability changes, we record an adjustment
to both the asset retirement obligation liability and the oil and natural gas property carrying value. Additionally, we estimate the
credit-risk adjusted discount rate, which is applied to the future inflated P&A costs to determine the discounted present value which
is recognized as the initial liability. The determined credit-risk adjusted discount rate is also subsequently applied to accrete the
liability.

Commitments
and Contingencies

We
recognize a liability for loss contingencies when we believe it is probable a liability has been incurred, and the amount can be reasonably
estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range,
we accrue that amount. When no amount within the range is a better estimate than any other amount we accrue the minimum amount in the
range.

Liabilities
at Fair Value

On September 30, 2024, we entered into the SEPA and issued the Senior Convertible
Note, the Subordinated Note, and the Subordinated Note Warrants. All three of these agreements contain features which must be evaluated
for embedded derivatives and bifurcation pursuant to ASC 815. As such, we have elected to account for the SEPA, the Senior Convertible
Note, the Subordinated Note, and the Subordinated Note Warrants using the fair value option.

Stock-based
Compensation

Our
stock–based compensation awards are classified as either equity or liability awards in accordance with GAAP. The fair value of
an equity–classified award is determined at the grant date and is amortized to general and administrative expense on a graded attribution
basis over the vesting period of the award. The fair value of a liability–classified award is determined on a quarterly basis beginning
at the grant date until final vesting. Changes in the fair value of liability–classified awards are recorded to general and administrative
expense over the vesting period of the award.

69

Additionally,
we grant PSUs, which vest and become earned upon the achievement of certain performance goals based on our relative total shareholder
return as compared to the performance peer group during the performance period, which represents a market condition per ASC Topic
718, Compensation—Stock Compensation. As such, the fair value of the PSUs awards is determined by a third party using a Monte
Carlo simulation model as of the grant date. Per the PSU agreements, these awards can be settled in either stock or cash, as determined
by the Committee; however, unless the Committee determines otherwise, these PSUs will be settled in stock; therefore, we classified the
PSUs as equity awards.

We
recognize compensation expense related to equity–classified and liability–classified awards using the straight-line method
over the requisite service period during which the employee, board member, director, or advisor is required to provide services in exchange
for the award in accordance with ASC Topic 718, Compensation - Stock Compensation. We have elected to not estimate the forfeiture
rate of its RSUs and PSUs in its initial calculation of compensation expense, but instead we will adjust compensation expense for forfeitures
as they occur.

Income
Taxes

We
account for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary
differences, and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the
differences between the reported amounts of assets and liabilities and their respective tax basis. Deferred tax assets are reduced
by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax
assets will be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the
date of enactment. As of December 31, 2024, we had a full valuation allowance to offset its net deferred tax
assets.

Off–Balance
Sheet Arrangements

We
do not have any off–balance sheet arrangements.

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

You
should read the following discussion and analysis of our financial condition and results of operations for the fiscal years ended December
31, 2023 and 2022 together with our consolidated financial statements and related notes and other financial information appearing in
this Annual Report. The discussion contains forward-looking statements reflecting our current expectations and estimates and assumptions
concerning events and financial trends that may affect our future operating results or financial position. Actual results and the timing
of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those
described under the headings “Risk Factors” and “Cautionary Statement Regarding Forward-Looking Statements” appearing
elsewhere in the Annual Report.

Overview

We are an independent oil and
gas company focused on the acquisition and development of crude oil, natural gas and NGLs. We currently hold attractive acreage in the
DJ Basin that our experienced management team intends to develop, deploying next-generation technology and techniques in an environmentally
efficient manner. In addition to growing production through our drilling operations, we also seek to grow our business through accretive
acquisitions, focusing on assets with the following criteria: (i) producing reserves, with opportunities to add accretive, undeveloped
bolt-on acreage; (ii) ample, high rate-of-return inventory of drilling locations that can be developed with cash flow reinvestment; (iii)
strong well-level economics; (iv) liquids-rich assets; and (v) accretive valuation.

As
of December 31, 2023, all of the Company’s E&P assets were acquired in the Exok Transaction (as described herein) and Exok
Option Purchase (as defined herein) and consist of certain oil and gas leasehold interests with no existing oil and gas production or
revenue. In February 2024, we acquired the Genesis Bolt-on Assets offsetting our existing assets. We refer to the assets acquired in
these transactions as our “Genesis Assets.” In all, the total Genesis Assets include 24,351 net mineral acres in, on and
under 37,985 gross acres. In addition, in January 2024, we entered into a definitive agreement with NRO to acquire producing acreage
and PUDs that are complementary to our existing acreage, which we refer to as the “Central Weld Assets.” We have no current
drilling or completion operations. As such, our current activities are focused on obtaining requisite permits to begin drilling wells
on our Genesis Assets, as well as funding and closing the NRO Acquisition, which we anticipate in the first half of 2024. In 2023, we
also engaged in cryptocurrency mining operations and these operations accounted for all of our revenues in 2023. In January 2024, we
divested all of our cryptocurrency mining assets. See “Business—Recent Developments” for more information regarding
the NRO and Genesis Bolt-On Assets acquisitions, as well as the sale of our Cryptocurrency mining operations.

53

Background

The
Merger, Exok Transaction and Related Events

On
May 3, 2023, the Company completed the Merger, pursuant to which, among other things, Merger Sub merged with and into Prairie LLC,
with Prairie LLC surviving and continuing to exist as a Delaware limited liability company and a wholly owned subsidiary of the
Company. Upon consummation of the Merger, the Company changed its name from “Creek Road Miners, Inc.” to “Prairie
Operating Co.” The Merger was accounted for as a reverse asset acquisition; as a result, our cryptocurrency mining operations
are reported as commencing on May 3, 2023, concurrent with the Merger and prior revenues and expenses of Creek Road related to
cryptocurrency mining activities are not presented in this “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” or the accompanying financial statements.

In
connection with the Merger, we acquired oil and gas leases covering approximately 3,158 net mineral acres in, on and under 4,494 gross
acres from Exok for $3.0 million. To fund the Exok Transaction, the Company sold an aggregate of approximately $17.4 million of Series
D Preferred Stock with a stated value of $1,000 per share and convertible into shares of common stock at a price of $5.00 per share,
Series A warrants to purchase 3,475,250 shares of common stock at an exercise price of $6.00 per share (“Series D A Warrants”)
and Series B warrants to purchase 3,475,250 shares of common stock at an exercise price of $6.00 per share (“Series D B Warrants”)
in a private placement (the “Series D PIPE”) pursuant to securities purchase agreements, dated May 3, 2023, by and between
the Company and each of the investors thereto (the “Series D PIPE Investors”).

On
August 15, 2023, the Company exercised its option under the Exok Transaction to purchase approximately 20,328 net mineral acres in, on
and under approximately 32,695 additional gross acres from Exok (the “Exok Option Assets”). The Company acquired this acreage
for $25.3 million consisting of (i) $18.0 million in cash (the “Cash Consideration”) to Exok, (ii) issuance of 670,499 shares
of the Company’s common stock and warrants to purchase 670,499 shares of common stock (“Exok Warrants”) to affiliates
of Exok, and (iii) direct transaction costs. The Cash Consideration was funded from the Series E preferred issuance (see below).

The
Company received an aggregate of $20.0 million in proceeds from the Series E private placement (the “Series E PIPE”) in exchange
for 20,000 shares of Series E preferred stock, par value $0.01 per share (“Series E Preferred Stock”) along with 39,614 shares
of the Company’s common stock, and Series A warrants to purchase 4,000,000 shares of the Company’s common stock (the “Series
E A Warrants”) and Series B warrants to purchase 4,000,000 shares of common stock (the “Series E B Warrants” and together
with the Series E A Warrants, the “Series E PIPE Warrants”).

See
“Business—Background” for more information regarding the Merger, the Exok Transaction and related events in
2023.

Reverse
Stock Split

On
October 16, 2023, the Company effected the Reverse Stock Split at an exchange ratio of 1:28.5714286. Unless otherwise noted, all per
share and share amounts presented herein have been retroactively adjusted for the effect of the Reverse Stock Split.

Cryptocurrency
Mining Operations and Sale

For
the year ended December 31, 2023, we generated all of our revenue through our cryptocurrency mining activities. During 2023, our cryptocurrency
mining activities consisted of engaging Atlas Power Hosting, LLC (“Atlas”) to operate our cryptocurrency mining assets, some
of which were owned by Creek Road prior to the Merger and others that we acquired following the Merger. Pursuant to the Atlas MSA, we
did not own, control or take custody of Bitcoin during 2023; rather, Atlas retained all Bitcoin rewards and remitted net revenue from
cryptocurrency mining to us in the form of US dollars pursuant to the Atlas MSA. Since the Merger was accounted for as a reverse asset
acquisition, our cryptocurrency mining operations are reported as commencing on May 3, 2023, concurrent with the Merger and prior revenues
and expenses of Creek Road related to cryptocurrency mining activities are not presented in this “Management’s Discussion
and Analysis of Financial Condition and Results of Operations” or the accompanying financial statements.

On
January 23, 2024, we completed the Crypto Sale, pursuant to which we sold all of our cryptocurrency assets and assigned our interests
under the Atlas MSA to the Crypto Purchaser. Accordingly, we do not expect to engage in cryptocurrency mining activities in 2024 or thereafter.
This disposition did not meet the requirements of held for sale classification at December 31, 2023, but will require presentation as
discontinued operations in prospective financial statements. We expect to recognize a loss of $1.1 million in conjunction with this disposition.
See “Business—Sale of Crypto Assets” for more information about the sale of our cryptocurrency assets and assignment
of the Atlas MSA.

NRO
Acquisition

On
January 11, 2024, we entered into the NRO Agreement, to acquire the Central Weld Assets for total consideration of $94.5 million, subject
to certain closing price adjustments and other customary closing conditions. The Purchase Price consists of $83.0 million in cash and
$11.5 million in deferred cash payments. The Company deposited $9 million of the Purchase Price into an escrow account on January 11,
2024, which will be released to Seller upon the earlier of the closing date and August 15, 2024 (the “Outside Date”). Portions
of the Deposit are subject to earlier release under certain circumstances if the closing has not occurred on or prior to June 17, 2024.
See “Business—Recent Developments—NRO Acquisition” for a description of the NRO Agreement. We expect to
fund the transaction through a combination of public and/or private issuance of common stock, cash on hand, and proceeds from existing
warrant exercises. While we expect to close the NRO Acquisition in the first half of 2024, such acquisition is subject to a number of
closing conditions. Satisfaction of some of these conditions is beyond our control. If these conditions are not satisfied or waived,
the NRO Acquisition will not be completed. See “Risk Factors—Risks Related to the NRO Acquisition.”

Liquidity

The
Company had a net loss of $79.1 million for the year ended December 31, 2023 and working capital (defined as current assets less current
liabilities) of $8.1 million at December 31, 2023. Cash and cash equivalents totaled $13.0 million at December 31, 2023. Our current
working capital decreased upon the $9.9 million deposit payment associated with the NRO Agreement and acquisition of the Genesis Bolt-on
Assets and is expected to further decrease in the future due to expenses incurred in connection with our business and until revenue is
recognized from our E&P business and/or we raise additional capital through the exercise of existing warrants or through the public
and/or private markets. We cannot predict if we will be profitable in the near future, or ever. We may continue to incur losses for an
indeterminate period of time and may be unable to achieve profitability. An extended period of losses and negative cash flow may prevent
us from successfully operating and expanding our business. See “—Liquidity
and Capital Resources,” “Risk Factors—We will require significant additional
capital to fund our growing operations; we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations,”
“Risk Factors—We have historically incurred significant losses, and may be unable to generate profitability. Our ability
to successfully operate and expand our business is dependent on the consummation of the NRO Acquisition or our ability to raise additional
capital to support our drilling program on our existing assets,” and “Risk Factors—We will require significant
additional capital to fund our growing operations; we may not be able to obtain sufficient capital and may be forced to limit the scope
of our operations” for more information.

Results
of Operations

54

Loss
from operations

Loss
from operations increased $33.2 million for the year ended December 31, 2023, compared to the period from June 7, 2022 (date of inception)
through December 31, 2022. The $1.5 million increase in cryptocurrency mining revenues resulting from the commencement of such operations
upon the Merger was more than offset by a $34.7 million increase in operating costs and expenses, as discussed below.

Operating
Costs and Expenses

Operating
costs and expenses increased $34.7 million for the year ended December 31, 2023 compared to the period from June 7, 2022 (date of inception)
to December 31, 2022.

Cryptocurrency
mining. The increase in cryptocurrency mining costs of $0.5 million for the year ended December 31, 2023 over the period from June
7, 2022 (date of inception) to December 31, 2022, respectively, is due to the commencement of cryptocurrency operations upon the Merger.

Depreciation,
depletion and amortization. The increase of $1.0 million in depreciation, depletion and amortization (“DD&A”) for
the year ended December 31, 2023 over the period from June 7, 2022 (date of inception) to December 31, 2022 is due to the commencement
of cryptocurrency operations upon the Merger. There was no DD&A associated with E&P for any of the respective periods.

General
and administrative. General and administrative expenses for the year ended December 31, 2023 increased $15.8 million over the period
from June 7, 2022 (date of inception) to December 31, 2022. This was primarily due to employment and benefit costs of $4.5 million, stock-based
compensation of $3.0 million, investor relations costs of $2.8 million, legal and accounting costs of $1.8 million, Board fees and expenses
$1.0 million, professional services of $0.6 million, insurance of $0.4 million and other costs of $1.7 million.

Impairment
of cryptocurrency mining equipment. The impairment of $17.1 million for the year ended December 31, 2023 is due to the $16.6 million
adjustment required to write-off the excess of the allocated purchase price of the Merger over the fair value of the acquired net assets,
the subsequent write-off of $0.2 million shipping and customs fees incurred on cryptocurrency miners after the Merger and $0.3 million
for impairment of the remaining mobile data centers and deposits on mobile data centers at December 31, 2023.

55

Exploration.
The increase in exploration expenses of $0.3 million for the year ended December 31, 2023 over the period from June 7, 2022 (date of
inception) to December 31, 2022 is due to delay rentals incurred on oil and gas leases. There were no such costs in 2022.

Other
income and expenses

Interest
income. Interest income for the year ended December 31, 2023 increased $0.2 million compared to the period from June 7, 2022 (date
of inception) to December 31, 2022. This increase was entirely due to interest earned on our cash balance in the current period and not
in the prior year period.

Interest
expense. Interest expense for the year ended December 31, 2023 increased $0.1 million compared to the period from June 7, 2022 (date
of inception) to December 31, 2022. This increase was entirely due to interest on the AR Debentures and SBA loan resulting from the Merger
and certain financing costs incurred in 2023.

Loss
on adjustment to fair value – warrant liabilities. The loss for the year ended December 31, 2023 increased $39.8 million compared
to the period from June 7, 2022 (date of inception) to December 31, 2022. This increase was entirely due to the change in fair value
of warrant liabilities that were reclassified from and to permanent equity during the period. The change in fair value was due to the
increase in the share price of the Company’s common stock.

Loss
on adjustment to fair value - AR Debentures. The loss for the year ended December 31, 2023 increased $3.8 million compared to the
period from June 7, 2022 (date of inception) to December 31, 2022. These increases were entirely due to the change in fair value of the
AR Debentures from the Merger through the date of their conversion in October 2023. The change in fair value was primarily due to the
increase in the share price of the Company’s common stock.

Loss
on adjustment to fair value - Obligation Shares. The loss for the year ended December 31, 2023 increased $1.5 million compared to
the period from June 7, 2022 (date of inception) to December 31, 2022, respectively. This increase was entirely due to the change in
fair value of the Obligation Shares (as defined herein) liability from the Merger through issuance of the Obligation Shares in September
2023. The change in fair value was due to the increase in the share price of the Company’s common stock.

Liquidated
damages. Liquidated damages of $0.5 million were recorded for the year ended December 31, 2023 as a result of the registration statement
registering the resale of certain shares of the Company’s common stock and shares of common stock underlying the Series D Preferred
Stock and Series D PIPE Warrants having not been declared effective within the timeframe required under the related registration rights
agreement. There were no such costs in 2022.

56

Liquidity
and Capital Resources

Overview

Our
E&P activities will require us to make significant operating and capital expenditures. In 2023, our primary sources of liquidity
were the Series D PIPE and the Series E PIPE, which funded the purchase of the Initial Genesis Assets and working capital, as well
as proceeds from the exercise of warrants, which funded, among other things, working capital and the deposit for the NRO Acquisition
in 2024. Since we sold our only revenue-generating assets in January 2024 and do not yet have any operating E&P assets, we will
require additional capital to fund our development program and operations. Our primary uses of cash have been for the acquisition
and development of oil and natural gas properties and payments of general, administrative and operating costs.

In
addition, in order to close the NRO Acquisition, we will need to raise $74 million in cash, subject to customary closing adjustments.
We do not currently have sufficient cash or committed capital to close the NRO Acquisition. While we are seeking to raise the necessary
capital through an offering of common stock, there is no assurance that we will be successful in raising sufficient funds from the proposed
offering or through other sources. If we are unable to raise sufficient funds to close the NRO Acquisition, or if we are unable to close
the acquisition for other reasons, we will need to seek other sources of capital to fund our development activity and operations until
our other E&P assets are generating revenues. Under certain circumstances, if we are unable to close the NRO Acquisition, we would
lose the deposit. See “Risk Factors – We do not
currently have sufficient funds or committed financing necessary to consummate the NRO Acquisition and the NRO Agreement does not include
a financing condition.”

We
do not currently have significant capital commitments outside of the NRO Acquisition. However, even if we are able to close the NRO Acquisition,
we expect that we will need to access additional capital through public and/or private markets in order to fund our E&P development
and strategy. The availability of such additional capital is subject to numerous factors including prices of oil and natural gas and
the overall health of the U.S. and global economic environment and are largely outside of the control of the Company. There can be no
assurance that the Company can obtain such additional capital. The amount and allocation of future capital expenditures will depend upon
a number of factors, including the amount and timing of cash flows from operations, investing and financing activities, and timing and
cost of additional capital sources.

Because
we are the operator of all of our acreage, the timing and level of our capital spending is largely discretionary and within our control.
We could choose to defer a portion of planned capital expenditures depending on a variety of factors, including, but not limited to,
the receipt and timing of required regulatory permits and approvals, seasonal conditions, drilling and acquisition costs, the level of
participation by other working interest owners, the success of our drilling activities, prevailing and anticipated prices for oil, natural
gas and NGLs, the availability of necessary equipment, infrastructure and capital.

We
expect to continue funding our business and strategic plans with cash on hand and proceeds from exercises of warrants, if any. Currently,
we have no debt outstanding. We expect to enter into a revolving credit facility primarily to support our hedging program, but we do
not intend to utilize such facility to fund our drilling program. We believe our approach to leverage will permit us to grow production
while mitigating adverse impacts of commodity price volatility. We expect that limiting our use of leverage will provide flexibility
to slow our development pace when commodity prices are not supportive and to accelerate when prices rise. In the near term, we intend
to primarily deploy our cash flow towards development.

Working
Capital

We
define working capital as current assets less current liabilities. At December 31, 2023 we had working capital of $8.1 million and at
December 31, 2022 we had a working capital deficit of $2.1 million. Our current working capital decreased upon the deposit payment associated
with the NRO Agreement and is expected to further decrease in the future due to expenses incurred in connection with our business and
until revenue is recognized from our E&P business and/or we raise additional capital through the exercise of existing warrants or
through the public and/or private markets. Cash and cash equivalents totaled $13.0 million and $0.1 million at December 31, 2023 and
December 31, 2022, respectively.

57

Cash
Flows from Operating, Investing and Financing Activities

The
following table summarizes our cash flows for the periods indicated:

Analysis
of Cash Flow Changes for the Year Ended December 31, 2023 and Period from June 7, 2022 (date of inception) through December 31, 2022

Operating
Activities

Net
cash used in operating activities was $11.9 million for the year ended December 31, 2023, compared to $0.0 million in the prior year
period. The increase resulted primarily from a net loss of $79.1 million, which was partially offset by the add back for non-cash
expenses for the impairment of cryptocurrency mining equipment of $17.1 million, losses on adjustment to fair value of certain
financial instruments of $45.1 million, stock based compensation expense of $2.9 million, change in working capital of $1.1 million
and depreciation and amortization expense of $1.0 million.

Net
cash used in operating activities for the period from June 7, 2022 (date of inception) to December 31, 2022 was related to bank charges
and is reflective of the Company’s limited activity initially after its formation.

Investing
Activities

Net cash used in investing activities
was $23.7 million for the year ended December 31, 2023 and primarily resulted from the $21.2 million acquisition of unproved oil and gas
properties, cash paid in the reverse asset acquisition, net of cash received of $2.0
million and capital investments of $0.4 million.

There was no cash used in or
provided by investing activities for the period from June 7, 2022 (date of inception) to December 31, 2022 reflective of the Company’s
limited activity initially after formation.

Financing Activities

Net cash provided by financing
activities was $48.6 million for the year ended December 31, 2023, compared to $0.1 million for the period from June 7, 2022 (date of
inception) to December 31, 2022, and primarily resulted from $17.4 million of proceeds from the Series D PIPE, $20.0 million from the
Series E PIPE, and $12.5 million from the exercise of warrants, partially offset by financing costs of $1.1 million and $0.2 million from
the payoff of the SBA loan.

Going
Concern Analysis

The
Company had a net loss of $79.1 million for the year ended December 31, 2023. We cannot predict if we will be profitable in the near
future, or ever. We may continue to incur losses for an indeterminate period of time and may be unable to achieve profitability. An extended
period of losses and negative cash flow may prevent us from successfully operating and expanding our business. We may be unable to achieve
or sustain profitability on a quarterly or annual basis. At December 31, 2023, we had cash and cash equivalents of $13.0 million, working
capital of $8.1 million, and an accumulated deficit of $78.9 million.

Subsequent to December 31, 2023,
our cash and cash equivalents were reduced by $9.9 million due to the Deposit and Genesis Bolt-on Assets. We expect that our cash balance
will decline until we are able to obtain financing through public or private capital markets and/or upon the exercise of common stock
warrants. As of December 31, 2023, the Company had common stock warrants with exercise prices of $6.00 per share of common stock and expiring
through August 2024 (see Note 15) that, if all were exercised, would represent cash proceeds to the Company of approximately $32.4 million.
Based on recent and current prices of the Company’s common stock, the Company expects such warrants to be exercised. The Company
received $1.2 million of cash proceeds from such warrant exercises in the period from January 1, 2024 through March 15, 2024. However,
there is no assurance that the remainder of such common stock warrants will ultimately be exercised.

58

The
assessment of liquidity and going concern requires the Company to make estimates of future activity and judgments about whether the Company
can meet its obligations and has adequate liquidity to operate. Significant assumptions used in the Company’s forecasted model
of liquidity in the next 12 months include our current cash position and our ability to manage spending. Based on an assessment of these
factors, management believes that the Company will have adequate liquidity for its operations for at least the 12 months from the date
the Company’s financial statements are issued.

The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets, or the amounts and classification of liabilities that may result from the matters discussed herein.

Off-Balance
Sheet Arrangements

We
do not have any off-balance sheet arrangements.

Critical
Accounting Policies and Estimates

The
preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States
(“GAAP”), requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue
and expenses, and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our
historical experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under
the circumstances. Actual results may differ under different estimates and assumptions. The accounting estimates and assumptions discussed
in this section are those that we consider to be the most critical to an understanding of our financial statements because they inherently
involve significant judgments and uncertainties.

Property
and equipment

E&P.
We follow the successful efforts method of accounting for our oil and natural gas properties. Under this method, exploration costs such
as exploratory geological and geophysical costs, expiration of unproved leasehold, delay rentals and exploration overhead are expensed
as incurred. All costs related to production, general corporate overhead and similar activities are also expensed as incurred. All property
acquisition costs and development costs are capitalized when incurred.

Exploratory
drilling costs are initially capitalized, or suspended, pending the determination of proved reserves. If proved reserves are found, drilling
costs remain capitalized and are classified as proved properties. Costs of unsuccessful wells are charged to exploration expense. For
exploratory wells that find reserves that cannot be classified as proved when drilling is completed, costs continue to be capitalized
as suspended exploratory drilling costs if there have been sufficient reserves found to justify completion as a producing well and sufficient
progress is being made in assessing the reserves and the economic and operational viability of the project. If we determine that future
appraisal drilling or development activities are unlikely to occur, associated suspended exploratory well costs are expensed. In some
instances, this determination may take longer than one year. We review the status of all suspended exploratory drilling costs quarterly.
Costs to develop proved reserves, including the costs of all development wells and related equipment used in the production of natural
gas and oil are capitalized.

Costs
of drilling and equipping successful wells, costs to construct or acquire facilities, and associated asset retirement costs are depreciated
using the unit-of-production (“UOP”) method based on total estimated proved developed oil and natural gas reserves. Costs
of acquiring proved properties, including leasehold acquisition costs transferred from unproved properties, are depleted using the UOP
method based on total estimated proved developed and undeveloped reserves.

59

Proceeds
from the sales of individual oil and natural gas properties and the capitalized costs of individual properties sold or abandoned are
credited and charged, respectively, to accumulated depreciation, depletion and amortization, if doing so does not materially impact the
depletion rate of an amortization base. Generally, no gain or loss is recognized until an entire amortization base is sold. However,
a gain or loss is recognized from the sale of less than an entire amortization base if the disposition is significant enough to materially
impact the depletion rate of the remaining properties in the amortization base.

When
circumstances indicate that the carrying value of proved oil and natural gas properties may not be recoverable, we compare unamortized
capitalized costs to the expected undiscounted pre-tax future cash flows for the associated assets grouped at the lowest level for which
identifiable cash flows are independent of cash flows of other assets. If the expected undiscounted pre-tax future cash flows, based
on our estimate of future crude oil and natural gas prices, operating costs, anticipated production from proved reserves and other relevant
data, are lower than the unamortized capitalized costs, the capitalized costs are reduced to fair value. Fair value is generally estimated
using the income approach described in Financial Accounting Standards Board (“FASB”) Accounting Standards Codification Topic
(“ASC”) 820, Fair Value Measurements. If applicable, we utilize prices and other relevant information generated by market
transactions involving assets and liabilities that are identical or comparable to the item being measured as the basis for determining
fair value. The expected future cash flows used for impairment reviews and related fair value measurements are typically based on judgmental
assessments of commodity prices, pricing adjustments for differentials, operating costs, capital investment plans, future production
volumes, and estimated proved reserves, considering all available information at the date of review. These assumptions are applied to
develop future cash flow projections that are then discounted to estimated fair value, using a market-based weighted average cost of
capital.

Cryptocurrency
Mining. Property and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful
lives of 2 to 5 years. Leasehold improvements are amortized over the shorter of the useful lives of the related assets, or the lease
term. Expenditures for maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized.
Gains and losses on disposals are included in the consolidated statements of operations.

Management
assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from
the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment
loss is recognized to write down the asset to its estimated fair value.

Cryptocurrency
mining assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset
may not be recoverable. An estimate of undiscounted future cash flows produced by the asset, or the appropriate grouping of assets, is
compared to the carrying value to determine whether an impairment exists, pursuant to the provisions of ASC 360-10 “Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.” If an asset is determined to be impaired,
the loss is measured based on quoted market prices in active markets, if available. If quoted market prices are not available, the estimate
of fair value is based on various valuation techniques, including a discounted value of estimated future cash flows and fundamental analysis.

Warrant
liabilities

The
Company evaluates all of its financial instruments, including issued private placement stock purchase warrants, to determine if such
instruments are derivatives or contain features that qualify as embedded derivatives, pursuant to GAAP. The Company accounts for warrants
as either equity-classified or liability-classified instruments based on an assessment of the warrant’s specific terms and applicable
GAAP. Management’s assessment considers whether the warrants are freestanding financial instruments, whether they meet the definition
of a liability, and whether the warrants meet all of the requirements for equity classification.

For
warrants that meet all of the criteria for equity classification, they are recorded as a component of additional paid-in capital at the
time of issuance. For warrants that are precluded from equity classification, they are recorded as a liability at their fair value on
the date of such classification and subject to remeasurement on each balance sheet date with changes in the estimated fair value of the
warrants to be recognized statements of operations.

As
of December 31, 2023, the Company had no liability-classified warrants.

60

Fair
value of financial instruments

ASC
820, Fair Value Measurements and Disclosures, defines fair value, establishes a consistent framework for measuring fair value, and expands
disclosure for each major asset and liability category measured at fair value on either a recurring or nonrecurring basis. Fair value
is defined as an exit price representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions
that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, ASC 820 establishes
a fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level
1 valuations – Consist of observable inputs that reflect unadjusted quoted prices for identical assets or liabilities in active
markets as of the reporting date.

Level
2 valuations – Consist of observable market-based inputs or unobservable inputs that are corroborated by market data. These
are inputs other than quoted prices in active markets included in Level 1 that are either directly or indirectly observable as of the
reporting date.

Level
3 valuations – Consist of unobservable inputs that are not corroborated by market data and may be used with internally developed
methodologies that result in management’s best estimate of fair value.

Commitments
and Contingencies

The
Company is subject to various litigation, claims and proceedings, that arise in the ordinary course of business. The Company recognizes
a liability for such loss contingencies when it believes it is probable a liability has been incurred, and the amount can be reasonably
estimated. If some amount within a range of loss appears at the time to be a better estimate than any other amount within the range,
the Company accrues that amount. When no amount within the range is a better estimate than any other amount the Company accrues the minimum
amount in the range. The outcomes of any such currently pending matters are not expected to have a material adverse effect on the Company’s
financial position or results of operations.

Revenue
Recognition

The
Company accounts for revenue in accordance with ASC 606, Revenue from Contracts with Customers. The underlying principle of ASC 606 is
to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected.

Revenues
are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration
that we expect to receive in exchange for those goods or services. The Company applies the following five steps in order to determine
the appropriate amount of revenue to be recognized as we fulfill our obligations under each of our agreements:

The
Company’s cryptocurrency mining assets that were in service in 2023 were operated under the Atlas MSA, whereby Atlas hosted, operated,
and managed the Company’s assets. The Company received payment in U.S. dollars for the net mining revenue representing the dollar
value of the cryptocurrency award generated less power and other costs. The Company did not receive or own cryptocurrencies under this
contract.

Cryptocurrency
Mining Costs

The
Company’s cryptocurrency mining costs consisted primarily of direct costs under the Atlas MSA, but exclude depreciation and amortization,
which are separately stated in the Company’s consolidated statements of operations.

Income
taxes

We
account for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. At December 31, 2023,
the Company had a full valuation allowance to offset its net deferred tax assets.

61

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

Cautionary
Notice Regarding Forward-Looking Statements

The
following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2022 and 2021
should be read in conjunction with our consolidated financial statements and related notes to those financial statements that are included
elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a number of factors, including those set forth under “Risk Factors”
and elsewhere in this report.

We
use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions to identify forward-looking statements. All forward-looking statements included in this
report are based on information available to us on the date hereof and, except as required by law, we assume no obligation to update
any such forward-looking statements.

Company
Overview

Creek
Road Miners, Inc. (formerly known as Wizard Brands, Inc., Wizard Entertainment, Inc., Wizard World, Inc., and GoEnergy, Inc.) was incorporated
in Delaware on May 2, 2001. Prior to cryptocurrency mining operations that began in October 2021, the Company produced live and virtual
pop culture conventions and events, and sold a gelatin machine and related consumables that were discontinued in 2021 In addition, the
Company operated an eCommerce site selling pop culture memorabilia that was discontinued on June 30, 2022 (collectively known as “legacy
operations”).

On
August 6, 2021, we entered into the Informa Agreement with Informa. Pursuant to the Informa Agreement, Creek Road Miners Corp. (fka Kick
the Can Corp.) sold, transferred, and assigned certain assets, properties, and rights to Informa related to the business of operating
and producing live pop culture events. The Company released deferred revenue and other liabilities
totaling $722,429 and recognized other income of this amount.

On
September 15, 2021, we sold our wholly owned subsidiary which contained our Jevo assets and all rights to our Jevo operations for $1,500,000
and recognized a gain on the transaction of approximately $1,130,740.

On
October 24, 2022, we entered into the Merger Agreement with Creek Road Merger Sub, LLC, a Delaware limited liability company and our
wholly-owned subsidiary (“Merger Sub”), and Prairie, pursuant to which Merger Sub will merge with and into Prairie, with
Prairie surviving and continuing to exist as a Delaware limited liability company and our wholly-owned subsidiary.

Cryptocurrency
Mining

We
currently generate substantially all our revenue through cryptocurrency we earn through our mining activities, which we may strategically
hold or sell at beneficial prices and times. Our mining operations commenced on October 24, 2021. We use special cryptocurrency mining
computers (known as “miners”) to solve complex cryptographic algorithms to support the Bitcoin blockchain and, in return,
receive Bitcoin as our reward. Miners measure their processing power, which is known as “hashing” power, in terms of the
number of hashing algorithms solved (or “hashes”) per second, which is the miner’s “hash rate.” We participate
in Mining Pools (“mining pool(s)”) that pool the resources of groups of miners and split cryptocurrency rewards earned according
to the “hashing” capacity each miner contributes to the mining pool. Since June 30,
2022 the Company is neither receiving meaningful cryptocurrency awards nor generating meaningful revenue from cryptocurrency mining.

Mining
Equipment

All
of our miners were manufactured by Bitmain, and incorporate application-specific integrated circuit (“ASIC”) chips specialized
to solve blocks on the Bitcoin blockchains using the 256-bit secure hashing algorithm (“SHA-256”) in return for Bitcoin cryptocurrency
rewards. As of December 31, 2022, we had 510 Bitmain S19J Pro miners with 51.0 Ph/s of hashing capacity and 270 Bitmain S19 miners with
24.3 Ph/s of hashing capacity, none of which were in service.

23

On
December 17, 2021 the Company entered into a Non-Fixed Price Sales and Purchase Agreement (the “Bitmain Agreement”) with
Bitmain Technologies Limited (“Bitmain”) for 600 Bitmain S19XP miners with a reference price of approximately $11,250 per
miner. The miners have a total of 84 Ph/s of hashing capacity and an initial estimated purchase commitment of $6,762,000 (the “total
reference price”), subject to price adjustments and related offsets, including potential adjustments related to the market price
of miners. As of December 31, 2022, the Company has made payments of $3,969,000 (classified as deposits on mining equipment) to Bitmain
pursuant to the Bitmain Agreement, and the remaining amount due under the Bitmain Agreement is $47,600 and presented in the table below:

As
of December 31, 2022, all 600 miners purchased from Bitmain have not been delivered to the Company, and will remain undelivered until
all fees are paid to ship the miners from the Bitmain facility to the Company.

Mining
Results

The
Company measures its operations by the number and U.S. Dollar (US$) value of the cryptocurrency rewards it earns from its cryptocurrency
mining activities. The following table presents additional information regarding our cryptocurrency mining operations:

24

Factors
Affecting Profitability

Our
business is heavily dependent on the market price of Bitcoin. The prices of cryptocurrencies, specifically Bitcoin, have experienced
substantial volatility. Further affecting the industry, and particularly for the Bitcoin blockchain, the cryptocurrency reward for solving
a block is subject to periodic incremental halving. Halving is a process designed to control the overall supply and reduce the risk of
inflation in cryptocurrencies using a Proof-of-Work consensus algorithm. At a predetermined block, the mining reward is cut in half,
hence the term “halving”. For Bitcoin the reward was initially set at 50 Bitcoin currency rewards per block. The Bitcoin
blockchain has undergone halving three times since its inception as follows: (1) on November 28, 2012 at block 210,000; (2) on July 9,
2016 at block 420,000; and (3) on May 11, 2020 at block 630,000, when the reward was reduced to its current level of 6.25 Bitcoin per
block. The next halving for the Bitcoin blockchain is anticipated to occur in March 2024 at block 840,000, when the reward will be reduced
to 3.125 Bitcoin per block. This process will reoccur until the total amount of Bitcoin currency rewards issued reaches 21 million and
the theoretical supply of new Bitcoin is exhausted. Many factors influence the price of Bitcoin, and potential increases or decreases
in prices in advance of, or following, a future halving is unknown.

Competition

Our
business environment is constantly evolving, and cryptocurrency miners can range from individuals to large-scale commercial mining operations.
We compete with other companies that focus all or a portion of their activities on mining activities at scale, including several public
and private companies. We face significant competition in every aspect of our business, including, but not limited to, the acquisition
of mining equipment, the ability to raise capital, and the ability to obtain the lowest cost energy to power our mining operations.

Government
Regulation

Cryptocurrency
is increasingly becoming subject to governmental regulation, both in the U.S. and internationally. State and local regulations also may
apply to our activities and other activities in which we may participate in the future. Numerous regulatory bodies have shown an interest
in regulating blockchain or cryptocurrency activities. For example, on March 9, 2022 President Biden signed an executive order on cryptocurrencies.
While the executive order does not mandate any specific regulations, it instructs various federal agencies to consider potential regulatory
measures, including the evaluation of the creation of a U.S. Central Bank digital currency. Future changes to existing regulations or
entirely new regulations may affect our business in ways it is not presently possible for us to predict with any reasonable degree of
reliability. As the regulatory and legal environment evolves, we may become subject to new laws and regulation which may affect our mining
and other activities. For additional discussion regarding our belief about the potential risks existing and future regulation pose to
our business, see the Section entitled “Risk Factors” herein.

Critical
Accounting Policies and Estimates

The
preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States,
or U.S. GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses,
and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical
experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under the circumstances.
Actual results may differ under different estimates and assumptions. The accounting estimates and assumptions discussed in this section
are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant
judgments and uncertainties.

Principles
of Consolidation

The
accompanying financial statements are consolidated and include the accounts of the Company and its wholly-owned subsidiaries. Intercompany
balances and transactions have been eliminated in consolidation.

Use
of Estimates

The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

Reclassification

Certain
prior period amounts have been reclassified to conform to current period presentation.

25

Cash
and cash equivalents

For
purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid debt instruments purchased with an
original maturity of three months or less. In all periods presented, cash equivalents consist primarily of money market funds.

Fair
value of financial instruments

Under
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value
Measurements and Disclosures, fair value is defined as the price at which an asset could be exchanged or a liability transferred
in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where
available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable
prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring
fair value into three broad levels as follows:

Level
1 – Quoted prices in active markets for identical assets or liabilities.

Level
2 – Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

Level
3 – Unobservable inputs based on the Company’s assumptions.

The
Company is required to use observable market data if such data is available without undue cost and effort. The Company has no fair value
items required to be disclosed as of December 31, 2022 or 2021 under these requirements. The carrying amounts of financial assets and
liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the
short maturity of these instruments.

Transactions
involving related parties typically cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions
of competitive, free market dealings may not exist. However, in the case of the secured convertible debentures due to related parties,
the Company obtained a fairness opinion from an independent third party which supports that the transaction was carried out at an arm’s
length basis.

Cryptocurrency

Cryptocurrency
(Bitcoin) is included in current assets in the accompanying consolidated balance sheets. The classification of cryptocurrencies as a
current asset has been made after the Company’s consideration of the significant consistent daily trading volume on readily available
cryptocurrency exchanges and the absence of limitations or restrictions on Company’s ability to sell Bitcoin. Cryptocurrencies
awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy
disclosed below. Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with
an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances
occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount
exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured.
In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely
than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative
impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the
extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses
is not permitted. Cryptocurrencies awarded to the Company through its mining activities are included within operating activities on the
accompanying consolidated statements of cash flows.

Impairment
of Long-Lived Assets

Long-lived
assets are comprised of intangible assets and property and equipment. Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash
flows produced by the asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment
exists, pursuant to the provisions of FASB ASC 360-10 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of”. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets,
if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including
a discounted value of estimated future cash flows and fundamental analysis. The Company reports an asset to be disposed of at the lower
of its carrying value or its estimated net realizable value.

26

Property
and equipment

Property
and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives of 3 to 9 years.
Leasehold improvements are amortized over the shorter of the useful lives of the related assets, or the lease term. Expenditures for
maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals
are included in the consolidated statements of operations.

Management
assesses the carrying value of property and equipment whenever events or changes in circumstances indicate that the carrying value may
not be recoverable. If there is indication of impairment, management prepares an estimate of future cash flows expected to result from
the use of the asset and its eventual disposition. If these cash flows are less than the carrying amount of the asset, an impairment
loss is recognized to write down the asset to its estimated fair value.

Revenue
Recognition

We
account for revenue in accordance with ASU 2014-09, Revenue from Contracts with Customers (Topic 606), (“ASC 606”). The underlying
principle of ASC 606 is to recognize revenue to depict the transfer of goods or services to customers at the amount expected to be collected.

Revenues
are recognized when control of the promised goods or services are transferred to a customer, in an amount that reflects the consideration
that we expect to receive in exchange for those goods or services. We apply the following five steps in order to determine the appropriate
amount of revenue to be recognized as we fulfill our obligations under each of our agreements:

The
Company has entered into digital asset mining pools by executing contracts with the mining pool operators to provide computing power
to the mining pool. The contracts are terminable at any time by either party and the Company’s enforceable right to compensation
only begins when the Company provides computing power to the mining pool operator. In exchange for providing computing power, the Company
is entitled to a fractional share of the fixed cryptocurrency award the mining pool operator receives (less digital asset transaction
fees to the mining pool operator which are recorded as a component of cost of revenues), for successfully adding a block to the blockchain.
The Company’s fractional share is based on the proportion of computing power the Company contributed to the mining pool operator
to the total computing power contributed by all mining pool participants in solving the current algorithm.

Providing
computing power in digital asset transaction verification services is an output of the Company’s ordinary activities. The provision
of providing such computing power is the only performance obligation in the Company’s contracts with mining pool operators. The
transaction consideration the Company receives, if any, is noncash consideration, which the Company measures at fair value on the date
received, which is not materially different than the fair value at contract inception or the time the Company has earned the award from
the pools. The consideration is all variable. Because it is not probable that a significant reversal of cumulative revenue will not occur,
the consideration is constrained until the mining pool operator successfully places a block (by being the first to solve an algorithm)
and the Company receives confirmation of the consideration it will receive, at which time revenue is recognized. There is no significant
financing component in these transactions.

Fair
value of the cryptocurrency award received is determined using the market rate of the related cryptocurrency at the time of receipt.
There is currently no specific definitive guidance under GAAP or alternative accounting framework for the accounting for cryptocurrencies
recognized as revenue or held, and management has exercised significant judgment in determining the appropriate accounting treatment.
In the event authoritative guidance is enacted by the FASB, the Company may be required to change its policies, which could have an effect
on the Company’s consolidated financial position and results from operations.

Cryptocurrency
Mining Costs

The
Company’s cryptocurrency mining costs consist primarily of direct costs of earning Bitcoin related to mining operations, including
mining pool fees, natural gas costs, turbine rental costs, and mobile data center rental costs, but exclude depreciation and amortization,
which are separately stated in the Company’s consolidated statements of operations.

27

Reverse
Stock Split

We
implemented a 1-for-20 reverse stock split of our outstanding shares of common stock that was effective on January 23, 2020. Unless otherwise
noted, all share and related option, warrant, and convertible security information presented has been retroactively adjusted to reflect
the reduced number of shares, and the increase in the share price which resulted from this action.

Stock-Based
Compensation

We
periodically issue stock options, warrants and restricted stock to employees and non-employees for services, in capital raising transactions,
and for financing costs. We account for share-based payments under the guidance as set forth in the Share-Based Payment Topic 718 of
the FASB Accounting Standards Codification, which requires the measurement and recognition of compensation expense for all share-based
payment awards made to employees, officers, directors, and consultants, including employee stock options, based on estimated fair values.
We estimate the fair value of stock option and warrant awards to employees and directors on the date of grant using an option-pricing
model, and the value of the portion of the award that is ultimately expected to vest is recognized as expense over the required service
period in our Statements of Operations. We estimate the fair value of restricted stock awards to employees and directors using the market
price of our common stock on the date of grant, and the value of the portion of the award that is ultimately expected to vest is recognized
as expense over the required service period in our Statements of Operations.

Income
taxes

We
account for income taxes using the asset and liability method whereby deferred tax assets are recognized for deductible temporary differences,
and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the
opinion of management, it is more likely than not that some portion or all of the deferred tax assets will be realized. Deferred tax
assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Discontinued
Operations

On
August 6, 2021, we entered into the Informa Agreement with Informa. Pursuant to the Informa Agreement, Creek Road Miners Corp (fka Kick
the Can Corp.) sold, transferred, and assigned certain assets, properties, and rights to Informa related to the business of operating
and producing live pop culture events. The Company released deferred revenue and other liabilities
totaling $722,429 and recognized other income of this amount.

On
September 15, 2021, we sold our wholly owned subsidiary which contained our Jevo assets and all rights to our Jevo operations for $1,500,000
and recognized a gain on the transaction of approximately $1,130,740.

Prior
to cryptocurrency mining operations that began in October 2021, the Company produced live and virtual pop culture conventions and events,
and sold a gelatin machine and related consumables that were discontinued in 2021 In addition, the Company operated an eCommerce site
selling pop culture memorabilia that was discontinued on June 30, 2022 (collectively known as “legacy operations”).

The
related assets and liabilities associated with the discontinued operations in our consolidated balance sheets for the years ending December
31, 2022 and 2021, are classified as discontinued operations. Additionally, the financial results associated with discontinued operations
in our consolidated statement of operations for the years ending December 31, 2022 and 2021, are classified as discontinued operations.

28

Results
of Operations

Comparison
of the Years Ended December 31, 2022 and 2021

Revenue

Total
revenue increased $147,798, or 40%, for the year ended December 31, 2022 compared to the prior year, primarily because cryptocurrency
mining operations did not begin until October 2021.

Operating
Costs and Expenses

29

Our
operating costs and expenses decreased $10,455,832 or 56%, for the year ended December 31, 2022 compared to the prior year, due to the
following:

Net
Income (Loss)

Net
loss from continuing operations decreased $5,801,038 or 30%, for the year ended December 31, 2022 compared to the prior year, primarily
due to decreased stock based compensation and general and administrative expenses as described above, partially offset by an impairment
of fixed assets of approximated $5.2 million.

Going
Concern Analysis

Historically,
we have relied upon cash from financing activities to fund substantially all of the cash requirements of our activities and have incurred
significant losses and experienced negative cash flow. The Company had net losses from continuing operations of $13,401,076, and $19,202,114,
for the years ended December 2022 and 2021, respectively. We cannot predict if we will be profitable. We may continue to incur losses
for an indeterminate period of time and may be unable to achieve profitability. An extended period of losses and negative cash flow may
prevent us from successfully operating and expanding our business. We may be unable to achieve or sustain profitability on a quarterly
or annual basis. On December 31, 2022, we had cash and cash equivalents of $246,358, a working capital deficit of approximately $8.1
million, and an accumulated deficit of approximately $61 million.

We
have evaluated the significance of the uncertainty regarding the Company’s financial condition in relation to our ability to meet
our obligations, which has raised substantial doubts about the Company’s ability to continue as a going concern. While it is very
difficult to estimate our future liquidity requirements the Company believes that if it is unable close the Merger, or obtain debt and/or
equity financing, existing cash resources will be depleted in early 2023. The Company may be able to generate cash through the sale of
fixed assets, specifically cryptocurrency miners. However, the total cash generated would be significantly less that the total of the
Company’s liabilities. There are no assurances that the Merger will close, that debt and/or equity financing can be obtained, or
that the sale of fixed assets, specifically cryptocurrency miners can be achieved.

The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. The consolidated
financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of
assets, or the amounts and classification of liabilities that may result from the matters discussed herein.

The
Company’s ability to continue as a going concern is dependent upon the Company’s ability to close the merger with Prairie,
or obtain debt and/or equity financing, and there are no assurances that either can occur.

Liquidity
and Capital Resources

30

Liquidity

As
of December 31, 2022, we had cash and cash equivalents of $246,358, compared to $2,785,187 as of December 31, 2021, a decrease of $2,538,830.
This decrease was primarily due to cash used in operating and investing activities, partially offset by cash generated by financing activities.

Operating
Activities

Net
cash used in operating activities was $2,192,607 for the year ended December 31, 2022 and resulted primarily from a net loss of $13,418,814,
partially offset by the impairment of fixed assets of $5,231,752, an increase in accounts payable and accrued expenses of $3,371,432,
and stock based compensation of $2,870,665.

Net
cash used in operating activities was $6,969,723 for the year ended December 31, 2021 and resulted primarily from a net loss of $17,270,703,
an adjustment for the gain on sale of discontinued operations of $1,853,169, a decrease in liabilities associated with discontinued operations
of $1,228,911, and partially offset by stock based compensation of $12,585,009.

Investing
Activities

Net
cash used in investing activities was $1,815,520 for the year ended December 31, 2022 and resulted primarily the purchase of property
and equipment of $5,295,478, partially offset by deposits on mining equipment, net of $2,939,550.

Net
cash used in investing activities was $9,928,726 for the year ended December 31, 2021 and resulted primarily from deposits on mining
equipment of $7,613,230, and the purchase of property and equipment, specifically mining equipment, of $2,315,496.

Financing
Activities

Net
cash provided by financing activities was $1,469,297 for the year ended December 31, 2022 and resulted primarily from proceeds from the
exercise of warrants of $983,330 and the issuance of a note payable for $500,000.

Net
cash provided by financing activities was $17,785,933 for the year ended December 31, 2021 and resulted primarily from proceeds from
the issuance of common and preferred stock and warrants, net of approximately $16 million, and from proceeds from of the sale of discontinued
operations of $1.5 million.

Working
Capital (Deficit)

The
following table summarizes total current assets, liabilities, and working capital for the years ended December 31, 2022 and 2021:

As
of December 31, 2022, we had a working capital deficit of $8,117,516, compared to a working capital of $4,788,662 as of December 31,
2021, a decrease of 12,906,178. The decrease was primarily due to decreases in cash and deposits on mining equipment, and increases in
accounts payable and accrued expenses, accrued interest, convertible notes payable, and secured convertible debenture – related
party moving from a non-current to a current liability.

Off-Balance
Sheet Arrangements

We
do not have any off-balance sheet arrangements.

Recently
Issued Accounting Pronouncements

For
information about recently issued accounting standards, refer to Note 3 to our Consolidated Financial Statements appearing elsewhere
in this report.

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

Cautionary
Notice Regarding Forward-Looking Statements

The
following discussion and analysis of our financial condition and results of operations for the years ended December 31, 2021 and 2020
should be read in conjunction with our consolidated financial statements and related notes to those financial statements that are included
elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those
anticipated in these forward-looking statements as a result of a number of factors, including those set forth under “Risk Factors”
and elsewhere in this report.

We
use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,”
“ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,”
“could,” and similar expressions to identify forward-looking statements. All forward-looking statements included in this
report are based on information available to us on the date hereof and, except as required by law, we assume no obligation to update
any such forward-looking statements.

Company
Overview

Creek
Road Miners, Inc. (formerly known as Wizard Brands, Inc., Wizard Entertainment, Inc., Wizard World, Inc., and GoEnergy, Inc.) was incorporated
in Delaware on May 2, 2001. Prior to Cryptocurrency mining operations that began in October 2021, the Company produced live and virtual
pop culture conventions and events, and sold a gelatin machine and related consumables (known collectively as “legacy operations”).
All legacy operations were discontinued during 2021. The Company operates an eCommerce site selling pop culture memorabilia and will
evaluate whether to continue the eCommerce operations in 2022.

On
August 6, 2021, we entered into an Asset Purchase Agreement (the “Agreement”) with Informa Pop Culture Events, Inc., a Delaware
corporation (“Informa”). Pursuant to the Agreement, Creek Road Miners Corp. (fka Kick the Can Corp.) sold, transferred, and
assigned certain assets, properties, and rights to Informa related to the business of operating and producing live pop culture events.
The Company released deferred revenue and other liabilities totaling $722,429 and recognized other income of this amount.

On
September 15, 2021, we sold our wholly owned subsidiary which contained our Jevo assets and all rights to our Jevo operations for $1,500,000
and recognized a gain on the transaction of approximately $1,130,740.

Cryptocurrency
Mining

We
currently generate substantially all our revenue through cryptocurrency we earn through our mining activities, which we may strategically
hold or sell at beneficial prices and times. We currently mine and hold Bitcoin exclusively and do not have the intention of mining any
other cryptocurrencies in the near future. While we plan to hold our mined Bitcoin until the next halving event (expected to occur around
March 2024), we may sell the Bitcoin we mine as necessary for operations or as dictated by market conditions. Our mining operations commenced
on October 24, 2021. We use special cryptocurrency mining computers (known as “miners”) to solve complex cryptographic algorithms
to support the Bitcoin blockchain and, in return, receive Bitcoin as our reward. Miners measure their processing power, which is known
as “hashing” power, in terms of the number of hashing algorithms solved (or “hashes”) per second, which is the
miner’s “hash rate.” We participate in Mining Pools (“mining pool(s)”) that pool the resources of groups
of miners and split cryptocurrency rewards earned according to the “hashing” capacity each miner contributes to the mining
pool.

Mining
Equipment

All
of the miners we operate were manufactured by Bitmain, and incorporate application-specific integrated circuit (“ASIC”) chips
specialized to solve blocks on the Bitcoin blockchains using the 256-bit secure hashing algorithm (“SHA-256”) in return for
Bitcoin cryptocurrency rewards. In October 2021 we put 156 Bitmain S19J Pro miners into production, and added another 84 into production
in December 2021. As of December 31, 2021, we had 240 miners with 24 Ph/s of hashing capacity in production, and had deposits for an
additional 1,140 miners with 135.3 Ph/s hashing capacity to be delivered in 2022 as follows:

After
the delivery of the miners above we will have a total of 1,380 miners with 159.3 Ph/s of hashing capacity.

24

The
purchase commitments for the miners total approximately $11.5 million, of which $7,089,000 was paid as a deposit during the year ending
December 31. 2021. The remaining commitments of approximately $4.4 million are anticipated to be paid monthly from the proceeds of the
sale of earned Bitcoin during the year ending December 31, 2022 or, if necessary or advisable, with earned Bitcoin to the extent that
if the vendor accepts Bitcoin as a form of payment or from additional capital raising, which may be debt or equity, or a combination
thereof pursuant to a private or public offering, with the last payment scheduled to occur on November 10, 2022.

Mobile
Data Centers

We
utilize mobile data centers to house our miners. Our mobile data centers are located close to natural gas wellheads. We use natural gas
to power a mobile turbine that produces electricity that, in turn, is used to power our miners.

Mining
Results

The
Company measures its operations by the number and U.S. Dollar (US$) value of the cryptocurrency rewards it earns from its cryptocurrency
mining activities. The following table presents additional information regarding our cryptocurrency mining operations:

Factors
Affecting Profitability

Our
business is heavily dependent on the market price of Bitcoin. The prices of cryptocurrencies, specifically Bitcoin, have experienced
substantial volatility. Further affecting the industry, and particularly for the Bitcoin blockchain, the cryptocurrency reward for solving
a block is subject to periodic incremental halving. Halving is a process designed to control the overall supply and reduce the risk of
inflation in cryptocurrencies using a Proof-of-Work consensus algorithm. At a predetermined block, the mining reward is cut in half,
hence the term “halving”. For Bitcoin the reward was initially set at 50 Bitcoin currency rewards per block. The Bitcoin
blockchain has undergone halving three times since its inception as follows: (1) on November 28, 2012 at block 210,000; (2) on July 9,
2016 at block 420,000; and (3) on May 11, 2020 at block 630,000, when the reward was reduced to its current level of 6.25 Bitcoin per
block. The next halving for the Bitcoin blockchain is anticipated to occur in March 2024 at block 840,000, when the reward will be reduced
to 3.125 Bitcoin per block. This process will reoccur until the total amount of Bitcoin currency rewards issued reaches 21 million and
the theoretical supply of new Bitcoin is exhausted. Many factors influence the price of Bitcoin, and potential increases or decreases
in prices in advance of, or following, a future halving is unknown.

While
we currently plan to hold our mined Bitcoin until the next halving event, we may use or sell our Bitcoin as necessary for operations
or as dictated by market conditions.

Competition

Our
business environment is constantly evolving, and cryptocurrency miners can range from individuals to large-scale commercial mining operations.
We compete with other companies that focus all or a portion of their activities on mining activities at scale, including several public
and private companies. We face significant competition in every aspect of our business, including, but not limited to, the acquisition
of mining equipment, the ability to raise capital, and the ability to obtain the lowest cost energy to power our mining operations.

Government
Regulation

Cryptocurrency
is increasingly becoming subject to governmental regulation, both in the U.S. and internationally. State and local regulations also may
apply to our activities and other activities in which we may participate in the future. Numerous regulatory bodies have shown an interest
in regulating blockchain or cryptocurrency activities. For example, on March 9, 2022 President Biden signed an executive order on cryptocurrencies.
While the executive order does not mandate any specific regulations, it instructs various federal agencies to consider potential regulatory
measures, including the evaluation of the creation of a U.S. Central Bank digital currency. Future changes to existing regulations or
entirely new regulations may affect our business in ways it is not presently possible for us to predict with any reasonable degree of
reliability. As the regulatory and legal environment evolves, we may become subject to new laws and regulation which may affect our mining
and other activities. For additional discussion regarding our belief about the potential risks existing and future regulation pose to
our business, see the Section entitled “Risk Factors” herein.

25

Strategic
Initiatives

Our
objective is to mine and hold select cryptocurrencies. We seek to own multiple oil and natural gas producing assets, utilize the natural
gas to power environmentally friendly, state of the art cryptocurrency mining facilities. By directing income from oil and excess natural
gas sales to cover operating expenses we will have the opportunity to retain our mined cryptocurrencies as assets.

COVID-19

We
are subject to risks and uncertainties as a result of the COVID-19 pandemic. The extent of the impact of the COVID-19 pandemic on our
business is highly uncertain and difficult to predict, as the responses that we, other businesses and governments are taking continue
to evolve. Furthermore, capital markets and economies worldwide have also been negatively impacted by the COVID-19 pandemic, and it is
possible that it could cause a local and/or global economic recession. Policymakers around the globe have responded with fiscal policy
actions to support the healthcare industry and economy as a whole. The magnitude and overall effectiveness of these actions remain uncertain.

The
severity of the impact of the COVID-19 pandemic on our business will depend on a number of factors, including, but not limited to, the
duration and severity of the pandemic and the extent and severity of the impact on our customers, service providers and suppliers, all
of which are uncertain and cannot be predicted. As of the date of issuance of our financial statements, the extent to which the COVID-19
pandemic may in the future materially impact our financial condition, liquidity or results of operations is uncertain.

Critical
Accounting Policies and Estimates

The
preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States,
or U.S. GAAP, requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses,
and related disclosure of contingent assets and liabilities. When making these estimates and assumptions, we consider our historical
experience, our knowledge of economic and market factors and various other factors that we believe to be reasonable under the circumstances.
Actual results may differ under different estimates and assumptions. The accounting estimates and assumptions discussed in this section
are those that we consider to be the most critical to an understanding of our financial statements because they inherently involve significant
judgments and uncertainties.

Principles
of Consolidation

The
accompanying financial statements are consolidated and include the accounts of the Company and its wholly-owned subsidiaries. Intercompany
balances and transactions have been eliminated in consolidation.

Use
of Estimates

The
preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting periods. Actual results could differ from these estimates.

Reclassification

Certain
prior period amounts have been reclassified to conform to current period presentation.

Cash
and cash equivalents

For
purposes of the statements of cash flows, the Company defines cash equivalents as all highly liquid debt instruments purchased with an
original maturity of three months or less. In all periods presented, cash equivalents consist primarily of money market funds.

26

Fair
value of financial instruments

Under
Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 820, Fair Value
Measurements and Disclosures, fair value is defined as the price at which an asset could be exchanged or a liability transferred
in a transaction between knowledgeable, willing parties in the principal or most advantageous market for the asset or liability. Where
available, fair value is based on observable market prices or parameters or derived from such prices or parameters. Where observable
prices or parameters are not available, valuation models are applied. A fair value hierarchy prioritizes the inputs used in measuring
fair value into three broad levels as follows:

Level
1 – Quoted prices in active markets for identical assets or liabilities.

Level
2 – Inputs, other than the quoted prices in active markets, are observable either directly or indirectly.

Level
3 – Unobservable inputs based on the Company’s assumptions.

The
Company is required to use observable market data if such data is available without undue cost and effort. The Company has no fair value
items required to be disclosed as of December 31, 2021 or 2020 under these requirements. The carrying amounts of financial assets and
liabilities, such as cash and cash equivalents, accounts receivable and accounts payable, approximate their fair values because of the
short maturity of these instruments.

Transactions
involving related parties typically cannot be presumed to be carried out on an arm’s-length basis, as the requisite conditions
of competitive, free market dealings may not exist. However, in the case of the secured convertible debentures due to related parties,
the Company obtained a fairness opinion from an independent third party which supports that the transaction was carried out at an arm’s
length basis.

Cryptocurrency

Cryptocurrency
(Bitcoin) is included in current assets in the accompanying consolidated balance sheets. The classification of cryptocurrencies as a
current asset has been made after the Company’s consideration of the significant consistent daily trading volume on readily available
cryptocurrency exchanges and the absence of limitations or restrictions on Company’s ability to sell Bitcoin. Cryptocurrencies
awarded to the Company through its mining activities are accounted for in connection with the Company’s revenue recognition policy
disclosed below. Cryptocurrencies held are accounted for as intangible assets with indefinite useful lives. An intangible asset with
an indefinite useful life is not amortized but assessed for impairment annually, or more frequently, when events or changes in circumstances
occur indicating that it is more likely than not that the indefinite-lived asset is impaired. Impairment exists when the carrying amount
exceeds its fair value, which is measured using the quoted price of the cryptocurrency at the time its fair value is being measured.
In testing for impairment, the Company has the option to first perform a qualitative assessment to determine whether it is more likely
than not that an impairment exists. If it is determined that it is not more likely than not that an impairment exists, a quantitative
impairment test is not necessary. If the Company concludes otherwise, it is required to perform a quantitative impairment test. To the
extent an impairment loss is recognized, the loss establishes the new cost basis of the asset. Subsequent reversal of impairment losses
is not permitted. Cryptocurrencies awarded to the Company through its mining activities are included within operating activities on the
accompanying consolidated statements of cash flows.

Impairment
of Long-Lived Assets

Long-lived
assets are comprised of intangible assets and property and equipment. Long-lived assets are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset may not be recoverable. An estimate of undiscounted future cash
flows produced by the asset, or the appropriate grouping of assets, is compared to the carrying value to determine whether an impairment
exists, pursuant to the provisions of FASB ASC 360-10 “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets
to Be Disposed Of”. If an asset is determined to be impaired, the loss is measured based on quoted market prices in active markets,
if available. If quoted market prices are not available, the estimate of fair value is based on various valuation techniques, including
a discounted value of estimated future cash flows and fundamental analysis. The Company reports an asset to be disposed of at the lower
of its carrying value or its estimated net realizable value.

Property
and equipment

Property
and equipment are stated at cost and are depreciated using the straight-line method over their estimated useful lives of 3 to 9 years.
Leasehold improvements are amortized over the shorter of the useful lives of the related assets, or the lease term. Expenditures for
maintenance and repairs are charged to operations as incurred while renewals and betterments are capitalized. Gains and losses on disposals
are included in the consolidated statements of operations.