As of June 30, 2022 and December 31, 2021, assets held for sale represent the acquired oil and natural gas properties from the Torchlight RTO.

Our outstanding drilling obligation includes five wells in 2022 and 2023. All drilling obligations through December 31, 2021 have been met. The drilling obligations are minimum yearly requirements and may be exceeded if acceleration is desired.

During the three and six months ended June 30, 2022, we have incurred an additional $0.4 million and $1.5 million, respectively, in costs to meet compliance requirements with the relevant leases.

We have obtained an updated valuation study performed by a third-party valuation firm to estimate the fair value of the Orogrande project assets and the related preferred stock dividends liability. The estimates involved are consistent with those outlined as part of the acquisition. The valuation concluded an implied enterprise value as of June 30, 2022 to be between $53 million and $108.7 million. We recorded the fair value of the Orogrande Project property at $71.7 million as the median value.

The Orogrande Project ownership as of June 30, 2022 is detailed as follows:


	Revenue Interest			Working Interest
University Lands - Mineral Owner		20.00	%	n/a
ORRI - Magdalena Royalties, LLC, an entity controlled by Gregory McCabe, Chairman		4.50	%	n/a
ORRI - Unrelated Party		0.50	%	n/a
Hudspeth Oil Corporation, a subsidiary of Meta Materials Inc.		49.88	%		66.50	%
Wolfbone Investments LLC, an entity controlled by Gregory McCabe, Chairman		18.75	%		25.00	%
Conversion by Note Holders in March, 2020		4.50	%		6.00	%
Unrelated Party		1.88	%		2.50	%
		100.00	%		100.00	%

As previously disclosed in the condensed consolidated interim financial statements for the three months ended March 31, 2022, we concluded that the fair value of the Hazel Project property is $Nil based on an engineering reserve report prepared by PeTech Enterprises, Inc. ("PeTech"), a third-party Reserve Engineer. The calculations were prepared using standard geological and engineering methods generally accepted by the petroleum industry and in accordance with SEC financial accounting and reporting standards.