OTC: SPND

Operating Approach

The Company has a long history with, and extensive
knowledge of, the Fort Worth Basin of Texas. Our technical staff has extensive oil and gas experience in the Fort Worth Basin, and other
geological basins in which the Company has operations.

The Company analyzes cost effective ways to
grow our production. We have traditionally increased our reserve base in one of two ways. Initially, in the 1970s and 1980s, the Company
obtained its production through an exploration and development drilling program focused principally in the Fort Worth Basin of North
Texas. Today, the Company has retained many of these wells as producing properties and holds a large amount of acreage by production
in that Basin.

During periods of lower product pricing the
Company cost effectively added to its reserve base through value-priced acquisitions. The Company’s focus has evolved to seek value-priced
acquisitions combined with the development of economically feasible drilling prospects. Currently we are continuing our efforts to acquire
producing properties, develop our leasehold acreage, and acquire selective additional leasehold acreage for development purposes. We
are pursuing growth primarily through acquisitions of good quality producing properties, participating in drilling projects with other
operators, and selective drilling and recompletion activities. Supply chain shortages along with labor shortages have caused rapidly
rising costs for the Company to develop and produce our oil and natural gas reserves. We believe that it is prudent to carefully evaluate
all our options and consider whether each transaction can be supported in today’s price environment.

Strategic Business Plans

One of our key strategies is to attempt to
maintain shareholder value through implementation of plans for selective drilling projects and value priced acquisitions to the extent
the economics of such projects work in the current environment. The Company's long-term focus is to grow its oil and natural gas production
through a strategic combination of selected property acquisitions, divestitures, participating in drilling projects with other operators,
and a development program primarily based on developing its leasehold acreage. Additionally, the Company plans to continue to rework
existing wells to increase production and reserves when feasible.

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The Company's primary area of operation has
been in the State of Texas. We plan to continue to focus on operations in Texas, and we want to capitalize on our strengths which include
an extensive knowledge of the various reservoirs in Texas, experience in operations in this geographic area, development of lease holdings,
and utilization of existing infrastructure to minimize costs.

The Company will continue to generate and
evaluate prospects using its own technical staff and outside consultants. The Company intends to fund operations primarily from cash
flow generated by its operations.

On July 26, 2021, the Company announced that
its Board of Directors has initiated a review of strategic alternatives to attempt to enhance shareholder value. The strategic alternatives
being considered include a possible sale of all or a material portion of assets, either in one transaction or a series of transactions,
a merger of the Company or other form of business combination involving the Company and a third party, the purchase of additional assets,
the outright sale of the Company, or recapitalization of the Company.

No definitive timeline exists for the process,
and there can be no assurance that the results of the review process will result in a transaction or other change. It is not expected
that there will be further disclosure of developments in the review process unless and until the Board of Directors has approved the
specific course of action or has otherwise determined that further disclosure is appropriate or required.

Areas of Operations

The Company owns various interests in wells
located in numerous states and the Company’s operations are currently located in 5 of those states which include Alabama, Louisiana,
Oklahoma, New Mexico and Texas.

The Company holds approximately 50,633 gross
acres (10,211 net acres) under lease in the states listed below. The majority of the leases are held by production. A breakout of the
Company’s leasehold acreage by geographic area is as follows:

Operated
Non-Operated

Percent

Properties
Properties
Total
of Total

Gross
Net
Gross
Net
Gross
Net
Gross
Net

Geographic Area
Acres
Acres
Acres
Acres
Acres
Acres
Acres
Acres

North Texas (1)
3,470
3,221
5,516
228
8,986
3,449
17.74%
33.77%

East Texas
3,904
2,832
5,082
323
8,986
3,155
17.75%
30.90%

Gulf Coast Texas
40
35
80
12
120
47
0.24%
0.46%

West Texas
80
53
2,280
155
2,360
208
4.66%
2.04%

Texas Panhandle
1,280
873
640
46
1,920
919
3.79%
9.00%

Alabama
1,160
719
3,139
61
4,299
780
8.49%
7.64%

Arkansas
—
—
1,043
55
1,043
55
2.06%
0.54%

Louisiana
—
—
1,328
115
1,328
115
2.62%
1.13%

New Mexico
956
816
40
3
996
819
1.97%
8.02%

Oklahoma
240
128
19,505
486
19,745
614
39.00%
6.01%

Montana
—
—
10
—
10
—
0.02%
0.00%

Wyoming
—
—
840
50
840
50
1.66%
0.49%

Total
11,130
8,677
39,503
1,534
50,633
10,211
100.00%
100.00%

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The Company uses recent and emerging technologies,
as well as proven industry practices, to develop and produce oil and natural gas from its properties. Additionally, the Company has a
dedicated and well-trained team of employees and professional staff that continually seek out low-risk profitable drilling and acquisition
opportunities.

The majority of the Company’s leasehold
acres are located in Texas.

A
breakout of the Company's most significant oil and gas reserves by geographic area is as follows:

BOE
%Total

North Texas including the Fort Worth Basin & Bend Arch
234,627
44.78%

East Texas
191,778
36.60%

Panhandle Texas
23,698
4.52%

West Texas
13,512
2.58%

Gulf Coast Texas
1,520
0.29%

Total Texas
465,135
88.77%

Alabama
39,807
7.60%

Oklahoma
18,202
3.47%

New Mexico
893
0.17%

Total Other States
58,902
11.23%

Total
524,037
100.00%

North Texas - Fort Worth
Basin & Bend Arch

The Fort Worth Basin has been a focal point
of the Company since its inception. Our technical personnel have numerous years of exploration, drilling, completing, and production
experience extracting natural gas and oil from both conventional and unconventional hydrocarbon deposits found across the basin. Furthermore,
the Company maintains comprehensive and extensive dossiers of geologic and engineering data gathered from the province.

The Fort Worth Basin is a major United States
onshore natural gas-prone expanse containing multiple pay zones that range in depth from one thousand to nine thousand (1,000-9,000)
feet. Improved technical advances in fracturing and stimulation technologies have helped unlock
natural gas and oil reserves from the hydrocarbon bearing Barnett Shale Formation; and thus, continue to bolster vigorous exploration
and development activities that target these conventional and unconventional reservoir reserves throughout the province.

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Current Activities

Oklahoma

During the first quarter of
2025, the Company participated in the drilling of a new horizontal well in Major County, OK, targeting the Mississippian Lime. The Fort
22.27-H well was spud on 2/28/2025 and was drilled to an approximate true vertical depth (TVD) of 9,250 ft and a measured depth of 14,444
ft. The well was cased on 4/01/2025, was completed in July 2025, and was placed into production on 7/28/2025. The well was producing
at a rate of 227 bopd, 1,241 mcfgpd and 440 bswpd as of 10/31/2025. The production rates are expected to decrease with time. The Company
owns a 0.0234375 non-operated working interest in the well.

During the second quarter
of 2025, the Company participated in the drilling of a new horizontal well in Major County, OK, targeting the Mississippian Lime.
The Reutlinger 22-27-1H well was spud on June 6, 2025, and was drilled to an approximate true vertical depth (TVD) of 9,000 ft and a
measured depth of 14,575 ft and is currently awaiting casing and completion. The Company owns a 0.0234375 non-operated working
interest in the well. The well is scheduled to be completed by the operator in 2026.

Subsequent to year end of 12/31/2025, the Company participated in the drilling
of a new horizontal well in Custer County, OK targeting the Cherokee Formation. The well was spudded on 1/4/2026 and drilled to a total
depth of 21,570’. The well was cased and cemented, and the drilling rig was released on 3/4/2026. The well is awaiting completion.
The Company owns an estimated 0.01725466 non-operated working interest in the well.

Subsequent to the year end of 12/31/2025, the Company participated in the
drilling of a horizontal well in Custer County, OK targeting the Des Moines Formation. The estimated total depth is 20,000 ft. and the
well should spud in the second quarter of 2026. The Company owns an estimated 0.015674 non-operated working interest in the well.

West
Texas

During the third quarter of 2025, the Company participated in the drilling
of a new horizontal well in Martin & Dawson Counties, Texas targeting the Dean Sands. The Sterling C 3H well was spud on September
3, 2025, and was drilled to an approximate true vertical depth (TVD) of 9,000 ft and a total measured depth of 19,730 ft. The well was
cased and is currently awaiting completion. The company owns a 0.0784909 non-operated working interest in the well. The well was placed
into production on 12/19/2025 at a rate of 14 bopd, 28 mcfgpd and 1,927 bwpd. Production has increased from the initial production as
the frac fluids are being pumped back. As of 12/31/2025, production had increased to 458 bopd, 192 mcfgpd, 5,005 bwpd. The average daily
production for the first quarter of 2026 is 786 bopd, 332 mcfgpd, 4,317 bwpd.

For all the above wells, the Company cautions that the initial production
rates of a newly completed well or newly recompleted well can have steep decline rates and the initial production rates reported above
may not be an indicator of the ultimate oil and gas recoveries obtained from the well. Additionally, production rates of well(s) acquired
by the Company at the effective date may not be an indicator of the ultimate oil and gas recoveries to be obtained from the well.

Oil and Natural Gas Reserves

The Company’s net proved oil and natural
gas reserves have been estimated by Company personnel. (See applicable footnote to the financial statements). No separate independent
reserve report analysis has been prepared by an independent third party.

The net proved crude oil and natural gas reserves
of the Company as of December 31, 2025, based on SEC guidelines, were classified as follows:

Barrels

of Oil
BCF

Gas

Proved Developed Producing
121,466
2,415

Proved Developed Non-Producing
—
—

Proved Undeveloped
—
—

Total Proved Reserves
121,466
2,415

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Only reserves that fell within the Proved
classification were considered. Other categories such as Probable or Possible Reserves were not considered. No value was given to the
potential future development of behind pipe reserves, untested fault blocks, or the potential for deeper reservoirs underlying the Company's
properties. Shut-in, uneconomic wells, and insignificant non-operated interests were excluded.

On a BOE (barrel of oil equivalent) basis
(6 MCF/BOE), the net reserves are:

Barrels of Oil

Equivalent

(BOE)

Natural Gas Reserves
402,571
77%

Oil Reserves
121,466
23%

Total Reserves
524,037
100%

Proved Developed Producing
524,037
100%

Proved Developed Non-Producing
—
—

Proved Undeveloped
—
—

Total Proved Reserves
524,037
100%

The Company has operational control over the
majority of these reserves and can therefore to a large extent control the timing of development and production.

Barrels of Oil

Equivalent

(BOE)

Operated Wells
401,382
77%

Non-Operated Wells
122,655
23%

Total
524,037
100%

Financial Information Relating to Industry
Segments

The Company has three identifiable business
segments: (1) exploration, acquisition, development and production of oil and natural gas, (2) natural gas gathering, and (3) commercial
real estate investment. Footnote 14 to the Consolidated Financial Statements filed herein sets forth the relevant information regarding
revenues, income from operations, and identifiable assets for these segments.

Narrative Description of Business

The Company is engaged in the exploration,
development, acquisition and production of oil and natural gas, and the gathering and marketing of natural gas. The Company is also engaged
in commercial real estate leasing through leasing office space to non-related third-party tenants in the Company’s corporate headquarters
office building.

Principal Products,
Distribution and Availability

The principal products marketed by the Company
are crude oil and natural gas which are sold to major oil and gas companies, brokers, pipelines, and distributors. Reserves of oil and
natural gas are depleted upon extraction. The Company is always seeking to replace its oil and gas reserves.

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The Company is also engaged in the gathering
and marketing of natural gas through its subsidiary PPC, which owns several miles of pipeline in Texas. Natural gas is gathered for a
fee. Substantially all the natural gas gathered by the Company is produced from wells that the Company operates and in which it owns
a working interest.

The Company owns land and a two-story commercial
office building in Dallas, Texas, which it uses as its principal headquarters office. The Company leases the remainder of the building
to non-related third-party commercial tenants at prevailing market rates.

Patents, Licenses and
Franchises

Oil and natural gas leases of the Company
are obtained from the owner of the mineral estate. The leases are generally for a primary term of one or more years and often have extension
options for an equivalent period as the original primary term for payment of additional bonus consideration. The leases customarily provide
for extension beyond their primary term for as long as oil and natural gas are produced in commercial quantities or other operations
are conducted on such leases as provided by the terms of the leases.

The Company currently holds interests in producing
and non-producing oil and natural gas leases. The existence of the oil and natural gas leases and the terms of the oil and natural gas
leases are important to the business of the Company because future additions to reserves will come from oil and natural gas leases currently
owned by the Company, and others that may be acquired, when they are proven to be productive. The Company is continuing to purchase oil
and natural gas leases in areas where it currently has production, and also in other areas.

The following is a summary of a partial list
of purchasers / operators (listed by percentage of total oil and natural gas sales) from oil and natural gas produced by the Company
for the three-year period ended December 31, 2025. The Company made sales of oil and natural gas to approximately 89 different purchasers
/ operators during 2025.

Dependence on Purchasers
and Operators

Purchaser / Operator
2025
2024
2023

Energy Transfer Crude
14%
18%
17%

Merit Energy Company
13%
1%
—

Enlink Gas Marketing, LTD.
12%
9%
11%

Bedrock Energy Partners
7%
6%
7%

Oil and natural gas production is sold to
many different purchasers/operators under market sensitive, short-term contracts.

Except as set forth above, there are no other
purchasers/operators of the Company’s oil and natural gas production that individually accounted for more than six percent (6.0%)
of the Company's oil and natural gas revenues during the three years ended December 31, 2025.

The Company currently has no hedged contracts.

Prospective Drilling
Activities

The Company's primary oil and natural gas
prospect generation and acquisition efforts have been in known producing areas in the United States with emphasis devoted to Texas.

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The Company intends to use a portion of its
available funds to participate in operated and non-operated drilling activities. The Company does not own any drilling rigs. Independent
drilling contractors perform all drilling activity. The Company does not refine or otherwise process its oil and natural gas production.

Exploration for oil and natural gas is normally
conducted with the Company acquiring undeveloped oil and natural gas leases under prospects and carrying out exploratory drilling on
the prospective leasehold with the Company retaining a majority interest in the prospect. The Company may sell interests to third parties,
with the Company retaining an overriding royalty interest, carried working interest, or a reversionary interest.

A prospect is a geographical area designated
by the Company for the purpose of searching for oil and natural gas reserves and reasonably expected by it to contain at least one oil
or natural gas reservoir. The Company utilizes its own funds along with the issuance of common stock and options to purchase common stock
in some limited cases, to acquire oil and gas leases covering the lands comprising the prospects. These leases are selected by the Company
and are obtained directly from the landowners, as well as from landmen, geologists, other oil companies, some of whom may be affiliated
with the Company, and by direct purchase, farm-in, or option agreements. After an initial test well is drilled on a property, any subsequent
development drilling of such prospect will normally require the Company to fund the development activities.

Employees and Independent
Contractors

As of December 31, 2025, the
Company employed or contracted for the services of a total of approximately 42 people. Of this
total, 13 are full-time employees, and the remainder are part-time employees or independent contractors. We believe that our relationships
with our employees and contractors are good.

In order to effectively utilize our resources,
we employ the services of independent consultants and contractors to perform a variety of professional, technical, and field services,
including in the areas of lease acquisition, land related documentation and contracts, drilling and completion work, pumping, inspection,
testing, maintenance and specialized services. We believe that it can be more cost effective to utilize the services of consultants and
independent contractors for some of these services.

We depend to a large extent on the services
of certain key management personnel and officers, and the loss of any these individuals could have a material adverse effect on our operations.
The Company does not maintain key-man life insurance policies on its employees.

Financial Information about Foreign and
Domestic Operations and Export Sales

All of the Company's business is conducted
domestically, with no export sales.

Competition

We compete with other oil
and natural gas companies for leases, equipment, personnel and markets for the sale of oil and natural gas, The oil and natural gas industry
is intensely competitive, and it is becoming more difficult for smaller companies such as ours to compete with larger oil and gas companies.
See “