Trillion Energy posts $5M profit on debt gain

Trillion Energy International Inc. (now Dune Oil Corp., TRLEF) filed June 30, 2026 interim results showing a major balance-sheet reset driven by asset sales and debt restructuring.

Rhea-AI Filing Summary

Trillion Energy International Inc. (now Dune Oil Corp., TRLEF) filed June 30, 2026 interim results showing a major balance-sheet reset driven by asset sales and debt restructuring. Total net income for the six months was $4.95 million versus $1.64 million a year earlier, largely from a $7.93 million gain on extinguishment of convertible debentures and a gain on sale of its Turkish subsidiary PPE Turkey.

At June 30, 2026, cash was $323,658, total assets $1.08 million, and current liabilities $9.42 million, leaving a working capital deficit of about $8.87 million. Stockholders’ deficiency improved to $(8.35) million from $(38.90) million at December 31, 2025 as large Turkish oil and gas liabilities and the asset retirement obligation were deconsolidated on the sale of PPE Turkey.

The company has pivoted from the SASB gas and Cendere oil fields to an earn-in on the M47 Oil Block in Türkiye, where it can earn a 29% working interest through $15 million of funding commitments (about $9.5 million for 2026 and $5.5 million for 2027). It retained a 7% gross overriding royalty on future revenues from the disposed licenses, payable after cumulative gross revenues exceed $7.5 million. Management states there is material uncertainty that raises substantial doubt about the company’s ability to continue as a going concern without additional financing.

Positive

• Stockholders’ deficiency reduced to $(8.35) million from $(38.90) million, mainly due to the sale of PPE Turkey and a $7.93 million gain on extinguishment of convertible debentures, significantly improving the capital structure.
• The company retained a 7% gross overriding royalty on PPE Turkey’s former licenses and secured an earn-in on the M47 Oil Block with potential 29% working interest, preserving upside exposure to Turkish oil and gas.

Negative

• Management reports a material uncertainty raising substantial doubt about going concern; current liabilities of $9.42 million far exceed current assets of $0.56 million and cash is only $323,658.
• The company faces significant funding needs, including $15 million of M47 Block commitments and a requirement to complete at least CAD$10 million of equity financing by September 30, 2026 to implement the revised debenture settlement.
• There are loan defaults on TR1 Master Fund borrowings and a 6% related-party promissory note, while total loans payable remain $3.82 million and convertible debt at fair value is $4.23 million.

Key Figures

Total net income (six months 2026): $4,950,354 Net income from continuing operations (six months 2026): $5,675,655 Gain on extinguishment of convertible debt: $7,927,913 +5 more

8 metrics

Total net income (six months 2026) $4,950,354 For the six months ended June 30, 2026, compared to $1,636,569 in 2025

Net income from continuing operations (six months 2026) $5,675,655 Six months ended June 30, 2026, versus net loss of $(1,739,740) in 2025

Gain on extinguishment of convertible debt $7,927,913 Recognized in the six months ended June 30, 2026 on Fourth Supplemental Indenture

Cash and cash equivalents $323,658 Balance as of June 30, 2026

Current liabilities $9,423,339 As of June 30, 2026, including loans payable and convertible debt

Stockholders’ deficiency $(8,345,371) As of June 30, 2026, improved from $(38,897,470) at December 31, 2025

M47 Block funding commitment $15,000,000 Total earn-in investment, including $9.5 million for 2026 and $5.5 million for 2027

Convertible debt at fair value $4,231,161 Carrying amount as of June 30, 2026 under fair value through profit or loss

Key Terms

gross overriding royalty, fair value through profit or loss, Level 3 of the fair value hierarchy, asset retirement obligation, +2 more

6 terms

gross overriding royalty financial

"the Company retained a 7% gross overriding royalty on future production revenues"

A gross overriding royalty is a contractual right that pays its holder a fixed percentage of revenue from the sale of produced minerals, oil, or gas, taken before the producing company deducts operating or capital costs. Think of it like a landlord who collects a slice of every sale from a shop on the property rather than sharing in the shop’s profits; it reduces the producer’s cash receipts on each unit sold without requiring the royalty holder to share costs or ownership. Investors care because it lowers future cash flow and project valuation per unit produced, can be transferable, and affects how attractive a resource or company appears compared with similar assets without such claims.

fair value through profit or loss financial

"designated the entire instrument as at fair value through profit or loss"

An accounting classification for certain financial assets where their current market price is used to update value on the books, and any increase or decrease is recorded immediately in the company’s profit & loss statement. Like checking the daily score of an investment and noting the gain or loss right away, this approach makes reported earnings reflect market swings more quickly, which can increase short-term volatility in reported profits and help investors see real-time value changes.

Level 3 of the fair value hierarchy financial

"classified within Level 3 of the fair value hierarchy, as the measurement"

asset retirement obligation financial

"The Company’s asset retirement obligations (“ARO”) result from its interest"

A liability recorded for the future cost to retire, dismantle or clean up a long-lived asset — for example removing an oil rig, closing a mine, or decommissioning a plant. Investors care because it reduces reported profit and ties up capital: companies must estimate and set aside money now for a known future expense, and changes to that estimate can swing earnings, debt ratios and the company’s cash needs much like setting aside savings to repair or return a rented property later.

hyper-inflationary economy financial

"Turkey has been designated a hyper-inflationary economy as of April 1, 2022"

going concern financial

"These condensed consolidated interim financial statements have been prepared on the assumption that the Company will continue as a going concern"

Going concern is the accounting assumption that a company will keep operating and meeting its obligations for the foreseeable future. The phrase matters most when a company or its auditors disclose substantial doubt about it, a formal warning that the business may not have enough resources to continue without raising money, restructuring, or selling assets. That language in a filing or press release signals elevated financial risk.

FAQ

How did TRLEF’s profitability change for the six months ended June 30, 2026?

For the six months ended June 30, 2026, TRLEF reported net income of $4.95 million compared with $1.64 million in 2025, driven mainly by a $7.93 million gain on extinguishment of convertible debentures and a gain on sale of its PPE Turkey subsidiary.

What is TRLEF’s liquidity position as of June 30, 2026?

As of June 30, 2026, TRLEF had cash of $323,658, current assets of $557,614 and current liabilities of $9,423,339, resulting in a working capital deficit of about $8.87 million and a disclosed material going-concern uncertainty.

What major asset transaction did TRLEF complete in 2026?

On April 7, 2026, TRLEF sold all shares of PPE Turkey, which held its SASB gas and Cendere oil interests. The purchaser assumed the related assets and liabilities, and TRLEF recorded a $523,110 gain and retained a 7% gross overriding royalty on future production revenues.

What are TRLEF’s commitments on the M47 Oil Block in Turkiye?

TRLEF agreed to fund approximately $15 million to earn a 29% working interest in the M47 Oil Block, including about $9.5 million for the 2026 work program and $5.5 million for the 2027 work program, mainly for drilling and seismic costs.

How were TRLEF’s convertible debentures restructured in 2026?

On March 20, 2026, TRLEF entered a Fourth Supplemental Indenture so that, if it completes at least CAD$10 million in equity financing by September 30, 2026, about CAD$11 million of debentures convert at the financing price and the remainder is forgiven, generating a $7.93 million extinguishment gain.

What is TRLEF’s current debt structure?

At June 30, 2026, TRLEF reported loans payable of $3.82 million, all current, and convertible debt at fair value of $4.23 million. Undiscounted contractual cash flows for convertible debt were $12.03 million, all due within one year.

What going-concern disclosure did TRLEF make in this 6-K?

TRLEF stated that current liabilities exceeded current assets by $8,865,725, it used $684,268 in operating cash in six months, and additional funding is required, leading management to conclude there is material uncertainty that raises substantial doubt about continuing as a going concern.

AI-generated analysis. How Rhea-AI works. Not financial advice.

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Available on EDGAR 09/01/2026 - 12:37 PM Accepted by SEC EDGAR 09/01/2026 - 12:36 PM Learn about SEC filing dates

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

August 2026

Commission File Number: 000-55539

DUNE OIL CORP.

(FORMERLY TRILLION ENERGY INTERNATIONAL INC.)

Suite 700, 838 W. Hastings Street, Vancouver, BC V6C 0A6

(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

☒ Form 20-F ☐ Form 40-F

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐

Indicate by check mark whether by furnishing the information contained in this Form, the registrant is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934. Yes ☐ No ☒

If “Yes” is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b):

Explanatory Note

Dune Oil Corp. (the “Company”) is furnishing this Form 6-K to provide its consolidated interim financial statements for the six months ended June 30, 2026, and 2025 and Management Discussion and Analysis related thereto as filed in the SEDAR filing system.

Exhibits:

99.1	CONSOLIDATED INTERIM FINANCIAL STATEMENTs FOR THE SIX MONTHS ENDED JUNE 30, 2026 AND 2025
99.2	MANAGEMENT DISCUSSION AND ANALYSIS

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	DUNE OIL CORP.
	(Registrant)
Date: August 31, 2026	By:	/s/ David Thompson
		David Thompson
		Chief Financial Officer

Exhibit 99.1

Dune Oil Corp. (formerly Trillion Energy International Inc.)

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2026 AND 2025

(Unaudited - Stated in United States dollars)

NOTICE OF NO AUDITOR REVIEW OF

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

The accompanying unaudited condensed consolidated interim financial statements for Trillion Energy International Inc. (the “Company”) have been prepared by management in accordance with International Financing Reporting Standards (“IFRS”). These condensed consolidated interim financial statements, which are the responsibility of management, are unaudited and have not been reviewed by the Company’s auditors. The Company’s Audit Committee and Board of Directors have reviewed and approved these condensed consolidated interim financial statements. In accordance with the disclosure requirements of National Instrument 51-102 released by the Canadian Securities Administrators, the Company’s independent auditors have not performed a review of these condensed consolidated interim financial statements.

DUNE OIL CORP. (FORMERLY TRILLION ENERGY INTERNATIONAL INC.)

Index to the Condensed Consolidated Interim Financial Statements

	Page
Consolidated interim statements of financial position (unaudited)	2
Consolidated interim statements of income and comprehensive income (unaudited)	3
Consolidated interim statements of stockholders’ equity (unaudited)	4
Consolidated interim statements of cash flows (unaudited)	5-6
Notes to the condensed consolidated interim financial statements (unaudited)	7

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Consolidated Interim Statements of Financial Position

(Expressed in U.S. dollars)

		Notes				June 30, 2026 (Unaudited)				December 31, 2025 (Audited)
							$				$
ASSETS
Current assets
Cash and cash equivalents							323,658				430,313
Amounts receivable			4				217,905				737,753
Prepaid expenses and deposits			5				16,051				46,909
Total current assets							557,614				1,214,975
Oil and gas properties, net			6				-				721,403
Exploration and evaluation assets			8				507,842				-
Property and equipment, net			7				12,512				409,931
Long-term deposits			5				-				756,634
TOTAL ASSETS							1,077,968				3,102,943
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
Current liabilities
Accounts payable and accrued liabilities			9,17				1,368,605				18,792,482
Loans payable			10,17				3,823,573				4,972,059
Convertible debt			11				4,231,161				11,823,815
Total current liabilities							9,423,339				35,588,356
Asset retirement obligation			12				-				6,412,057
TOTAL LIABILITIES							9,423,339				42,000,413
Stockholders’ deficiency
Share capital							81,412,463				79,611,590
Warrant and option reserve							7,256,544				7,228,089
Obligation to issue shares							155,195				54,042
Accumulated other comprehensive income (loss)							1,110,462				(22,560,802	)
Accumulated deficit							(98,280,035	)			(103,230,389	)
TOTAL STOCKHOLDERS’ DEFICIENCY							(8,345,371	)			(38,897,470	)
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY							1,077,968				3,102,943

Nature of operations (Note 1)

Commitments and Contingencies (Note 22)

Subsequent events (Note 23)

APPROVED BY THE BOARD OF DIRECTORS ON August 31, 2026
“Sean Stofer”		“David Thompson”
Director		Director

See accompanying notes to condensed consolidated interim financial statements.

2

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Consolidated Statements of Income and Comprehensive Income

(Expressed in U.S. dollars)

(Unaudited) 

						For the three months ended								For the six months ended
		Notes				June 30, 2026				(Re-presented) (1) June 30, 2025				June 30, 2026				(Re-presented) (1) June 30, 2025
Expenses
Depreciation			7			$	2,065				2,065			$	4,126				4,034
Stock-based compensation			13,14,15				1,028				16,959				4,466				16,959
General and administrative			18				873,969				443,707				1,417,280				843,284
Total expenses							877,062				462,731				1,425,872				864,277
Loss before other income (expenses)							(877,062	)			(462,731	)			(1,425,872	)			(864,277	)
Other income (expenses)
Interest (expense) income							(298	)			1,105				(309	)			2,635
Finance cost			10,11				(105,659	)			(689,940	)			(470,415	)			(1,301,045	)
Foreign exchange (loss) income							(115,975	)			190,047				(156,011	)			192,067
Gain on debt settlement			11				3,695				225,375				3,695				230,880
Gain on net monetary position							9,084				-				9,089				-
Gain (loss) on debt extinguishment			11				-				-				7,927,913				-
Fair value loss on remeasurement of convertible debenture			11				(190,327	)			-				(212,435	)			-
Total other income (expenses)							(399,480	)			(273,413	)			7,101,527				(875,463	)
Net income (loss) from continuing operations							(1,276,542	)			(736,144	)			5,675,655				(1,739,740	)
Net (loss) income from discontinued operations, net of tax			3				451,131				177,031				(725,301	)			3,376,309
Total net (loss) income							(825,411	)			(559,113	)			4,950,354				1,636,569
Other comprehensive income (loss) Items that may be reclassified subsequently to net income (loss):
Continuing operations:
Foreign currency translation							953,277				(761,507	)			1,126,784				(723,220	)
Discontinued operations:
Foreign currency translation – foreign subsidiary held for sale							21,583,905				(1,157,593	)			22,544,480				(2,972,415	)
Total other comprehensive income (loss)							22,537,182				(1,919,100	)			23,671,264				(3,695,635	)
Total comprehensive income (loss)							21,711,771				(2,478,213	)			28,621,618				(2,059,066	)
Total comprehensive income (loss) attributable to:
Continuing operations							(323,265	)			(1,497,651	)			6,802,439				(2,462,960	)
Discontinued operations							22,035,036				(980,562	)			21,819,179				403,894
Total comprehensive income (loss)							21,711,771				(2,478,213	)			28,621,618				(2,059,066	)
Earnings (loss) per share
Basic and diluted from continuing operations							(0.02	)			(0.01	)			0.13				(0.04	)
Basic and diluted from discontinued operations							0.01				0.00				(0.02	)			0.09
Weighted average shares outstanding
Basic and diluted							48,272,194				39,364,800				44,966,665				39,364,800

⁽¹⁾ The comparative information has been re-presented to account for a discontinued operation (Note 3).

See accompanying notes to condensed consolidated interim financial statements.

3

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Consolidated Interim Statements of Stockholders’ Equity

(Expressed in U.S. dollars)

(Unaudited) 

		Shares				Share capital				Warrant and option reserve				Receivables for equity issued				Obligation to issue shares				Shares to be cancelled				Accumulated other comprehensive income (loss)				Accumulated deficit				Total
							$				$				$				$				$				$				$				$
Balance, December 31, 2024			31,897,753				78,382,631				7,209,546				(90,425	)			6,000				7,645				(17,356,701	)			(54,009,488	)			14,149,208
Stock issued for debt settlement			1,031,232				140,301				–				–				–				–				–				–				140,301
Stock issued for services			466,483				73,857				–				–				6,000				–				–				–				79,857
Stock issued for convertible debentures			5,969,332				754,335				–				–				–				–				–				–				754,335
Stock-based compensation – RSUs			–				–				16,959				–				–				–				–				–				16,959
Net income and comprehensive income			–				–				–				–				–				–				(3,695,635	)			1,636,569				(2,059,066	)
Balance, June 30, 2025			39,364,800				79,351,124				7,226,505				(90,425	)			12,000				7,645				(21,052,336	)			(52,372,919	)			13,081,594
Balance, December 31, 2025			41,624,407				79,611,590				7,228,089				–				54,042				–				(22,560,802	)			(103,230,389	)			(38,897,470	)
Stock issued in private placements			10,012,668				1,028,866				23,989				–				105,728				–				–				–				1,158,583
Stock issued for debt settlement			6,996,943				754,452				–				–				(46,636	)			–				–				–				707,816
Stock issued for services			162,808				17,555				–				–				42,061				–				–				–				59,616
Stock-based compensation – RSUs			–				–				4,466				–				–				–				–				–				4,466
Net income and comprehensive income			–				–				–				–				–				–				23,671,264				4,950,354				28,621,618
Balance, June 30, 2026			58,796,826				81,412,463				7,256,544				–				155,195				–				1,110,462				(98,280,035	)			(8,345,371	)

See accompanying notes to condensed consolidated interim financial statements.

4

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Consolidated Interim Statements of Cash Flows

(Expressed in U.S. dollars)

(Unaudited) 

		Six months ended
		June 30, 2026				June 30, 2025
			$				$
OPERATING ACTIVITIES
Total net income			4,950,354				1,636,569
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation			4,466				16,959
Stock issued for services			59,616				79,857
Depletion			4,647				113,494
Depreciation			11,764				37,757
Accretion of asset retirement obligation			68,465				131,780
Accretion and accrued interest expense			478,696				1,310,291
Interest expense			-				7,932
Change in asset retirement obligation estimate			(80,467	)			-
Unrealized foreign exchange loss			1,238,178				1,124,049
Gain on revaluation for assets held for sale			-				(44,950	)
Gain on debt settlement			(3,695	)			(230,880	)
Gain on sale of subsidiary			(523,110	)			-
Loss (gain) on net monetary position			79,564				(7,142,605	)
Deferred tax expense			-				1,299,167
Gain on debt extinguishment			(7,927,913	)			-
Gain on modification of lease			-				(31,363	)
Gain on disposal of property and equipment			-				(61,676	)
Fair value loss on remeasurement of convertible debenture			212,435				-
Changes in non-cash working capital items:
Amounts receivable			583,756				385,022
Prepaid expenses and deposits			(37,999	)			199,125
Accounts payable and accrued liabilities			196,975				2,014,813
Net cash (used in) provided by operating activities			(684,268	)			845,341
INVESTING ACTIVITIES
Property and equipment expenditures			-				(3,975	)
Oil and gas properties expenditures			-				(557,669	)
Advances from JV Partners			-				290,821
Exploration and evaluation expenditures			(521,840	)			-
Cash and cash equivalents derecognized on sale of subsidiary			(48,404	)			-
Changes in non-cash working capital items:
Prepaid expenses and deposits			(28,235	)			(147,321	)
Accounts payable and accrued liabilities			476				32,715
Net cash used in investing activities			(598,003	)			(385,429	)
FINANCING ACTIVITIES
Proceeds from issuance of shares in private placements			1,158,583				-
Repayments of loans payable			-				(990,008	)
Lease payments			-				(7,593	)
Net cash provided by (used in) financing activities			1,158,583				(997,601	)
Effect of exchange rate changes on cash and cash equivalents			17,033				(32,654	)
Net decrease in cash and cash equivalents			(106,655	)			(570,343	)
Cash and cash equivalents, beginning of period			430,313				599,208
Cash and cash equivalents, end of period			323,658				28,865

5

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Consolidated Interim Statements of Cash Flows

(Expressed in U.S. dollars)

(Unaudited)

		Six months ended
		June 30, 2026				June 30, 2025
			$				$
Supplemental cash flow information
Interest paid on credit facilities			158,903				226,020
Interest paid on lease liability			–				7,862
Non-cash investing and financing activities:
Stock issued for debt settlement			707,816				140,301
Stock issued for services			59,616				79,857

Refer to Note 3 for disclosure of cash flows attributable to discontinued operations.

See accompanying notes to condensed consolidated interim financial statements.

6

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

1. Organization and Going Concern

Dune Oil Corp. (formerly Trillion Energy International Inc.) and its consolidated subsidiaries, (collectively referred to as the “Company”) is a Canadian based oil and gas exploration and production company. Effective January 2022, the corporate headquarters moved to Suite 700, 838 West Hastings Street, Vancouver, B.C., Canada from Turan Gunes Bulvari, Park Oran Ofis Plaza, 180-y, Daire:54, Kat:14, 06450, Oran, Cankaya, Anakara, Turkey. The Company also has a registered office in Canada. The Company is incorporated in British Columbia. The Company’s shares trade on the OTCQB under the symbol “TRLEF” and trade on the Canadian Securities Exchange (the “Exchange”) under the symbol “DUNE” (formerly “TCF”).

The Company meets the definition of a foreign private issuer, as defined under Rule 3b-4 of the Securities Exchange Act of 1934, as amended.

In April 2026, the Company consolidated its issued share capital on a ratio of five old common shares for every one new post-consolidated common share. All current and comparative references to the number of common shares, weighted average number of common shares, loss per share, stock options and warrants have been restated to give effect to this share consolidation.

Effective August 4, 2026, Trillion Energy International Inc. changed its name to Dune Oil Corp., to reflect its strategic focus on oil exploration and development, and its trading symbol on the Exchange changed from “TCF” to “DUNE”. The name change did not result in any consolidation of the Company’s share capital and did not affect the rights of shareholders. Existing share certificates remain valid and are not required to be exchanged.

Discontinued operations:

During the period, the Company committed to a plan to dispose of its wholly-owned subsidiary, Park Place Energy Turkey (“PPE Turkey”), which holds the Company’s license interests in the SASB natural gas project and the Cendere oil field. Accordingly, the assets and liabilities of PPE Turkey have been classified as held for sale, and the results of PPE Turkey have been presented as a discontinued operation in these condensed consolidated interim financial statements in accordance with IFRS 5, Non-current Assets Held for Sale and Discontinued Operations. The consolidated interim statements of income (loss) and comprehensive income (loss) and the related notes for the comparative period have been re-presented to show the discontinued operation separately from continuing operations. In accordance with IFRS 5, the consolidated statement of financial position for the comparative period has not been re-presented.

On April 7, 2026, the Company completed the sale of all of the issued and outstanding shares of PPE Turkey. Further information regarding the discontinued operation and the sale agreement is provided in Note 3.

Going concern:

These condensed consolidated interim financial statements have been prepared on the assumption that the Company will continue as a going concern, meaning it will continue in operation for the foreseeable future and will be able to realize assets and discharge liabilities in the ordinary course of operations. As at June 30, 2026, the Company’s current liabilities exceeded its current assets by $8,865,725 (December 31, 2025 – $34,373,381) and its accumulated deficit amounts to $98,280,035 (December 31, 2025 – $103,230,389). For the six months ended June 30, 2026, cash used in operating activities was $684,268 (2025 – $845,341 net cash provided in operating activities). The Company’s continuation as a going concern is dependent upon its ability to complete financing sufficient to meet current and future obligations, the successful results from its business activities, and its ability to operate profitably and generate funds. Although the Company raised capital in previous reporting periods, additional funding will be required to continue current operations and further advance its existing oil and gas assets in the upcoming 12 months. These factors indicate the existence of material uncertainty which raises substantial doubt about the Company’s ability to continue as a going concern.

7

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

2. Basis of Presentation and Material Accounting Policies

(a) Statement of Compliance

These unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to the preparation of condensed interim financial statements, including International Accounting Standards (“IAS”) 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (“IASB”), and the Interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”). Accordingly, certain disclosures included in annual financial statements have been condensed or omitted and these unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2025.

(b) Use of Estimates and Judgments

The Company’s management makes judgments in its process of applying the Company’s accounting policies in the preparation of its unaudited condensed consolidated interim financial statements. In addition, the preparation of the financial data requires that the Company’s management make assumptions and estimates of the effects of uncertain future events on the carrying amounts of the Company’s assets and liabilities at the end of the reporting period and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates as the estimation process is inherently uncertain. Estimates are reviewed on an ongoing basis based on historical experience and other factors that are considered to be relevant under the circumstances. Revisions to estimates and the resulting effects on the carrying amounts of the Company’s assets and liabilities are accounted for prospectively. The critical judgments and estimates applied in the preparation of the Company’s condensed consolidated interim financial statements are consistent with those applied and disclosed in the Company’s consolidated financial statements for the year ended December 31, 2025.

(c) Basis of Consolidation

These condensed consolidated interim financial statements include the accounts of the Company and its wholly owned subsidiaries Park Place Energy Corp. (“PPE Corp.”), Park Place Energy Bermuda (“PPE Bermuda”), BG Exploration EOOD (“BG Exploration”), PPE Turkey (up to date of deconsolidation April 7, 2026 – Note 3) and Trillion Energy International Petrol Arama (“Trillion A.S.”).

The Company’s oil and gas operations are conducted jointly with its joint venture partner (Note 6). The joint arrangement meets the definition of a joint operation under IFRS 11, “Joint Arrangements” (“IFRS 11”); therefore, the Company’s share of the assets, liabilities, revenues and expenses are recorded in the consolidated financial statements. All intercompany balances and transactions are eliminated on consolidation.

Name of the joint arrangement		Nature of the relationship with the joint arrangement		Principal place of operation of joint arrangement		Proportion of participating share
South Akcakoca Sub-Basin (“SASB”)		Operator		Turkey		49%
Cendere		Participant		Turkey		19.6%

(d) Functional and Presentation Currency

The condensed consolidated interim financial statements are expressed in U.S. dollars. The functional currency of BG Exploration is the Bulgarian Lev. The functional currency of the Company’s Turkish operations is the Turkish Lira (“₺”). The functional currency of the Company’s Bermuda subsidiary is the United States dollar (“USD”), and the function currency of PPE Corp is the USD.

8

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

2. Basis of Presentation and Material Accounting Policies (continued)

(e) Basis of Measurement

These condensed consolidated interim financial statements have been prepared on a historical cost basis except for certain derivative liabilities, which are measured at fair value.

(f) Hyperinflation

Due to various qualitative factors and developments with respect to the economic environment in Turkey, including but not limited to, the acceleration of multiple local inflation indices, the three-year cumulative inflation rate of the local Turkish wholesale price index exceeding 100% at the end of February 2022 and the significant devaluation of the Turkish Lira, Turkey has been designated a hyper-inflationary economy as of April 1, 2022 for accounting purposes.

Accordingly, IAS 29, Financial Reporting in Hyper-Inflationary Economies was adopted by the Company in its consolidated financial statements and applied to these consolidated financial statements in relation to PPE Turkey and Trillion A.S. The condensed consolidated interim financial statements are based on the historical cost approach in IAS 29.

The application of hyperinflation accounting requires restatement of PPE Turkey and Trillion A.S’s non-monetary assets and liabilities, equity and comprehensive income (loss) items from the original transaction date when they were first recognized into the current purchasing power which reflects a general price index current at the end of the reporting period. To measure the impact of inflation on its financial statements and results, the Company has elected to use the consumer price index (“CPI”) as published by the Turkish Statistical Institute “TURKSTAT”.

IAS 29 also requires the restatement of comparative periods for the effects of hyperinflation unless the comparatives were previously presented in a different presentation currency of a non-hyperinflationary economy. The condensed consolidated interim financial statements of the Company are presented in US dollars, a stable currency, and as a result the comparative amounts do not require restatement.

On April 1, 2022, the Company recognized an adjustment of $473,907 for the impact of hyperinflation within accumulated other comprehensive loss related to the non-monetary assets held by PPE Turkey, which have been restated from the historic date when they were first recognized to the beginning of the reporting period (the “Opening Hyperinflation Adjustment”). On initial adoption of IAS 29, there is an accounting policy choice to recognize the Opening Hyperinflation Adjustment directly to opening equity or to other comprehensive income and the Company has elected to recognize this amount directly to opening equity.

The value of the CPI at June 30, 2026, was 130 (December 31, 2025 - 110) and the movement in the CPI for the six months ended June 30, 2026 was 20 (2025 – 14), an increase of approximately 20% (2025 – 17%). During FY2026 Turkstat updated the basis year for their CPI calculation from 2003 to 2025, the CPI figures have been updated to represent this change. As a result of the change in CPI, the Company recognized a gain on net monetary position of $9,089 in continuing operations for the six months ended June 30, 2026 (2025 – $Nil) to restate transactions into a measuring unit current as of each period end. In addition, the Company recognized a loss on net monetary position of $88,653 in discontinued operations for the six months ended June 30, 2026 (2025 – gain of $7,142,605) to restate transactions into a measuring unit current as of each period end.

9

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

(g) New Material Accounting Policies

The accounting policies applied in these condensed consolidated interim financial statements are consistent with those applied and disclosed in the Company’s audited financial statements for the year ended December 31, 2025 except for the following not previously disclosed:

2. Basis of Presentation and Material Accounting Policies (continued)

Assets and liabilities held for sale and discontinued operations:

Assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is met when the sale is highly probable, the asset is available for immediate sale in its present condition and the sale is expected to be completed within one year from the date of classification.

Assets and disposal groups are classified and presented as discontinued operations if the assets or disposal groups are disposed of or classified as held for sale and:

●	The assets or disposal groups are a major line of business or geographical area of operations;
●	The assets or disposal groups are part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or,
●	The assets or disposal groups are a subsidiary acquired solely for the purpose of resale.

A component that is a separate major line of business or geographical area of operations and has been disposed of, closed, abandoned or terminated is also classified as a discontinued operation.

The assets or disposal groups that meet these criteria are measured at the lower of carrying amount and fair value less cost of disposal, with impairments recognized in the consolidated statements of income (loss) and comprehensive income (loss). An impairment loss is recognized for any initial or subsequent write-down of the asset or disposal group to fair value less cost to dispose. Non-current assets and liabilities held for sale are presented separately in current assets and liabilities within the consolidated statement of financial position. Assets held for sale are not depreciated, depleted or amortized. The comparative period consolidated statement of financial position is not re-presented.

The results of discontinued operations, net of tax, are shown separately in the consolidated statements of income (loss) and comprehensive income (loss) and comparative figures are re-presented.

Convertible debentures — modification and designation at fair value through profit or loss

During the six months ended June 30, 2026, the Company and the holders of its 12.0% convertible debentures agreed to amend the terms of the debentures pursuant to a fourth supplemental debenture indenture. The Company assessed the amendment under IFRS 9 and concluded that it resulted in terms substantially different from those of the original debentures. Accordingly, the original financial liability was derecognized and a new financial liability was recognized at its fair value on the date of modification, with the difference between the carrying amount of the original liability and the fair value of the new liability recognized in profit or loss as a gain on extinguishment.

The new financial liability is a hybrid instrument comprising a debt host and an embedded conversion feature that would otherwise require separation. As permitted under IFRS 9, the Company has irrevocably designated the entire instrument as at fair value through profit or loss on initial recognition, rather than separating the embedded derivative, as this eliminates the measurement inconsistency that would otherwise arise. The instrument is subsequently measured at fair value at each reporting date, with changes in fair value recognized in profit or loss, except for any change attributable to the Company’s own credit risk, which is recognized in other comprehensive income unless doing so would create or enlarge an accounting mismatch.

The fair value of the new instrument is determined using a probability-weighted expected present value technique and is classified within Level 3 of the fair value hierarchy, as the measurement relies on significant unobservable inputs, including the estimated probability of completing the related equity financing and the estimated recovery rate in the event the financing is not completed.

10

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

2. Basis of Presentation and Material Accounting Policies (continued)

Royalty receivable

On the sale of PPE Turkey (Note 3), the Company retained a 7% gross overriding royalty on future production revenues from the underlying licenses. The royalty represents a contractual right to receive cash from a third party and is accounted for as a financial asset under IFRS 9. Because the amount and timing of the cash flows vary with future production volumes, commodity prices and the purchaser’s continued operation or disposition of the licenses, the royalty does not give rise to cash flows that are solely payments of principal and interest. Accordingly, the royalty receivable is classified and subsequently measured at fair value through profit or loss.

The royalty receivable was recognized initially at its fair value of $164,115 on April 7, 2026 as part of the consideration received on the sale of PPE Turkey, and is remeasured at fair value at each reporting date, with changes in fair value recognized in profit or loss. Fair value is determined using a discounted cash flow technique incorporating management’s estimates of future production revenue from the SASB gas field and the Cendere oil field, the probability and timing of cumulative gross revenues following closing exceeding the $7.5 million royalty threshold, a risk-adjusted discount rate, and the amount of proved oil reserves for the properties. The measurement relies on significant unobservable inputs and is classified within Level 3 of the fair value hierarchy. The royalty receivable is presented within amounts receivable (Note 4).

3. Sale of Subsidiary and Discontinued Operations

On April 7, 2026, the Company, through a subsidiary, closed a sale agreement (the “SPA”) to sell all of the issued and outstanding shares of PPE Turkey, which holds the Company’s license interests in the SASB natural gas project and the Cendere oil field.

Under the terms of the SPA, the purchaser will assume the assets and liabilities associated with PPE Turkey. In connection with the transaction, the Company will retain a 7% gross overriding royalty on future production revenues from the underlying licenses. The royalty becomes payable once cumulative gross revenues from the licenses following closing exceed $7.5 million and may also be realized upon any future disposition of the licenses by the purchaser.

From the date of closing, the Company does not hold any shareholding, voting rights, board representation or management role in PPE Turkey, and the Company has no power to direct or control the activities of PPE Turkey. All directors and officers of PPE Turkey affiliated with the Company resigned effective on or before the closing date.

The Company’s continuing involvement with PPE Turkey following the disposal is limited to the following:

(a) Gross overriding royalty. The Company retained a 7% gross overriding royalty on production revenue from the SASB gas field and the Cendere oil field, together with related audit and information rights, including the receipt of monthly cumulative production revenue statements.

11

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

3. Sale of Subsidiary and Discontinued Operations (continued)

(b) Transition services agreement. Effective April 7, 2026, the Company entered into an agreement (the “Transition Agreement”) with the purchaser under which the purchaser is responsible for the post-closing transition of PPE Turkey, including retaining Turkish legal counsel, notifying the General Directorate of Mining and Petroleum Affairs of the Republic of Türkiye (“MAPEG”) of the change in ownership of PPE Turkey, completing the regulatory steps required for PPE Turkey’s continued operation of its petroleum licences, and maintaining professional working relationships with the Turkish Petroleum Corporation (“TPAO”), MAPEG and other Turkish governmental authorities. The purchaser has agreed not to act in a manner adverse to the business, operations or regulatory standing of the Company or its subsidiaries operating in Türkiye, and the purchaser’s liability under the Transition Agreement is uncapped.

In consideration, the Company agreed to pay (i) a service fee of CAD $25,000, which was earned upon execution of the agreement and is non-refundable, and (ii) CAD $25,000 on account of anticipated legal fees in connection with the regulatory filings described above, with the purchaser responsible for funding all legal fees and related costs incurred. The agreement has a term of six months from the effective date and may be terminated by the Company for convenience on 30 days’ written notice.

(c) Transition assistance. Under the SPA and the Transition Agreement, the Company will provide reasonable commercial assistance with licence-transfer requirements, including joint applications to MAPEG and/or TPAO as required, and, during the six-month transition period, limited handover support on a question-and-answer basis, including referrals of PPE Turkey’s counterparties, creditors and contacts to PPE Turkey’s new management, the provision of certain historical information and presentations, and the provision of information relevant to existing PPE Turkey litigation. No additional consideration is receivable or payable by the Company in respect of this assistance.

		$
Total consideration received
Cash			1
Royalty receivable			164,115
			164,116
Carrying value of net assets sold
Cash and cash equivalents			48,404
Amounts receivable			66,419
Long-term deposits			756,634
Prepaid expenses and deposits			66,859
Oil and gas properties, net			759,188
Property and equipment, net			408,488
Intercompany balances receivable			243,544
Loans payable			(1,295,852	)
Accounts payable and accrued liabilities			(17,085,282	)
Asset retirement obligation			(6,381,048	)
			(22,412,646	)
Excess of net liabilities over consideration			(22,248,530	)
Cumulative translation adjustment reclassified to profit and loss			21,725,420
Gain on sale of subsidiary			523,110

12

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

3. Sale of Subsidiary and Discontinued Operations (continued)

The following table summarizes the major line items for PPE Turkey that are included in loss (income) from discontinued operations, in the consolidated statements income (loss) and comprehensive income (loss):

		Three months ended								Six months ended
		June 30, 2026				June 30, 2025				June 30, 2026				June 30, 2025
		$				$				$				$
Revenue
Oil and gas revenue, net			-				636,530				609,245				1,575,466
Cost and expenses
Production			-				731,235				453,142				1,322,803
Depletion			-				13,997				4,647				113,494
Depreciation			-				19,956				7,638				33,723
Accretion of asset retirement obligation			-				66,974				68,465				131,780
Geological and geophysical expenses			-				3,498				-				30,819
General and administrative			34,128				493,189				405,027				858,745
Total expenses			34,128				1,328,849				938,919				2,491,364
Loss before other income (expenses)			(34,128	)			(692,319	)			(329,674	)			(915,898	)
Other income (expenses)
Interest expense			-				(37,914	)			-				(134,280	)
Finance cost			-				(5,214	)			(192,818	)			(9,246	)
Foreign exchange loss			(38,215	)			(542,727	)			(717,733	)			(1,545,694	)
Gain on revaluation for assets held for sale			-				18,518				-				44,950
Gain (loss) on net monetary position			364				2,504,987				(88,653	)			7,142,605
Change in estimate of asset retirement obligation			-				-				80,467				-
Gain on modification of lease			-				31,363				-				31,363
Gain on disposal of property plant and equipment			-				61,676				-				61,676
Gain on sale of subsidiary			523,110				-				523,110				-
Total other income (expenses)			485,259				2,030,689				(395,627	)			5,591,374
Deferred tax expense			-				(1,161,339	)			-				(1,299,167	)
Income (Loss) from discontinued operations			451,131				177,031				(725,301	)			3,376,309

The following represents the cash flows from operating, investing and financing activities of discontinued operations for the six months ended June 30, 2026 and 2025.

		June 30, 2026				June 30, 2025
			$				$
Net cash provided by operating activities			280,476				845,341
Net cash used in investing activities			(76,163	)			(385,429	)
Net cash used in financing activities			-				(997,601	)

13

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

4. Amounts Receivable

		June 30, 2026				December 31, 2025
			$				$
Accounts receivable			–				711,984
GST receivable			53,816				20,610
Royalty receivable (Note 3)			159,076				–
Other			5,013				5,159
			217,905				737,753

5. Prepaid Expenses and Deposits

		June 30, 2026				December 31, 2025
			$				$
Exploration and production advances			–				39,924
Prepaid expenses			16,051				6,985
Close-Out Fund			–				756,634
			16,051				803,543
Prepaid expenses and deposits – Current			16,051				46,909
Long-term deposits			–				756,634

14

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

6. Oil and Gas Properties

		SASB				Cendere				Total
			$				$				$
Cost
As at December 31, 2024			69,851,749				3,218,873				73,070,622
Additions			721,672				–				721,672
Sale of O&G assets			(38,273	)			–				(38,273	)
JV Contribution			(379,450	)			–				(379,450	)
Change in ARO estimate and additions			239,061				1,728				240,789
Currency translation adjustment			(12,361,503	)			(567,487	)			(12,928,990	)
Impact of hyperinflation			17,841,448				819,360				18,660,808
As at December 31, 2025			75,874,704				3,472,474				79,347,178
Change in ARO estimate and additions			–				(376	)			(376	)
Currency translation adjustment			(2,852,516	)			(130,540	)			(2,983,056	)
Impact of hyperinflation			7,352,625				336,499				7,689,124
Transfer to assets held for sale			(80,374,813	)			(3,678,057	)			(84,052,870	)
As at June 30, 2026			–				–				–
Accumulated depletion and impairment
As at December 31, 2024			19,727,803				2,519,635				22,247,438
Depletion			105,227				34,323				139,550
Impairment			54,498,394				–				54,498,394
Currency translation adjustment			(3,476,986	)			(444,076	)			(3,921,062	)
Impact of hyperinflation			5,020,266				641,189				5,661,455
As at December 31, 2025			75,874,704				2,751,071				78,625,775
Depletion			–				4,647				4,647
Currency translation adjustment			(2,852,516	)			(103,440	)			(2,955,956	)
Impact of hyperinflation			7,352,625				266,592				7,619,217
Transfer to assets held for sale			(80,374,813	)			(2,918,870	)			(83,293,683	)
As at June 30, 2026			–				–				–
Net book value
As at December 31, 2025			–				721,403				721,403
As at June 30, 2026			–				–				–

15

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

7. Property and Equipment

		Right-of-use assets				Leasehold improvements				Other Equipment				Motor Vehicles				Furniture				Total
			$				$				$				$				$				$
Cost
As at December 31, 2024			194,642				246,028				435,035				439,832				92,814				1,408,351
Additions			–				12,401				–				–				275				12,676
Disposals			(228,480	)			–				–				(516,297	)			–				(744,777	)
Currency translation adjustment			(4,298	)			(39,411	)			(76,814	)			(35,462	)			(13,606	)			(169,591	)
Impact of hyperinflation			50,920				55,746				110,910				111,927				19,344				348,847
As at December 31, 2025			12,784				274,764				469,131				–				98,827				855,506
Currency translation adjustment			–				(9,888	)			(17,670	)			–				(3,416	)			(30,974	)
Impact of hyperinflation			–				23,752				45,539				–				7,966				77,257
Transfer to assets held for sale			(12,784	)			(260,442	)			(497,000	)			–				(87,082	)			(857,308	)
As at June 30, 2026			–				28,186				–				–				16,295				44,481
Accumulated depreciation
As at December 31, 2024			97,746				184,611				149,280				202,263				32,768				666,668
Depreciation			15,216				10,947				21,382				8,860				8,384				64,789
Disposals			(107,824	)			-				-				(226,946	)			-				(334,770	)
Currency translation adjustment			(17,228	)			(30,495	)			(26,309	)			(35,648	)			(5,556	)			(115,236	)
Impact of hyperinflation			24,874				43,562				37,988				51,471				6,229				164,124
As at December 31, 2025			12,784				208,625				182,341				–				41,825				445,575
Depreciation			–				4,244				4,727				–				2,793				11,764
Currency translation adjustment			–				(7,863	)			(6,855	)			–				(1,021	)			(15,739	)
Impact of hyperinflation			–				18,472				17,670				–				3,049				39,191
Transfer to assets held for sale			(12,784	)			(203,678	)			(197,883	)			–				(34,477	)			(448,822	)
As at June 30, 2026			–				19,800				–				–				12,169				31,969
Net Book Value
As at December 31, 2025			–				66,139				286,790				–				57,002				409,931
As at June 30, 2026			–				8,386				–				–				4,126				12,512

8. Exploration and Evaluation Assets

			$
As at December 31, 2025			-
Additions			521,840
Currency translation adjustment			(22,958	)
Impact of hyperinflation			8,960
As at June 30, 2026			507,842

16

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

8. Exploration and Evaluation Assets (continued)

Turkey – M47 Block

During the six months ended June 30, 2026, the Company, through a wholly owned subsidiary, entered into an agreement to earn a 29% working interest in the M47 Block located in southeast Turkey in exchange for a total investment of $15,000,000. The earn-in is conditional on the Company funding certain work program costs as they fall due. The work program comprises exploration drilling and the acquisition of seismic data.

Under the earn-in, the Company is required to bear 80% of the cost of the next two exploration wells and certain seismic costs, and to advance two funding tranches of $9,500,000 in respect of the 2026 work program and $5,500,000 in respect of the 2027 work program. The Company’s entitlement to the 29% working interest is conditional on it meeting these funding commitments (Note 22).

Exploration and evaluation assets are not subject to depletion and are assessed for impairment when facts and circumstances suggest that the carrying amount may exceed the recoverable amount. As at June 30, 2026, no such indicators were identified and no impairment was recognized.

9. Accounts Payable and Accrued Liabilities

		June 30, 2026				December 31, 2025
			$				$
Accounts payable			963,701				16,310,709
Accrued liabilities			404,458				2,371,047
Payroll, withholding and sales tax liabilities			446				110,726
			1,368,605				18,792,482

10. Loans Payable

		June 30, 2026				December 31, 2025
			$				$
Unsecured, interest-bearing loan at 6% per annum2			34,162				34,415
Unsecured, interest-bearing loan at 1% per month1			3,621,000				3,461,250
Unsecured, interest-bearing loan at 12% per annum3			168,411				147,391
Unsecured, interest-bearing loan at a variable interest rate4			–				1,329,003
Total loans payable			3,823,573				4,972,059
Current portion of loans payable			(3,823,573	)			(4,972,059	)
Long-term portion of loans payable			–				–

17

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

10. Loans Payable (continued)

The Company is in compliance with all debt covenants on loans payable, other than as noted below, and has not received any waivers from lenders:

	(1)	On July 1, 2023, the Company entered into agreements with TR1 Master Fund to borrow $1,065,000 and $1,597,500. The loans were issued with a $65,000 and $97,500 discount, respectively, and bear an interest rate of 1% per month. The maturity date was December 31, 2023, and the Company is claiming that the principal of TR1 Master Fund agreed to extend the loans to December 31, 2024. In the event that the loan is repaid in full prior to the maturity date, the minimum interest payments on the loans are $40,000 and $60,000, respectively. If, during the period that any amount of the loan remains outstanding, the Company issues any equity, the Lender may demand repayment of all or part of the principal amount of the loan in an amount equal to the aggregate subscription price of the equity offering. Accrued interest in excess of the minimum interest payments of $63,900 and $95,850, respectively, were recorded during the six months ended June 30, 2026 (June 30, 2025 - $63,900 and $95,850, respectively). The Company is currently in default on these loans, however, the Company has filed claims in connection with the ongoing receivership proceedings of the lender and related entities, and is seeking to offset any amounts outstanding against damages claimed by the Company (Note 22).
	(2)	On July 20, 2023, the Company entered into a promissory note for CAD$300,000 (USD$228,023) with a company controlled by a related party. The promissory note bears an interest rate of 6% per annum. The principal plus all accrued unpaid interest is to be repaid on demand but no later than December 31, 2024, as a result the Company is currently in default on this loan. During the year ended December 31, 2025, CAD$8,000 (USD$5,536) of the principal balance was repaid and CAD$2,693 (USD$1,965) in interest was accrued. During the six months ended June 30, 2026, $Nil of the principal balance was repaid and CAD$1,394 (USD$981) in interest was accrued (June 30, 2025 - CAD$8,000 (USD$5,536) of the principal balance was repaid and CAD$1,317 (USD$965) in interest was accrued).
	(3)	On December 27, 2024, the Company entered into a loan agreement with an officer of the Company for CAD$200,000 (USD$138,782). The loan bears interest at 12% per annum and is due on demand. As at December 31, 2025, the loan accrued interest of CAD$2,031 (USD$1,617). During the six months ended June 30, 2026, the loan accrued interest of CAD$13,766 (USD$9,823) (June 30, 2025 - CAD$994 (USD$699)). The Company is not in default on this loan.
	(4)	On July 17, 2025, PPE Turkey drew down ₺50,000,000 (or approximately USD$1,202,380) from their overdraft facility with Ziraat Bankasi. This balance bears interest at a variable rate based on the banks effective interest rate (approximately 31%) payable at the end of each quarter. As at and for the year ended December 31, 2025, the loan accrued interest expense of $164,588. During the six months ended June 30, 2026, the loan accrued interest of $173,797 (June 30, 2025 - $Nil). The total amount payable was derecognized on the sale of the subsidiary during the six months ended June 30, 2026. The Company is not in default on this loan.

11. Convertible Debentures

On April 20, 2023, the Company entered into an agreement to issue 15,000 units of the Company (the “Units”) at a price of CAD$1,000 per unit, for gross proceeds of CAD$15,000,000 (USD$11,135,145). Each Unit will consist of CAD$1,000 (approximately USD$742) principal amount secured convertible debenture (“Debenture”) and 333 common share purchase warrants of the Company (the “Warrants”). Each Warrant will be exercisable for one common share of the Company at an exercise price of CAD$2.50 (approximately USD$1.86 at initial recognition) and shall have an expiry date of June 29, 2025.

18

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

11. Convertible debentures (continued)

The Debentures matured on April 30, 2025 (the “Maturity Date”) and accrued interest at the rate of 12% per annum, payable semi-annually. The Company had the ability to redeem the Debentures at any time between the dates of April 30, 2024 and April 30, 2025 at a redemption price of 105% of the principal amount plus any accrued interest. At the holders’ option, the Debentures may be converted into common shares of the Company at any time, up to the earlier of the Maturity Date and the redemption of the Debentures, at a conversion price of CAD$3.00 (approximately USD$2.23 at initial recognition) per common share.

The convertible debentures were determined to be a financial instrument comprising a host debt component, a conversion feature classified as equity, and freestanding warrants classified as equity. The warrants and conversion features were determined to be equity components because the exercise prices are denominated in the functional currency of the Company. Thus, these components meet the criterion of an equity instrument.

During the year ended December 31, 2025, the Company signed a second and third supplemental debenture indenture with the debenture holders to make the following modifications to the original debenture:

Second Supplemental Debenture

	●	The semi-annual interest due as at April 30, 2025 will be payable in either cash or common shares of the Company;
	●	The convertible debentures’ maturity date was extended from April 30, 2025 to July 31, 2025; and
	●	The debenture holders received an extension fee in the aggregate amount of CAD$85,000 payable in common shares as compensation for the above modifications.

Third Supplemental Debenture

● The convertible debentures’ maturity date was extended from July 31, 2025 to October 31, 2025.

These modifications were accounted for as an adjustment to the existing liability as the discounted present value of the cash-flows under the new terms did not exceed the quantitative threshold to be considered a substantial modification.

Fourth Supplemental Indenture

On March 20, 2026, the Company entered into a fourth supplemental debenture indenture (the “Fourth Supplemental Indenture”) related to the Company’s unsecured convertible debentures issued on April 20, 2023, bearing interest at 12% per annum.

The total amount owing under the convertible debentures will be comprised of the principal of CAD15.0 million and accrued interest to March 20, 2026 (the “Amount Due”). Pursuant to the Fourth Supplemental Indenture, and conditional upon the Company completing an equity financing of not less than CAD10.0 million on or before September 30, 2026, the following settlement terms will apply:

	(1)	approximately CAD11.0 million of the Amount Due will be converted into common shares of the Company at the same price as the equity financing; and,
	(2)	the remaining balance including accrued interest will be forgiven by the debenture holders.

If the Company does not complete the required financing by September 30, 2026, the Fourth Supplemental Indenture will terminate and the full Amount Due will remain payable in accordance with the original terms of the debentures.

The Company concluded that the amendment substantially modifies the terms of the debentures and accounted for it as an extinguishment of the original financial liability and recognition of a new financial liability. The new financial liability is a hybrid instrument containing an embedded contingent equity conversion feature. Rather than separate the embedded derivative, the Company has designated the entire instrument to be measured at fair value through profit and loss.

19

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

11. Convertible debentures (continued)

A continuity schedule of the Company’s convertible debt measured at amortized cost is as follows:

Balance as at December 31, 2024		$	10,364,993
Repayment through the issuance of shares			(649,851	)
Extension fee			(61,379	)
Gain on modification			(503,624	)
Accretion			858,838
Interest			1,288,067
Currency translation adjustment			526,771
Balance as at December 31, 2025		$	11,823,815
Interest			284,015
Currency translation adjustment			(7,760	)
Extinguishment of convertible debt			(12,100,070	)
Balance as at June 30, 2026		$	-

A continuity schedule of the Company’s convertible debt measured at fair value through profit or loss is as follows:

Balance as at December 31, 2025		$	-
Recognition at fair value			4,172,157
Fair value loss on remeasurement			212,435
Currency translation adjustment			(153,431	)
Balance as at June 30, 2026		$	4,231,161
Current		$	4,231,161
Long-term		$	–

The Company recorded a gain on extinguishment of $7,927,913 upon derecognition of the previous financial liability and recognition of the new financial liability under the modified terms of the Fourth Supplemental Indenture.

Fair value measurement

The new financial liability recognized on extinguishment is measured at fair value through profit or loss on a recurring basis and is classified within Level 3 of the fair value hierarchy, as its measurement relies on significant unobservable inputs. The fair value was determined using a probability-weighted expected present value technique that considers the two mutually exclusive outcomes contemplated by the Fourth Supplemental Indenture: completion of the equity financing, in which approximately CAD$11.0 million of the Amount Due converts into common shares at the financing price and the remaining balance is forgiven; and non-completion of the financing, in which the full Amount Due is reinstated and recovery is estimated on a distressed basis.

20

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

11. Convertible debentures (continued)

The significant unobservable inputs used in the fair value measurement as at March 20, 2026 (initial recognition) and June 30, 2026 were as follows:

Unobservable input		Input used		Relationship to fair value
Probability of completing the equity financing		50%		An increase raises fair value toward the value of shares issuable on conversion
Estimated recovery rate if the financing is not completed		9%		An increase raises the fair value of the liability in the non-completion scenario
Credit-adjusted discount rate		18%		An increase decreases fair value
Expected term to resolution		September 30, 2026		A longer term decreases fair value

The fair value measurement is most sensitive to the estimated probability of completing the equity financing and the estimated recovery rate in the event the financing is not completed. Holding all other inputs constant, an increase or decrease of 10% in the probability of completing the financing would change the fair value of the liability, and correspondingly change the gain recognized in profit or loss, by approximately $907,800. A change of 5% in the estimated recovery rate would change the fair value of the liability by approximately $410,200.

There were no transfers into or out of Level 3 during the period. The change in the fair value of the liability during the period is presented in the continuity schedule above.

12. Asset Retirement Obligation

The following is a continuity of asset retirement obligations:

		June 30, 2026				December 31, 2025
			$				$
Beginning balance			6,412,057				5,895,209
Accretion expense			68,465				269,386
Impact of hyperinflation			–				(133,603	)
Currency translation adjustment			(17,208	)			140,276
Change in estimate			(82,266	)			240,789
Transfer to liabilities held for sale (Note 3)			(6,381,048	)			–
Ending balance			–				6,412,057

The Company’s asset retirement obligations (“ARO”) result from its interest in oil and gas assets including well sites. The total ARO is estimated based on the Company’s net ownership interest in all sites, estimated costs to reclaim and abandon these wells and the estimated timing of the costs to be included in future years. The Company estimated the total undiscounted amount required to settle the ARO as at April 7, 2026 is $8 million (December 31, 2025 – $8 million). The ARO is calculated using an inflation rate of 2.5% (December 31, 2025 – 2.5%) and discounted using a risk-free rate of 4.58% (December 31, 2025 – 4.49%) between 10 and 20 years.

21

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

12. Asset Retirement Obligation (continued)

During 2023, the Company and TPAO agreed to establish a close out-fund (the “Close-Out Fund”) in a US dollar bank account. The amounts accumulated in the Close-Out Fund will not be used for any purpose other than to cover the cost of close-out of the SASB project. The US dollar bank account is held by TPAO. Starting with the July 2023 natural gas revenue, each party agreed to transfer 10% of its revenue into the Close-Out Fund on a monthly basis, until an amount agreed to by both parties is attained. The Company accounted for its share in the Close-Out Fund as a long-term deposit. The Company’s share of the Close-Out Fund amounted to $756,634 (December 31, 2025 – $756,634). The $756,634 deposit was reclassified to assets held for sale (Note 3).

13. Common Stock

The Company has an unlimited number of common shares authorized with no par value. As at June 30, 2026, 58,796,826 common shares were issued and outstanding (December 31, 2025 – 41,624,407).

For the six months ended June 30, 2026

During the six months ended June 30, 2026, the Company issued 10,012,668 units at CAD$0.15 for gross proceeds of CAD$1,501,943 (USD$1,196,227) pursuant to the closing of non-brokered private placements. Each unit comprises one common share and one half share purchase warrant. Each warrant entitles the holder to purchase one common share for CAD$0.25 for one year from the date of the closing of the offering. As the fair value of the common shares on the same date exceeded the issuance price, no residual value was assigned to the warrants. Cash finder’s fee of CAD$53,520 (USD$37,644) were paid and 286,134 finder’s warrants were issued with a fair value of $23,989. The finders warrants are exercisable into one common share at CAD$0.25 for one year from the closing of the offering.

During the six months ended June 30, 2026, the Company issued 6,996,943 units with a fair value of $754,452 to settle debt of $758,147 and recognized a gain on the settlement of $3,695. Each unit comprises one common share and one half share purchase warrant. Each warrant entitles the holder to purchase one common share for CAD$0.25 for one year from the date of the debt settlement.

During the six months ended June 30, 2026 , the Company issued 162,808 units with a fair value of $17,555 for services rendered. Each unit comprises one common share and one half share purchase warrant. Each warrant entitles the holder to purchase one common share for CAD$0.25 for one year from the date of the debt settlement.

For the six months ended June 30, 2025

During the six months ended June 30, 2025, the Company issued 1,031,232 shares with a fair value of $140,301 to settle debt of $150,522 and recognized a gain on the settlement of $10,221.

During the six months ended June 30, 2025, the Company issued 466,483 shares valued at $73,857 for services rendered and to settle $6,000 in obligation to issue shares. The Company recognized a gain on the settlement of $2,045.

During the six months ended June 30, 2025, the Company issued 5,454,181 shares valued at $689,236 to settle interest payable of $649,851 on convertible debentures and recognized a loss on the settlement of $39,385.

During the six months ended June 30, 2025, the Company issued 515,151 shares valued at $65,099 to settle an extension fee of CAD$85,000 (USD$61,379) related to the extension of the maturity date of the convertible debenture from April 30, 2025 to July 31, 2025. The Company recognized a loss on the settlement of $3,720.

22

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

14. Stock Options

The Board of Directors adopted the Dune Oil Corp. 2022 Long-Term Incentive Equity Plan (the “2022 Plan”) effective as of December 1, 2022. The 2022 Plan permits grants of stock options and restricted stock awards and other stock-based awards.

Under the 2022 Plan, the maximum number of shares of authorized stock that may be delivered is 10% of the total number of shares of common stock issued and outstanding of the Company as determined on the applicable date of grant of an award under the 2022 Plan. Under the 2022 Plan, the exercise price of each option shall be determined by the Board of Directors, subject to any applicable Exchange approval or rules, at the time any option or other stock-based award is granted. In no event shall such exercise price be lower than the exercise price permitted by the Exchange. The vesting schedule for each option or other stock-based award shall be specified by the Board of Directors at the time of grant, subject to any applicable Exchange approval or rules.

A continuity of the Company’s outstanding stock options for the six months ended June 30, 2026 and the year ended December 31, 2025 is presented below:

		Number of options				Weighted average exercise price (CAD)
							$
Outstanding and Exercisable, December 31, 2024			2,402,800				1.05
Expired			(62,800	)			8.61
Cancelled			(40,000	)			1.00
Outstanding and Exercisable, December 31, 2025			2,300,000				0.85
Expired			(10,000	)			9.50
Outstanding and Exercisable, June 30, 2026			2,290,000				0.81

At June 30, 2026 the Company had the following outstanding stock options:

Outstanding				Exercise Price				Expiry Date				Vested
	40,000				1.50 CAD				January 2, 2027				40,000
	50,000				1.00 CAD				February 15, 2027				50,000
	100,000				1.25 CAD				February 28, 2027				100,000
	490,000				1.00 CAD				March 8, 2027				490,000
	1,610,000				0.70 CAD				August 12, 2029				1,610,000
	2,290,000												2,290,000

As at June 30, 2026, the weighted average remaining contractual life of outstanding stock options is 2.39 years (December 31, 2025 – 2.84 years).

23

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

15. Warrants

A continuity of the Company’s outstanding share purchase warrants for the six months ended June 30, 2026 and the year ended December 31, 2025 is presented below:

		Number of warrants				Weighted average exercise price (CAD)
							$
Outstanding, December 31, 2024			10,003,454				3.93
Expired			(3,046,340	)			10.89
Outstanding, December 31, 2025			6,957,114				0.89
Issued			8,872,350				0.25
Expired			(196,522	)			0.45
Outstanding, June 30, 2026			15,632,942				0.53

At June 30, 2026, the Company had the following outstanding share purchase warrants:

Outstanding				Exercise Price				Expiry Date
	2,646,475				0.90 CAD			(1)May 28, 2027
	1,228,445				0.90 CAD			(1)May 31, 2027
	306,496				0.90 CAD			(1)June 10, 2027
	452,556				0.90 CAD			(1)June 19, 2027
	1,694,520				0.90 CAD			(2)June 28, 2027
	400,000				0.90 CAD			(2)July 3, 2027
	30,000				0.90 CAD			(2)July 5, 2027
	2,100				0.45 CAD			July 5, 2026
	1,000,000				0.25 CAD			April 27, 2027
	2,600,773				0.25 CAD			May 20, 2027
	330,500				0.25 CAD			May 29, 2027
	4,941,077				0.25 CAD			June 5, 2027
	15,632,942

As at June 30, 2026, the weighted average remaining contractual life of outstanding warrants is 1.17 years (December 31, 2025 – 0.44 years).

⁽¹⁾ On May 21, 2026, the Company extended the expiry date by one year from the original expiry date.

⁽²⁾ On June 8, 2026, the Company extended the expiry date by one year from the original expiry date.

24

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

16. Restricted Stock Units

During the six months ended June 30, 2026 and 2025, the Company granted RSUs as follows:

	●	On January 1, 2026, the Company granted 67,200 RSU’s which vest quarterly beginning January 1, 2026.
	●	On January 1, 2025, the Company granted 67,200 RSU’s which vest quarterly beginning January 1, 2025.

For the six months ended June 30, 2026, the Company recognized $4,466 (2025 – $16,959) in stock-based compensation expense for RSUs granted and vested.

		Number of unvested restricted stock units				Weighted average fair value per award
							$
Balance, December 31, 2024			207,700				0.15
Granted			67,200				0.09
Balance, December 31, 2025			274,900				0.14
Granted			67,200				0.10
Balance, June 30, 2026			342,100				0.13

As at June 30, 2026, the Company had 342,100 RSU’s (December 31, 2025 – 274,900) outstanding.

17. Related Party Transactions

At June 30, 2026 accounts payable and accrued liabilities included $808,294 (December 31, 2025 – $1,121,180) due to related parties. The amounts are unsecured, non-interest bearing and due on demand.

During the six months ended June 30, 2026, management fees and salaries of $140,392 (2025 – $88,431), director fees of $43,200 (2025 – $30,600), consulting fees of $354,430 (2025 – $63,060), and stock-based compensation of $4,466 (2025 – $4,034) were incurred to related parties.

During the six months ended June 30, 2026, the Company issued Nil shares (2025 – 43,200) to directors for services performed.

During the six months ended June 30, 2026, the Company issued 162,808 shares (2025 – 198,682) to officers for services performed.

As at June 30, 2026, loans payable included CAD$287,994 (USD$203,573) (December 31, 2025 – CAD$248,189 (USD$181,806)) due to related parties. The loans payable are unsecured, bears interest ranging from 6% - 12% per annum and have maturity dates ranging from December 31, 2024 to December 27, 2026.

As at June 30, 2026 $43,541 (December 31, 2025 – $24,000) in shares were owed to an officer of the Company.

25

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

18. General and Administrative

		For the six months ended
		June 30, 2026				June 30, 2025
			$				$
Salaries, consulting and compensation			789,600				497,965
Professional fees			262,831				185,003
Investor relations			113,198				9,250
Office			128,324				64,154
Advertising			43,680				44,967
Filing and transfer fees			54,116				16,874
Travel			21,686				21,825
Bank charges and other			3,845				3,246
			1,417,280				843,284

19. Segmented Information

During the six months ended June 30, 2026 and 2025, the Company’s operations were in the resource industry in Turkey with head offices in Canada and a satellite office in Sofia, Bulgaria.

		Canada				Turkey				Bulgaria				Total
			$				$				$				$
Six months ended June 30, 2026
Finance cost			(470,415	)			–				–				(470,415	)
Depreciation			(4,126	)			–				–				(4,126	)
Stock-based compensation			(4,466	)			–				–				(4,466	)
Gain on debt settlement			3,695				–				–				3,695
Gain on net monetary position			–				9,089				–				9,089
Gain on debt extinguishment			7,927,913				–				–				7,927,913
Fair value loss on remeasurement of convertible debenture			(212,435	)			–				–				(212,435	)
Net loss from discontinued operations			–				(725,301	)			–				(725,301	)
Net income (loss) from continuing operations			5,724,143				(48,488	)			–				5,675,655
As at June 30, 2026
Non-current assets			12,512				507,842				–				520,354

		Canada				Turkey				Bulgaria				Total
			$				$				$				$
Six months ended June 30, 2025
Finance cost			(1,301,045	)			–				–				(1,301,045	)
Depreciation			(4,034	)			–				–				(4,034	)
Stock-based compensation			(16,959	)			–				–				(16,959	)
Gain on debt settlement			230,880				–				–				230,880
Net income from discontinued operations			–				3,376,309				–				3,376,309
Net loss from continuing operations			(1,739,740	)			–				–				(1,739,740	)
As at December 31, 2025
Non-current assets			17,125				1,870,843				–				1,887,968

26

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

20. Capital Management

The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going concern to support its business plan, as well as to ensure that the Company is able to meet its financial obligations as they become due. The Company considers its capital for this purpose to be its stockholders’ equity. As at June 30, 2026, the Company is in a stockholders’ deficiency position of $8,345,371 (December 31, 2025 – stockholders’ deficiency position of $38,897,470).

The basis for the Company’s capital structure is dependent on the Company’s expected business growth and changes in business environment. To maintain or adjust the capital structure, the Company may issue new shares through private placement, incur debt or return capital to members.

The Company is dependent upon external financings to fund activities. In order to carry future projects and pay administrative costs, the Company will utilize its existing working capital and raise additional funds as needed. Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. The Company is not subject to externally imposed capital requirements.

21. Financial Instruments and Risk Management

The Company is exposed, through its operations, to the following financial risks:

a)	Market risk
b)	Credit risk
c)	Liquidity risk

The Company is exposed to risks that arise from its use of financial instruments. This note describes the Company’s objectives, policies, and processes for managing those risks and the methods used to measure them. Further quantitative information in respect of these risks is presented throughout these condensed consolidated interim financial statements.

There have been no substantive changes in the Company’s exposure to financial instrument risks, its objectives, polices and processes for managing those risks or the methods used to measure them from previous reported periods unless otherwise stated in the note. The overall objective of management is to set policies that seek to reduce risk as far as possible without unduly affecting the Company’s competitiveness and flexibility. Further details regarding these policies are set out below.

a) Market risk

Market risk is the risk of loss that may arise from changes in market factors such as foreign currency exchange, interest rates and equity price risk.

Foreign currency risk:

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company and its subsidiaries are exposed to currency risk as it has transactions denominated in currencies that are different from their functional currencies. The Company does not hedge its exposure to fluctuations in foreign exchange rates.

27

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

21. Financial Instruments and Risk Management (continued)

As at June 30, 2026 and December 31, 2025, significant foreign exchange currency exposure on its financial instruments, expressed in USD was as follows:

		June 30, 2026				December 31, 2025
			$				$
Cash and cash equivalents			316,018				396,859
Accounts receivable			–				21,558
Accounts payable			(349,097	)			(5,211,836	)
Loans payable			(3,621,000	)			(3,461,250	)
Total			(3,654,079	)			(8,254,669	)

If the CAD strengthened or weakened against the USD by 10% the exchange rate fluctuation would impact net loss from continuing operations by $366,618 at June 30, 2026. If the Turkish Lira strengthened or weakened against the USD by 10% the exchange rate fluctuation would impact net loss from continuing operations by $1,210, at June 30, 2026.

Interest rate risk:

Interest rate risk is the risk that future cash flows will fluctuate because of changes in market interest rates. The interest earned on cash is insignificant and the Company does not rely on interest income to fund its operations. The Company does not have significant debt facilities with variable interest rates and is therefore not exposed to interest rate risk.

Other price risk:

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company does not hold equity investments in other entities and therefore is not exposed to a significant risk.

b) Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.

The Company is subject to credit risk on its cash and cash equivalents and amounts receivable which consists primarily of trade receivables and notes and amounts receivable for equity issued. The Company limits its exposure to credit loss on cash and cash equivalents by placing its cash with a high-quality financial institution. Exposure to credit loss notes and amounts receivable for equity issued is limited by entering into these types of transactions with related parties and entities that are well known to the Company.

The Company only has two customers. The Company mitigates credit risk by evaluating the creditworthiness of customers prior to conducting business with them and monitoring its exposure for credit losses with existing customers. One of the customers is the largest oil refinery in Turkey. The other customer provides letters of credit to be used by the Company in the event of default. As at June 30, 2026 all of the Company’s trade receivables are current (< 30 days outstanding).

The Company’s maximum credit exposure is $487,747 (December 31, 2025 – $1,147,456).

28

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

21. Financial Instruments and Risk Management (continued)

c) Liquidity risk

Liquidity risk arises from the Company’s general and capital financing needs. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial assets and liabilities, when feasible. The Company anticipates increases in revenue in future periods resulting from the completion of an additional well subsequent to the period end. Historically, the Company’s sources of funding has been through equity and debt financings. The Company’s access to financing is uncertain. There can be no assurance of continued access to significant debt or equity funding.

The table below summarizes the maturity profile of the Company’s undiscounted contractual cashflows:

As at June 30, 2026

Less than 1 year

1 – 2 years

Later than 2 years

Total

Accounts payable and accrued liabilities

1,368,605

–

–

1,368,605

Loans payable

3,823,573

–

–

3,823,573

Convertible debt

12,027,799

–

–

12,027,799

17,219,977

–

–

17,219,977

As at December 31, 2025

Less than 1 year

1 – 2 years

Later than 2 years

Total

Accounts payable and accrued liabilities

18,792,482

–

–

18,792,482

Loans payable

4,972,059

–

–

4,972,059

Convertible debt

11,823,815

–

–

11,823,815

35,588,356

–

–

35,588,356

22. Commitments and Contingencies

TR1 Master Fund loans

The Company has filed claims in connection with ongoing receivership proceedings against certain Traynor Ridge Capital entities (Note 10), alleging that improper and unlawful trading activities in the Company’s securities caused a significant decline in its share price and resulted in substantial financial losses, including impairment of a planned equity financing. The Company is seeking damages of up to $25 million per respondent on a joint and several basis. A threshold hearing is scheduled to determine whether the claims disclose a valid cause of action. At this stage, the outcome of the proceedings is uncertain, and no amounts have been recognized in the consolidated financial statements. The Company is seeking to offset any amounts outstanding under the TR1 Master Fund loans (Note 10) against damages claimed by the Company.

Close-out Fund

The Company’s subsidiary PPE Turkey, committed to contribute to the Close-Out Fund (Note 12) where it has deposited 10% of natural gas revenue from the SASB project into the Close-Out Fund until an amount agreed to by both parties is attained. PPE Turkey did not meet its commitment since the beginning of 2025 and as a result its contribution to the Close-Out Fund is short by approximately $33,000. PPE Turkey was disposed of in April 2026 (Note 3).

29

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

22. Commitments and Contingencies (continued)

Arbitration

The Company through its’ former subsidiary PPE Turkey has advanced arbitration against an offshore drilling rig contractor for $20.3 million for gross negligent and breach of contact involving health and safety issues during the prior year drilling program resulting in loss and damages to Company (the “Trillion Losses”). Liability is not admitted, the litigation is at the inception, and thus, legal counsel has advised that it is too soon to predict the outcome or the quantum of damages that will be assessed. In accordance with guidance for contingent assets and liabilities, no provision for any potential recovery of the Trillion Losses will be made until recovery is virtually certain. If the Company’s claim is successful, the award will exceed the amount, if any, that is payable to the drilling contractor in its claim.

The Company’s former subsidiary PPE Turkey is defending an action brought by the same drilling contractor in Europe to which it has advanced an arbitration claim, for drilling services seeking $3 million. This amount has fully been recorded in accounts payable in accordance with guidance as there is significant uncertainty as to the outcome of the arbitration. PPE Turkey was disposed of in April 2026 (Note 3).

Third party liability claim

As at December 31, 2024, the Company included in accounts payable and accrued liabilities a potential liability for an invoice in the amount of $144,247, issued to a 3rd party with whom the Company previously had a farm-in arrangement. The vendor is claiming that the Company is liable given the previous relationship. As at December 31, 2025, the Company included in accounts payable and accrued liabilities an additional $1,880,855 related to additional claims for invoices issued to the 3rd party. The claims and related accruals were held within PPE Turkey that was disposed of in April 2026 (Note 3). The Company disputes the asserted claims, and the ultimate resolution of these matters remains uncertain.

Dispute with former employees

The Company has filed claims against, and has received counter claims from former employees of PPE Turkey which was disposed of in April 2026 (Note 3). Management believes the claims against the Company are without merit. Accordingly, no provision has been recognized as at period end. The ultimate outcome of the proceedings cannot presently be determined.

M47 Block work program

In connection with the earn-in for a 29% working interest in the M47 Block in Turkey (Note 8), the Company is committed to a total investment of $15,000,000, of which $9,500,000 is payable in respect of the 2026 work program and $5,500,000 in respect of the 2027 work program. The Company is also required to bear 80% of the cost of the next two exploration wells on the block and certain seismic costs. The Company’s entitlement to the working interest is conditional on it meeting these funding commitments.

30

DUNE OIL CORP. (formerly Trillion Energy International Inc.)

Notes to the Condensed Consolidated Interim Financial Statements

For the six months ended June 30, 2026 and 2025

(Expressed in U.S. dollars)

(Unaudited)

23. Subsequent Events

Debt settlement

On August 25, 2026, the Company issued 133,333 units at CAD0.15 to settle CAD20,000 of debt. Each unit consists of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant is exercisable at CAD0.25 and shall be exercisable for a period of one (1) year from the date of issue.

Unit issuance

On August 25, 2026 the Company issued 1,266,667 units for gross proceeds of CAD190,000. Each unit consists of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant is exercisable at CAD0.25 and shall be exercisable for a period of one (1) year from the date of issue.

31

Exhibit 99.2

DUNE OIL CORP. (FORMERLY TRILLION ENERGY INTERNATIONAL INC.)

MANAGEMENT DISCUSSION & ANALYSIS

For the three months and six months ended June 30, 2026 and 2025

(Stated in United States dollars)

1

TABLE OF CONTENTS

Caution Regarding Forward-Looking Statements	3
Management’s Responsibility for Financial Statements	4
Overview	4
Overall Performance	7
Results of Continuing Operations	8
Summary of Quarterly Results	10
Liquidity and Capital Resources	12
Transactions with Related Parties	14
Risk Management	15
Off-Balance Sheet Arrangements	18
Disclosure of Outstanding Share Data	19
Critical Accounting Policies and Estimates	19
Commitments and Contingencies	24
Events Subsequent to the Three Months Ended June 30, 2026	25

2

DUNE OIL CORP. (FORMERLY TRILLION ENERGY INTERNATIONAL INC.)

MANAGEMENT DISCUSSION & ANALYSIS

For the three and six months ended June 30, 2026 and 2025

(Expressed in United States Dollars)

Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is intended to provide readers of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. This MD&A was prepared effective August 31, 2026.

Our MD&A should be read in conjunction with our unaudited condensed interim consolidated financial statements of Dune Oil Corp. (formerly Trillion Energy International Inc.), (the “Company”, “we”, and “our”) and the related notes thereto for the three and six months ended June 30, 2026 and 2025, and the audited consolidated financial statements for the years ended December 31, 2025 and 2024 and the related notes thereto. Unless otherwise noted, all currency amounts are in US dollars.

Caution Regarding Forward-Looking Statements

Certain statements in this report are forward-looking statements which reflect management’s expectations regarding future growth, results of operations, performance, business prospects and opportunities, the Company’s ability to meet financial commitments and its ability to raise funds when required. Forward-looking statements consist of statements that are not purely historical, including any statements regarding beliefs, plans, expectations, or intentions regarding the future. Such statements are subject to risks and uncertainties that may cause actual results, performance, or developments to differ materially from those contained in the statements. No assurance can be given that any of the events anticipated by the forward-looking statements will occur or, if they do occur, what benefits the Company will obtain from them. These forward-looking statements reflect management’s current views and are based on certain assumptions and speak only as of the date of this report. These assumptions, which include management’s current expectations, the global economic environment, and the Company’s ability to manage its operating costs, may prove to be incorrect. Several risks and uncertainties could cause actual results to differ materially from those expressed or implied by the forward-looking statements.

There is a significant risk that such forward-looking statements will not prove to be accurate. Investors are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

3

Actual performance, achievement or other realities could differ materially from those expressed in, or implied by, any forward-looking statements or information in this MD&A and, accordingly, investors should not place undue reliance on any such forward-looking statements or information. Further, any forward-looking statement or information speaks only as of the date on which such statement is made, and the Company does not undertake any obligation to update any forward-looking statements or information to reflect information, events, results, circumstances, realities or otherwise after the date on which such statement is made or to reflect the occurrence of unanticipated events, except as required by law, including securities laws. All forward-looking statements and information contained in this MD&A and other documents of the Company are qualified by such cautionary statements. New factors emerge from time to time, and it is not possible for management to predict all such factors and to assess in advance the impact of each such factor on the Company’s business or the extent to which any factor, or combination of factors, may cause actual realities to differ materially from those contained in any forward-looking statements.

In addition, forward-looking statements, and information herein, including financial information, is based on certain assumptions relating to the business and operations of the Company. Although the Company has attempted to identify important factors that could cause actual actions, events, or results to differ materially from those described in forward-looking statements and forward-looking information in this MD&A, and the documents incorporated by reference herein, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended. There is no assurance that such statements and information will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly, readers should not place undue reliance on forward-looking statements and forward-looking information contained in this MD&A.

Management’s Responsibility for Financial Statements

The information provided in this MD&A, including the audited consolidated financial statements and the unaudited condensed consolidated interim financial statements, are the responsibility of management. In the preparation of consolidated financial statements, estimates are sometimes necessary to make a determination of the future values for certain assets or liabilities. Management believes such estimates have been based on careful judgments and have been properly reflected in the accompanying audited consolidated financial statements and unaudited condensed consolidated interim financial statements.

Overview

Dune Oil Corp. (formerly Trillion Energy International Inc.) and its consolidated subsidiaries, (collectively referred to as the “Company”) is a Canadian based oil and gas exploration and production company with operations primarily in Turkiye. The Company’s shares trade on the Canadian Securities Exchange under the symbol “DUNE” (formerly “TCF”). The Company also trades on the OTCQB under the symbol “TRLEF” and the Frankfurt exchange under the symbol Z620. A class of the Company’s warrants trade on the CSE under the symbol TCF.WT.

The Company is focused on oil and gas exploration in Turkiye. The Company pivoted its strategic asset mix to focus principally on an earn-in on the M47 Oil Block in Turkiye, through an agreement to farmin made during Q1 2026. During Q2 2026, the Company disposed of its license interests in the SASB natural gas project and the Cendere oil field which were its principal operating assets in prior years.

4

In connection with the sale of its subsidiary (PPE Turkey) in Turkey, the Company disposed of its conventional natural gas project, the SASB gas field located in the Black Sea, Turkiye. The Company had a 49% interest in the SASB gas field. In addition, the Company disposed of its interest in the Cendere field in Turkiye, a long-term low decline oil field where it held a 19.6% (except three wells with 9.8%) interest.

In January 2026 and in connection with the Company’s strategic asset pivot, the Company, through a wholly owned subsidiary, entered into an agreement to earn a 29% working interest in the M47 Oil Block in exchange for total funding commitments of approximately $15.0 million. The earn-in is subject to the Company funding certain work program costs, including approximately $9.5 million for the 2026 work program and approximately $5.5 million for the 2027 work program. As part of the agreement, the Company is expected to fund a significant portion of the costs of initial drilling and seismic programs, after which costs will be shared based on participating interests. The earn-in is contingent upon the Company meeting its funding commitments.

In April 2026, the Company, through a subsidiary, completed the sale of all the issued and outstanding shares of PPE Turkey, which holds the license interests in the SASB natural gas project and the Cendere oil field. Under the terms of the agreement, the purchaser assumed the assets and liabilities associated with PPE Turkey. In connection with the transaction, the Company retained a 7% gross overriding royalty on future production revenues from the underlying licenses. The royalty becomes payable once cumulative gross revenues from the licenses following closing exceed $7.5 million and may also be realized upon any future disposition of the licenses by the purchaser.

Effective August 4, 2026, Trillion Energy International Inc. changed its name to Dune Oil Corp., to reflect its strategic focus on oil exploration and development, and its trading symbol on the Exchange changed from “TCF” to “DUNE”. The name change did not result in any consolidation of the Company’s share capital and did not affect the rights of shareholders. Existing share certificates remain valid and are not required to be exchanged.

In this MD&A, we report both on the “discontinued operations” of PPE Turkey and on “continuing operations” of the Company.

Strategic Pivot

The Company’s strategic focus has recently shifted with the sale of its subsidiary PPE Turkey, including the license interests in the SASB natural gas project and the Cendere oil field. The disposition of PPE Turkey in April 2026 is further to a general restructuring and includes the disposition of the full operating unit for Cendere and SASB, respective licenses and all related assets and liabilities of PPE Turkey. The PPE Turkey disposition improves the Company’s working capital position, significantly reduces the consolidated entity’s debt load, and paves the way for refocusing on the M47c,d oil exploration block, where an oil discovery was made during 2025.

The Company is now focused on meeting its earning in obligations for a 29% working interest in the M47 Oil Block and raising the necessary funding to meet funding commitments for the 2026 and 2027 work programs. The Company has advanced US $800,000 in furtherance of its commitments to date.

With the shift in strategic focus to the M47 Oil Block, and the need to strengthen the Company’s balance sheet to raise funds for the earn-in funding commitments, the decision was made to sell all of the issued and outstanding shares of PPE Turkey, which held the Company’s license interests in the SASB natural gas project and the Cendere oil field.

5

Other Developments of the Business

Restructuring of convertible debentures:

During the year ended December 31, 2025, in lieu of paying cash, the Company issued 5,454,181 shares to settle CAD$899,940 (US$649,851) in interest accrued on the Company’s convertible debentures. The Company also issued 515,151 shares to the convertible debentures holders as at extension fee for the extension of the maturity date from April 30, 2025 to July 31, 2025. On July 24, 2025, the maturity date was further extended to October 31, 2025.

On March 20, 2026, the Company entered into a fourth supplemental debenture indenture (the “Fourth Supplemental Indenture”) related to the Company’s convertible debentures.

The total amount owing under the convertible debentures will be comprised of the principal of CAD15.0 million and accrued to March 20, 2026 (the “Amount Due”). Pursuant to the Fourth Supplemental Indenture, and conditional upon the Company completing an equity financing of not less than CAD10.0 million on or before September 30, 2026, the following settlement terms will apply:

	(1)	approximately CAD11.0 million of the Amount Due will be converted into common shares of the Company at the same price as the equity financing; and,
	(2)	the remaining balance including accrued interest will be forgiven by the debenture holders.

If the Company does not complete the required financing by September 30, 2026, the Fourth Supplemental Indenture will terminate and the full Amount Due will remain payable in accordance with the original terms of the debentures.

The Company concluded that the amendment substantially modifies the terms of the debentures and accounted for it as an extinguishment of the original financial liability and recognition of a new financial liability. The new financial liability is a hybrid instrument containing an embedded contingent equity conversion feature. Rather than separate the embedded derivative, the Company has designated the entire instrument to be measured at fair value through profit and loss.

Exit of PPE Turkey - Cendere oil field and SASB Gas Field – Discontinued Operations

Both the Cendere oil field and SASB gas field assets were sold as a result of the sale of the Company’s subsidiary, PPE Turkey on April 7, 2026.

SASB

Until disposed of in April 2026, the Company had a 49% interest in the SASB Gas Field which has several natural gas fields, four production platforms plus 18 kilometers of subsea pipelines connecting the gas fields to an onshore gas processing facility. SASB is located off the North West coast of Turkey in the Black Sea. Total gross production to date from the four fields is over 43 billion cubic feet (“Bcf”). The Company sold its interest in the SASB Gas Field during April 2026 as part of the sale of all the outstanding shares of PPE Turkey.

6

The Company commenced the SASB re-Development Program during September 2022 where five wells were drilled off different tripods. Those 5 new wells and one recompletion were put on production, thus generating revenue for the Company. In 2024, the Company was required to transfer operatorship to TPAO, the state operator. Subsequently, the SASB Gas Field has incurred significant downtime due to water loading issues, despite having considerable reserves, and production significantly diminished during 2025. The SASB Gas Field was not able to be restarted with cooperation and commitment from TPAO.

Cendere

Prior to the sale of PPE Turkey in April 2026, the Company had a 19.6% interest in the Cendere oil field located in Southeast Turkey all except certain wells. The Company sold its interest in the Cendere oil field as part of the sale of all the outstanding shares of PPE Turkey.

Oil Exploration Licence M47 (“M47 Oil Block”)

In January 2026, the Company, through a new wholly owned subsidiary, signed a new agreement to earn a 29% working interest in the M47 Block located in SE Turkey in exchange for a total investment of US $15 million over two years’ time. Approximately $4.4 million is due to be advanced for work program commitments by September 15, 2026. The earn-in is subject to, inter alia, the Company paying for certain work program costs on a timely basis. The work program is expected to include new exploration wells and acquisition of seismic data.

The total work program cost for the M47 Oil Block shared between the existing parties is approximately $35 million, of which approximately $18 million has been expended to date. As part of the contemplated earn-in, the Company will bear 80% of the cost of two out of three of the next wells, and 40% of one well, as well as certain seismic costs.

The Company is responsible for advancing two funding tranches: the first tranche is $4.4 million for the 2026 work program, and remainder of the second tranche in 2027, after the first amount is exhausted. The second tranche is $5,500,000 for the 2027 work program is due September 15, 2027. The 29% earn-in interest is subject to the Company meeting its funding commitments as set out herein. The Company anticipates further amendments to these agreements and timing of the payments commitments to occur in the near future.

A Joint Operating Committee will determine all drilling decisions, planning and procurement matters.

Following the Company’s investment, the parties to the M47 Oil Block shall thereafter bear costs in proportion to their participating interests. The Company’s cost contribution shall thereafter be reduced to its pro rata interest.

The previously announced farm in agreements on M47 and M46C and M46D blocks have been cancelled.

Overall Performance

During the six months ended June 30, 2026, the Company recognized net income of $4,950,354. This is comprised of net income from continuing operations of $5,675,655 and net loss from discontinued operations of $725,301. This compares to a net income of $1,636,569 during the six months ended June 30, 2025, which is comprised of a net loss from continuing operations of $1,739,740 and net income from discontinued operations of $3,376,309. The change for continuing operations is primarily due to a gain on debt extinguishment of $7,927,913 recorded as a result of the restructuring of the convertible debentures in accordance with the Fourth Supplemental Indenture. The change for discontinued operations is primarily due to a decrease in oil and gas revenue from $1,575,466 for the six months ended June 30, 2025, to oil gas revenue of $609,245 for the six months ended June 30, 2026. In addition, reflected in discontinued operations, there was a significant gain on net monetary position of $7,142,605 in the 2025 period compared to an $88,653 loss on net monetary position during the six months ended June 30, 2026.

7

The Company’s cash flow for the six months ended June 30, 2026 yielded a net decrease of $106,655 primarily as a result of operating activities and investing activities. This decrease was offset by cash provided by financing activities of $1,158,583 from financings that were closed during the period.

The Company’s total assets decreased from $3,102,943 to $1,077,968 primarily as a result of a decrease in cash, amounts receivable, oil and gas properties and long-term deposits. The decrease is attributable to the PPE Turkey assets that were sold during the period.

The Company’s total liabilities decreased from $42,000,413 to $9,423,339 due to the restructuring of the convertible debentures in accordance with the Fourth Supplemental Indenture and liabilities that were sold as part of the sale of PPE Turkey during the period.

The unaudited condensed interim consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (“IFRS”) applicable to the preparation of condensed interim financial statements, including International Accounting Standards (“IAS”) 34, Interim Financial Reporting and are expressed in United States dollars.

Total Assets

As at June 30, 2026, total assets decreased by $2,024,975 from $3,102,943 as at December 31, 2025 to $1,077,968 as at June 30, 2026. The decrease in total assets was primarily a result of a decrease in cash equivalents, amounts receivable, oil and gas properties and long-term deposits. The decrease is attributable to the PPE Turkey assets that were sold during the period.

Total Non-current Liabilities

Total non-current liabilities as at June 30, 2026 decreased from $6,412,057 as at December 31, 2025 to $Nil as at June 30, 2026. The decrease in total non-current financial liabilities is attributable to the asset retirement obligation that was included in the sale of PPE Turkey.

Results of Continuing Operations

Six months ended June 30, 2026, compared to the six months ended June 30, 2025

The net income from continuing operations for the six months ended June 30, 2026 improved by $7,415,395 to a net income of $5,675,655, compared to the net loss from continuing operations of $1,739,740 recognized during the six months ended June 30, 2025.

8

Factors contributing to the net income from continuing operations for the six-month periods included the following:

Expenses

For the six months ended June 30, 2026, the Company had general and administrative expenses of $1,417,280, compared to $843,284 for the six months ended June 30, 2025. The increase is primarily due to an increase in salaries and compensation from management and consulting fees, professional fees and investor relations. The increase is driven by costs associated with the strategic pivot and restructuring.

Other Income (Expense)

For the six months ended June 30, 2026, the Company had other income of $7,101,527 compared to other expenses of $875,463 for the six months ended June 30, 2025. Other income for the six months ended June 30, 2026 consists mainly of a gain on debt extinguishment of $7,927,913 (2025 - $nil) partially offset by a foreign exchange loss of $156,011 (2025 – $192,067 foreign exchange gain) and finance costs of $470,415 (2025 – $1,301,045) primarily as a result of interest recognized on convertible debentures issued in 2023. The gain on debt extinguishment is due to the restructuring of the convertible debentures in accordance with the Fourth Supplemental Indenture. The decrease in finance cost is due to the Company recording interest at the contractual rate and accretion at the effective interest rate during 2025, compared to only interest during 2026 as the convertible debentures were past due during 2026.

Results of Discontinued Operations

Six months ended June 30, 2026, compared to the six months ended June 30, 2025

The net loss from discontinued operations for the six months ended June 30, 2026 increased by $4,101,610 to a net loss of $725,301 compared to the net income from discontinued operations of $3,376,309 recognized during the six months ended June 30, 2025.

Factors contributing to the net loss (income) from discontinued operations for the six-month periods included the following:

Revenue

Revenues decreased by $966,221 from $1,575,466 for the six months ended June 30, 2025 to $609,245 for the six months ended June 30, 2026. The decrease observed is due to PPE Turkey being sold during the period and no revenue being earned after April 7, 2026.

Expenses

For the six months ended June 30, 2026, the Company incurred production expenses related to its Turkey discontinued operations of $453,142 (2025 - $1,322,803), depletion charges of $4,647 (2025 - $113,494), depreciation expense of $7,638 (2025 - $33,723) and asset retirement obligation accretion expense of $68,465 (2025 - $131,780). The decreases for production expenses, depletion charges, depreciation and asset retirement obligation accretion expense are due to PPE Turkey being sold during the period and no further expenses being recognized after April 7, 2026.

9

For the six months ended June 30, 2026, the Company had general and administrative expenses of $405,027, compared to $858,745 for the six months ended June 30, 2025. The decrease is due to PPE Turkey being sold during the period and no further expenses being recognized after April 7, 2026.

Geological and geophysical expenses decreased to $Nil for the six months ended June 30, 2026 from $30,819 during the same period in 2025. This was a result of decreased activity due to water loading of wells up until the sale of PPE Turkey during the period.

Other Income (Expense)

For the six months ended June 30, 2026, the Company had other expenses of $395,627 compared to other income of $5,591,374 for the six months ended June 30, 2025. Other expenses for the six months ended June 30, 2026 consists mainly of a foreign exchange loss of $717,733 (2025 – $1,545,694), finance costs of $192,818 (2025 – $9,246) primarily as a result of interest recognized on loans payable and a loss on net monetary position of $88,653 (2025 – $7,142,605 gain on net monetary position). These amounts are offset by a gain on the sale of PPE Turkey of $523,110 (2025 - $Nil), included in the gain of $523,110 is the gain on sale of $22,248,530 offset by the OCI recycle loss of $21,725,420. The gain or loss on net monetary position is a result of Turkey being designated a hyper-inflationary economy as of April 1, 2022 for accounting purposes.

Summary of Quarterly Results

The financial information in the following tables summarizes selected financial information for the Company for the last eight quarters which was derived from annual and interim financial statements prepared in accordance with IFRS and are expressed in United States dollars.

		June 30, 2026 ($)				March 31, 2026 ($)				December 31, 2025 ($)				September 30, 2025 ($)
Revenue (from discontinued operations)			-				609,245				627,402				677,790
Net Income (Loss)			(825,411	)			5,775,765				(46,865,592	)			(3,991,878	)
Net Income (Loss) per share (basic and diluted)			(0.02	)			0.14				(1.14	)			(0.10	)
Net and comprehensive income (Loss)			21,711,771				6,909,847				(47,770,104	)			(4,595,832	)

		June 30, 2025 ($)				March 31, 2025 ($)				December 31, 2024 ($)				September 30, 2024 ($)
Revenue (from discontinued operations)			636,530				938,936				2,110,078				2,325,694
Net Income (Loss)			(559,113	)			2,195,682				(9,620,515	)			(1,177,731	)
Net Income (Loss) per share (basic and diluted)			(0.00	)			0.07				(0.30	)			(0.05	)
Net and comprehensive income (Loss)			(2,478,213	)			419,147				(9,640,143	)			(2,358,571	)

*In April 2026 the outstanding shares were consolidated on a 5 to 1 basis.

10

Summary of Results During Prior Eight Quarters

Net loss increased for the three months ended June 30, 2026 by $6,601,176 compared to the three months ended March 31, 2026 from a net income of $5,775,765 to a net loss of $825,411. The increase is primarily due to the gain on debt extinguishment of $7,927,913 that was recorded during the three months ended March 31, 2026 due to the restructuring of the convertible debentures in accordance with the Fourth Supplement Indenture, as this was a one time event no such gains were recorded in the three months ended June 30, 2026.

Net income improved for the three months ended March 31, 2026 by $52,641,357 compared to the three months ended December 31, 2025, from a net loss of $46,865,592 to a net income of $5,775,765. The improvement is primarily due to an impairment of oil and gas assets of $48,067,394 recognized in the three months ended December 31, 2025, there were no such impairment amount recognized during the three months ended March 31, 2026. In addition, the Company recorded a gain on debt extinguishment of $7,927,913 during the three months ended March 31, 2026 due to the restructuring of the convertible debentures in accordance with the Fourth Supplemental Indenture.

Net loss increased for the three months ended December 31, 2025 by $42,873,714 compared to the three months ended September 30, 2025, from a net loss of $3,991,878 to a net loss of $46,865,592. The increase is primarily due to an impairment of oil and gas assets of $48,067,394 recognized in the three months ended December 31, 2025. This was partially offset by the gain on net monetary position of $2,128,533 recognized in the current period as a result of hyperinflationary accounting.

Net loss increased for the three months ended September 30, 2025 by $3,432,765 compared to the three months ended June 30, 2025, from a net loss of $559,113 to a net loss of $3,991,878. The increase is primarily due to an impairment of oil and gas assets of $6,431,000 recognized in the three months ended September 30, 2025, no such impairment was recognized during the three months ended June 30, 2025. This was partially offset by the gain of $3,520,731 recognized in the current period as a result of hyperinflationary accounting compared to a gain of $2,504,987 in the three months ended June 30, 2025.

Net income decreased for the three months ended June 30, 2025 by $2,754,795 compared to the three months ended March 31, 2025, from a net income of $2,195,682 to a net loss of $559,113. The decrease is primarily due to a deferred tax expense of $1,161,339 recognized in the three months ended June 30, 2025 compared to a deferred tax expense of $137,828 during the three months ended March 31, 2025. The Company also recognized a gain of $2,504,987 recognized in the current period as a result of hyperinflationary accounting compared to a gain of $4,637,618 in the three months ended March 31, 2025.

Net income increased for the three months ended March 31, 2025 by $11,816,197 compared to the three months ended December 31, 2024, from a net loss of $9,620,515 to a net income of $2,195,682. The Company did not recognize impairment on its oil and gas assets in the current period, compared to an impairment charge of $9,892,000 recognized in the previous quarter. The Company also recognized a gain of $4,637,618 recognized in the current period as a result of hyperinflationary accounting compared to a gain of $2,259,183 in the three months ended December 31, 2024.

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Net loss increased for the three months ended December 31, 2024, by $8,442,784 compared to the three months ended September 30, 2024, from a net loss of $1,177,731 to a net loss of $9,620,515. The increase is primarily due to an impairment on oil and gas assets of $9,892,000 recognized in the current period, coupled with a gain of $2,259,183 recognized in Q4 as a result of hyperinflationary accounting compared to a gain of $4,125,084 in the three months ended September 30, 2024. Furthermore, a foreign exchange loss of $1,154,268 was recorded for the three months ended December 31, 2024 compared to a loss of $720,213 in the prior quarter. Furthermore, the Company earned $2,110,078 in revenues during the current quarter compared to $2,325,694 in the prior quarter.

Net loss increased for the three months ended September 30, 2024, by $1,527,479 compared to the three months ended June 30, 2024, from a net income of $349,748 to a net loss of $1,177,731. The decrease is primarily due to a gain of $4,125,084 recognized in Q3, 2024 as a result of hyperinflationary accounting compared to a gain of $5,697,856 in the three months ended June 30 2024. Furthermore, the Company recorded deferred income tax expense of $2,030,631 in Q3 compared to $1,067,016 in Q2 2024.

Liquidity and Capital Resources

The following table summarizes our liquidity position in USD:

		June 30, 2026				December 31, 2025
Cash and cash equivalents			323,658				430,313
Working capital deficit			(8,865,725	)			(34,373,381	)
Total assets			1,077,968				3,102,943
Total liabilities			9,423,339				42,000,413
Stockholders’ equity (deficit)			(8,345,371	)			(38,897,470	)

As at June 30, 2026, working capital deficit was $8,865,725 in comparison to a working capital deficit of $34,373,381 as at December 31, 2025. The $25,507,656 decrease in working capital deficit is primarily attributable to the decrease in convertible debt, due to the restructuring of the convertible debentures in accordance with the Fourth Supplemental Indenture and a decrease in trade payables on the sale of PPE Turkey.

Operating, Investing and Financing Activities

The chart below highlights the Company’s cash flows:

		June 30, 2026				June 30, 2025
Net cash provided by (used in):
Operating activities			(684,268	)			845,341
Investing activities			(598,003	)			(385,429	)
Financing activities			1,158,583				(997,601	)
Effect of exchange rate on cash and cash equivalents			17,033				(32,654	)
Decrease in cash and cash equivalents			(106,655	)			(570,343	)

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Cash Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2026 was $684,268, compared to $845,341 provided for the six months ended June 30, 2025. The current period’s net income of $4,950,354 was coupled with $742,732 in changes in working capital items and offset by $6,377,354 in net non-cash items. Net income of $1,636,569 was coupled with $2,598,960 in changes in working capital items and offset by $3,390,188 in net non-cash items for the six months ended June 30, 2025.

Cash Used in Investing Activities

Net cash used in investing activities for the six months ended June 30, 2026, was $598,003, compared to $385,429 used for the six months ended June 30, 2025. During the six months ended June 30, 2026 E&E expenditures increased to $521,840 from $Nil in the comparative period, oil and gas properties expenditures decreased to $Nil from $557,669 in the comparative period, the Company received $Nil in advances from its JV partners in comparison to $290,821 in the comparative period.

Cash Used in Financing Activities

We have funded our business to date from sales of our common stock through private placements and loans.

Net cash from financing activities for the six months ended June 30, 2026, was $1,158,583, this is comprised entirely of funds received for private placements closed during the period. Net cash used in financing activities for the six months ended June 30, 2025 was $997,601. This was comprised entirely of loan and lease payments.

Future Operating Requirements

As of June 30, 2026, the Company had unrestricted cash of $323,658 and current liabilities of $9,423,339, which is not sufficient to cover its plan of operations over the next 12 months. During the six months ended June 30, 2026 the Company raised $1,158,583 in funds through private placements.

The Company is seeking to raise further funds through equity financing in order to meet the terms of the convertible debenture restructuring agreement and to fund the work program commitments on the M47 Oil Block earn-in arrangement.

In addition, the Company is looking for additional opportunities both in Turkey and internationally to develop the Company’s asset base.

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Cash Flows Attributable to Discontinued Operations

		June 30, 2026				June 30, 2025
		$				$
Net cash provided by operating activities			280,476				845,341
Net cash used in investing activities			(76,163	)			(385,429	)
Net cash used in financing activities			-				(997,601	)

Transactions with Related Parties

Name		Relationship		Share based (‘000) $				Salary, bonuses & directors fees (‘000) $				Total (‘000) $
David M. Thompson		Director and Interim CFO			1				12				13
Burak Terzi		Chief Commercial Officer (“CCO”)			–				140				140
Scott Lower		President			–				150				150
Sean Stofer		Director & Chairman			2				106				108
Jay Park		Director			2				50				52
Other		Close family			–				80				80

At June 30, 2026 accounts payable and accrued liabilities included $808,294 (December 31, 2025 – $1,121,180) due to related parties. The amounts are unsecured, non-interest bearing and due on demand.

During the six months ended June 30, 2026, management fees and salaries of $140,392 (2025 – $88,431), director fees of $43,200 (2025 – $30,600), consulting fees of $354,430 (2025 – $63,060), and stock-based compensation of $4,466 (2025 – $4,034) were incurred to related parties.

During the six months ended June 30, 2026, the Company issued Nil shares (2025 – 43,200) to directors for services performed.

During the six months ended June 30, 2026, the Company issued 162,808 shares (2025 – 198,682) to officers for services performed.

As at June 30, 2026, loans payable included CAD$287,994 (USD$203,573) (December 31, 2025 – CAD$248,189 (USD$181,806)) due to related parties. The loans payable are unsecured, bears interest ranging from 6% - 12% per annum and have maturity dates ranging from December 31, 2024 to December 27, 2026.

As at June 30, 2026 $43,541 (December 31, 2025 – $24,000) in shares were owed to an officer of the Company.

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Risk Management

The Company is exposed to varying degrees to a variety of financial instrument and other risks:

Foreign currency risk

Foreign currency risk is the risk that the fair values of future cash flows of a financial instrument will fluctuate because they are denominated in currencies that differ from the respective functional currency. The Company and its subsidiaries are exposed to currency risk as it has transactions denominated in currencies that are different from their functional currencies. The Company does not hedge its exposure to fluctuations in foreign exchange rates.

As at June 30, 2026 and December 31, 2025, significant foreign exchange currency exposure on its financial instruments, expressed in USD was as follows:

		June 30, 2026				December 31, 2025
		$				$
Cash and cash equivalents			316,018				396,859
Accounts receivable			–				21,558
Accounts payable			(349,097	)			(5,211,836	)
Loans payable			(3,621,000	)			(3,461,250	)
Total			(3,654,079	)			(8,254,669	)

If the CAD strengthened or weakened against the USD by 10% the exchange rate fluctuation would impact net loss from continuing operations by $366,618 at June 30, 2026. If the Turkish Lira strengthened or weakened against the USD by 10% the exchange rate fluctuation would impact net loss from continuing operations by $1,210, at June 30, 2026.

Credit risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations.

The Company is subject to credit risk on its cash and cash equivalents and amounts receivable which consists primarily of trade receivables and notes and amounts receivable for equity issued. The Company limits its exposure to credit loss on cash and cash equivalents by placing its cash with a high-quality financial institution. Exposure to credit loss notes and amounts receivable for equity issued is limited by entering into these types of transactions with related parties and entities that are well known to the Company.

The Company only has two customers. The Company mitigates credit risk by evaluating the creditworthiness of customers prior to conducting business with them and monitoring its exposure for credit losses with existing customers. One of the customers is the largest oil refinery in Turkey. The other customer provides letters of credit to be used by the Company in the event of default. As at June 30, 2026 all of the Company’s trade receivables are current (< 30 days outstanding).

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The Company’s maximum credit exposure is $487,747 (December 31, 2025 – $1,147,456).

Interest rate risk:

Interest rate risk is the risk that future cash flows will fluctuate because of changes in market interest rates. The interest earned on cash is insignificant and the Company does not rely on interest income to fund its operations. The Company does not have significant debt facilities with variable interest rates and is therefore not exposed to interest rate risk.

Other price risk:

Other price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. The Company does not hold equity investments in other entities and therefore is not exposed to a significant risk.

Liquidity risk

Liquidity risk arises from the Company’s general and capital financing needs. The Company continuously monitors and reviews both actual and forecasted cash flows, and also matches the maturity profile of financial assets and liabilities, when feasible. The Company anticipates increases in revenue in future periods resulting from the completion of an additional well subsequent to the period end. Historically, the Company’s sources of funding has been through equity and debt financings. The Company’s access to financing is uncertain. There can be no assurance of continued access to significant debt or equity funding.

Earn-in commitment risk

The Company’s principal asset following its strategic pivot is its right to earn a 29% working interest in the M47 Oil Block in Turkiye, which is contingent upon the Company funding approximately $15.0 million in work program costs, comprised of approximately $9.5 million for the 2026 work program and approximately $5.5 million for the 2027 work program. As at the date of this report, the Company has advanced US$800,000 toward these obligations and remains required to source the balance. Failure by the Company to meet its funding commitments on a timely basis, in whole or in part, could result in the Company forfeiting all or a portion of its earned interest in the M47 Oil Block, a reduction in the working interest ultimately earned, dilution, penalties, or the loss of the opportunity altogether. Any such outcome would have a material adverse effect on the Company’s business, financial condition, results of operations and prospects, particularly given that the M47 Oil Block represents substantially all of the Company’s go-forward operating asset base following the disposition of PPE Turkey.

Funding and capital availability risk

The Company’s ability to meet its earn-in commitments on the M47 Oil Block and the terms of its convertible debenture restructuring arrangement is dependent on its ability to raise significant additional capital through equity financing or other sources. There can be no assurance that such financing will be available on acceptable terms, on a timely basis, or at all. Adverse equity market conditions, volatility in commodity prices, the Company’s share price, dilution concerns, and general macroeconomic conditions may each impair the Company’s ability to raise capital. A failure to secure sufficient funding would directly jeopardize the Company’s ability to meet its earn-in obligations and the convertible debenture restructuring terms and could ultimately threaten the Company’s ability to continue as a going concern.

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Exploration and reserves risk

The M47 Oil Block is an exploration-stage asset and the planned work program includes the drilling of new exploration wells and the acquisition of seismic data. Oil and gas exploration is inherently speculative and involves a high degree of risk. There is no assurance that the planned wells will encounter commercial quantities of hydrocarbons, that any discovered resources will prove to be economically recoverable, or that the Company will recover any of its invested capital. Even where commercial discoveries are made, production volumes, reserves estimates, decline rates and ultimate recoveries may differ materially from expectations. The Company’s reliance on a single exploration-stage block significantly concentrates this risk.

Non-operator risk

The Company does not act as operator of the M47 Oil Block. Drilling decisions, planning, procurement and other operational matters in respect of the block are to be determined by a Joint Operating Committee. As a non-operating, minority working-interest participant, the Company has limited ability to control the timing, scope, cost, execution or success of work programs, including the wells and seismic acquisition on which its earn-in is based. Cost overruns, schedule delays, technical decisions, sub-optimal operating practices, or disputes among working-interest participants could each adversely affect the Company’s costs, the timing of its funding obligations, and ultimately the value of its interest.

Commodity price risk

The Company’s revenues, cash flows and the economic viability of its current and future operations are directly affected by prevailing prices for crude oil, and historically natural gas. Commodity prices are volatile and are influenced by numerous factors beyond the Company’s control, including global supply and demand, OPEC+ production decisions, geopolitical events, sanctions, currency movements, weather, transportation constraints, the energy transition and changes in regulatory and fiscal regimes. Sustained low oil prices could render the M47 Oil Block work program uneconomic, impair the Company’s ability to attract financing for its earn-in funding commitments, and adversely affect the Company’s financial condition and prospects. The Company does not currently hedge its commodity price exposure.

Country and political risk

The Company’s operations are located entirely in Turkiye. As such, the Company is exposed to political, economic, regulatory, fiscal, legal and currency risks particular to that jurisdiction, including changes in petroleum legislation, royalty and tax regimes, licensing requirements, foreign investment restrictions, currency convertibility and repatriation of funds, inflation and interest rate volatility (including in respect of the Turkish Lira), and broader geopolitical developments in the region. Any adverse change in these conditions could materially affect the Company’s title to or interest in its assets, its operating costs, its access to capital, and its overall results of operations.

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Litigation and contingent liability risk

The Company and its former subsidiary PPE Turkey are party to ongoing legal and arbitration proceedings, including an arbitration claim advanced against an offshore drilling rig contractor, a related defence of an action brought by the same contractor in Europe, and claims by a third party in respect of a former farm-in arrangement. While certain of these matters relate to PPE Turkey, which has been disposed of, the outcome of any such proceedings is inherently uncertain. There is no solid guarantee that any creditor of PPE Turkey will not attempt to commence an action against the Company. Adverse outcomes, including in matters where liability is presently disputed or recovery is not virtually certain, could result in material monetary judgments or settlements, indemnification obligations, or reputational harm, any of which could adversely affect the Company’s financial condition and ability to fund its earn-in commitments.

General risks

Petroleum and natural gas exploration and production can involve environmental risks such as litigation, physical and regulatory risks. Physical risks include the pollution of the environment, climate change and destruction of natural habitat, as well as safety risks such as personal injury. The Company works hard to identify the potential environmental impacts of its new projects in the planning stage and during operations. The Company conducts its operations with high standards in order to protect the environment, its employees and consultants, and the general public. We maintain current insurance coverage for comprehensive and general liability as well as limited pollution liability. The amount and terms of this insurance are reviewed on an ongoing basis and adjusted as necessary to reflect current corporate requirements, as well as industry standards and government regulations. Without such insurance, and if the Company becomes subject to environmental liabilities, the payment of such liabilities could reduce or eliminate its available funds or could exceed the funds the Company has available and result in financial distress.

Climate change risks

Our exploration and production infrastructure and other operations and activities emit greenhouse gasses (“GHG”) which may require us to comply with federal and/or provincial GHG emissions legislation. Climate change policy is evolving at regional, national and international levels, and political and economic events may significantly affect the scope and timing of climate change measures that are ultimately put in place to prevent climate change or mitigate our effects. The direct or indirect costs of compliance with GHG-related regulations may have a material adverse effect on our business, financial condition, results of operations and prospects. Some of our significant facilities may ultimately be subject to future regional, provincial and/or federal climate change regulations to manage GHG emissions. In addition, climate change has been linked to long-term shifts in climate patterns and extreme weather conditions both of which pose the risk of causing operational difficulties.

Off-Balance Sheet Arrangements

During 2018 the Company entered into an agreement to grant to a consultant of the Company a 2% (two percent) gross overriding royalty on petroleum substances produced from certain of its currently undeveloped exploration properties, namely: Block 1-11 Vranino situated in Dobrich District, Bulgaria. The Grant of the royalty agreement was for services involving technical and corporate advisory services.

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Disclosure of Outstanding Share Data

The Company’s authorized share capital consists of an unlimited number of common shares of which 58,796,826 were issued and outstanding as of June 30, 2026. As of the date of this MD&A, the total number of outstanding common shares is 60,196,826

As at June 30, 2026 and as at the date of this MD&A, the following stock options were outstanding, entitling the holders thereof the right to purchase one common share for each option held as follows:

Outstanding				Exercise Price		Expiry Date		Vested
	40,000			1.50 CAD		January 2, 2027			40,000
	50,000			1.00 CAD		February 15, 2027			50,000
	100,000			1.25 CAD		February 28, 2027			100,000
	490,000			1.00 CAD		March 8, 2027			490,000
	1,610,000			0.70 CAD		August 12, 2029			1,610,000
	2,290,000								2,290,000

As at the date of this MD&A, the following warrants were outstanding, entitling the holders thereof the right to purchase one common share for each warrant held as follows:

Outstanding				Exercise Price		Expiry Date
	2,646,475			0.90 CAD		(1)May 28, 2027
	1,228,445			0.90 CAD		(1)May 31, 2027
	306,496			0.90 CAD		(1)June 10, 2027
	452,556			0.90 CAD		(1)June 19, 2027
	1,694,520			0.90 CAD		(2)June 28, 2027
	400,000			0.90 CAD		(2)July 3, 2027
	30,000			0.90 CAD		(2)July 5, 2027
	2,100			0.45 CAD		July 5, 2026
	1,000,000			0.25 CAD		April 27, 2027
	2,600,773			0.25 CAD		May 20, 2027
	330,500			0.25 CAD		May 29, 2027
	4,941,077			0.25 CAD		June 5, 2027
	15,632,942

⁽¹⁾ On May 21, 2026, the Company extended the expiry date by one year from the original expiry date.

⁽²⁾ On June 8, 2026, the Company extended the expiry date by one year from the original expiry date.

Critical Accounting Policies and Estimates

Our consolidated financial statements and accompanying notes have been prepared in accordance with IFRS. The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

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We regularly evaluate the accounting policies and estimates that we use to prepare our consolidated financial statements. In general, management’s estimates are based on historical experience, on information from third party professionals, and on various other assumptions that are believed to be reasonable under the facts and circumstances. Actual results could differ from those estimates made by management.

We believe that our critical accounting policies and estimates include the following:

Revenue Recognition

Revenue from Contracts with Customers

The Company recognizes revenue when it satisfies its performance obligation(s) by transferring control over a product to a customer. Revenue is measured based on the consideration the Company expects to receive in exchange for those products.

Performance Obligations and Significant Judgments

The Company sells oil and natural gas products in Turkey. The Company enters into contracts that generally include one type of distinct product in variable quantities and priced based on a specific index related to the type of product.

The oil and natural gas are typically sold in an unprocessed state to processors and other third parties for processing and sale to customers. The Company recognizes revenue at a point in time when control of the oil is transferred. For oil sales, control is typically transferred to the customer upon receipt at the wellhead or a contractually agreed upon delivery point. Under the Company’s natural gas contracts with processors, control transfers upon delivery at the wellhead or the inlet of the processing entity’s system. For the Company’s other natural gas contracts, control transfers upon delivery to the inlet or to a contractually agreed upon delivery point. In the cases where the Company sells to a processor, the Company has determined that the Company is the principal in the arrangement and the processors are the Company’s customers. The Company recognizes the revenue in these contracts based on the net proceeds received from the processor.

For the Company’s product sales that have a contract term greater than one year, the Company uses the practical expedient in IFRS 15 Paragraph 121(a) which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to an unsatisfied performance obligation. Under these sales contracts, each unit of product represents a separate performance obligation; therefore, future volumes are unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required. The Company has no unsatisfied performance obligations at the end of each reporting period.

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The Company does not believe that significant judgments are required with respect to the determination of the transaction price, including any variable consideration identified. There is a low level of uncertainty due to the precision of measurement and use of index-based pricing with predictable differentials. Additionally, any variable consideration identified is not constrained.

Amounts Receivable

Amounts receivable consist of oil and gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company deems all accounts receivable to be collectable and has not recorded any allowance for doubtful accounts.

Exploration and Evaluation Assets

Pre-license exploration costs are recognized in the consolidated statement of operations and comprehensive loss as incurred.

The costs to acquire non-producing oil and gas properties or licenses to explore, drill exploratory wells and the costs to evaluate the commercial potential of underlying resources, including related borrowing costs, are initially capitalized as exploration and evaluation assets.

Exploration and evaluation assets are subject to technical, commercial and management review to confirm the continued intent to develop and extract the underlying resources. If an area or exploration well is no longer considered commercially viable, the related capitalized costs are charged to exploration expense.

Exploration and evaluation assets are not subject to depreciation, depletion and amortization.

When management determines with reasonable certainty that an exploration and evaluation asset will be developed, as evidenced by the classification of proved or probable reserves and the appropriate internal and external approvals, the asset is transferred to oil and gas properties.

Oil and gas properties

Oil and gas properties (“O&G”) include development and productions costs, less accumulated depletion and depreciation and accumulated impairment loss. O&G are grouped into cash generating units for impairment testing.

When significant parts of an item of O&G have different useful lives, they are accounted for as separate items (major components).

Costs incurred subsequent to the determination of technical feasibility and commercial viability and the costs of replacing parts of O&G are capitalized only when they increase the future economic benefits embodied in the specific asset to which they relate. All other expenditures are recognized in profit or loss as incurred. Such capitalized items generally represent costs incurred in developing proved and/or probable reserves and bringing on or enhancing production from such reserves and are accumulated on a field or geotechnical area basis. The carrying amount of any replaced or sold component is derecognized. The costs of the day-to-day servicing of oil ang gas properties are recognized in profit or loss as incurred.

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The net carrying value of oil and gas properties is depleted using the unit-of-production method by reference to the ratio of production in the year to the related proved reserves, taking into account estimated future development costs necessary to bring those reserves into production. These estimates are reviewed by independent reservoir engineers at least annually.

Stock-based compensation

Under the company’s share-based compensation plans, share-based awards may be granted to executives, employees and non-employee directors. The Company grants restricted share units (“RSUs”) and stock options to directors, officers, employees, and consultants. An individual is classified as an employee when the individual is an employee for legal or tax purposes or provides services like those performed by an employee.

The costs of equity-settled transactions with employees are measured by reference to the fair value at the date on which they are granted, using the Black Scholes valuation model. The costs of equity-settled transactions are recognized, together with a corresponding increase in equity, over the period in which the performance and/or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (the “vesting date”). For cash settled share-based compensation, the expense is determined based on the fair value of the liability at the end of the reporting period until the award is settled.

In situations where equity instruments are issued to non-employees and some or all of the goods or services received by the entity as consideration cannot be specifically identified, they are measured at fair value of the share-based payment.

The cumulative expense is recognized for equity-settled transactions at each reporting date until the vesting date reflects the Company’s best estimate of the number of equity instruments that will ultimately vest. The profit or loss charge or credit for a period represents the movement in cumulative expense recognized as at the beginning and end of that period, and the corresponding amount is represented in contributed surplus. At the end of each reporting period, the Company re-assesses its estimates of the number of awards that are expected to vest and recognizes the impact of the revisions in the consolidated statements of loss.

No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market condition, which are treated as vesting irrespective of whether or not the market condition is satisfied provided that all other performance and/or service conditions are satisfied.

Where the terms of an equity settled award are modified, the minimum expense recognized is the grant date fair value of the unmodified award, provided the original terms of the award are met. An additional expense or its reduction is recognized for any modification which increases or decreases the total fair value of the share-based payment arrangement or is otherwise beneficial to the employee as measured at the date of modification. Where an award is cancelled by the Company or the counterparty, any remaining element of the fair value of the award is expensed immediately or reversed through profit or loss, depending on the type of cancellation. The dilutive effect of outstanding options is reflected as additional dilution in the computation of earnings per share whereas anti-dilutive options are ignored.

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Consideration paid to the Company on exercise of hare-based awards is credited to share capital and the associated amount in option reserve is reclassified to share capital.

Unit Offerings

Common shares are classified as equity. Proceeds from unit placements are allocated between shares and warrants issued using the residual method. The residual method first allocates fair value to the component with the best evidence of fair value and then the residual value, if any, to the less easily measurable component. The fair value of the common shares, measured on date of issue, was determined to be the component with the best evidence of fair value. The balance, if any, was allocated to the attached warrants. Costs directly identifiable with share capital financing are charged against share capital. If the subscription is not funded upon issuance, the Company records a receivable as a contra account to shareholders’ equity.

Hyperinflation in a subsidiary’s functional currency

IAS 29 provides guidance on when a hyperinflation economic environment exists. When hyperinflation is deemed to exist, the subsidiary’s financial statements are first restated before being translated into the consolidated financial statements. Comparative amounts are excluded from the restatement requirement when the presentation currency of the ultimate financial statements into which they will be included (USD) is non-hyperinflationary.

Monetary items are not restated because they are already expressed in terms of the monetary unit current at the end of the reporting period. Certain non-monetary items are carried at amounts current at the end of the reporting period, such as net realizable value and fair value, so they also are not restated. All other non-monetary assets and liabilities are restated in their functional currency so that all the items presented are equivalent to their current purchasing power at the end of the current reporting period. A non-monetary item once restated, in accordance with the appropriate IFRS’s, cannot exceed its recoverable amount.

Assets and liabilities held for sale and discontinued operations:

Assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than through continuing use. This condition is met when the sale is highly probable, the asset is available for immediate sale in its present condition and the sale is expected to be completed within one year from the date of classification.

Assets and disposal groups are classified and presented as discontinued operations if the assets or disposal groups are disposed of or classified as held for sale and:

●	The assets or disposal groups are a major line of business or geographical area of operations;
●	The assets or disposal groups are part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or,
●	The assets or disposal groups are a subsidiary acquired solely for the purpose of resale.

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A component that is a separate major line of business or geographical area of operations and has been disposed of, closed, abandoned or terminated is also classified as a discontinued operation.

The assets or disposal groups that meet these criteria are measured at the lower of carrying amount and fair value less cost of disposal, with impairments recognized in the consolidated statements of income (loss) and comprehensive income (loss). An impairment loss is recognized for any initial or subsequent write-down of the asset or disposal group to fair value less cost to dispose. Non-current assets and liabilities held for sale are presented separately in current assets and liabilities within the consolidated statement of financial position. Assets held for sale are not depreciated, depleted or amortized. The comparative period consolidated statement of financial position is not re-presented.

The results of discontinued operations, net of tax, are shown separately in the consolidated statements of income (loss) and comprehensive income (loss) and comparative figures are re-presented.

Commitments and Contingencies

TR1 Master Fund loans

The Company has filed claims in connection with ongoing receivership proceedings against certain Traynor Ridge Capital entities, alleging that improper and unlawful trading activities in the Company’s securities caused a significant decline in its share price and resulted in substantial financial losses, including impairment of a planned equity financing. The Company is seeking damages of up to $25 million per respondent on a joint and several basis. A threshold hearing is scheduled to determine whether the claims disclose a valid cause of action. At this stage, the outcome of the proceedings is uncertain, and no amounts have been recognized in the consolidated financial statements. The Company is seeking to offset any amounts outstanding under the TR1 Master Fund loans against damages claimed by the Company.

Close-out Fund

The Company’s former subsidiary PPE Turkey contributed to the Close-Out Fund held by the operator where it has deposited 10% of natural gas revenue from the SASB project into the Close-Out Fund until an amount agreed to by both parties is attained. PPE Turkey did not meet its commitment since the beginning of 2025 and as a result its contribution to the Close-Out Fund is short by approximately $33,000. PPE Turkey was disposed of in April 2026

Arbitration

The Company through its’ former subsidiary PPE Turkey has advanced arbitration against an offshore drilling rig contractor for $20.3 million for gross negligent and breach of contact involving health and safety issues during the prior year drilling program resulting in loss and damages to Company. Liability is not admitted, the litigation is at the inception, and thus, legal counsel has advised that it is too soon to predict the outcome or the quantum of damages that will be assessed. In accordance with guidance for contingent assets and liabilities, no provision for any potential recovery of the losses will be made until recovery is virtually certain. If the Company’s claim is successful, the award will exceed the amount, if any, that is payable to the drilling contractor in its claim.

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The Company’s former subsidiary PPE Turkey is defending an action brought by the same drilling contractor in Europe to which it has advanced an arbitration claim, for drilling services seeking $3 million. This amount has fully been recorded in accounts payable in accordance with guidance as there is significant uncertainty as to the outcome of the arbitration. PPE Turkey was disposed of in April 2026.

Third party liability claim

As at December 31, 2024, the Company included in accounts payable and accrued liabilities a potential liability for an invoice in the amount of $144,247, issued to a 3rd party with whom the Company previously had a farm-in arrangement. The vendor is claiming that the Company is liable given the previous relationship. As at December 31, 2025, the Company included in accounts payable and accrued liabilities an additional $1,880,855 related to additional claims for invoices issued to the 3rd party. The claims and related accruals were held within PPE Turkey that was disposed of in April 2026. The Company disputes the asserted claims, and the ultimate resolution of these matters remains uncertain.

Dispute with former employees

The Company’s former subsidiary PPE Turkey filed claims against, and has received counter claims from former employees of PPE Turkey which was disposed of in April 2026. Management believes the claims against the Company are without merit. Accordingly, no provision has been recognized as at period end. The ultimate outcome of the proceedings cannot presently be determined.

M47 Block work program

In connection with the earn-in for a 29% working interest in the M47 Block in Turkey, the Company is committed to a total investment of $15,000,000, of which $9,500,000 is payable in respect of the 2026 work program and $5,500,000 in respect of the 2027 work program. The Company is also required to bear 80% of the cost of the next two exploration wells on the block and certain seismic costs. The Company’s entitlement to the working interest is conditional on it meeting these funding commitments.

Events Subsequent to the Three Months Ended June 30, 2026

Debt settlement

On August 25, 2026, the Company issued 133,333 units at CAD0.15 to settle CAD20,000 of debt. Each unit consists of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant is exercisable at CAD0.25 and shall be exercisable for a period of one (1) year from the date of issue.

Unit issuance

On August 25, 2026, the Company issued 1,266,667 units for gross proceeds of CAD190,000. Each unit consists of one common share in the capital of the Company and one half of one common share purchase warrant. Each whole warrant is exercisable at CAD0.25 and shall be exercisable for a period of one (1) year from the date of issue.

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Filing Exhibits & Attachments

2 documents

Press Releases

• EX-99.1 EX-99.1 959.4 KB
• EX-99.2 EX-99.2 256.5 KB