Wilton Resources Inc.

Management Discussion and Analysis

For the years ended December 31, 2021, and 2020

MANAGEMENT DISCUSSION AND ANALYSIS

The following Management’s Discussion and Analysis (“MD&A”) of Wilton Resources Inc. (“Wilton” or the “Company”) should be read in conjunction with the audited annual consolidated financial statements of the Company for the years ended December 31, 2021 and 2020, together with the notes thereto (the “Financial Statements”). Amounts herein are expressed in Canadian dollars except where indicated otherwise. The Financial Statements and all comparative information herein have been prepared in accordance with International Financial Reporting Standards (“IFRS”).

This MD&A, as well as the Financial Statement and additional information regarding the Company are available on the Company’s SEDAR profile at www.sedar.com.

This MD&A is dated April 28, 2022 and was prepared by management of the Company. The board of directors of the Company approved this MD&A on April 28, 2022.

FORWARD-LOOKING INFORMATION

Certain statements contained in this MD&A constitute forward-looking statements. These statements relate to future events or the Company’s future performance. All statements other than statements of historical fact may be forward-looking statements. Forward-looking statements are often, but not always, identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “prospect”, “future”, “possible”, “can”, “speculative”, “perhaps” and similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements. The Company believes that the expectations reflected in those forward-looking statements are reasonable but no assurance can be given that these expectations will prove to be correct and such forward-looking statements included in this MD&A should not be unduly relied upon. These statements speak only as of the date of this MD&A. The Company does not intend, and does not assume any obligation, to update or revise these forward-looking statements except as required pursuant to applicable securities laws.

Forward looking information and statements are included throughout this MD&A and include, but are not limited to, statements pertaining to the following:

the Company’s ability to continue as a going concern;
the potential impacts of access to capital conditions;
the Company’s pursuit to acquire oil and natural gas properties in various international locations, including in the Middle East and Africa;
the Company’s liquidity and capital resources;
the nature of the risks faced by the Company; and
the potential impacts of COVID-19.

The Company’s actual results could differ materially from those anticipated in these forward-looking statements as a result of the risk factors set forth below and elsewhere in this MD&A:

general economic conditions in Canada, the United States and globally, including reduced availability of debt and equity financing generally;
industry conditions, including fluctuations in the price of oil, NGL and natural gas;
governmental regulation of the oil and gas industry, including environmental regulation;
fluctuation in foreign exchange or interest rates;
liabilities inherent in oil and natural gas operations;
geological, technical, drilling and processing problems and other difficulties in producing reserves;
uncertainties associated with estimating oil and natural gas reserves;
incorrect assessments of the value of acquisitions;
unanticipated operating events which can reduce production or cause production to be shut in or delayed;
failure to obtain industry partner and other third party consents and approvals, when required;

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stock market volatility and market valuations;
availability of financing on acceptable terms;
competition for, among other things, capital, acquisitions of reserves, undeveloped land and skilled personnel;
competition for and inability to retain drilling rigs and other services;
rights to surface access;
the need to obtain required approvals from regulatory authorities;
general business and market conditions;
economic slowdown as a result of COVID-19; and
changes in commodity prices

These factors should not be considered exhaustive. Statements in respect of “reserves” are by their nature forward-looking statements, as they involve the implied assessment, based on certain estimates and assumptions that the reserves described can be profitably produced in the future.

Forward-looking statements or information is based on a number of factors and assumptions which have been used to develop such statements and information but which may prove to be incorrect. Although the Company believes that the expectations and assumptions reflected in such forward-looking statements or information are reasonable, undue reliance should not be placed on forward-looking statements because the Company cannot give any assurance that they will prove to be correct. In addition to other factors and assumptions which may be identified in this document and other documents filed by the Company, assumptions have been made regarding, among other things: future exchange rates; energy markets and the price of oil and natural gas; general economic conditions, commodity and financial markets; the ability to replace and expand oil and natural gas reserves through acquisition, development or exploration; the ability to acquire oil and natural gas properties in various international locations, including in the Middle East and Africa; current technology; cash flow; commodity prices; production rates; effects of regulation and environmental and tax laws; future operating costs and the Company’s ability to obtain financing on acceptable terms. Readers are cautioned that the foregoing list of factors is not exhaustive.

The above summary of assumptions and risks related to forward-looking information has been provided in this MD&A in order to provide readers with a more complete perspective on the Company’s future operations and prospects. Readers are cautioned that this information may not be appropriate for other purposes.

The forward-looking statements contained in this MD&A are expressly qualified by this cautionary statement.

DESCRIPTION OF THE BUSINESS

Hackamore Capital Corp. was incorporated under the laws of the Province of Alberta on August 15, 2007 and changed its name to Wilton Resources Inc. on October 27, 2008. On July 24, 2009, the Company completed its initial public offering by way of a capital pool company prospectus. The Company was listed as a capital pool company as defined in Policy 2.4 of the TSX Venture Exchange (“TSXV”) on August 5, 2009. On October 28, 2011, Wilton completed its qualifying transaction by the acquisition of a certain oil and gas interests.

The Financial Statements of the Company comprise accounts of the Company and its subsidiaries (collectively, the "Company" or "Wilton"). Wilton is currently an oil and gas exploration and development company, with a property in Canada, however, the Company is pursuing oil and gas properties in various international locations including the Middle East and Africa.

The common shares of the Company (“Common Shares”) are listed for trading on the TSXV with the trading symbol WIL .

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GOING CONCERN

As at December 31, 2021, the Company had a working capital deficit of $767,822 (December 31, 2020 - $1,132,715). In order to settle its existing liabilities and continue operations, including its ongoing oil and natural gas acquisition, exploration and development activities, Wilton will require additional financing. Failure to obtain such financing on a timely basis could cause Wilton to forfeit its interest in its properties, to miss acquisition opportunities and/or to reduce or terminate its operations. There can be no assurance that debt or equity financing will be available or for an amount sufficient to meet the Company’s needs and intentions, or, if debt or equity financing is available, that it will be on terms acceptable to Wilton. Moreover, future activities may require Wilton to alter its capitalization significantly. The inability of Wilton to access sufficient capital for its operations could have a material adverse effect on Wilton’s financial condition, results of operations or prospects. These conditions create a material uncertainty which may cast significant doubt on the Company’s ability to continue as a going concern.

The coronavirus pandemic (COVID-19) and the subsequent economic recovery continues to drive the global demand and prices for crude oil and natural gas. Restrictions on the conduct of business in many jurisdictions remain and the global movement of people and some goods continuous to be challenging. There is significant ongoing uncertainty surrounding COVID-19 and the extent and duration of the impacts that it may have on the Company’s operations. The extent to which COVID-19 impacts the Company’s results long-term will depend on future developments, which are highly uncertain and cannot be predicted, including actions taken to contain COVID-19, the timing of the recovery, and lifting of travel restrictions and movement of goods and services. COVID-19 may limit management’s ability to travel and conduct meetings with third parties. In person meetings are important to generating and progressing investment opportunities. The availability of third parties to meet or conduct business with respect to the opportunities Wilton is pursing may be impacted with priorities shifting to managing personal safety and present operations.

CORPORATE UPDATES

On January 26, 2021, the Company closed a non-brokered private placement of an aggregate of 999,999 units of the Company at a purchase price of $0.35 per unit for gross proceeds of $350,000. Each unit consisted of one Common Share and one Common Share purchase warrant (each a “Warrant”). Each Warrant entitles the holder to purchase an additional Common Share for a period of twenty-four months from the date of issuance at an exercise price of $0.40 per Common Share. $300,000 was received during the year ended December 31, 2020 and recorded in deferred share capital contributions.

On February 2, 2021, the Company received TSXV approval to amend the term of 835,714 Common Share purchase warrants issued to subscribers as part of the Company’s private placement financing which closed on February 13, 2019. The expiry date of such Warrants were extended from February 21, 2021 to February 13, 2022. All other terms of the Warrants remain the same.

On February 26, 2021, the Company granted 1,176,399 stock options to purchase Common Shares (“Options”) to certain directors, officers and consultants of the Company. The Options vested on the date of the grant and are exercisable for a period of five years from the date of the grant at an exercise price of $0.52 per Common Share.

On April 9, 2021, the Company closed a private placement for an aggregate of 520,000 units of the Company at a purchase price of $0.50 per unit for gross proceeds of $260,000. Each unit sold pursuant to the private placement consisted of one Common Share and one Warrant. The fair value assigned to the Warrants pursuant to the unit offering was $85,560. Each Warrant entitles the holder thereof to purchase an additional Common Share for a period of twenty-four months from the date of issuance at an exercise price of $0.55 per Common Share.

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The Company also paid finder’s fees to Haywood Securities Inc. (the “Finder”) consisting of a cash payment equal to 6.0% of the aggregate proceeds raised from the sale of units to subscribers introduced to the Company by the Finder and issued 31,200 non-transferable warrants (“Finders Warrants”). Each Finder Warrant entitles the holder to acquire one Common Share on or before April 9, 2023 at an exercise price of $0.50 per common share.

On July 14, 2021, the Company closed a non-brokered private placement for aggregage of 1,221,431 units of the Company at a purchase price of $0.35 per unit for gross proceeds of $427,501.20. Each unit is comprised of one common share in the capital of the Company and one Warrant. Each Warrant entitles the holder to purchase one common share for a period of 24 months from the date of issuance at an exercise price of $0.40 per common share.

On October 24, 2021, 375,000 Warrants were exercised at a price of $0.40 for aggregate proceeds of $150,000. 1,125,000 Warrants expired unexercised.

On November 1, 2021, the Board of Directors of the Company granted 2,018,000 stock options to purchase Common Shares of the Company to certain directors, officers and consultants of the Company. The Options vest on the date of issuance and are exercisable for a period of five years from the grant at an exercise price of $0.50 per common share.

On November 12, 2021, the Company closed a non-brokered private placement for an aggregate of 700,000 of units of the Company at a purchase price of $0.36 per unit for gross proceeds of $252,000. Each unit sold pursuant to the private placement consisted of one Common Share and one Warrant. The fair value assigned to the Warrants pursuant to the unit offering was $133,277. Each Warrant entitles the holder thereof to purchase an additional Common Share for a period of twenty-four months from the date of issuance at an exercise price of $0.48 per Common Share.

On December 7, 2021, the Company received TSXV approval to amend the term of 529,000 Warrants issued to subscribers as part of the Company’s private placement financing which closed on December 11, 2019. The expiry date of such Warrants were extended from December 11, 2021 to December 11, 2022. All other terms of the Warrants remain the same.

The Warrants are not owned by, directly or indirectly, any of the Company’s directors, officers or control persons.

SUBSEQUENT EVENTS

On January 24, 2022, the Company received TSXV approval to amend the term of 835,714 Warrants issued to subscribers as part of the Company’s private placement financing which closed on February 13, 2019. The expiry date of such Warrants were extended from February 13, 2022 to February 13, 2023. All other terms of the Warrants remain the same.

On March 18, 2022, the shareholders of the Company approved a new equity incentive plan within TSXV Policy 4.4 (the “Incentive Plan”). The Incentive Plan is a “rolling up to 10% and fixed up to 10% plan” which allows for the grant of the following equity based compensation awards: (i) stock options of the Company; (ii) restricted share units of the Company; (iii) deferred share units of the Company; and (iv) performance share units of the Company.

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Summary Financial Information

As of December 31	2021	2020	2019
Revenue	$ 12,442	$ 12,523	$ 13,367
Cash used in operations	(1,311,705)	(1,157,537)(1)	(1,478,008)
Cash from financing activities	1,384,325	1,152,526(1)	1,688,259
Net loss	(2,269,619)	(1,703,126)	(1,794,954)
Loss per share - basic and
diluted	(0.04)	(0.03)	(0.03)
As at	December 31, 2021	December 31, 2020	December 31, 2019
Total assets	$ 779,462	$ 647,087	$ 696,612
Current assets	375,988	344,777	316,572
Current liabilities	1,143,810	1,477,492	1,067,195
Working capital deficiency	767,822	1,132,715	750,853
Total non-current financial
liabilities	49,601	49,653	46,770
Common Shares outstanding	63,665,262	59,163,832	55,963,832

(1) Certain comparative figures have been reclassified to be conissitent with the presentation of the current year selected annual information

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SUMMARY OF QUARTERLY RESULTS

The following table summarizes the Company’s quarterly financial results:

	December	31		September	30		June 30		March 31
Three months ended,	2021	2020(1)		2021		2020(1)	2021	2020(1)	2021	2020(1)
Revenue
Petroleum and natural gas
sales	$ 3,641	$	2,666	$ 3,031	$	2,724	$ 2,957	$ 1,258	$ 2,813	$ 5,875
Less:
Royalty	182		81	85		62	78	40	83	459
	3,459		2,585	2,946		2,662	2,879	1,218	2,730	5,416
Expenses
Production	1,013		2,293	1,254		3,071	1,195	867	1,318	1,619
Remediation (recovery)
expense	173		28,891	53		-	10,257	-	(11,428)	-
Professional fees	68,498	106,891		31,006		34,513	65,963	45,538	157,939	34,695
Officer & consulting costs	116,837	118,905		112,399	129,333		118,137	241,967	82,070	246,442
Office & administrative
	64,681		57,110	51,765		41,741	55,723	55,383	51,672	65,514
Meals & travel
	20,571		6,643	20,387		3,858	4,347	4,064	5,616	16,930
Accretion and change in
estimate of decommissioning
obligation	1,227		974	166		1,037	166	1,049	(1,611)	(177)
Share based compensation	779,092		-	-		-	-	-	466,191	456,293
Depletion	1,140		1,686	1,176		1,748	1,274	3,015	1,367	3,114
	1,053,232	323,393		218,205	215,301		257,062	351,883	753,134	824,430
NetLossforthe period	$ 1,049,773	$320,808		$ 215,259	$212,639		$ 254,183	$350,665	$ 750,404	$819,014
Lossper share – basic and diluted	$ 0.00	$	0.00	$ 0.00	$	0.00	$ 0.00	$0.01	$ 0.01	$0.01

(1) Certain comparative figures have been reclassified to be conissitent with the presentation of the current year selected annual information

Fourth Quarter 2021 vs Fourth Quarter 2020

Revenue increased to $3,641 (2020 - $2,666) as a result of increased oil prices.
Royalties increased to $182 (2020 - $81) as a result of increased oil sales.
General and administrative expenses decreased to $270,587 (2020 – $289,549) due to decreased consulting fees, office and travel expenses. Wilton reduced of consulting fees in Q4 2020 as operational activity requiring these services decreased .
Production costs were $1,013 compared to $2,293 in 2020 due to decreased production costs related to the oil and gas sales.
Share based compensation was $779,092 compared to $nil in 2020 as a result of options issued to directors and officers.

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Year Ended 2021 vs Year Ended 2020

Revenue decreased to $12,442 (2020 – $12,523) as a result of decreased oil sales and production.
Royalties decreased to $482 (2020 - $642) as a result of decreased production and decreased commodity prices.
Professional fees increased to $323,405 (2020 – $221,636) due to increased legal fees as a result of increased activities.
Officer and consulting fees decreased to $429,442 (2020 – 736,647) as a result of decreased need for third party consultants.
Production costs were $4,780 compared to $7,850 in 2020 less production as a result of abandonment of one of the Company’s wells.
Remediation recovery was $945 (2020 – expense of $28,891) as a result of an adjustment to the actual costs of the abandonment of the Company’s non-producing well.

DISCUSSION OF OPERATIONS

The Company’s business development plan is focused upon acquiring international oil and natural gas interests. Wilton’s revenue for the year ended December 31, 2021 was $12,442 (2020 - $12,523). The Company earned revenue from production during the year ended December 31, 2021 from the Company’s working interest in a well near Highvale, Alberta. Royalty costs for the year ended December 31, 2021 was $428 (2020 - $642) and production costs for the year ended December 31, 2021 was $4,780 (2020 - $7,850). The Company is dedicating resources, including third party consultants, to identify and evaluate potential international oil and natural gas property acquisitions.

General and administrative expenses decreased during the years ended December 31, 2021 over the prior comparative periods principally due to the net effect of the following:

Travel and meals increased to $50,920 (2020 – $31,495) primarily as a result of increased travel;
Professional fees decreased to $323,405 (2020 - $221,636) primarily as a result of increased legal fees as a result of increased activities;
Office and administrative fees decreased to $223,842 (2020 - $219,749) primarily as a result of decreased activities during the period.
Officer and Consulting Costs decreased to $429,442 (2020 - $736,647) as a result of decreased consulting fees paid

The Company earned $12,442 (2020 - $12,523) in revenue from production during the years ended December 31, 2021 and 2020 from the Company’s working interest in a well near Highvale, Alberta.

LIQUIDITY AND CAPITAL RESOURCES

The Company is exposed to liquidity risk. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities.

As previously highlighted under the Going Concern section of this MD&A, significant doubt exists about the Company’s ability to continue as a going concern. As at December 31, 2021, the Company had working capital deficit of $767,822 including cash of $348,532 compared with a working capital deficit of $1,132,715 including cash of $275,912 at December 31, 2020. The Company continues to experience negative operating cash flow as a result of limited revenue from its Canadian oil and natural gas assets, coupled with the Company’s ongoing expenses related to its international oil and natural gas business development activities. The Company anticipates a negative operating cash flow will continue until such time as international oil and natural gas assets are acquired or developed.

In order to satisfy its existing liabilities and maintain further operations and to carry out its ongoing oil and natural gas acquisition, exploration and development activities, Wilton will require additional financing. The amount of

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capital required cannot be quantified until additional transactions are identified and completed. Failure to obtain such financing on a timely basis could cause Wilton to forfeit its interest in its property, to miss certain acquisition opportunities and/or to reduce or terminate its operations. Upon any resumption of production, any decrease of Wilton’s revenues from its reserves as a result of lower oil and natural gas prices or otherwise will affect Wilton’s ability to expend the necessary capital to replace its reserves or to maintain its production. There can be no assurance that debt or equity financing, or cash generated by operations will be available or sufficient to meet these requirements or for other corporate purposes or, if debt or equity financing is available, that it will be on terms acceptable to Wilton. Moreover, future activities may require Wilton to alter its capitalization significantly. The inability of Wilton to access sufficient capital for its operations could have a material adverse effect on Wilton’s financial condition, results of operations or prospects. Unfavorable global economic conditions, unfavorable global oil market conditions, scarce credit, volatile capital markets and the consequences of COVID-19 may exacerbate Wilton’s liquidity risk.

OFF BALANCE SHEET ARRANGEMENTS

The Company is not a party to any off balance sheet arrangements or transactions.

RELATED PARTY TRANSACTIONS

In 2014, the Company entered into an agreement with Rick Anderson, Chief Executive Officer and a Director, whereby the Company pays Mr. Anderson for office rental. During the year ended December 31, 2021, the Company recorded $48,000 as an expense for office rental (2020 - $48,000).

At December 31, 2021, Mr. Anderson owed the Company $363,652 (December 31, 2020 - $257,531). The December 31, 2021 amount represents an advance on operating expenses that will be drawn down as incurred on behalf of Wilton in addition to expenses reimbursed by the Company and repayment.

ACCOUNTING POLICIES & CRITICAL ACCOUNTING ESTIMATES

Management is required to make judgments, assumptions and estimates in the application of IFRS that may have a significant impact on the financial results of the Company. Details outlining the Company’s accounting policies are contained in the notes to the Financial Statements.

The preparation of the Financial Statements in conformity with IFRS requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of such Financial Statements and the reported amounts of revenues and expenses during the reported periods. The Company evaluates its estimates on an ongoing basis and bases them on various assumptions that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

The Company has applied all Standards and Interpretations issued or adopted by the International Accounting Standards Board.

Certain pronouncements were issued by the International Accounting Standards Board (“IASB”) or the IFRS Interpretations Committee (“IFRIC”) that are mandatory for accounting periods after December 31, 2021. Pronouncements that are not applicable to the Company have been excluded from this note.

IAS 16 – Property, plant and equipment – Proceeds before intended use

In May 2020, the IASB issued an amendment to prohibit the deducting from property, plant and equipment amounts received from selling items produced while preparing an item of PPE while bringing that item of PPE to the condition capable of operating in the manner intended by management. Instead, sales proceeds are to be recognized in profit or loss and the amounts are to be disclosed in a note if not presented separately

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in the statement. The amendment is effective for annual periods beginning on or after January 1, 2022, with earlier application permitted.

IAS 37 – Provisions

In May 2020, the IASB issued amendments that clarify the determination of the least net cost of exiting from an onerous contract, the costs that relate directly to the cost of fulfilling the contract. The amendments also modify the requirement to recognize any impairment loss that has occurred from assets dedicated to the contract to those used in fulfilling the contract. The amendments are to be applied to contracts for which it has not yet fulfilled all its obligations at the beginning of the annual reporting period in which it first applies the amendments. Comparative information is not restated. Entities are to recognize the cumulative effect of initial application of the amendment as an adjustment to opening retained earnings or other appropriate component of equity. The amendment is effective for annual periods beginning on or after January 1, 2022 with no requirement for the restatement of comparatives amounts.

IAS 1 – Presentation of Financial Statements

In January 2020, the IASB issued amendments to deal with the classification of liabilities. Clarifications were added that if an entity does not have a right to defer settlement of a liability for at least twelve months after the reporting period they meet the definition of a current liability. The amendments are effective for annual periods beginning on or after January 1, 2023, with earlier application permitted.

IAS 12 – Income taxes

In September 2021, IAS 12 was amended to narrow the scope of when the existing exemption for recognizing deferred income tax assets and deferred income tax liabilities on initial recognition of an asset and a liability is applied. The amendments clarify the requirement to account for deferred tax on transactions such as initial recognition of leases and decommissioning obligations where the transaction gives rise to an equal taxable and deductible temporary difference. The amendment is effective for annual periods beginning on or after January 1, 2023, and applied retrospectively.

ISSUED AND OUTSTANDING SECURITIES INFORMATION

(a) Preferred Shares

The Company is authorized to issue an unlimited number of preferred shares, issuable in series, none of which are issued and outstanding as of the date hereof.

(b) Common Shares

The Company is authorized to issue an unlimited number of Common Shares without nominal or par value.

The holders of Common Shares are entitled to dividends, if and when declared by the board of directors, to one vote per share at meetings of the shareholders of the Company and, upon dissolution, to share equally in such assets of the Company as are distributable to the holders of Common Shares.

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Issued share capital

The Company had 63,665,262 Common Shares outstanding as of December 31, 2021.

	Number of	Number of Stock	Number of
	Common Shares	Options	Warrants
Balance at December 31, 2020	59,163,832	5,593,480	3,899,026
Common Shares issued	3,441,430	-	-
Options exercised	685,000	(685,000)	-
Warrants exercised	375,000	-	(375,00)
Options granted	-	3,344,399	-
Warrants issued	-	-	3,472,630
Options expired	-	(1,890,000)	-
Warrants expired	-	-	(1,159,312)
Balance at December 31, 2021	63,665,262	6,362,879	5,837,344

Stock Options

During the period ended December 31, 2021, the Company issued 3,344,399 stock options to certain directors, officers and consultants of the Company (2020 – 3,000,000).

Stock options issued and outstanding as of December 31, 2021 were as follows:

Exercise	Number Outstanding	Number Exercisable	Issue Date	Expiration Date
$0.85	560,000	560,000	October 13, 2017	October 13, 2022
$0.98	130,000	130,000	June 6, 2018	June 6, 2023
$1.00	400,000	400,000	July 24, 2018	July 24, 2023
$1.10	250,000	250,000	November 1, 2018	November 1, 2023
$1.00	100,000	100,000	January 3, 2019	January 3, 2024
$0.80	180,000	180,000	June 18, 2019	June 22, 2022
$0.33	423,480	423,480	June 18, 2019	June 18, 2024
$0.50	975,000	975,000	January 6, 2020	January 6, 2025
$0.52	1,176,399	1,176,399	February 26, 2021	February 26, 2026
$0.50	2,018,000	2,018,000	November1, 2021	November1, 2026
$0.66	150,000	150,000	December 1, 2021	December 1, 2026
	6,362,879	6,362,879

As of December 31, 2021, the weighted-average life of the options outstanding was 3.3 years (2020 – 3.1 years)

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Warrants

As at December 31, 2021, the Company had the following warrants outstanding and exercisable:

Exercise		Number outstanding	Expiration date
price
$0.70	(3)	835,714	February 13, 2022
$1.00	(1)	529,000	December 11, 2022
$0.30		1,000,000	September 14, 2022
$0.40		999,999	January 26, 2026
$0.55		520,000	April 9, 2026
$0.50	(2)	31,200	April 9, 2026
$0.40		1,221,431	July 14, 2026
$0.40		700,000	November 12,2026
		5,837,344

Note (1): If at any time prior to the expiry of the purchase warrants the trading price of the Common Shares exceeds $1.50 for a certain period of time, the Company may provide notice to the holder of the purchase warrants that the warrants will be subject to early expiry.

Note (2): These warrants were issued to agents as finder’s warrants.

Note (3): The expiry date of these warrants were extended from February 13, 2021 to February 13, 2022.

As of December 31, 2021, the weighted-average life of the warrants outstanding was 2.2 years (2020 – 1.9 years)

As at the date of this MD&A, the Company had 63,665,262 Common Shares, 6,362,879 stock options and 5,837,344 share purchase warrants issued and outstanding.

CONTROLS AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management of the Company is responsible for establishing and maintaining appropriate information systems, procedures and controls to ensure that information used internally and disclosed externally is complete, reliable and timely. Management is also responsible for the design and evaluation of internal controls over financial reporting to provide sufficient knowledge to support the representations made in this MD&A and in the financial statements for the years ended December 31, 2021 and 2020.

Management of the Corporation has filed the Venture Issuer Basic Certificate with the filings for the years ended December 31, 2021and 2020 on SEDAR at www.sedar.com.

In contrast to the certificate required under National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), the venture issuer basic certificate does not include representations relating to the establishment and maintenance of disclosure controls and procedures (“DC&P”) and internal control over financial reporting (“ICFR”), as defined in NI 52-109. In particular, the certifying officers filing certificates for venture issuers are not making any representations relating to the establishment and maintenance of:

(a) controls and other procedures designed to provide reasonable assurance that information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation, and

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(b) a process to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the financial statements for external purposes in accordance with the issuer’s generally accepted accounting principles.

The issuer’s certifying officers are responsible for ensuring that processes are in place to provide them with sufficient knowledge to support the representations they are making in their certificates.

Investors should be aware that inherent limitations on the ability of certifying officers of a venture issuer to design and implement DC&P and ICFR as defined in NI 52-109 on a cost-effective basis may result in additional risks to the quality, reliability, transparency, and timeliness of interim and annual filings and other reports provided under securities legislation.

BUSINESS RISKS

Readers are cautioned that the following is a summary only of certain risk factors and is not exhaustive and is qualified in its entirety by reference to, and must be read in conjunction with the additional information on these and other factors that could affect the Company’s operations and financial results that are included in reports on file with Canadian securities regulatory authorities and may be accessed through the SEDAR website (www.sedar.com).

The Company’s access to capital will impact its ability to complete exploration and development activities, acquire international concessions and to ultimately achieve profitable operations. The 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. Should the Company be unable to continue as a going concern, it may be unable to realize the carrying value of its assets and to meet its liabilities as they become due. The Financial Statements do not reflect the adjustments or reclassification of assets and liabilities which would be necessary if the Company were unable to continue its operations.

Oil and natural gas exploration involves a high degree of risk, which even a combination of experience, knowledge and careful evaluation may not be able to overcome. These include the uncertainty of finding new reserves, the volatility of commodity prices, operational risks, the cost of capital available to fund exploration and development programs, regulatory issues and taxation, and the requirements of new environmental laws and regulations.

There is no assurance that expenditures made on future exploration by Wilton will result in new discoveries of oil or natural gas in commercial quantities. Without the continual addition of new reserves, any existing reserves that Wilton may have at any particular time and the production there from will decline over time as such existing reserves are depleted. It is difficult to project the costs of implementing an exploratory drilling program due to the inherent uncertainties of drilling in unknown formations, the costs associated with encountering various drilling conditions such as over pressured zones and tools lost in the hole, and changes in drilling plans and locations as a result of prior exploratory wells or additional seismic data and interpretations thereof.

The long-term commercial success of Wilton depends on its ability to find, acquire, develop and commercially produce oil and natural gas reserves. No assurance can be given that Wilton will be able to continue to locate satisfactory properties for acquisition or participation. Moreover, if such acquisitions or participations are identified, Wilton may determine that current markets, terms of acquisition and participation or pricing conditions make such acquisitions or participations uneconomic.

Future oil and natural gas exploration may involve unprofitable efforts, not only from dry wells, but from wells that are productive but do not produce sufficient net revenues to return a profit after drilling, operating and other costs. Completion of a well does not assure a profit on the investment or recovery of drilling, completion and operating costs. In addition, drilling hazards or environmental damage could greatly increase the cost of operations, and various field operating conditions may adversely affect the production from successful wells. These conditions include delays in obtaining governmental approvals or consents, shut-ins of connected wells resulting from extreme weather conditions, insufficient storage or transportation capacity or other geological and mechanical conditions. While diligent well supervision and effective maintenance operations can contribute to maximizing production

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rates over time, production delays and declines from normal field operating conditions cannot be eliminated and can be expected to adversely affect revenue and cash flow levels to varying degrees.

Oil and natural gas operations are subject to the risks of exploration, development and production of oil and natural gas properties, including encountering unexpected formations or pressures, premature declines of reservoirs, blowouts, cratering, sour gas releases, fires and spills. Losses resulting from the occurrence of any of these risks could have a materially adverse effect on Wilton and its future results of operations, liquidity and financial condition.

Oil and natural gas are commodities whose prices are determined based on world demand, supply and other factors, including geo political events, all of which are beyond the control of the Company. Oil prices are expected to remain volatile and may decline in the near future as a result of global excess supply due to the increased growth of shale oil production in the United States, declines in global demand for exported crude oil commodities, and recent decisions by the Organization of the Petroleum Exporting Countries in respect of member countries’ production of oil, among other factors. These recent fluctuations have had a material impact on the oil and natural gas industry.

The Company may elect not to produce from certain wells at lower prices in the future. All these factors could result in a material decrease in the Company’s future net production revenue, causing a reduction in its oil and gas exploration, development and acquisition activities.

In addition, bank borrowings available to the Company in the future, if any, will be in part determined by the borrowing base of the Company. A sustained material decline in prices from prior relatively higher average prices could reduce the Company’s future borrowing base, therefore reducing the bank credit available to the Company.

Volatility in oil and natural gas prices makes it difficult to estimate the value of producing properties for acquisitions and often cause disruption in the market for oil and natural gas producing properties, as buyers and sellers may have difficultly agreeing on the value of such properties. Price volatility also makes it difficult to budget for and project the return on acquisitions and development and exploitation projects.

The marketability and price of oil and natural gas which may be acquired or discovered by Wilton will be affected by numerous factors beyond its control. Wilton will be affected by the differential between the price paid by refiners for light quality oil and the grades of oil produced by Wilton. The ability of Wilton to market its oil and natural gas may depend upon its ability to acquire capacity on pipelines which deliver oil and natural gas to commercial markets. Wilton will also likely be affected by deliverability uncertainties related to the proximity of its reserves to pipelines and processing facilities and related to operational problems with such pipelines and facilities and extensive government regulation relating to price, taxes, royalties, land tenure, allowable production, the export of oil and natural gas and many other aspects of the oil and natural gas business.

The Company manages these risks by contracting competent professional staff, following sound operating practices and the prudent issuance of equity to fund capital expenditures so that debt does not become a burden. Extensive geological, geophysical, engineering and environmental analyses are performed before committing to the exploration of new prospects. These analyses are used to ensure a suitable balance between risk and reward. The Company conducts its operations in a manner consistent with environmental regulations as stipulated in applicable local legislation. The Company is committed to meeting its responsibilities to protect the environment wherever it may operate and anticipates making increased capital and operating expenditures as a result of the increasingly stringent laws relating to the protection of the environment. Wilton’s operations are subject to the risks normally associated with the oil and natural gas industry. The Company is committed to respecting the safety of its personnel, the environment and the communities where it has operations.

The Company is presently pursuing direct investments in international oil and natural gas projects, often competing with companies that possess greater financial and other resources. There is no assurance that oil and natural gas concessions will be granted to the Company in foreign jurisdictions where the Company is making applications, nor is there assurance that any resulting exploration or development efforts will be successful. If the Company is successful in obtaining exploration prospects in foreign jurisdictions, additional capital will be required to execute the exploration and development programs.

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If these international investments are successful, the Company will be exposed to the laws governing the petroleum industry with respect to matters such as taxation, environmental compliance, and other regulatory and political factors as well as shifts in the politics and labor unrest, any of which could adversely affect the Company and its exploration and production activities. The Company’s business, results of operations, financial condition, and the trading price of its Common Shares could be materially adversely affected by any of the foregoing risks and by other risks, including risks related to development of petroleum properties, third party transportation, disruption to export pipelines due to vandalism, political and community unrest, oil prices, title matters, reclamation costs, oil price volatility, competition, additional funding requirements, destruction or expropriation of assets, changes to agreements with co-venturers governing commercial terms of the venture including allocation of tax burdens amongst the co-venturers, insurance, currency fluctuations, conflicts of interest, and share trading volatility. Any of these risks could have a material adverse effect on the business, operations or financial condition of the Company.

The Company is subject to anti-corruption legislation including the Corruption of Foreign Public Officials Act (Canada) and other similar acts (collectively “ Anti-Corruption Legislation ”), which prohibit the Company or any of its officers, directors, employees or agents acting on its behalf from paying, offering to pay or authorizing the payment of anything of value to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business or to otherwise influence a person working in an office capacity. The Company’s international activities create the risk of unauthorized payments or offers of payments by its employees, consultants or agents, even though they may not always be subject to its control. The Company strictly prohibits these practices by its employees and agents.

However, the Company’s existing safeguards and any future improvements may prove to be less than effective, and its employees, consultants and agents may engage in conduct for which the Company may be held responsible. Any failure by the Company to adopt appropriate compliance procedures and to ensure that its employees and agents comply with Anti-Corruption Legislation and applicable laws and regulations in foreign jurisdictions could result in substantial penalties or restrictions on its ability to conduct its business, which may have a material adverse impact on the Company or its share price.

During the year ended December 31, 2021, the spread of COVID-19 has severely impacted many local economies around the globe. In many countries, businesses are being forced to cease or limit operations for long or indefinite periods of time. Measures taken to contain the spread of the virus, including travel bans, quarantines, social distancing, and closures of non-essential services have triggered significant disruptions to businesses worldwide, resulting in an economic slowdown. Global stock markets have also experienced great volatility and a significant weakening. Governments and central banks have responded with monetary and fiscal interventions to stabilize economic conditions. The current travel bans in place may delay the Company’s ability to acquire international assets.

The duration and impact of the COVID-19 pandemic, as well as the effectiveness of government and central bank responses, remains unclear at this time. It is not possible to reliably estimate the duration and severity of these consequences, as well as their impact on the financial position and results of the Company for future periods.

FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

The Company recognizes financial assets and financial liabilities, including derivatives, on the consolidated statements of financial position when the Company becomes a party to the contract. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or when the Company has transferred substantially all risks and rewards of ownership. Financial liabilities are removed from the Financial Statements when the liability is extinguished either through settlement of or release from the obligation of the underlying liability.

Financial assets, financial liabilities and derivatives are measured at fair value on initial recognition. Measurement in subsequent periods depends on the financial instrument’s classification, as described below.

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Amortized cost

A financial asset is measured at amortized cost if the objective of the business model is to hold the financial asset for the collection of the cash flows, and all contractual cash flows represent only principal and interest on that principal. All financial liabilities are measured at amortized cost using the effective interest method except for liabilities which meet the definition of a derivative and liabilities incurred for the purposes of selling or repurchasing in the short-term, if they are held for trading.

Fair value through other comprehensive income

A financial asset shall be measured at FVTOCI if the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets, and the contractual terms of the financial asset give rise on specified dates to cash flows that are Solely Payment of Principal and Interest on the principal amount outstanding.

Fair value through profit or loss

All financial assets that do not meet the definition of being measured at amortized cost or FVTOCI are measured at FVTPL, which includes all derivative financial assets. A financial liability is classified as measured at FVTPL if it is held-for-trading, a derivative, or designated as FVTPL on initial recognition. For financial assets and liabilities, the Company may make an irrevocable election to designate an asset at FVTPL. If the election is made it is irrevocable, meaning that asset, liability, or group of financial instruments must be recorded at FVTPL until that asset, liability or group of financial instruments are derecognized.

Financial assets and liabilities are offset and the net amount is reported on the balance sheet when there is a legally enforceable right to offset the recognized amounts, and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.

The fair value of cash, accounts receivable, due from related party and accounts payable approximates the carrying value. The main financial risks affecting the Company are as follows:

Concentration risk

A majority of the Company’s cash is held by one major Canadian banking institution. Deposits held with this bank may exceed the amount of insurance provided on such deposits. Generally, these deposits may be redeemed upon demand and bear minimal risk.

Liquidity risk

The Company may need to obtain additional sources of cash resources to execute future exploration programs and believes that it has access to sufficient capital through potential external equity sources to meet projected expenditures.

Credit risk

The Company’s principal financial assets are cash and accounts receivable. The credit risk on cash is limited because the majority of cash of the Company is deposited with banks with high credit ratings.

The Company's accounts receivable relates to amounts owing from petroleum and natural gas sales and GST receivables which are from the Canadian government and is subject to credit risk that would be considered normal in the environment.

The Company estimates the recoverability of the balance of due from related pary based on uncertain future events and assumptions.

Commodity price risk

The Company’s operations and financial results may be affected by fluctuations in commodity prices and exchange rates.

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Wilton Resources Inc. Management Reports 2022

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