RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2022

Related Party Transactions [Abstract]

RELATED PARTY TRANSACTIONS [Text Block]

16. RELATED PARTY TRANSACTIONS

The Company's related parties consist of directors and officers of the Company, their immediate families, and companies that are controlled or significantly influenced by directors and officers of the Company.

Management Services Agreements & Other Related Party Balances

On December 22, 2020, the Company entered into a Management Services Agreement (the "MSA") with an entity related by virtue of common equity holders, directors and officers. Under this MSA, the related entity provided management, finance, operations and administrative services. The MSA had an initial period of 11 years with a 90 day cancellation notice. The Company was obligated to pay for these services on a quarterly basis amounting to the lesser of; i) $2.00 per produced barrel of oil equivalent (converting natural gas to BOE equivalent of 6:1), and ii) 0.375% of measured assets as defined in the credit agreement. During the year ended December 31, 2021, the Company incurred and paid fees of $287,126, recognized in in general and administrative expenses. In the second quarter of 2021, the MSA was effectively terminated, by assigning the MSA to one of the Company's subsidiaries. Therefore, no fees were incurred in connection with the MSA in the year ended December 31, 2022.

As part of terminating the MSA, the Company entered into a new Letter Agreement (the "Letter") in the second quarter of 2021, with the same related entity by virtue of common equity holders, directors and officers. The Letter requires the Company to hire its own employees, obtain its own office lease and assume certain management obligations. In exchange, the Company is paid an annual fee of $1,000,000 on a quarterly basis.

During the third quarter of 2022, the Letter was terminated by the Company.

During the year ended December 31, 2022, the Company received $916,667 (December 31, 2021 - $416,666 in connection with the Letter, which is included in general and administrative expenses in the consolidated statements of operations and comprehensive income (loss). As at December 31, 2022, amounts receivable of $nil (December 31, 2021 - $120,501) were included in accounts receivable, net on the consolidated balance sheets.

Other Related Party Balances

As at December 31, 2022, accounts payable and accrued liabilities included $143,572 (December 31, 2021 -$120,501) due from a company related by virtue of common equity holders, officers and directors under normal credit terms.