ROK Resources Inc. — Interim / Quarterly Report 2021

May 26, 2021

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INTERIM CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2021

NOTICE OF NO AUDITORS’ REVIEW OF INTERIM FINANCIAL STATEMENTS

The accompanying unaudited interim condensed financial statements of ROK Resources Inc. have been prepared by and are the responsibility of the Company’s management. The Company’s independent auditor has not performed a review of these financial statements in accordance with standards established by the Chartered Professional Accountants of Canada for a review of interim financial statements by an entity’s auditors.

ROK RESOURCES INC.

INTERIM CONDENSED STATEMENTS OF FINANCIAL POSITION

(Unaudited, expressed in Canadian Dollars)	March 31, 2021	December 31,2020
Assets
Current Assets
Cash and cash equivalents	1,289,367	1,420,067
Accounts receivable	393,087	445,095
Prepaids and deposits	127,584	86,974
	1,810,038	1,952,136
Non‐current Assets
Property, plant and equipment (Note 5)	3,690,323	3,434,274
Exploration & evaluation assets(Note 6)	1,225,927	1,178,458
	6,726,288	6,564,868
Liabilities
Current Liabilities
Accounts payable and accrued liabilities	398,343	355,611
Non‐current Liabilities
Decommissioningobligations	3,697,355	3,304,071
	4,095,698	3,659,682
Shareholders' Equity
Share capital (Note 7a)	3,648,908	3,607,761
Subscription receipts (Note 7a)	70,000	‐
Warrants (Note 7b)	446,044	446,044
Contributed surplus (Note 7c)	43,960	54,263
Deficit	(1,578,322)	(1,202,882)
	2,630,590	2,905,186
	6,726,288	6,564,868

Going concern (Note 2) Commitments (Note 10) Subsequent events (Note 12)

See accompanying notes to the interim condensed financial statements.

ROK RESOURCES INC.

INTERIM CONDENSED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS For the three months ended March 31

(Unaudited, expressed in Canadian Dollars)	2021	2020
Revenue:
Oil and natural gas sales (Note 8)	440,027	‐
Royalties	(84,192)	‐
Revenue	355,835	‐
Expenses and other items:
Operating expenses	215,565	‐
General and administrative	255,513	148,516
Business development	81,726	9,095
Stock‐based compensation (Note 7c)	8,344	27,366
Depletion and depreciation (Note 5)	155,874	‐
Net finance expense (income)	13,380	(2,114)
Foreign exchange loss(gain)	873	(6,101)
	731,275	176,762
Net loss and comprehensive loss	(375,440)	(176,762)
Lossper share – basic and diluted(Note 7d)	(0.01)	(0.00)
Weighted average number of common shares outstanding	59,099,076	43,274,268

See accompanying notes to the interim condensed financial statements.

ROK RESOURCES INC.

INTERIM CONDENSED STATEMENTS OF CASH FLOWS

For the three months ended March 31

(Unaudited, expressed in Canadian Dollars)	2021	2020
Cash flows provided by (used in):
Operating activities
Loss	(375,440)	(176,762)
Adjustments for:
Depletion and depreciation	155,874	‐
Stock‐based compensation	8,344	27,366
Foreign exchange loss (gain)	873	(6,102)
Other liability	22,500
Net finance expense (income)	13,380	(2,114)
Abandonment costs paid	(378)	‐
Change in non‐cash workingcapital(Note 11)	54,130	(22,359)
	(120,717)	(179,971)
Investing activities
Expenditures on property, plant and equipment	(31,299)	‐
Expenditures on exploration and evaluation assets	(47,469)	‐
	(78,768)	‐
Financing activities
Proceeds on subscription receipts	70,000	‐
Net finance received(paid)	(342)	2,114
	69,658	2,114
Foreign exchangegain(loss)on cash	(873)	6,102
Decrease in cash and cash equivalents	(130,700)	(171,755)
Cash and cash equivalents,beginningofperiod	1,420,067	1,250,300
Cash and cash equivalents, end ofperiod	1,289,367	1,078,545

Cash is defined as cash and cash equivalents.

See accompanying notes to the interim condensed financial statements.

ROK RESOURCES INC.

INTERIM CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

(Unaudited, expressed in Canadian Dollars)	Number of		Subscription		Contributed
	Shares	Share Capital	Receipts	Warrants	Surplus	Deficit	Total
Balance at December 31, 2020	58,996,576	3,607,761	‐	446,044	54,263	(1,202,882)	2,905,186
Net loss	‐	‐	‐	‐	‐	(375,440)	(375,440)
Subscription receipts	‐	‐	70,000	‐	‐	‐	70,000
Stock option exercise (Note 7)	225,000	41,147	‐	‐	(18,647)	‐	22,500
Stock‐based compensation	‐	‐	‐	‐	8,344	‐	8,344
Balance at March 31, 2021	59,221,576	3,648,908	70,000	446,044	43,960	(1,578,322)	2,630,590
Balance at December 31, 2019	43,274,268	87,210,218	‐	40,004	31,586,276	(116,790,578)	2,045,920
Net loss	‐	‐	‐	‐	‐	(176,762)	(176,762)
Stock‐based compensation	‐	‐	‐	‐	27,366	‐	27,366
Balance at March 31,2020	43,274,268	87,210,218	‐	40,004	31,613,642	(116,967,340)	1,896,524

See accompanying notes to the interim condensed financial statements.

ROK RESOURCES INC. Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

1. REPORTING ENTITY

ROK Resources Inc. (“ROK” or the “Company”) is a public company that is engaged in oil and gas exploration and development activities in Canada. The Company’s head office is located in Regina, Saskatchewan, Canada. The Company’s shares are listed and publicly traded on the TSX Venture Exchange (the “Exchange”) under the trading symbol “ROK”.

2. GOING CONCERN

These interim condensed financial statements have been prepared on a going concern basis, which assumes that the Company will be able to discharge its obligations and realize its assets in the normal course of operations for the foreseeable future. During the three months ended March 31, 2021, the Company incurred a loss of $0.4 million and used $0.1 million of cash flows in its operating activities, which were financed principally from proceeds from share issuances. As at March 31, 2021, the Company had a working capital balance of $1.4 million.

In the past year, the Company has acquired petroleum and natural gas assets with production capabilities. Until such time that these new producing assets generate sufficient cash flow to fund the Company’s operations, the Company will continue to rely upon its remaining financial resources to fund administrative costs and the development of its oil and gas properties. These conditions indicate the existence of a material uncertainty that casts significant doubt about the Company’s ability to continue as a going concern. While the Company intends to move forward with the development of its oil and gas assets, there is no guarantee that the Company will be successful in raising the capital required to fund ongoing operations and exploration and development activities or that the terms of a financing, if any, will be acceptable to the Company. The continued volatility of commodity prices and the COVID‐19 global pandemic and its impact on the economy further increases the risk associated with obtaining the capital necessary to develop the Company’s oil and gas properties.

Management believes that the going concern assumption is appropriate for these interim condensed financial statements and that the Company will be able to fund its operations during the upcoming year. Should the going concern assumption not be appropriate and the Company is not able to realize its assets and settle its liabilities in the normal course of operations, these financial statements would require adjustments to the amounts and classifications of assets and liabilities.

3. BASIS OF PRESENTATION

Statement of compliance

These interim condensed financial statements have been prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” under International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board.

These interim condensed financial statements follow the same accounting policies and method of computation as the Company’s annual audited financial statements for the year ended December 31, 2020, with the exception of certain disclosures that are normally required to be included in annual financial statements which have been condensed or omitted. These interim condensed financial statements should be read in conjunction with the Company’s annual audited financial statements for the year ended December 31, 2020.

These interim condensed financial statements were authorized for issue by the Board of Directors on May 25, 2021.

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ROK RESOURCES INC. Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

Basis of measurement

These interim condensed financial statements have been prepared on the historical cost basis except for certain financial and non‐financial assets and liabilities, which have been measured at fair value. The methods used to measure fair value are consistent with the Company’s December 31, 2020 audited financial statements.

More than a year after being declared a global pandemic by the World Health Organization in March 2020, COVID‐ 19 continues to impact global economic conditions. Global financial markets, and commodity prices in particular, have experienced significant volatility and uncertainty. Crude oil and natural gas prices have recovered from the historic lows observed in the first two quarters of 2020 and exceeded pre‐pandemic levels during the first quarter of 2021. While the current outlook for commodity prices is relatively strong, long‐term price support from future demand remains uncertain. The scale and duration of these developments remain uncertain but could impact the Company's operations, future net earnings, cash flows and financial condition.

The preparation of financial statements in conformity with IFRS requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. By their nature, estimates are subject to measurement uncertainty and changes in such estimates in future periods could require a material change in the financial statements. Accordingly, actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future years affected.

Estimates and judgements made by management in the preparation of these interim condensed financial statements are subject to a higher degree of measurement uncertainty during this volatile period.

Functional and presentation currency

These interim condensed financial statements are presented in Canadian dollars (“CAD”).

Significant accounting policies

The Company’s significant accounting policies can be read in Note 4 to the Company’s annual audited financial statements as at and for the year ended December 31, 2020.

The IASB has issued a number of new accounting standards, amendments to accounting standards, and interpretations that are effective for annual periods beginning on or after January 1, 2021. None of the accounting pronouncements are expected to have a material impact upon initial adoption. The Company will continue to evaluate the impact of the pronouncements which will be adopted on their respective effective dates.

4. ACQUISITIONS

The below amounts are estimates which were made by management at the time of the preparation of these financial statements based on information then available. Amendments may be made to these amounts as values subject to estimate are finalized for a period of up to one year.

a) Non‐Operated Acquisition

In February 2021, the Company entered into a purchase and sale agreement to acquire certain producing oil and gas assets in Southeastern Saskatchewan. Total consideration for the acquisition was the assumption of all liabilities associated with the acquired assets.

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ROK RESOURCES INC. Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

The transaction was accounted for as an acquisition of net assets with the following net fair values assigned:

Development and production assets	362,498
Decommissioning liability	(362,498)
Purchaseprice allocation	‐

b) Glen Ewen Asset Acquisition

On June 30, 2020, the Company closed the acquisition of certain petroleum and natural gas properties located within the Glen Ewen area of Southeastern Saskatchewan. The acquired assets also include associated facilities and land directly adjacent to the Company’s existing land base within the project area, as well as associated liabilities relating to future abandonment obligations on well and facility sites.

The transaction was accounted for as an acquisition of net assets with the following net fair values assigned:

Development and production assets	1,238,691
Decommissioning liability	(1,086,989)
Total net assets acquired	151,702
Cash consideration	70,000
Purchase price adjustments	45,789
Transaction costs	35,913
Totalpurchaseprice	151,702

As of December 31, 2020, a balance of $157,863 was included in accounts receivable representing balances owed by the seller to the Company in accordance with the final statement of adjustments related to this acquisition. This balance was collected subsequently in January 2021.

5. PROPERTY, PLANT AND EQUIPMENT

The Company’s property, plant and equipment (“PP&E”) consist of development and production assets (“D&P”). D&P assets include the Company’s interests in developed petroleum and natural gas properties, as well as interests in infrastructure such as facilities and pipelines. PP&E consist of the following D&P asset amounts:

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ROK RESOURCES INC.

Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

Cost
Balance, December 31, 2019	‐
Acquisitions (Note 4b)	1,238,691
Change in discount rate on acquisition	2,287,770
Additions	241,865
Change in decommissioning provision	(74,516)
Balance, December 31, 2020	3,693,810
Acquisitions (Note 4a)	362,498
Additions	31,299
Change in decommissioning provision	18,126
Balance, March 31, 2021	4,105,733
Accumulated Depletion & Depreciation
Balance, December 31, 2019	‐
Depletion & depreciation	259,536
Balance, December 31, 2020	259,536
Depletion & depreciation	155,874
Balance, March 31, 2021	415,410
Net Book Value
At December 31, 2020	3,434,274
At March 31, 2021	3,690,323

At March 31, 2021, the balance of PP&E primarily consisted of those oil and gas properties acquired as part of the transactions outlined in Note 4 as well as ongoing capital additions. Future development costs in the amount of $12.3 million were included in the depletion calculated for the period ended March 31, 2021.

6. EXPLORATION AND EVALUATION ASSETS

Exploration and evaluation (“E&E”) assets consist of the following amounts:

Balance, December 31, 2019	918,246
Additions	260,212
Balance, December 31, 2020	1,178,458
Additions	47,469
Balance, March 31, 2021	1,225,927

The Company’s E&E assets represent the recognized acquisition value and subsequent costs incurred in relation to the undeveloped land interests located in Saskatchewan on which it intends to conduct petroleum and natural gas exploratory work. At March 31, 2021, there were no indicators of impairment.

7. SHARE CAPITAL

a) Common shares

At March 31, 2021, the Company was authorized to issue an unlimited number of Class B Shares, with no par value, with holders of Class B Shares entitled to two votes per share and to dividends, if declared. Outstanding Class B Shares as of March 31, 2021, are as follows:

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ROK RESOURCES INC.

Notes to the Interim Condensed Financial Statements

For the periods ended March 31, 2021 and 2020

	Common shares	Amount
Balance, December 31, 2019	43,274,268	87,210,218
Private placement, July 2020	7,692,308	362,012
Private placement, November 2020	6,960,000	1,078,397
Stock option exercise	920,000	138,036
Warrant exercise	150,000	23,400
Elimination of deficit(1)	‐	(85,204,302)
Balance, December 31, 2020	58,996,576	3,607,761
Stock option exercise	225,000	41,147
Balance, March 31, 2021	59,221,576	3,648,908

(1) At the Company’s annual general meeting on December 18, 2020, the shareholders of the Company approved a resolution to reduce share capital and contributed surplus for accounting purposes, without the payment of or a reduction to stated or paid‐up capital, by the amount of the deficit on December 31, 2019 of $116.8 million. As a result, share capital was reduced by $85.2 million and contributed surplus was reduced by $31.6 million as of December 31, 2020.

As of March 31, 2021, proceeds towards subscription receipts relating to the private placement closed in May 2021 (See note 12) had been received by the Company. Such balance was recorded as “Subscription Receipts” within the statement of financial position as of March 31, 2021.

b) Warrants

The Company has issued and outstanding warrants exercisable to acquire Class B Shares of the Company that were issued as part of various private placement financings carried out in prior years.

A summary of the changes in warrants is presented below:

A summary of the changes in warrants is presented below:
		Weighted average
	Warrants	exercise price
Balance, December 31, 2019	6,666,667	0.15
Purchase warrants issued, July private placement	7,692,308	0.15
Purchase warrants issued, November private placement	3,480,000	0.30
Broker warrants issued, November private placement	70,000	0.30
Warrants exercised	(150,000)	0.15
Balance, December 31, 2020 & March 31, 2021	17,758,975	0.18

The following summarizes information about total purchase warrants outstanding as at March 31, 2021:

	Number of warrants	Weighted average term to	Number of warrants
Exercise prices	outstanding	expiry (years)	exercisable
0.15	14,208,975	1.28	14,208,975
0.30	3,550,000	1.61	3,550,000
	17,758,975	1.35	17,758,975

c) Stock options

The Company has a stock option plan whereby options can be granted from time to time to directors, employees and consultants at the discretion of the Board of Directors. The number of options that can be granted is limited to 10% of the total shares issued and outstanding. Options issued typically vest one‐third on the date of the grant, one‐ third after one year following the date of the grant, and one‐third after two years following the grant date. Options issued expire five years following the date of the grant.

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ROK RESOURCES INC. Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

A summary of the changes in stock options is presented below:

		Weighted average
	Stock options	exercise price
Balance, December 31, 2019	3,910,000	0.12
Options forfeited	(166,667)	0.15
Expired options	(83,333)	0.15
Options exercised	(920,000)	0.10
Balance, December 31, 2020	2,740,000	0.13
Options exercised	(225,000)	0.10
Balance, March 31, 2021	2,515,000	0.13
Exercisable, March 31, 2021	1,981,666	0.13

The following summarizes information about stock options outstanding as at March 31, 2021:

	Number of options	Weighted average term to	Number of options
Exercise prices	outstanding	expiry (years)	exercisable
0.10	915,000	2.16	915,000
0.15	1,600,000	3.68	1,066,666
	2,515,000	3.13	1,981,666

No stock options were issued during the period ended March 31, 2021. For the three months ended March 31, 2021, the Company recognized $8,344 (March 31, 2020 ‐ $27,366) in stock‐based compensation expense. Recognized stock‐based compensation is recorded as an expense and as contributed surplus.

d) Loss per share

For purposes of the loss per share calculations for the periods ended March 31, 2021 and 2020, there is no difference between the basic loss per share and the diluted loss per share amounts. For the period ended March 31, 2021, 2,515,000 options and 17,758,975 warrants (March 31, 2020 ‐ 3,910,000 options and 6,666,667 warrants) were excluded as their impact was anti‐dilutive.

8. REVENUE

The following table presents the Company’s oil and natural gas revenue disaggregated by product type for the three months ended March 31, 2021 and 2020:

months ended March 31, 2021 and 2020:
	2021	2020
Oil sales	368,406		‐
NGL sales	45,755		‐
Natural gas sales	25,866		‐
Total	440,027		‐

As at March 31, 2021, receivables from contracts with customers, which are included in accounts receivable, were $310,020 (December 31, 2020 ‐ $250,523).

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ROK RESOURCES INC. Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

9. FINANCIAL RISK MANAGEMENT

The Company has exposure to the following risks from its use of financial instruments:

• Credit risk

• Liquidity risk

• Market risk

This note presents information about the Company’s exposure to each of the above risks and the Company’s objectives, policies and processes for measuring and managing these risks, and the Company’s management of capital. The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Company’s risk management policies are established to identify and analyze the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to market conditions and the Company’s activities.

Credit risk

Credit risk reflects the risk of loss if counterparties do not fulfill their contractual obligations and arises principally from the Company’s receivables from joint operations partners and petroleum and natural gas customers.

Receivables from petroleum and natural gas marketers are normally collected on the 25th day of the month following production. When production is not taken in kind, payment comes from the common stream operator and facility operator in which payment is typically received on the 25th day of the month following production. The Company’s approach to mitigate credit risk associated with these balances is to maintain marketing relationships with established and reputable customers, common stream operators and facility operators that are considered to be creditworthy. The Company has not experienced any collection issues with its current common stream and facility operators.

Joint operations receivables are typically collected within two to three months of the joint operations billing being issued to the partner. The Company mitigates collection risk from joint operations receivables by obtaining partner approval of significant capital and operating expenditures prior to expenditure and, in certain circumstances, may collect cash deposits in advance of incurring financial obligations on behalf of joint operations partners. Joint operations receivables are from partners in the petroleum and natural gas industry who are subject to the risks and conditions of the industry. Significant changes in industry conditions and risks that negatively impact partners’ ability to generate cash flow will increase the risk of not collecting joint operations receivables.

The Company has considered the impact of the COVID‐19 outbreak and the resulting decreases to commodity prices on the expected credit loss of the Company and has not noted a significant impact.

In determining the recoverability of trade and other receivables, the Company considers the type and age of the outstanding receivables, the credit risk of the counterparties, and the recourse available to the Company. The maximum exposure to credit risk for accounts receivable and accruals, net of expected credit loss at the reporting date by type of customer was:

Carrying Amount	March 31, 2021	December 31, 2020
Oil and natural gas customers	385,020	250,523
Joint operations partners	8,067	18,530
Accruals and other	‐	176,042
Total	393,087	445,095

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ROK RESOURCES INC.

Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

The Company applies the simplified approach to providing for expected credit losses as prescribed by IFRS 9, which permits the use of lifetime expected loss provision for all accounts receivable and accrued receivables. The expected credit losses below also incorporate forward looking information.

Aging	March 31, 2021	December 31, 2020
0 ‐ 30 days	392,152	431,413
30 ‐ 90 days	935	12,165
Greater than 90 days	‐	1,517
Expected credit loss	‐	‐
Total	393,087	445,095

The Company considers amounts outstanding greater than 90 days to be past due, unless circumstances on particular balances provide certainty of collection. Receivables normally collectible within 30 to 60 days can take longer as information requests and timing can come into effect in dealing with receivables from joint venture partners. At March 31, 2021 there were no significant receivables which were considered past due (December 31, 2020 ‐ $nil).

The Company held cash and cash equivalents of $1,289,367 as at March 31, 2021 (December 31, 2020 ‐ $1,420,067). The Company manages the credit exposure related to cash and cash equivalents by selecting counter parties based on credit ratings and monitors all investments to ensure a stable return, avoiding complex investment vehicles with higher risk.

Liquidity risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they become due and describes the Company’s ability to access cash. The impacts of the COVID‐19 outbreak and the resulting impact on commodity prices has increased the liquidity risk of the Company. The Company’s approach to managing liquidity is to ensure, as far as possible, that it will have sufficient cash resources in order to finance operations, fund capital expenditures, and to repay debt and other liabilities of the Company as they come due, without incurring unacceptable losses or risking harm to the Company’s reputation. The Company’s processes for managing liquidity risk include preparing and monitoring capital and operating budgets, coordinating and authorizing project expenditures, and authorization of contractual agreements. The Company seeks additional financing based on the results of these processes. The budgets are updated when required as conditions change. See further discussion relating to liquidity in Note 2.

At March 31, 2021, the Company’s contractual obligations consist of accounts payable and accrued liabilities which are considered current in nature and due within one year.

Market risk

Market risk is the risk or uncertainty that changes in price, such as commodity prices, foreign exchange rates, and interest rates will affect the Company’s net earnings and the value of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable limits, while maximizing returns. From time to time, the Company may utilize financial derivative contracts to manage market risks in accordance with the risk management policy that has been approved by the Board of Directors. There were no financial contracts or embedded derivatives outstanding at March 31, 2021 or December 31, 2020.

Commodity price risk

Commodity price risk is the risk that the fair value of the future cash flows will fluctuate as a result of changes in commodity prices. Commodity prices for petroleum and natural gas are impacted by not only the US dollar, but also by world economic events that dictate the levels of supply and demand.

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ROK RESOURCES INC.

Notes to the Interim Condensed Financial Statements

For the periods ended March 31, 2021 and 2020

Despite modest recovery from the 20 year low reached in April 2020, oil prices continue to be volatile as a result of factors such as the COVID‐19 outbreak. Natural gas prices have also been adversely affected by oversupply and expectation of lower industrial demand, however the AECO gas reference price has improved relative to the comparative period of 2020.

As of March 31	2021	2020	%
WTI Cushing Oklahoma (US$/bbl)(1)	62.36	30.45	105
Canadian Light Sweet 40 API ($/bbl)(1)	75.64	33.19	128
NYMEX Henry Hub (US$/MMBtu)(1)	2.62	1.73	51
AECO 5A ($/GJ)(2)	2.57	1.86	38
Exchange rate(CA$/US$) (1)	1.26	1.39	(9)

(1) Source: Sproule Associates Limited

(2) Source: ICE Report Center (NGX AB‐NIT Same Day Index 5A)

As at March 31, 2021, the Company had not entered into any derivative contracts or forward commodity sales contracts to manage its exposure to commodity price fluctuations.

Foreign currency risk

Foreign currency risk is the risk that the fair value of future cash flows will fluctuate as a result of changes in foreign currency exchange rates. While the majority of the Company’s financing and administrative costs will be based and paid in Canadian dollars, the Company is exposed to the risk of fluctuations in foreign exchange rates between the Canadian dollar and the US dollar (US$) given the Company’s realized pricing in Canadian dollars is directly influenced by US$ denominated benchmark pricing. As at March 31, 2021, the Company had not entered into any foreign currency derivatives to manage its exposure to currency fluctuations.

Interest rate risk

Interest rate risk is the risk that future cash flows will fluctuate as a result of changes in prevailing market interest rates. The Company is exposed to interest rate risk on its cash and cash equivalents and short‐term investments that have a floating interest rate. Fluctuations of interest rates for the periods ended March 31, 2021 and 2020 would not have had a significant impact on the financial statements.

Fair value of financial instruments

The Company’s financial instruments as at March 31, 2021, include cash and cash equivalents, accounts receivable, prepaids, and accounts payable and accrued liabilities.

The Company’s financial instruments recorded at fair value require disclosure about how the fair value was determined based on significant levels of inputs described in accordance with the following hierarchy:

Level 1 ‐ inputs are based on quoted market prices in active markets that the Company has the ability to access at the measurement date.

Level 2 ‐ inputs are based on quoted prices in the markets that are not active or based on prices that are observable for the asset or liability.

Level 3 ‐ inputs are based on unobservable market data for the asset or liability.

The Company aims to maximize the use of observable inputs when preparing calculations of fair value. Classification of each measurement into the fair value hierarchy is based on the lowest level of input that is significant to the fair value calculation.

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ROK RESOURCES INC. Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

The fair value of cash and cash equivalents, accounts receivable, prepaids, accounts payable and accrued liabilities approximate their carrying amounts due to their short terms to maturity.

Capital management

The Company’s objectives when managing capital are to ensure the Company will have sufficient financial capacity, liquidity, and flexibility to fund the Company’s operations and potential strategic transactions for the foreseeable future (see Note 2). The Company is dependent upon funding these activities through a combination of available cash, debt and equity, which it considers to be the components of its capital structure as outlined below.

The Company regularly monitors its capital structure and, as necessary, adjusts to changing economic circumstances and the underlying risk characteristics of its assets in order to meet current and upcoming obligations and investments by the Company. The Company frequently reviews alternate financing options and arrangements to meet its current and upcoming commitments and obligations.

The Company's objectives when managing capital are: (i) to maintain a flexible capital structure, which optimizes the cost of capital at acceptable risk; and (ii) to maintain investor, creditor and market confidence in order to sustain the future development of the business. The Company’s share capital is not subject to external restrictions.

10. COMMITMENTS

The Company’s estimated financial commitments consist of fees and taxes related to the existing mineral leases held in Saskatchewan that equate to a total financial commitment of approximately $220,000 per year. Fees or royalties on production are only derived once production is realized on existing mineral leases.

11. SUPPLEMENTAL CASH FLOW INFORMATION

11. SUPPLEMENTAL CASH FLOW INFORMATION
For the periods ended March 31	2021	2020
Accounts receivable	52,008	3,645
Prepaids and deposits	(40,610)	(3,602)
Accounts payable and accrued liabilities	42,732	(22,402)
Change in non‐cash working capital	54,130	(22,359)
Relating to:
Operating activities	54,130	(22,359)
Change in non‐cash working capital	54,130	(22,359)

12. SUBSEQUENT EVENTS

Private placement, May 2021

In May 2021, the Company completed the first closing of a private placement financing for a total of $1,790,000, whereby 8,950,000 units of the Company were issued at a price of $0.20 per unit. Each unit consists of one Class B Share in the capital of the Company and one half of one purchase warrant. Each purchase warrant is exercisable for one Class B Share at an exercise price of $0.35 per purchase warrant for a period of 2 years. The shares issued are subject to a four‐month trading restriction, expiring on August 28, 2021. Commissions were paid to various brokers and finders in an amount of approximately $56,000 plus the issuance of a total of 280,000 broker warrants, with each such broker warrant exercisable for one Class B Share at an exercise price of $0.35 per broker warrant for a period of two years.

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ROK RESOURCES INC. Notes to the Interim Condensed Financial Statements For the periods ended March 31, 2021 and 2020

Bolt‐on acquisition

In April 2021, the Company closed the transaction to acquire certain producing oil and gas assets in Southeastern Saskatchewan, with an effective date of April 1, 2021. Total consideration for the acquisition was $1,500,000 in cash and 2,000,000 Class B Shares of the Company. The acquisition property includes D&P assets which are located within the Company's core operating area in Southeastern Saskatchewan.

Acquisition and farm‐in

In March 2021, the Company entered into a purchase and sale agreement to acquire certain producing oil and gas assets in Southeastern Saskatchewan. Closing of the acquisition is expected to occur on or about May 27, 2021 with an effective date of April 1, 2021, subject to the completion of a financing transaction to provide funding to purchase the assets, as well as the receipt of any necessary regulatory approvals. Total consideration for the acquisition is $2,500,000 in cash and 2,250,000 Class B Shares. The acquired assets also include central oil batteries and certain prospective lands in proximity to the Company’s existing land base.

Further, in March 2021 the Company entered into a farmout agreement (the “Farm‐In”) to acquire the rights to earn certain oil and gas assets (the “Undeveloped Assets”) in Southeastern Saskatchewan. ROK will participate in the drilling, completion and equipping of two earning wells, paying 70% of the costs to earn a 35% working interest in the earning wells, plus a 35% working interest in certain prospective lands in the Undeveloped Assets. The first commitment well is expected to be spud on or before August 31, 2021. Prior to March 31, 2022, ROK has the option to purchase up to a 50% interest in the Undeveloped Assets, which includes two producing oil and gas wells. The Farm‐In is subject to financing and the receipt of any necessary regulatory approvals.

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