Note 10 – Commitments and Contingencies

Management Additions and Changes

On March 3, 2017, the Company announced the appointment of Christopher Jarvis and Kevin J. Sylla to its senior management team. Mr. Jarvis is a current Director of Foothills Exploration and FPI and has taken on the full-time role of Executive Vice President of Finance for the Company and Vice President of Risk Management for FPI. Mr. Sylla was appointed Director and Chief Executive Officer of FPI, which oversees the Company’s oil and gas operations.

On June 1, 2017, the Company announced appointment of Kevin J. Sylla as Executive Chairman of the Company. Mr. Sylla continues to serve as Director and Chief Executive Officer of FPI and manager of the Company’s indirect subsidiaries Tiger Energy Operating, LLC, Tiger Energy Partners International, LLC, and Tiger Energy Mineral Leasing, LLC.

Legal proceedings

SCI Welding & Oilfield Service vs. Tiger Energy Operating LLC. (Case Number 169000023, Eighth District Court-Roosevelt Duchesne County, State of Utah)

This case concerns the collection of unpaid debt owed by Tiger Energy Operating, LLC (TEO) when acquired on December 30, 2016, concerning the workover of wells in Duchesne County, Utah, in the amount of $64,470. The Company and SCI Welding reached an agreement to settle the matter for $35,000. SCI Welding has received these settlement funds. Prior to October 10, 2017, the parties had agreed that a Stipulated Motion to Dismiss was to have been filed by opposing counsel. Upon filing this Motion, all claims against Tiger Energy Operating in the underlying case no. 169000023 will have been resolved with no further judicial intervention required.

Graco Fishing & Rental Tools, Inc. vs. Tiger Energy Operating LLC., (Case No. 160800005 Eighth Judicial District Court in and for Duchesne County, State of Utah)

This case concerns the collection of unpaid debt owed by TEO for services performed by plaintiff, which existed at the time of acquisition. A default judgment in the amount of $159,965 was obtained on June 1, 2016, against TEO, for unpaid accounts in connection with its workover of wells in Duchesne County, Utah. Graco has filed a writ of execution against the A Rust 2, Dye-Hall 2-21 A1, Wilkins 1-24 A5 and Rust 3-22A-4 wells located in Duchesne County. A Motion to Set Aside a sheriff’s sale concerning these properties was filed based on the fact that TEO is not the owner of these properties. A hearing for this matter was held on May 1, 2017, in Duchesne County, Utah, at which a Company representative was present to comply with the court’s order to produce documents. Prior to the hearing, TEO made an initial settlement offer, which was eventually rejected by the Plaintiffs. The matter remains unresolved as of the filing of this report. As of September 30, 2017, the Company recorded a contingent liability in the amount of $159,965. The Company and Graco are in negotiations to settle this matter but as of the date of this report no firm settlement agreement had yet been reached by the parties.

Conquest Well Servicing, LLC vs. Foothills Exploration Operating, Inc. (Case No. 179800421 Eighth Judicial District Court in and for Uintah County, State of Utah)

This case was filed on September 11, 2017 and concerns the collection of unpaid debt owed by Foothills Exploration Operating, Inc., a wholly-owned subsidiary of the Company, for services performed by plaintiff in the amount of $49,689 for unpaid accounts in connection with its workover of wells in Uintah County, Utah. A Settlement Agreement and Stipulation to Entry of Judgement for the full amount of the suit was agreed to by the parties and filed with the court on or around October 10, 2017.

In February 2017, the Company drilled a test well on the Labokay prospect to the total measured depth of 8,795 feet, where hydrocarbons shows were present, but not in commercial quantities to warrant completion. Consequently, the Labokay test well was plugged and abandoned in February 2017. Since the well was not commercially viable, the Company’s working interest in the underlying mineral lease terminated and we no longer have title to said property.

The three civil suits filed below were all filed against Foothills Petroleum Operating, Inc. (“FPOI”), a wholly-owned subsidiary of the Company, and all stem from unpaid accounts in connection with drilling of the Labokay test well.

R.W. Delaney Construction Company vs Foothills Petroleum Operating, Inc. (Cause No. 2017-CV-0330 – County Court of Adams County, Mississippi)

This case was filed on September 18, 2017, and concerns the collection of unpaid debt owed by FPOI for services performed by plaintiff in the amount of $72,495.00 for unpaid accounts in connection with its drilling of the Labokay test well in Calcasieu Parish, Louisiana. The Company is in the process of retaining counsel and plans to file a response with the court in the near future.

Performance Drilling Company, LLC vs Foothills Petroleum Operating, Inc. (Case No. 2017-3916 G Fourteenth Judicial District Court in Parish of Calcasieu, State of Louisiana)

This case was filed on September 25, 2017, and concerns the collection of unpaid debt owed by FPOI for services performed by plaintiff in the amount of $205,251.24 for unpaid accounts in connection with its drilling of the Labokay test well in Calcasieu Parish, Louisiana. The Company is in the process of retaining counsel and plans to file a response with the court in the near future.

Monster Rentals, LLC dba Deepwell Equipment Rentals vs Foothills Petroleum Operating, Inc. (Case No. 201711013-E – Fifteenth Judicial District Court in Parish of Acadia, State of Louisiana)

This case was filed on October 24, 2017, and concerns the collection of unpaid debt owed by FPOI for services performed by plaintiff in the amount of $53,943.53 for unpaid accounts in connection with its drilling of the Labokay test well in Calcasieu Parish, Louisiana. The Company is in the process of retaining counsel and plans to file a response with the court in the near future.