Bayou City Exploration (BYCX) 10-Q 13 Nov 13 2013 Q3 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	9 Months Ended
	Sep. 30, 2013	Nov. 10, 2013
Document And Entity Information	'	'
Entity Registrant Name	'BAYOU CITY EXPLORATION, INC.	'
Entity Central Index Key	'0001050957	'
Document Type	'10-Q	'
Document Period End Date	30-Sep-13	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Is Entity a Well-known Seasoned Issuer?	'No	'
Is Entity a Voluntary Filer?	'No	'
Is Entity's Reporting Status Current?	'Yes	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	990,217
Document Fiscal Period Focus	'Q3	'
Document Fiscal Year Focus	'2013	'

CONSOLIDATED_BALANCE_SHEETS

CONSOLIDATED BALANCE SHEETS (USD $)	Sep. 30, 2013	Dec. 31, 2012
CURRENT ASSETS:	'	'
Cash	$878,697	$2,087,480
Accounts receivable:	'	'
Trade and other	115,789	60,790
Receivable due from affiliates	1,113,064	104,167
Prepaid expenses and other	297,024	117,142
TOTAL CURRENT ASSETS	2,404,574	2,369,579
OIL AND GAS PROPERTIES, NET	311,281	340,053
OTHER FIXED ASSETS, NET	31,813	19,680
OTHER INVESTMENTS AT COST	120,564	126,128
INVESTMENT IN UNCONSOLIDATED AFFILIATE COMPANY	58,300	150,099
INVESTMENTS HELD FOR SALE	190,000	190,000
TOTAL ASSETS	3,116,532	3,195,539
CURRENT LIABILITIES:	'	'
Accounts payable and accrued liabilities	247,683	53,953
Accounts payable - minority shareholder	84,906	84,906
Turnkey partnership obligation	656,464	582,746
Accounts payable - related party	0	530,611
Notes payable - minority shareholders	100,000	100,000
Federal income taxes payable	0	32,697
TOTAL CURRENT LIABILITIES	1,089,053	1,384,913
COMMITMENTS AND CONTINGENCIES (NOTE 5)	'	'
TOTAL LIABILITIES	1,089,053	1,384,913
STOCKHOLDERS' EQUITY:	'	'
Preferred stock	0	0
Common stock	4,951	4,951
Additional paid in capital	13,912,814	13,912,814
Accumulated deficit	-11,890,268	-12,107,139
Treasury stock	-18	0
TOTAL STOCKHOLDERS' EQUITY	2,027,479	1,810,626
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY	$3,116,532	$3,195,539

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]	'	'
Preferred stock par value	$0.00	$0.00
Preferred stock shares authorized	5,000,000	5,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock par value	$0.01	$0.01
Common stock shares authorized	150,000,000	150,000,000
Common stock shares issued	990,217	990,230
Common stock shares outstanding	990,217	990,230

CONSOLIDATED_STATEMENTS_OF_OPE

CONSOLIDATED STATEMENTS OF OPERATIONS (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012	Sep. 30, 2013	Sep. 30, 2012
OPERATING REVENUES:	'	'	'	'
Oil and gas sales	$108,609	$32,824	$291,950	$115,018
Turnkey drilling contract revenue	1,038,932	328,696	1,598,658	1,829,164
TOTAL OPERATING REVENUES	1,147,541	361,520	1,890,608	1,944,182
OPERATING COSTS AND EXPENSES:	'	'	'	'
Lease operating expenses and production taxes	9,911	163	3,190	44,295
Abandonment and dry hole costs	57,590	66,903	82,059	66,903
Depletion, depreciation, and amortization	30,894	40,001	91,274	73,874
Turnkey drilling contract costs	576,394	123,923	850,161	775,668
Marketing Costs	88,027	32,666	146,046	282,844
General and administrative costs	183,993	123,502	566,836	456,009
TOTAL OPERATING COSTS	946,809	387,158	1,739,566	1,699,593
OPERATING INCOME (LOSS)	200,732	-25,638	151,042	244,589
OTHER INCOME (EXPENSE):	'	'	'	'
Miscellaneous income (expense)	7,329	0	7,529	-2,364
Equity in earnings from affiliated company	21,500	61,120	58,300	142,168
INCOME BEFORE INCOME TAX PROVISION	229,561	35,482	216,871	384,393
Income tax provision	0	0	0	0
NET INCOME	$229,561	$35,482	$216,871	$384,393
NET INCOME PER COMMON SHARE - BASIC	$0.23	$0.04	$0.22	$0.48
NET INCOME PER COMMON SHARE - DILUTED	$0.23	$0.04	$0.22	$0.48
Weighted average common shares outstanding -	'	'	'	'
Basic	990,217	990,154	990,217	798,469
Diluted	990,217	990,154	990,217	798,469

CONSOLIDATED_STATEMENTS_OF_CAS

CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
CASH FLOW FROM OPERATING ACTIVITIES:	'	'
Net Income (loss)	$216,871	$384,393
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:	'	'
Depreciation, depletion, and amortization	91,274	73,874
Abandonments and dry holes	82,059	66,903
Equity in earnings of affiliated company	-58,300	-141,901
Stock issued for services	0	22,500
Change in operating assets and liabilities:	'	'
Accounts receivable - trade	-54,999	-51,787
Receivable from partnerships	-1,008,897	0
Prepaid expenses and other	-179,882	0
Accounts payable and accrued liabilities	193,730	-128,794
Turnkey partnership obligation	73,718	30,900
Accounts payable - related party	-530,611	0
Federal income tax payable	-32,697	0
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	-1,207,734	256,087
CASH FLOW FROM INVESTING ACTIVITIES:	'	'
Purchase of oil and gas properties	-156,694	-140,607
Cash received from unconsolidated affiliated company	150,099	0
Principal payments received from other investments at cost	5,564	0
Purchase of investments of BYCX opportunity fund	0	-123,659
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	-1,031	-264,266
CASH FLOWS FROM FINANCING ACTIVITIES:	'	'
Proceeds from issuing stock	0	327,500
Purchase of treasury stock	-18	0
NET CASH PROVIDED BY FINANCING ACTIVITIES	-18	327,500
NET INCREASE (DECREASE) IN CASH	-1,208,783	319,321
CASH AT BEGINNING OF PERIOD	2,087,480	1,259,934
CASH AT END OF PERIOD	$878,697	$1,579,255

1_BASIS_OF_PRESENTATION

1. BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 1 - BASIS OF PRESENTATION	'
	The consolidated financial statements (“financial statements”) of Bayou City Exploration, Inc. (the “Company”) included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Although certain information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States has been omitted, the Company believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto included in the Form 10-K of the Company for its fiscal year ended December 31, 2012 and subsequent filings with the SEC.
	The financial statements included herein reflect all adjustments (consisting only of normal recurring accruals) which, in the opinion of management, are necessary to present a fair statement of the results for the interim periods. The results for interim periods are not necessarily indicative of trends or of results to be expected for a full year.

2_SUMMARY_OF_SIGNIFICANT_ACCOU

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	'
	Revenue Recognition
	Under the sales method, oil and gas revenue is recognized when produced and sold. Management fees are recognized under the accrual method and recorded when earned. Prospect fees charged under joint participation agreements are recorded after execution.
	Accounts Receivable
	Accounts receivable are from oil and gas sales produced and sold during the reporting period but awaiting cash payment, from expenditures paid on behalf of the limited partnerships, from expenditures on behalf of non-operators, including related parties and on oil and gas properties operated by the Company. Based upon a review of trade receivables as of September 30, 2013, there were no accounts receivable considered potentially uncollectible.
	Managed Limited Partnerships
	The Company sponsors limited partnerships for which it serves as the Managing General Partner. The Company normally participates for 10% of each limited partnership as its Managing General Partner, and accounts for the investment under proportionate consolidation. Revenues received and changes in the partnership investments are recorded as oil and gas revenues and net assets, respectively.
	Consolidation Policy
	The Company consolidates its interest in joint ventures and partnerships in the oil and gas industry using the “proportionate consolidation” method provided for in Accounting Standards Codification (ASC) Topic 810-10-45-14, Consolidation – Other Presentation Matters.   A proportionate consolidation is permitted when the Company does not control the joint venture or partnership but nonetheless exercises significant influence.  Under this method, the Company recognizes its proportionate share of each partnership’s assets, liabilities, revenues and expenses, which are included in the appropriate classifications on the Company’s financial statements.
	All significant intercompany transactions of the Company’s consolidated subsidiary and the limited partnerships have been eliminated.
	Oil and Gas Properties
	The Company follows the successful efforts method of accounting for oil and gas producing activities. Under the successful efforts method of accounting, costs which relate directly to the discovery of oil and gas reserves are capitalized. These capitalized costs include:
		-1	the costs of acquiring mineral interest in properties,
		-2	costs to drill and equip exploratory wells that find proved reserves,
		-3	costs to drill and equip development wells, and
		-4	costs for support equipment and facilities used in oil and gas producing activities.
	These costs are depreciated, depleted or amortized on the unit of production method, based on estimates of recoverable proved developed oil and gas reserves. Costs to drill exploratory wells that do not find proved reserves, geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed.
	The costs of acquiring unproved properties are capitalized as incurred and carried until the property is reclassified as a producing oil and gas property, or considered impaired as discussed below. The Company annually assesses its unproved properties to determine whether they have been impaired. If the results of this assessment indicate impairment, a loss is recognized by providing a valuation allowance. When an unproved property is surrendered, the costs related thereto are first charged to the valuation allowance, with any additional balance expensed to operations.
	The costs of drilling exploratory wells are capitalized as wells in progress pending determination of whether the well has proved reserves. Once a determination is made, the capitalized costs are charged to expense if no reserves are found or otherwise reclassified as part of the costs of the Company’s wells and related equipment. In the absence of a determination as to whether the reserves that have been found can be classified as proved, the costs of drilling such an exploratory well are not carried as an asset for more than one year following completion of drilling. If, after a year has passed, the Company is unable to determine that proved reserves have been found, the well is assumed to be impaired and its costs are charged to expense. At September 30, 2013 and December 31, 2012 the Company had $0 in capitalized costs pending determination.
	Other Dispositions
	Upon disposition or retirement of property and equipment other than oil and gas properties, the cost and related accumulated depreciation are removed from the accounts and the gain or loss thereon, if any, is credited or charged to expense. The Company recognizes the gain or loss on the sale of either a part of a proved oil and gas property or of an entire proved oil and gas property constituting a part of a field upon the sale or other disposition of such. The unamortized cost of the property or group of properties, a part of which was sold or otherwise disposed of, is apportioned to the interest sold and interest retained on the basis of the fair value of those interests.
	Impairment of Long-Lived Assets
	The Company follows the provisions of ASC Subtopic 360-35, “Property, Plant and Equipment – Subsequent Measurement.” Consequently, the Company reviews its long-lived assets to be held and used, including oil and gas properties accounted for under the successful efforts method of accounting. Whenever events or circumstances indicate the carrying value of those assets may not be recoverable, an impairment loss for proved properties and capitalized exploration and development costs is recognized. The Company assesses impairment of capitalized costs, or carrying amount, of proved oil and gas properties by comparing net capitalized costs to undiscounted future net cash flows on a field-by-field basis using known expected prices, based on set agreements. If impairment is indicated based on undiscounted expected future cash flows, then impairment is recognizable to the extent that net capitalized costs exceed the estimated fair value of the property. Fair value of the property is estimated by the Company using the present value of future cash flows discounted at 10%, in accordance with ASC 932-235, “Disclosures about Oil and Gas Producing Activities.”
	Stock Options
	Effective January 1, 2006, the Company accounts for stock options in accordance with revised Statement of Financial Accounting Standards (SFAS) No. 123, Share-Based Payment (SFAS 123(R) (ASC 718 and 505). Accordingly, stock compensation expense has been recognized in the statements of operations based on the grant date fair value of the options for the period ended December 31, 2006 and thereafter.
	Under SFAS 123(R) (ASC 718 and 505), the fair value of options is estimated at the date of grant using a Black-Scholes-Merton (“Black-Scholes”) option-pricing model, which requires the input of highly subjective assumptions including the expected stock price volatility. Volatility is determined using historical stock prices over a period consistent with the expected term of the option. The Company utilizes the guidelines of Staff Accounting Bulletin No. 107 (SAB 107) of the Securities and Exchange Commission relative to “plain vanilla” options in determining the expected term of option grants. SAB 107 permits the expected term of “plain vanilla” options to be calculated as the average of the option’s vesting term and contractual period.
	The Company has used this method in determining the expected term of all options. The Company has several awards that provide for graded vesting. The Company recognizes compensation cost for awards with graded vesting on a straight-line basis over the requisite service period for the entire award. The amount of compensation expense recognized at any date is at least equal to the portion of the grant date value of the award that is vested at that date.
	Concentrations of Credit Risk Arising From Cash Deposits in Excess of Insured Limits
	The Company maintains its cash balances in one financial institution located in Bowling Green, Kentucky. The account the cash balance reflects is insured by the Federal Deposit Insurance Corporation (“FDIC”) for an unlimited amount since it meets the FDIC’s requirements as a noninterest-bearing account. At September 30, 2013, the cash balances were at $878,697.
	Offering Related Expenses
	The Company expenses marketing-related offering expenses as these are incurred. Marketing expenses totaled $146,046 and $282,844 in the nine months ended September 30, 2013 and 2012, respectively.
	Fair Value of Financial Instruments
	The carrying cash value and cash equivalents, receivables, prepaids, accounts payable, notes payable and advances payable approximate their fair value. Management is of the opinion that the Company is not exposed to significant interest or credit risk arising from these financial instruments.
	Income Taxes
	The accompanying consolidated statements of operations do not reflect any income tax expense due to the partial utilization of the net operating loss carry forward existing at December 31, 2012 totaling $2,303,527.

3_CERTAIN_RELATIONSHIPS_AND_RE

3. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 3 - CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS	'
	Sale of Common Stock to Related Parties
	On March 8, 2012, the Company entered into a Stock Purchase Agreement with eight investors (the “Investors”), pursuant to which the Company sold 700,000 shares of the Company’s common stock, $0.005 par value (the “Common Stock”) in a private offering (the “Offering”) at a price of $0.005 per share, for total consideration to the Company valued at $350,000.  The Investors included Charles T. Bukowski, Jr., the Company’s former President and a former member of the Company’s Board of Directors (the “Board”), Travis N. Creed, a member of the Board, Stephen C. Larkin, the Company’s President and Chief Financial Officer as well as a member of the Board, Robert D. and Doris R. Burr, the Company’s former Chief Executive Officer and his spouse, Danny Looney, the Company’s tax accountant, Harry J. Peters, a consultant to the Company, Robert Shallow, a current stockholder, and G2 International, Inc., a consultant to the Company. Of the $350,000, $327,500 was collected in cash and $22,500 was issued in satisfaction of payment for consulting services.
	As of September 30, 2013, there were 990,217 shares of Common Stock issued and outstanding. Stephen C. Larkin, President, Director and Chief Financial Officer of the Company, beneficially owns approximately 27% of the issued and outstanding Common Stock as a result of his purchase in the Offering.
	Payables and Notes Payable to Related Parties
	As of September 30, 2013 and December 31, 2012, the Company had the following debts and obligations to related parties:
		30-Sep-13		31-Dec-12
	Note Payable to a minority shareholder	$	100,000	$	100,000
	Total Note Payable to a minority shareholder	$	100,000	$	100,000
	During the fourth quarter of 2007, Peter Chen, a minority shareholder, loaned the Company $100,000 to finance the Company’s operations. The Company executed a written promissory note on October 4, 2007 which is due on demand and bears an interest rate of 0%.
	The Opportunity Funds and Affiliated Partners
	In April 2011, the Company acquired a 25% ownership interest in Affiliated Partners, a general partnership formed for the purpose of holding an 80% interest in Loanmod, LLC, a Delaware limited liability company (“Loanmod”). Affiliated Partners is also owned by our President, Chief Executive Officer, Chief Financial Officer and director, Stephen Larkin (50%) and our other director, Travis Creed (25%). The Company acquired its interest in Affiliated Partners in exchange for its agreement to serve as the managing member and investment manager of the Opportunity Fund VII, LLC, a Delaware limited liability company (the “Opportunity Fund VII”), which invests in mortgage notes and land contracts secured by real estate. The Company also serves as the managing member and investment manager of the BYCX Opportunity Fund I (“BYCX Fund I”), established in June 2011, and the Opportunity Fund VIII, LLC (the “Opportunity Fund VIII,” and collectively with the other managed funds, the “Opportunity Funds”), established February 2013, both of which are also Delaware limited liability companies that invest in mortgage notes and land contracts. The purchases of mortgage notes and land contracts by the Opportunity Funds are facilitated primarily by Loanmod, which receives income in connection with its acquisition of mortgage notes and land contracts for the Opportunity Funds.
	Bonus Payment to Chief Executive Officer
	In February 2013, the Company paid Stephen Larkin, its President, Chief Executive Officer and Chief Financial Officer, a bonus of $27,750 (the “2012 Bonus”). The 2012 Bonus was based upon the Company’s performance during the 2012 fiscal year.

4_OIL_AND_GAS_PROPERTIES

4. OIL AND GAS PROPERTIES	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 4 - OIL AND GAS PROPERTIES	'
	Oil and Gas properties, stated at cost, consisted of the following:
		30-Sep-13			31-Dec-12
	Proved oil and gas properties	$	1,007,420		$	776,540
	Total oil and gas properties		1,007,420			776,540
	Less accumulated depletion and amortization		(696,139	)		(436,487	)
	Net oil and gas properties	$	311,281		$	340,053

5_COMMITMENTS_AND_CONTINGENCIE

5. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 5 - COMMITMENTS AND CONTINGENCIES	'
	Commitments
	As of September 30, 2013, neither the Company nor any of its properties is subject to any material pending legal proceedings.
	Contingencies
	As the managing general partner of the Company’s investment partnerships, the Company’s operations are subject to environmental protection regulations established by federal, state, and local agencies that may necessitate significant capital outlays that, in turn, would materially affect the financial position and business operations of the Company. These regulations, enacted to protect against waste, conserve natural resources and prevent pollution, could necessitate spending funds on environmental protection measures, rather than on drilling operations. Because these laws and regulations change frequently and are becoming increasingly more stringent, the costs to the Company of compliance with existing and future environmental regulations and the overall impact on the Company’s operations or financial condition cannot be predicted, but are likely to increase. Furthermore, if any penalties or prohibitions were imposed on the Company for violating such regulations, the Company’s operations could be adversely affected.

6_STOCKHOLDERS_EQUITY

6. STOCKHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2013
Notes to Financial Statements	'
NOTE 6 - STOCKHOLDERS' EQUITY	'
	Authorization to Issue Shares — Preferred and Common
	The Company is authorized to issue two classes of stock that are designated as common and preferred stock. As of September 30, 2013, the Company was authorized to issue 155,000,000 shares of stock, 150,000,000 being designated as Common Stock, of which 990,217 were outstanding, and 5,000,000 shares designated as preferred stock, of which 0 shares were outstanding.
	Issuance of Equity Securities
	As described in Note 3 above, on March 8, 2012, the Company conducted a private offering pursuant to which the Company sold 700,000 shares of the Company’s Common Stock for total consideration to the Company valued at $350,000.  The consideration for the Common Stock was paid primarily in cash, however, the shares issued to one Investor were issued in exchange for settlement of outstanding invoices for consulting services rendered.
	During the nine months ended September 30, 2013, the Company did not issue any equity securities.
	Stock Options
	During the nine months ended September 30, 2013, the Company did not issue any options to purchase shares of the Company’s Common Stock, and no outstanding options were exercised during this period.
	Reverse Split of Common Stock
	On July 26, 2012, the Company effected a 1 for 100 reverse stock split of the Company’s Common Stock, resulting in a reduction of the number of shares outstanding of the Company from approximately 99,003,633 to 990,230. At September 30, 2013, the Company had 990,217 shares of Common Stock outstanding. Persons holding less than 100 shares of Common Stock received one share of Common Stock. The rights and privileges of the holders of shares of Common Stock were substantially unaffected by the reverse stock split. All issued and outstanding options, warrants and convertible securities were appropriately adjusted for the reverse stock split automatically on the effective date of the reverse stock split, and have been presented in the financial statements to adjust for the reverse stock split.
	Common Stock Repurchase
	On July 22, 2012, the Company agreed, in a privately negotiated transaction, to repurchase 13 shares of its Common Stock for total consideration of $18, or $1.40 per share, which was the closing price of the Company’s Common Stock on the date of repurchase. The 13 shares are reflected on the Company’s financial statements as Treasury Stock.

2_SUMMARY_OF_SIGNIFICANT_ACCOU1

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2013
Accounting Policies [Abstract]	'
Revenue Recognition	'
	Under the sales method, oil and gas revenue is recognized when produced and sold. Management fees are recognized under the accrual method and recorded when earned. Prospect fees charged under joint participation agreements are recorded after execution.
Accounts Receivable	'
	Accounts receivable are from oil and gas sales produced and sold during the reporting period but awaiting cash payment, from expenditures paid on behalf of the limited partnerships, from expenditures on behalf of non-operators, including related parties and on oil and gas properties operated by the Company. Based upon a review of trade receivables as of September 30, 2013, there were no accounts receivable considered potentially uncollectible.
Managed Limited Partnerships	'
	The Company sponsors limited partnerships for which it serves as the Managing General Partner. The Company normally participates for 10% of each limited partnership as its Managing General Partner, and accounts for the investment under proportionate consolidation. Revenues received and changes in the partnership investments are recorded as oil and gas revenues and net assets, respectively.
Consolidation Policy	'
	The Company consolidates its interest in joint ventures and partnerships in the oil and gas industry using the “proportionate consolidation” method provided for in Accounting Standards Codification (ASC) Topic 810-10-45-14, Consolidation – Other Presentation Matters.   A proportionate consolidation is permitted when the Company does not control the joint venture or partnership but nonetheless exercises significant influence.  Under this method, the Company recognizes its proportionate share of each partnership’s assets, liabilities, revenues and expenses, which are included in the appropriate classifications on the Company’s financial statements.
	All significant intercompany transactions of the Company’s consolidated subsidiary and the limited partnerships have been eliminated.
Oil and Gas Properties	'
	The Company follows the successful efforts method of accounting for oil and gas producing activities. Under the successful efforts method of accounting, costs which relate directly to the discovery of oil and gas reserves are capitalized. These capitalized costs include:
		-1	the costs of acquiring mineral interest in properties,
		-2	costs to drill and equip exploratory wells that find proved reserves,
		-3	costs to drill and equip development wells, and
		-4	costs for support equipment and facilities used in oil and gas producing activities.
	These costs are depreciated, depleted or amortized on the unit of production method, based on estimates of recoverable proved developed oil and gas reserves. Costs to drill exploratory wells that do not find proved reserves, geological and geophysical costs, and costs of carrying and retaining unproved properties are expensed.
	The costs of acquiring unproved properties are capitalized as incurred and carried until the property is reclassified as a producing oil and gas property, or considered impaired as discussed below. The Company annually assesses its unproved properties to determine whether they have been impaired. If the results of this assessment indicate impairment, a loss is recognized by providing a valuation allowance. When an unproved property is surrendered, the costs related thereto are first charged to the valuation allowance, with any additional balance expensed to operations.
	The costs of drilling exploratory wells are capitalized as wells in progress pending determination of whether the well has proved reserves. Once a determination is made, the capitalized costs are charged to expense if no reserves are found or otherwise reclassified as part of the costs of the Company’s wells and related equipment. In the absence of a determination as to whether the reserves that have been found can be classified as proved, the costs of drilling such an exploratory well are not carried as an asset for more than one year following completion of drilling. If, after a year has passed, the Company is unable to determine that proved reserves have been found, the well is assumed to be impaired and its costs are charged to expense. At September 30, 2013 and December 31, 2012 the Company had $0 in capitalized costs pending determination.
Other Dispositions	'
	Upon disposition or retirement of property and equipment other than oil and gas properties, the cost and related accumulated depreciation are removed from the accounts and the gain or loss thereon, if any, is credited or charged to expense. The Company recognizes the gain or loss on the sale of either a part of a proved oil and gas property or of an entire proved oil and gas property constituting a part of a field upon the sale or other disposition of such. The unamortized cost of the property or group of properties, a part of which was sold or otherwise disposed of, is apportioned to the interest sold and interest retained on the basis of the fair value of those interests.
Impairment of Long-Lived Assets	'
	The Company follows the provisions of ASC Subtopic 360-35, “Property, Plant and Equipment – Subsequent Measurement.” Consequently, the Company reviews its long-lived assets to be held and used, including oil and gas properties accounted for under the successful efforts method of accounting. Whenever events or circumstances indicate the carrying value of those assets may not be recoverable, an impairment loss for proved properties and capitalized exploration and development costs is recognized. The Company assesses impairment of capitalized costs, or carrying amount, of proved oil and gas properties by comparing net capitalized costs to undiscounted future net cash flows on a field-by-field basis using known expected prices, based on set agreements. If impairment is indicated based on undiscounted expected future cash flows, then impairment is recognizable to the extent that net capitalized costs exceed the estimated fair value of the property. Fair value of the property is estimated by the Company using the present value of future cash flows discounted at 10%, in accordance with ASC 932-235, “Disclosures about Oil and Gas Producing Activities.”
Stock Options	'
	Effective January 1, 2006, the Company accounts for stock options in accordance with revised Statement of Financial Accounting Standards (SFAS) No. 123, Share-Based Payment (SFAS 123(R) (ASC 718 and 505). Accordingly, stock compensation expense has been recognized in the statements of operations based on the grant date fair value of the options for the period ended December 31, 2006 and thereafter.
	Under SFAS 123(R) (ASC 718 and 505), the fair value of options is estimated at the date of grant using a Black-Scholes-Merton (“Black-Scholes”) option-pricing model, which requires the input of highly subjective assumptions including the expected stock price volatility. Volatility is determined using historical stock prices over a period consistent with the expected term of the option. The Company utilizes the guidelines of Staff Accounting Bulletin No. 107 (SAB 107) of the Securities and Exchange Commission relative to “plain vanilla” options in determining the expected term of option grants. SAB 107 permits the expected term of “plain vanilla” options to be calculated as the average of the option’s vesting term and contractual period.
	The Company has used this method in determining the expected term of all options. The Company has several awards that provide for graded vesting. The Company recognizes compensation cost for awards with graded vesting on a straight-line basis over the requisite service period for the entire award. The amount of compensation expense recognized at any date is at least equal to the portion of the grant date value of the award that is vested at that date.
Concentrations of Credit Risk Arising From Cash Deposits in Excess of Insured Limits	'
	The Company maintains its cash balances in one financial institution located in Bowling Green, Kentucky. The account the cash balance reflects is insured by the Federal Deposit Insurance Corporation (“FDIC”) for an unlimited amount since it meets the FDIC’s requirements as a noninterest-bearing account. At September 30, 2013, the cash balances were at $878,697.
Offering Related Expenses	'
	The Company expenses marketing-related offering expenses as these are incurred. Marketing expenses totaled $146,046 and $282,844 in the nine months ended September 30, 2013 and 2012, respectively.
Fair Value of Financial Instruments	'
	The carrying cash value and cash equivalents, receivables, prepaids, accounts payable, notes payable and advances payable approximate their fair value. Management is of the opinion that the Company is not exposed to significant interest or credit risk arising from these financial instruments
Income Taxes	'
	Income Taxes
	The accompanying consolidated statements of operations do not reflect any income tax expense due to the partial utilization of the net operating loss carry forward existing at December 31, 2012 totaling $2,303,527.

3_CERTAIN_RELATIONSHIPS_AND_RE1

3. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Tables)	9 Months Ended
	Sep. 30, 2013
Related Party Transactions [Abstract]	'
Payables and Notes Payable to Related Parties	'
	As of September 30, 2013 and December 31, 2012, the Company had the following debts and obligations to related parties:
		30-Sep-13		31-Dec-12
	Note Payable to a minority shareholder	$	100,000	$	100,000
	Total Note Payable to a minority shareholder	$	100,000	$	100,000

4_OIL_AND_GAS_PROPERTIES_Table

4. OIL AND GAS PROPERTIES (Tables)	9 Months Ended
	Sep. 30, 2013
Oil and Gas Property [Abstract]	'
OIL AND GAS PROPERTIES	'
	Oil and Gas properties, stated at cost, consisted of the following:
		30-Sep-13			31-Dec-12
	Proved oil and gas properties	$	1,007,420		$	776,540
	Total oil and gas properties		1,007,420			776,540
	Less accumulated depletion and amortization		(696,139	)		(436,487	)
	Net oil and gas properties	$	311,281		$	340,053

2_SUMMARY_OF_SIGNIFICANT_ACCOU2

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $)	9 Months Ended
	Sep. 30, 2013	Sep. 30, 2012
Accounting Policies [Abstract]	'	'
Marketing-related offering expenses	$146,046	$282,844

3_CERTAIN_RELATIONSHIPS_AND_RE2

3. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Related Party Transactions [Abstract]	'	'
Note Payable to a minority shareholder	$100,000	$100,000
Total Note Payable to a minority shareholder	$100,000	$100,000

4_OIL_AND_GAS_PROPERTIES_Detai

4. OIL AND GAS PROPERTIES (Details) (USD $)	Sep. 30, 2013	Dec. 31, 2012
Oil and Gas Property [Abstract]	'	'
Proved oil and gas properties	$1,007,420	$776,540
Total oil and gas properties	1,007,420	776,540
Less accumulated depletion and amortization	-696,139	-436,487
Net oil and gas properties	$311,281	$340,053