Crown Point Energy : Condensed Interim Consolidated Financial Statements for the three months ended March 31, 2024

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CROWN POINT ENERGY INC.

Condensed Interim Consolidated Financial Statements

For the three months ended March 31, 2024

(Unaudited)

Notice of No Auditor Review of

Condensed Interim Consolidated Financial Statements

In accordance with National Instrument 51-102 released by the Canadian Securities Administrators, the Company discloses that its auditors have not reviewed these unaudited condensed interim consolidated financial statements as at and for the three months ended March 31, 2024.

CROWN POINT ENERGY INC.

CONSENSED INTERIM CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(United States Dollars)

			March 31		December 31
As at	Note			2024		2023
Assets
Current assets:
Cash		$		314,986	$	191,507
Investments	3				-		2,667,792
Trade and other receivables	4			2,829,003		1,917,440
Hydrocarbon inventories				922,795		1,456,822
Prepaid expenses and other current assets	5			2,047,714		1,402,847
				6,114,498		7,636,408
Exploration and evaluation assets			14,103,353		14,103,353
Property and equipment	6		43,892,301		45,834,731
Restricted cash	9			127,645		123,653
Other non-current assets	7			2,487,520		87,520
		$	66,725,317	$	67,785,665
Liabilities and Shareholders' Equity
Current liabilities:
Trade and other payables	10	$		7,132,247	$	5,768,105
Bank debt	8			2,490,067		508,114
Current portion of notes payable	9		15,599,848		12,298,533
Current portion of decommissioning provision	11			364,923		360,546
Current portion of lease liabilities	12			388,730		487,044
			25,975,815		19,422,342
Non-current trade and other payables	10			1,480,545		1,480,545
Notes payable	9		10,911,617		16,459,187
Decommissioning provision	11		10,166,410		10,061,672
Lease liabilities	12			357,787		378,124
Deferred tax liability	18			926,266		2,151,708
			49,818,440		49,953,578
Shareholders' equity
Share capital			56,456,328		56,456,328
Contributed surplus				691,343		691,343
Accumulated other comprehensive loss			(18,240,776)		(18,217,300)
Deficit			(22,000,018)		(21,098,284)
			16,906,877		17,832,087
		$	66,725,317	$	67,785,665
Going concern	1
Commitments	23
Subsequent events	24
Approved on behalf of the Board of Directors:	"Gordon Kettleson"			"Pablo Peralta"
	Gordon Kettleson, Director		Pablo Peralta, Director

See accompanying notes to condensed interim consolidated financial statements.

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CROWN POINT ENERGY INC.

CONSENSED INTERIM CONSOLIDATED STATEMENTS OF LOSS

AND COMPREHENSIVE LOSS

(Unaudited)

(United States Dollars)

For the three months ended March 31	Note		2024		2023
Revenue
Oil and natural gas sales	15	$	6,101,086	$	7,100,558
Processing income			74,251		61,895
Export tax			(152,016)		(138,196)
Royalties and turnover tax			(1,016,422)		(1,108,697)
			5,006,899		5,915,560
Expenses
Operating			4,252,711		4,652,387
General and administrative	16		581,318		695,413
Depletion and depreciation			2,264,034		2,004,768
Share-based payments	13		-		9,594
Foreign exchange gains			(270,041)		(247,534)
			6,828,022		7,114,628
Operating loss			(1,821,123)		(1,199,068)
Net finance expense	17		(306,053)		(1,194,127)
Loss before taxes			(2,127,176)		(2,393,195)
Tax recovery	18		1,225,442		531,625
Net loss			(901,734)		(1,861,570)
Other comprehensive income (loss)
Items that may subsequently be reclassified to profit or loss
Exchange differences on translation of Canadian
parent company			(23,476)		4,549
Total comprehensive loss		$	(925,210)	$	(1,857,021)
Net loss per share	14
Basic		$	(0.01)	$	(0.03)
Diluted		$	(0.01)	$	(0.03)

See accompanying notes to condensed interim consolidated financial statements.

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CROWN POINT ENERGY INC.

CONSENSED INTERIM CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited)

(United States Dollars)

For the three months ended March 31	Note	2024		2023
Share capital
72,903,038 common shares issued and outstanding
Balance, January 1 and March 31	$	56,456,328	$	56,456,328
Contributed surplus
Balance, January 1		691,343		675,195
Share-based payments	13	-		9,594
Balance, March 31		691,343		684,789
Accumulated other comprehensive loss
Balance, January 1		(18,217,300)		(18,260,539)
Exchange differences on translation of Canadian
parent company		(23,476)		4,549
Balance, March 31		(18,240,776)		(18,255,990)
Deficit
Balance, January 1		(21,098,284)		(12,970,652)
Net loss		(901,734)		(1,861,570)
Balance, March 31		(22,000,018)		(14,832,222)
Total shareholders' equity	$	16,906,877	$	24,052,905

See accompanying notes to condensed interim consolidated financial statements.

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CROWN POINT ENERGY INC.

CONDENSED INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(United States Dollars)

For the three months ended March 31	Note	2024		2023
Operating activities
Net loss	$	(901,734)	$	(1,861,570)
Items not affecting cash:
Depletion and depreciation		2,264,034		2,004,768
Share-based payments	13	-		9,594
Net finance expense		337,718		1,129,446
Unrealized foreign exchange gains		(3,082)		(615,170)
Tax recovery	18	(1,225,442)		(531,625)
Funds flow provided by operating activities		471,494		135,443
Change in non-cash working capital	19	(8,154)		788,331
Net cash provided by operating activities		463,340		923,774
Financing activities
Bank debt proceeds	8	2,176,056		1,867,484
Bank debt repayments	8	(282,267)		(205,576)
Notes payable repayments	9	(2,093,967)		-
Notes payable interest payments	9	(317,583)		(147,740)
Restricted cash		17,536		46,248
Lease payments	12	(133,364)		(143,061)
Interest paid	8	(243,128)		(891,558)
Net cash provided by (used in) financing activities		(876,717)		525,797
Investing activities
Exploration and evaluation expenditures		-		(3,139)
Property and equipment expenditures	6	(280,202)		(1,042,009)
Settlement of contingent consideration liability		-		(178,296)
Collection of contingent consideration receivable		-		86,022
Proceeds from redemption of investments	3	2,930,954		-
Acquisition advance payment	7	(2,400,000)		-
Change in non-cash working capital	19	296,272		(351,139)
Net cash provided by (used in) investing activities		547,024		(1,488,561)
Change in cash		133,647		(38,990)
Foreign exchange effect on cash held in foreign currencies		(10,168)		(64,608)
Cash, January 1		191,507		536,752
Cash, March 31	$	314,986	$	433,154

See accompanying notes to condensed interim consolidated financial statements.

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CROWN POINT ENERGY INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2024

(Unaudited)

(United States Dollars)

1. REPORTING ENTITY AND GOING CONCERN:

Crown Point Energy Inc. ("Crown Point" or the "Company") was incorporated under the laws of British Columbia and continued under the laws of Alberta on July 27, 2012. Crown Point is based in Calgary, Alberta and is involved in the exploration for, and development and production of, petroleum and natural gas in Argentina.

The Company's registered office is Suite 2400, 525 - 8th Avenue SW, Calgary, Alberta, T2P 1G1.

As at March 31, 2024, Liminar Energía S.A. ("Liminar"), the Company's largest shareholder owned approximately 63.9% of the Company's issued and outstanding common shares. See Note 20(a).

These consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the payment of liabilities in the ordinary course of business.

For the three months ended March 31, 2024, the Company reported a loss of $0.9 million (three months ended March 31, 2023 - $1.9 million) and a working capital deficit of $19.9 million at that date (December 31, 2023 - $11.8 million working capital deficit). As of March 31, 2024, the carrying amount of notes payable outstanding is $26.5 million (Note 9), of which $15.6 million is classified as a current liability. The maturities of the Company's financial liabilities based on contractual cash flows are disclosed in Note 21. In addition, the Company has significant future capital commitments to develop its properties (Note 23).

The ability of the Company to continue as a going concern is dependent upon the Company's ability to obtain additional financing through bank debt and/or the issuance of notes payable or equity, and the generation of funds from operating activities to meet current and future obligations. Management plans to secure the necessary financing for its debt and future capital commitments through the issuance of new notes payable or other debt or equity instruments, however, there is no assurance that these initiatives will be successful. The need to obtain additional capital to repay or refinance bank debt and notes payable and to fund the Company's existing commitments, including the purchase price for the proposed Acquisition of the Santa Cruz Concessions and ongoing operations, creates a material uncertainty that may cast significant doubt about the Company's ability to meet its obligations as they become due, and accordingly, the appropriateness of the use of accounting principles applicable to a going concern.

These consolidated financial statements do not reflect adjustments in the carrying values of the assets and liabilities, expenses and the statements of financial position classifications that would be necessary if the going concern assumption were not appropriate. Such adjustments could be material.

2. BASIS OF PRESENTATION:

The unaudited condensed interim consolidated financial statements of the Company and its subsidiaries have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and adhere to the guidance of International Accounting Standard 34 - Interim Financial Reporting. Certain information and disclosures normally included in the notes to the audited consolidated financial statements and notes thereto for the year ended December 31, 2023 prepared in accordance with IFRS Accounting Standards have been condensed or omitted. The Company has consistently applied the same accounting policies throughout all periods presented. These unaudited condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2023.

The unaudited condensed interim consolidated financial statements were approved and authorized for issuance by the Board of Directors on May 13, 2024.

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CROWN POINT ENERGY INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2024

(Unaudited)

(United States Dollars)

3. INVESTMENTS:

A continuity of the Company's investments is as follows:

Balance, December 31, 2023	$	2,667,792
Proceeds on redemption		(2,930,954)
Interest income		333,324
Change in fair value (Note 17)		(23,182)
Effect of change in exchange rates		(46,980)
Balance, March 31, 2024	$	-

4. TRADE AND OTHER RECEIVABLES:

The Company's trade and other receivables are exposed to the risk of financial loss if the counterparty fails to meet its contractual obligations. The Company's trade and other receivables include amounts due from the sale of crude oil and natural gas. The majority of the Company's oil production is exported by the Company to two international traders and sold to two Argentine companies; the majority of the Company's natural gas production is sold by the Company to several Argentine companies.

Three major purchasers that represents 90% of oil revenue reported in the three months ended March 31, 2024 comprise $1,620,953 of accounts receivable at March 31, 2024 (December 31, 2023 - two major purchasers, 89% of oil revenue, $1,394,639 of accounts receivable) and one major purchaser that represent 79% of natural gas revenue reported in the three months ended March 31, 2024 comprise $454,935 of accounts receivable at March 31, 2024 (December 31, 2023 - two major purchasers, 75% of natural gas revenue, $290,808 of accounts receivable) (Note 15).

The Company's maximum exposure to credit risk at March 31, 2024 and December 31, 2023 in respect of trade and other

receivables consists of:
		March 31		December 31
		2024		2023
Due from Argentine companies	$	1,734,894	$	1,470,396
Due from an international company		847,037		296,157
Due from related parties (Note 20(c))		454,935		290,769
Other receivables		26,619		95,157
Allowance for credit losses		(234,482)		(235,039)
Total trade and other receivables	$	2,829,003	$	1,917,440
The Company's trade and other receivables are aged as follows:
		March 31		December 31
		2024		2023
Not past due (less than 90 days)	$	2,844,847	$	1,934,822
Past due (more than 90 days)		218,638		217,657
		3,063,485		2,152,479
Allowance for credit losses		(234,482)		(235,039)
Total trade and other receivables	$	2,829,003	$	1,917,440

5. PREPAID EXPENSES AND OTHER CURRENT ASSETS:

		March 31		December 31
		2024		2023
Prepaid expenses	$	1,762,593	$	1,027,441
Value Added Tax		285,121		375,406
Total prepaid expenses and other current assets	$	2,047,714	$	1,402,847

Value Added Tax ("VAT") on purchases is applied against VAT on sales to reduce the amount paid to the Argentine Government. VAT is included in prepaid expenses when amounts are expected to be offset with VAT on current sales. VAT does not expire and may be carried forward indefinitely.

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CROWN POINT ENERGY INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2024

(Unaudited)

(United States Dollars)

6. PROPERTY AND EQUIPMENT:

			Argentina		Canada
	Development
	and production	Right-of-	Other	Other
	assets	use assets	assets	assets	Total
Cost:	$		$	$	$	$
Balance, December 31, 2023	126,133,260	1,225,613	658,466	295,192	128,312,531
Additions	280,202	-	-	-	280,202
Government grants	(50,850)	-	-	-	(50,850)
Effect of change in exchange rates	-	(316)	-	(7,066)	(7,382)
Balance, March 31, 2024	126,362,612	1,225,297	658,466	288,126	128,534,501
Accumulated depletion and depreciation:
Balance, December 31, 2023	72,355,454	379,147	577,368	289,831	73,601,800
Depletion and depreciation	2,042,277	121,660	7,180	393	2,171,510
Effect of change in exchange rates	-	(170)	-	(6,940)	(7,110)
Balance, March 31, 2024	74,397,731	500,637	584,548	283,284	75,766,200
Accumulated impairment:
Balance, December 31, 2023 and
March 31, 2024	8,876,000	-	-	-	8,876,000
Net carrying amount:
At December 31, 2023	44,901,806	846,466	81,098	5,361	45,834,731
At March 31, 2024	43,088,881	724,660	73,918	4,842	43,892,301

Government grants

In July 2021 the Province of Mendoza created the Mendoza Activa Hydrocarbons II Program ("Program II") to promote and increase the development and reactivation of hydrocarbon activity in the Province. Program II provides a refund ("government grant") of up to 40% of amounts invested in the Province prior to December 31, 2022, that met certain technical and economic requirements. Government grants are paid as follows:

• 50% in the form of a turnover tax credit that is freely transferable and may be applied against up to 10% of the holder's monthly turnover tax balance; and
• 50% in the form of a royalty credit that can be applied against provincial royalties on incremental production obtained from the related investment.

Government grants received under Program II expire on December 31, 2025, and may be extended for up to three years if certain criteria are met.

During the three months ended March 31, 2024, the Company received ARS 43.5 million ($0.05 million) of Program II turnover tax and royalty credits related to investments in the CH Concession.

Future development costs

The depletion expense calculation for the three months ended March 31, 2024 included $76.2 million (December 31, 2023 - $76.2 million) for estimated future development costs associated with petroleum and natural gas proved and probable reserves in Argentina.

7. OTHER NON-CURRENT ASSETS

		March 31		December 31
		2024		2023
Acquisition advance payment (a)	$	2,400,000	$	-
Contingent consideration receivable		87,520		87,520
Total non-current assets	$	2,487,520	$	87,520

1. On February 1, 2024, the Company's wholly owned subsidiary, Crown Point Energía S.A. ("Crown Point Energía"), entered into an asset sale and purchase agreement (the "Acquisition Agreement") with Pan American Energy S.L., Sucursal Argentina

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CROWN POINT ENERGY INC.

NOTES TO CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS

For the three months ended March 31, 2024

(Unaudited)

(United States Dollars)

(the "Seller") to acquire the Seller's 100% working interest in the Piedra Clavada and Koluel Kaike hydrocarbon exploitation concessions (the "Santa Cruz Concessions", and collectively, the "Acquisition"). The purchase price is comprised of $12 million cash, subject to closing adjustments, plus contingent in-kind consideration payable throughout a 15-year period following closing. On February 7, 2024, the Company made a $2.4 million advance payment to the Seller. The advance payment will be refundable if the Acquisition Agreement is terminated by the Seller in circumstances where the cause of the termination is not the responsibility of the Company.

Completion of the acquisition is subject to the receipt of all necessary regulatory and Provincial approvals, including the approval of the TSX Venture Exchange and other customary closing conditions. Completion of the acquisition is not subject to approval by the Company's shareholders. The effective date of the acquisition will be January 1, 2024.

8. BANK DEBT:

The Company's bank debt is not subject to covenants. A continuity of the Company's current bank debt is as follows:

Balance, December 31, 2023	$	508,114
Proceeds		2,176,056
Repayments		(282,267)
Interest accrued (Note 17)		376,016
Interest paid		(243,128)
Effect of change in exchange rates		(44,724)
Balance, March 31, 2024	$	2,490,067

As at March 31, 2024 and December 31, 2023, bank debt was comprised of the following balances:

		March 31		December 31
		2024		2023
Banco Hipotecario S.A. (a)	$	1,532,505	$	-
Banco Galicia S.A.U. (b)		126,106		67,019
Banco de la Nación S.A.(c)		831,456		441,095
	$	2,490,067	$	508,114

1. Banco Hipotecario S.A.
   The Company had an overdraft loan agreement available until April 30, 2024 of up to ARS 1,600 million ($1.86 million) with Banco Hipotecario S.A. at variable interest rate which is determined monthly. The overdraft loan was guaranteed by Grupo ST S.A. or ST Inversiones S.A. under an agreement with Banco Hipotecario S.A. pursuant to which the Company is charged a loan guarantee fee of 1% of the loan balance per annum (Note 20(b)). The overdraft loan agreement was extended until June 30, 2024.
   As at March 31, 2024, ARS 1,235.1 million ($1.44 million) (December 31, 2023 - $nil) was drawn on the overdraft loan.
   During the three months ended March 31, 2024, the Company recognized $225,079 (three months ended March 31, 2023 - $624,220) of interest on the Banco Hipotecario S.A. overdraft loan, of which $131,884 was paid and $93,195 is included in the loan balance as at March 31, 2024 (December 31, 2023 - $nil).
2. Banco Galicia S.A.U.
   On October 5, 2023, the Company obtained a working capital loan of ARS 50 million ($0.2 million) with Banco Galicia S.A.U. at an annual interest rate of 115% payable monthly. The working capital loan was repaid on April 5, 2024 (Note 24(a)).
   On March 26, 2024, the Company obtained a working capital loan of ARS 50 million ($0.06 million) with Banco Galicia S.A.U. at an annual interest rate of 102% payable monthly. The working capital loan is repayable on September 26, 2024.
   As at March 31, 2024, a total of ARS 100 million ($0.12 million) (December 31, 2023 - ARS 50 million ($0.1 million)) was drawn on the Banco Galicia S.A.U. working capital loans.
   During the three months ended March 31, 2024, the Company recognized $22,237 (three months ended March 31, 2023 - $74,586) of interest on Banco Galicia S.A.U. loans, of which $17,568 was paid and $9,842 is included in the loan balance as at March 31, 2024 (December 31, 2023 - $5,173).
3. Banco de la Nación S.A. ("BNA")

9