Mirasol Resources Ltd. — Interim / Quarterly Report 2021

Jun 30, 2021

SAMOTH OILFIELD INC.

Condensed Interim Financial Statements

For the three and six months ended April 30, 2021 and 2020

SAMOTH OILFIELD INC.

National Instrument 51-102 Continuous Disclosure Obligations Notice

Pursuant to Part 4.3 (3) of National Instrument 51-102, these unaudited condensed interim financial statements of Samoth Oilfield Inc. for the three and six month periods ended April 30, 2021 have not been reviewed by the Company's external auditors.

SAMOTH OILFIELD INC.

Statements of Financial Position

	April 30, 2021	October 31, 2020 (Audited)
	(Unaudited)
ASSETS Current Assets: Cash Trade and other receivables GST receivable Prepaids and deposits (Note 6)		$287,924 4,740 6,594 28,966
	$137,845
	-
	10,846
	24,385
		$328,224
	$173,076
LIABILITIES AND EQUITY Current Liabilities: Trade and other payables Currentportion of decommissioningliabilities(Note 11)		$116,560 60,000
	$172,002
	60,000
Long term Liabilities: Decommissioningliabilities (Note11)	232,002	176,560 255,075
	255,075
		431,635
	487,077
EQUITY Share capital (Note 12) Contributed surplus Deficit		3,287,398 657,575 (4,048,384)
	3,287,398
	657,575
	(4,258,974)
		(103,411)
	(314,001)
		$328,224
	$173,076

Going concern (Note 2)

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

Approved on behalf of the Board:

“Leonard D. Jaroszuk” _____ Director “Des O’Kell” _____ Director

SAMOTH OILFIELD INC.

Statements of Loss and Comprehensive Loss (Unaudited)

	Three months April 30, 2021	Three months April 30, 2020	Six months April 30, 2021	Six months April 30, 2020
Revenue Petroleum and natural gas sales and royalties		$3,669		$14,536
	$8,652		$18,718
Expenses Production and transportation General and administrative		43,143 19,970		66,644 26,648
	47,066		112,210
	64,269		117,098
	111,335	63,113	229,308	93,292
Net loss and comprehensive loss		$(59,444)		$(78,756)
	$(102,683)		$(210,590)
Loss per share Basic Diluted Weighted average number of common shares outstanding Basic Diluted		$(0.002) $(0.002) 32,967,222 32,967,222		$(0.002) $(0.002) 32,967,222 32,967,222
	$(0.003)		$(0.006)
	$(0.003)		$(0.006)
	32,967,222		32,967,222
	32,967,222		32,967,222

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

SAMOTH OILFIELD INC.

Statements of Changes in Equity

(Unaudited)

	Share Capital	Contributed Surplus	Deficit	Total
Balance as at October 31, 2019 Net loss	$3,287,398	$657,575	$(3,821,075) (78,756)	$123,898 (78,756)
	-	-
Balance as at April 30, 2020	$3,287,398	$657,575	$(3,899,831)	$45,142
Balance as at October 31, 2020 Netloss	$3,287,398 -	$657,575 -	$(4,048,384) (210,590)	$(103,411) (210,590)
Balance as at April 30, 2021	$3,287,398	$657,575	$(4,258,974)	$(314,001)

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

SAMOTH OILFIELD INC.

Statements of Cash Flows

(Unaudited)

Six months ended April 30	2021	2020
Cash used in:
OPERATING ACTIVITIES: Net loss Items not affecting cash: Change in non-cash working capital (Note 10)		$(78,756) (28,989)
	$(210,590)
	60,511
	(150,079)	(107,745)
Change in cash Cash, beginning ofperiod	(150,079)	(107,745) 499,189
	287,924
Cash, end of period	$137,845	$391,444

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

SAMOTH OILFIELD INC.

Notes to the Unaudited Condensed Financial Statements

For the three and six months ended April 30, 2021 and 2020

1. Reporting Entity and Corporate Information

Samoth Oilfield Inc. (the "Company") was incorporated under the Business Corporations Act (Alberta) on May 8, 2006. The Company is engaged in the development and production of natural gas, and natural gas liquids in western Canada. The Company is listed on the TSX Venture Exchange, trading under the symbol SCD. The Company’s registered office is #2, 64 Riel Drive, St. Albert, Alberta, Canada, T8N 4A4.

2. Going Concern

These unaudited condensed financial statements have been prepared on a going concern basis which assumes that the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. As at April 30, 2021, the Company had working capital of $1,074 (October 31, 2020 - working capital of $211,664 and April 30, 2020 – working capital of $327,703) and an accumulated deficit of $4,258,974 (October 31, 2020 - accumulated deficit of $4,048,384 and April 30, 2020 - $3,899,831). During the six months ended April 30, 2021, the Company incurred a net loss of $210,590 (six months ended April 30, 2020 - net loss of $78,756) and negative cash flows from operations of $150,079 (six months ended April 30, 2020 – negative cash flows from operations of $107,745). These considerations create a material uncertainty that may cast a significant doubt about the Company's ability to continue as a going concern. The Company however, has no secured debt and does not expect to undertake any such obligations in the near future. The Company's ability to continue as a going concern is dependent upon cash flow from field operations and the sale of property and equipment that has previously been fully impaired. Realization of asset values may be substantially different from carrying values as disclosed at April 30, 2021, and these financial statements do not give effect to adjustments that would be necessary to the carrying values and classifications of assets and liabilities should the Company be unable to continue as a going concern.

3. Significant Accounting Policies

The unaudited condensed interim financial statements are prepared by management and reported in Canadian dollars, in accordance with International Accounting Standard "IAS" 34, "Interim Financial Reporting " as issued by the International Accounting Standards Board (“IASB”) . These unaudited condensed interim financial statements do not include all of the information required for full annual financial statements and should be read in conjunction with the Company's 2020 Financial Statements and the notes thereto .

The unaudited condensed interim financial statements have been prepared, for all periods presented, following the same accounting policies and methods of computation as described in notes 3, 4, 13 and 15 to the Company's 2020 Financial Statements for the fiscal year ended October 31, 2020.

The financial statements were authorized for issue by the Board of Directors on June 29, 2021.

4. Financial Instruments and Risk Management

(a) Pandemics and Health Risks

The Company is exposed to risks relating to public health emergencies and infectious diseases, including the COVID-19pandemic, and related government responses, which has had a negative impact on global financial conditions and could have a material and adverse effect on the Company's business, financial condition and results of operations. The Company cannot accurately predict the impact COVID-19 will have on its ability to execute its business plans in response to government public health efforts to contain COVID-19 and to obtain financing or third parties’ ability

SAMOTH OILFIELD INC.

Notes to the Unaudited Condensed Financial Statements

For the three and six months ended April 30, 2021 and 2020

4. Financial Instruments and Risk Management (continued)

to meet their contractual obligations with the Company. In the event that the prevalence of COVID19 continues to increase (or fears in respect of COVID-19 continue to increase), governments may increase regulations and restrictions regarding the flow of labour, products and travel bans which could impact the Company’s ability to carry out its ongoing business plan.

(b) Fair Value of Financial Instruments

All financial assets are classified as fair value through profit or loss, available-for-sale, loans and receivables or held-to-maturity. All financial liabilities are classified as other financial liabilities or at fair value through profit or loss. All financial instruments are measured as fair value on initial recognition, with measurement in subsequent periods being dependent on the instrument’s classification. Financial instruments classified at fair value through profit or loss are measured at fair value with changes in fair value recorded in the statement of income. Financial assets classified as available-for-sale are measured at fair value with changes in fair value recognized in other comprehensive income. Financial instruments that are classified as held-to-maturity, loans and receivables and other financial liabilities are measured at amortized cost using the effective interest method. The Company has classified marketable securities as fair value through profit or loss. Cash and cash equivalents and trade and other receivable are classified as loans and receivables and trade and other payables and related as other financial liabilities. The Company accounts for the purchase or sale of a financial asset at the trade date which is the date the Company commits to buy or sell the financial asset. Transaction costs related to financial assets or financial liabilities other than those classified as fair value through profit or loss will be capitalized to the initial carrying value of the financial asset or liability.

The carrying amounts of cash, trade and other receivables and trade and other payables approximate fair value due to the short term nature of these items.

Risks associated with financial assets and liabilities:

The Company may be exposed to risks of varying degrees of significance which could affect its ability to achieve its objectives. The main objectives of the Company's risk management processes are to ensure that risks are properly identified and that the capital base is adequate in relation to those risks. The principal risks to which the Company is exposed are described below.

(c) Credit Risk

The Company is exposed to credit risk which is the risk that a counterparty will fail to perform an obligation or settle a liability. The balance of trade and other receivables are unsecured and due from one counterparty; therefore, the collection of accounts receivable may be affected by changes in economic or other conditions. During six months ended April 30, 2021, the Company recognized credit losses of $nil (year ended October 31, 2020 -$nil).

(d) Liquidity Risk

Liquidity risk is the risk that the Company will not meet its financial obligations as they fall due. The Company's financial liabilities are comprised of trade and other payables. As at April 30, 2021, all trade and other payables are due within twelve months or less of the reporting date and the expected cash flows associated with them are equal to their carrying values. The Company manages its risk of not meeting its financial obligations through management of its capital structure and annual budgeting of its revenues, expenditures and cash flows.

SAMOTH OILFIELD INC.

Notes to the Unaudited Condensed Financial Statements

For the three and six months ended April 30, 2021 and 2020

4. Financial Instruments and Risk Management (continued)

(e) Market Risk Market risk is the risk that changes in market prices, such as foreign exchange rates, commodity prices, and interest rates will affect the Company's net loss or the value of financial instruments. These risks are generally outside the control of the Company. The objective of the Company is to mitigate market risk exposures within acceptable limits, while maximizing returns.

(f) Foreign Exchange Rate Risk

The Company is exposed to fluctuations in the exchange rate between the Canadian dollar and the US dollar. Crude oil and natural gas prices are referenced to U.S. dollar denominated prices while all the Company's expenses are denominated in Canadian dollars. As at April 30, 2021, October 31, 2020 and April 30, 2020, the Company had no financial instruments denominated in foreign currencies, no forward foreign exchange contracts in place, nor any significant working capital items denominated in foreign currencies.

(g) Commodity Price Risk

The Company is exposed to commodity price movements as part of its normal oil and gas operations. Oil and natural gas prices are impacted by global supply and demand, as well as political and other forces. Prices continue to be volatile and can undergo significant changes in relatively short time periods. Management continuously monitors commodity prices and initiates instruments to manage its exposure to these risks when it deems necessary. The Company did not enter into any fixed forward contracts or derivative financial instruments during the six months ended April 30, 2021, year ended October 31, 2020 or the six months ended April 30, 2020 and has no outstanding fixed forward contracts or derivative financial instruments as at April 30, 2021, October 31, 2020 and April 30, 2020.

5. Capital Management

The Company's capital consists of equity. The Company has no bank debt. The Company's objectives in managing its capital are to maintain adequate levels of funding to support its operations; to maintain a flexible capital structure which optimizes the cost of capital at an acceptable risk; to perform development activities on its petroleum and natural gas projects; and to seek out and acquire new projects of merit. Funds are secured through debt financing or equity capital. There can be no assurance that the Company will be able to obtain sufficient capital in the case of operating cash deficits. The Company may, from time to time, invest its capital in short-term, liquid and highly rated financial instruments held with major financial institutions or in marketable securities. The Company does not maintain a formal investing strategy. The Company manages its capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of its underlying assets. To maintain or adjust the capital structure, the Company may from time to time, issue shares, obtain debt financing and adjust its capital spending. There were no changes in the Company's approach to capital management from the previous year. The Company does not have any externally imposed capital restrictions.

6. Prepaids and deposits

6. Prepaids and deposits
	April30,2021	October31,2020
Prepaids Deposits	$9,385	$13,966 15,000
	15,000
	$24,385	$28,966

SAMOTH OILFIELD INC.

Notes to the Unaudited Condensed Financial Statements

For the three and six months ended April 30, 2021 and 2020

7. Related Party Transactions

(a) Key management personnel compensation.

The Company has determined key management personnel to be the Chief Executive Officer and Chief Financial Officer and board of directors. Compensation paid to key management personnel was:

	April30,2021	April30,2020
Management compensation	$-	$-
Total	$-	$-

8. Property and Equipment

The Company’s PNG assets were impaired to $nil in prior years and there have been no facts or circumstances indicating that any reversal of this impairment has occurred as at October 31, 2020 and October 31, 2019. For the six months ended April 30, 2020, the Company has recognized an impairment charge of $nil (year ended October 31, 2020 - $28,389) as a result of revisions to Decommissioning Liabilities (Note 11).

9. Share-based Compensation

Pursuant to the Company's stock option plan, the Company may reserve a maximum of 10% of the total issued and outstanding listed common shares with the exercise price and term to be determined by the Board of Directors on the date of issuance of the options. The number of common shares reserved for issuance to any individual director or officer will not exceed 5% of the issued and outstanding common shares and the number of common shares reserved for issuance to all technical consultants or employees will not exceed 2% of the issued and outstanding common shares.

A summary of stock option activity in the period is as follows:

	Six months ended April30,2021	Six months ended April30,2021	Year ended October31,2020	Year ended October31,2020
	Number of Options	Weighted Average Exercise Price	Number of Options	Number of Options
Outstanding options, beginning of period	3,266,722	$0.07	3,266,722	$0.07
Outstanding options, end of period	3,266,722	$0.07	3,266,722	$0.07
Exercisable options, end ofperiod	3,266,722	$0.07	3,266,722	$0.07

SAMOTH OILFIELD INC.

Notes to the Unaudited Condensed Financial Statements

For the three and six months ended April 30, 2021 and 2020

9. Share-based Compensation (continued)

A summary of the options outstanding and exercisable at April 30, 2020 is as follows:

Exercise Price	Number of Options	Remaining Contractual Life (years)
$0.10 $0.055 $0.05	1,071,889 720,000 1,020,000	0.7 2.5 2.6
$0.08	3,266,722	2.2

A summary of the options outstanding and exercisable at October 31, 2020 is as follows:

Exercise Price	Number of Options	Remaining Contractual Life (years)
$0.10 $0.055 $0.05	1,071,889 720,000 1,020,000	1.2 3.0 3.1
$0.08	3,266,722	2.5

During the six months ended April 30, 2021, share-based payments expense of $nil was recognized (year ended October 31, 2021 - $nil).

10. Supplemental Information

Changes in operating non-cash working capital consisted of the following:

	Six months April30,2021	Six months April30,2020
Trade, GST and other receivables Prepaids and deposits Trade and otherpayables	$488	$(2,224) (19,348) (7,417)
	4,581
	55,442
	$60,511	$(28,989)

SAMOTH OILFIELD INC.

Notes to the Unaudited Condensed Financial Statements

For the three and six months ended April 30, 2021 and 2020

11. Decommissioning Liabilities

The following table presents the aggregate carrying amount of obligations associated with the decommissioning of the Company's oil and gas assets:

decommissioning of the Company's oil and gas assets:
	Six months ended April 30, 2021	Year ended October 31, 2020
Balance, beginning of period Finance expense Revisionofestimate	$315,075	$282,561 4,125 28,389
	-
	-
Balance, end ofperiod	$315,075	$315,075
	Six months ended April30,2021	Year ended October31,2020
Current Long term	$60,000	$60,000 255,075
	255,075
Balance, end ofperiod	$315,075	$315,075

At October 31, 2020, the total undiscounted amount of estimated cash flows required to settle the obligation was $318,102 which has been adjusted for inflation using a weighted average estimated inflation rate of 2% and, subsequently discounted using an unadjusted risk free rate of between 0.24% and 0.36%. The cash flows related to reclamation and abandonment costs are expected to be incurred between 2021 and 2025. An increase in the risk free rate of 1% would result in a decrease in the liability of $9,449.

12. Share Capital

Authorized:

The Company is authorized to issue an unlimited number of common shares without par value and an unlimited number of preferred shares issuable in series. No preferred shares have currently been issued.

Issued and outstanding:

	April30,2021	April30,2021	October	31,2020
	Amount	Number of Shares	Amount	Number of Shares
Common shares
Balance, beginning of period	$3,287,398	32,977,222	$3,287,398	32,967,222
Balance, end ofperiod	$3,287,398	32,977,222	$3,287,398	32,967,222

The carrying amounts of cash and cash equivalents, trade and other receivables and trade and other payables approximate fair value due to the short term nature of these items. The fair value of related party loan receivable and related party loan payable approximate carrying value as they are due on demand.

SAMOTH OILFIELD INC.

Notes to the Unaudited Condensed Financial Statements

For the three and six months ended April 30, 2021 and 2020

13. Revenues

The Corporation’s revenues consist solely of natural gas and natural gas liquids; hence there is no disaggregation of revenue to disclose as the natural gas liquids revenues are nominal. All of the Company’s revenues are generated in Western Canada and as at April 30, 2021, October 31, 2021 and April 30, 2020, all of the Corporation’s assets were held in Canada.