Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 14, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | VIKING ENERGY GROUP, INC. | |
Entity Central Index Key | 1,102,432 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 66,220,524 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash | $ 568,222 | $ 18,605 |
Accounts receivable - oil and gas | 63,257 | 66,176 |
Other receivable - related party | 76,939 | 76,939 |
Prepaid expenses | 6,549 | 87,532 |
Total current assets | 714,967 | 249,252 |
Oil and gas properties, full cost method | ||
Proved developed producing oil and gas properties, net | 2,254,925 | 1,765,373 |
Undeveloped and non-producing oil and gas properties, net | 1,166,383 | 1,237,489 |
Total oil and gas properties, net | 3,421,308 | 3,002,862 |
Long term investment | 106,930 | |
Derivative asset | 683 | |
TOTAL ASSETS | 4,136,958 | 3,359,044 |
Current liabilities: | ||
Accrued expenses and other current liabilities | 253,491 | 179,421 |
Accounts payable | 115,885 | 121,365 |
Derivative liability | 606,878 | 1,136,894 |
Amount due to directors | 1,056,147 | 1,072,576 |
Current portion of long term debt - net of debt discount | 1,518,464 | 1,302,476 |
Total current liabilities | 3,550,865 | 3,812,732 |
Long term debt - net of current portion and debt discount | 2,568,568 | 1,579,469 |
Asset retirement obligation | 1,067,232 | 833,017 |
TOTAL LIABILITIES | 7,186,665 | 6,225,218 |
Commitments and contingencies (Note 7) | ||
Capital Stock | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 28,092 shares issued and outstanding as of September 30, 2017 and December 31, 2016 | 28 | 28 |
Common stock, $0.001 par value, 100,000,000 shares authorized, 66,220,524 and 53,093,192 shares issued, issuable and outstanding as of September 30, 2017 and December 31, 2016 respectively. | 66,221 | 53,093 |
Additional Paid-In Capital | 14,011,458 | 11,526,847 |
Prepaid equity-based compensation | (50,072) | (35,068) |
Accumulated other comprehensive loss | (1,446) | |
Accumulated deficit | (17,077,342) | (14,409,628) |
TOTAL STOCKHOLDERS DEFICIT | (3,049,707) | (2,866,174) |
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $ 4,136,958 | $ 3,359,044 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
STOCKHOLDERS' DEFICIT | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 5,000,000 | 5,000,000 |
Preferred stock, issued | 28,092 | 28,092 |
Preferred stock, outstanding | 28,092 | 28,092 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 100,000,000 | 100,000,000 |
Common stock, issued | 66,220,524 | 53,093,192 |
Common stock, outstanding | 66,220,524 | 53,093,192 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenue | ||||
Oil and gas sales | $ 221,329 | $ 105,427 | $ 588,622 | $ 232,013 |
Operating expenses | ||||
Lease operating costs | 172,893 | 66,456 | 437,477 | 165,773 |
General and administrative | 180,400 | 186,508 | 666,323 | 439,604 |
Stock based compensation | 153,155 | 172,219 | 1,304,175 | 578,363 |
Accretion - ARO | 10,526 | 5,234 | 29,167 | 15,513 |
Depreciation, depletion and amortization | 59,711 | 29,009 | 146,602 | 77,625 |
Total operating expenses | 576,685 | 459,426 | 2,583,744 | 1,276,878 |
Loss from operations | (355,356) | (353,999) | (1,995,122) | (1,044,865) |
Other income (expenses) | ||||
Interest expense | (470,614) | (542,107) | (1,160,875) | (1,966,015) |
Change in fair value of derivatives | 40,370 | 2,765,013 | 495,468 | 833,418 |
Loss on sale of investments | (7,185) | |||
Gain on settlement of debt | 75,000 | |||
Total other income (expense) | (430,244) | 2,222,906 | (672,592) | (1,057,597) |
Net income (loss) before income taxes | (785,600) | 1,868,907 | (2,667,714) | (2,102,462) |
Income tax provision | (635,428) | |||
Benefit from utilization of net operating loss | 635,428 | |||
Net income (loss) | (785,600) | 1,868,907 | (2,667,714) | (2,102,462) |
Other comprehensive income (loss) | ||||
Unrealized gain (loss) on securities available-for-sale | (3,394) | 1,446 | 148,663 | |
Net Comprehensive income (loss) | $ (785,600) | $ 1,865,513 | $ (2,666,268) | $ (1,953,798) |
Earnings (loss) per common share | ||||
Basic | $ (0.01) | $ 0.04 | $ (0.04) | $ (0.05) |
Diluted | $ (0.01) | $ 0.04 | $ (0.04) | $ (0.05) |
Weighted average number of common shares outstanding | ||||
Basic | 64,051,015 | 45,837,636 | 60,723,535 | 43,584,699 |
Diluted | 64,051,015 | 54,004,303 | 60,723,535 | 43,584,699 |
Consolidated Statement Of Cash
Consolidated Statement Of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Cash flows from operating activities: | |||||
Net loss | $ (785,600) | $ 1,868,907 | $ (2,667,714) | $ (2,102,462) | $ (5,445,187) |
Adjustments to reconcile net loss to cash used in operating activities: | |||||
Derivative gain | (40,370) | (2,765,013) | (495,468) | (833,418) | |
Amortization of prepaid expenses | 180,983 | ||||
Stock based compensation | 153,155 | 172,219 | 1,304,175 | 578,363 | |
Stock based interest payment | 52,500 | ||||
Loss on sale of investments | 7,185 | ||||
Depreciation, depletion and amortization | 59,711 | 29,009 | 146,602 | 77,625 | |
Accretion - Asset retirement obligation | 10,526 | 5,234 | 29,167 | 15,513 | |
Amortization of debt discount | 817,431 | 1,626,062 | |||
Changes in operating assets and liabilities | |||||
Accounts receivable | 2,919 | (11,947) | |||
Accounts payable | (5,480) | (89,282) | |||
Accrued expenses and other current liabilities | 90,975 | 151,862 | |||
Amounts due to directors | 121,755 | 197,280 | |||
Net cash used in operating activities | (467,470) | (337,904) | |||
Cash flows from investing activities: | |||||
Purchase of oil and gas properties | (360,000) | (1,350,000) | |||
Proceeds from sale of investments | 101,191 | ||||
Net cash used in investing activities | (258,809) | (1,350,000) | |||
Cash flows from financing activities: | |||||
Proceeds from amount due to directors | 5,350 | ||||
Repayments of amount due to directors | (348,438) | (56,056) | |||
Proceeds from sale of common stock | 331,667 | 388,125 | |||
Common stock issuance costs | (37,500) | ||||
Proceeds from long term debt | 3,288,650 | 2,021,875 | |||
Debt issuance costs | (216,000) | ||||
Repayment of long term debt | (1,785,333) | (570,500) | |||
Net cash provided by financing activities | 1,275,896 | 1,745,944 | |||
Net increase in cash | 549,617 | 58,040 | |||
Cash, beginning of period | 18,605 | 30,585 | 30,585 | ||
Cash, end of period | $ 568,222 | $ 88,625 | 568,222 | 88,625 | $ 18,605 |
Supplemental Cash Flow Information | |||||
Cash paid for: Interest | 209,307 | 125,431 | |||
Cash paid for: Income taxes | |||||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | |||||
Conversion of convertible note payable | 6,778 | ||||
Issuance of shares for oil and gas property acquisitions | 820,250 | ||||
Issuance of warrants for 4,062,500 common shares as debt discount | 416,315 | ||||
Loan from director to pay convertible debt | 100,000 | ||||
Issuance of shares as deposit for oil and gas property acquisition | 288,000 | ||||
Prepayment of contract through amounts due directors | 100,000 | ||||
Long term debt paid through amounts due directors | 104,904 | ||||
Issuance of shares for contract services | 700,920 | ||||
Sale of shares through satisfaction of unrelated notes payable | 127,215 | ||||
Accrued expenses exchanged for long term debt | 9,500 | ||||
Increase in oil and gas properties due to asset retirement obligation | 205,048 | ||||
Issuance of shares and warrants as discount on debt | $ 684,411 |
Consolidated Statement of Chang
Consolidated Statement of Changes in Stockholders Deficit (Unaudited) - USD ($) | Common Stock | Shares to be issued | Preferred Stock | Additional Paid-in Capital | Prepaid Equity Based Compensation | Accumulated Other Comprehensive Income | Accumulated Deficit | Total |
Beginning Balance, Shares at Dec. 31, 2015 | 30,333,993 | 28,092 | ||||||
Beginning Balance, Amount at Dec. 31, 2015 | $ 30,334 | $ 28 | $ 7,960,372 | $ (145,562) | $ (158,424) | $ (8,964,441) | $ (1,277,693) | |
Shares issued in satisfaction of debt, Shares | 300,926 | |||||||
Shares issued in satisfaction of debt, Amount | $ 301 | 9,810 | 10,111 | |||||
Derivative liability adjustment - satisfaction of convertible debt | 685,668 | 685,668 | ||||||
Shares issued for consulting services, Shares | 1,315,000 | |||||||
Shares issued for consulting services, Amount | $ 1,315 | 164,185 | 165,500 | |||||
Shares issued in acquisition of oil and gas properties, Shares | 14,862,021 | |||||||
Shares issued in acquisition of oil and gas properties, Amount | $ 14,862 | 1,430,829 | 1,445,691 | |||||
Shares issued as prepaid equity-based compensation, Shares | 5,000,000 | |||||||
Shares issued as prepaid equity-based compensation, Amount | $ 5,000 | 795,000 | (800,000) | |||||
Cancellation of shares issued as prepaid equity-based compensation, Shares | (4,000,000) | |||||||
Cancellation of shares issued as prepaid equity-based compensation, Amount | $ (4,000) | (636,000) | 640,000 | |||||
Sale of stock, Shares | 2,841,667 | |||||||
Sale of stock, Amount | $ 2,842 | 423,408 | 426,250 | |||||
Capital issuance costs | (37,500) | (37,500) | ||||||
Shares issued as payment for interest expense, Shares | 1,931,250 | |||||||
Shares issued as payment for interest expense, Amount | $ 1,931 | 324,444 | 326,375 | |||||
Shares issued as additional discount on debt, Shares | 508,335 | |||||||
Shares issued as additional discount on debt, Amount | $ 508 | 75,742 | 76,250 | |||||
Warrants issued for services | 330,889 | 330,889 | ||||||
Amortization of prepaid equity-based compensation | 270,494 | 270,494 | ||||||
Unrealized gain (loss) on securities held for sale | 156,978 | 156,978 | ||||||
Net loss | (5,445,187) | (5,445,187) | ||||||
Ending Balance, Shares at Dec. 31, 2016 | 53,093,192 | 28,092 | ||||||
Ending Balance, Amount at Dec. 31, 2016 | $ 53,093 | $ 28 | 11,526,847 | (35,068) | (1,446) | (14,409,628) | (2,866,174) | |
Derivative liability adjustment - satisfaction of convertible debt | 35,232 | 35,232 | ||||||
Shares issued for consulting services, Shares | 2,892,889 | |||||||
Shares issued for consulting services, Amount | $ 2,894 | 478,739 | 481,633 | |||||
Shares issued as prepaid equity-based compensation, Shares | 4,135,000 | |||||||
Shares issued as prepaid equity-based compensation, Amount | $ 4,135 | 833,411 | (837,546) | |||||
Sale of stock, Shares | 3,059,442 | |||||||
Sale of stock, Amount | $ 3,059 | 455,858 | 458,917 | |||||
Amortization of prepaid equity-based compensation | 822,542 | 822,542 | ||||||
Unrealized gain (loss) on securities held for sale | 1,446 | 1,446 | ||||||
Shares and warrants issued as discount on new debt, Shares | 3,040,000 | |||||||
Shares and warrants issued as discount on new debt, Amount | $ 3,040 | 681,371 | 684,411 | |||||
Net loss | (2,667,714) | (2,667,714) | ||||||
Ending Balance, Shares at Sep. 30, 2017 | 66,220,523 | 28,092 | ||||||
Ending Balance, Amount at Sep. 30, 2017 | $ 66,221 | $ 28 | $ 14,011,458 | $ (50,072) | $ (17,077,342) | $ (3,049,707) |
Nature of Business and Going Co
Nature of Business and Going Concern | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Note 1 - Nature of Business and Going Concern | Viking Energy Group, Inc. (Viking or the Company) was incorporated under the laws of the State of Florida on May 3, 1989, as Sparta Ventures Corp. and remained inactive until June 27, 1998. After several name changes, the Company merged with and into a wholly-owned subsidiary, SinoCubate, Inc., which remained the surviving entity of the merger. SinoCubate, Inc. was formed in the State of Nevada on September 11, 2008. The merger resulted in a change of name of the Company from Synthenol Inc. to SinoCubate, Inc., and a change in the state of incorporation of the Company from Florida to Nevada. On June 13, 2012, the Company changed its name to Viking Investments Group, Inc., and the Companys ticker symbol was changed to VKIN. On March 17, 2017, the Company changed its name to Viking Energy Group, Inc. The Company's business plan is to engage in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through collaborative partnerships with other companies in this field of endeavor. On March 8, 2016, the Company incorporated a wholly owned subsidiary, Viking Oil & Gas (Canada) ULC, in Alberta, Canada, to hold its Canadian oil and gas interests. In November of 2014, the Company entered into its first contract relative to oil and gas activities involving jointly controlled assets and related liabilities by purchasing an undivided 50% interest in the Joffre project located in Alberta, Canada. On February 23, 2016, the Company closed on the acquisition of working interests in four leases with access to the mineral rights (oil and gas) concerning approximately 281 acres of property in Miami and Franklin Counties in eastern Kansas. On August 30, 2016, the Company created an additional wholly owned subsidiary, Mid-Con Petroleum, LLC (Mid-Con), in the State of Kansas to hold its current acquisitions in the central United States. On October 4, 2016, the Company, through Mid-Con, completed an acquisition whereby the Company (i) increased its working interest in three existing oil and gas leases in Miami and Franklin Counties in Eastern Kansas, and (ii) acquired a working interest in four new oil and gas leases in the same region, comprising approximately 660 acres of property. On August 25, 2017, the Company created an additional wholly owned subsidiary, Mid-Con Drilling, LLC. (Mid-Con Drilling), in the State of Kansas to hold additional acquisitions in the central United States. On September 11, 2017, the Company through Mid-Con Drilling, completed an acquisition of a 90% working interest in four new oil and gas leases in Anderson County in Eastern Kansas, comprising approximately 980 acres of property. These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company had a net comprehensive loss of $2,666,268, and $1,953,798 for the nine months ended September 30, 2017 and 2016, respectively. The Company has accumulated a stockholders deficit of $3,049,707 as of September 30, 2017. These conditions raise substantial doubt about the Companys ability to continue as a going concern. The Companys ability to continue as a going concern is dependent upon its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management has no formal plan in place to address this concern but considers that the Company will be able to obtain additional funds by equity financing and/or related party advances; however, there is no assurance of additional funding being available. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Note 2 - Summary of Significant Accounting Policies | a) Basis of Presentation The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and the rules of the Securities and Exchange Commission (SEC) and should be read in conjunction with the audited financial statements and notes thereto contained in Vikings latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. b) Basis of Consolidation The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiaries, Viking Oil & Gas (Canada) ULC, a Canadian corporation formed on March 8, 2016, to provide a base of operations for properties in Canada, Mid-Con Petroleum, LLC, formed on August 30, 2016, and Mid-Con Drilling, LLC, formed on August 25, 2017, both to provide a base of operations for properties in the Central United States. All significant intercompany transactions and balances have been eliminated upon consolidation. c) Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company's actual results could vary materially from management's estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination of expected tax rates for future income tax recoveries, stock-based compensation, embedded derivative liabilities, asset retirement obligations and impairment of long-lived assets. The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized. d) Financial Instruments ASC Topic 820-10, Fair Value Measurement requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for other receivable related party, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to directors, and convertible notes each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: · Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement. Assets and liabilities measured at fair value as of September 30, 2017 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ 1,446 Commodity Derivative - 683 - 61,744 $ - $ 683 $ - $ 69,190 Financial liabilities Derivative liabilities $ - $ - $ 606,878 $ 433,724 $ - $ - $ 606,878 $ 433,724 Assets and liabilities measured at fair value as of December 31, 2016 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 106,930 $ - $ - $ 156,978 $ 106,930 $ - $ - $ 156,978 Financial liabilities Derivative liabilities $ - $ - $ 1,075,833 $ 265,448 Commodity Derivative - 61,061 - (61,061 ) $ - $ 61,061 $ 1,075,833 $ 204,387 The Companys long-term investment consisted of 1,437,500 common shares of Tanager Energy Inc., as of December 31, 2016, which is traded on the TSX Venture Exchange (Toronto Stock Exchange). During the three months ended March 31, 2017, the Company sold these shares. The change in the fair value of this investment that has been recognized as an unrealized gain in other comprehensive income on the statement of operations and comprehensive loss was $1,446 for the nine months ended September 30, 2017, and $148,663 for the nine months ended September 30, 2016. The Company had commodity financial derivatives in place at September 30, 2017. The Company does not designate its commodities derivative instruments as hedges and therefore does not apply hedge accounting. Changes in fair value of derivative instruments subsequent to the initial measurement are recorded as change in fair value on derivative liability, in other income (expense). The estimated fair value amounts of the Companys commodity derivative instruments have been determined at discrete points in time based on relevant market information which resulted in the Company classifying such derivatives as Level 2. Although the Companys commodity derivative instruments are valued using public indices, the instruments themselves are traded with unrelated counterparties and are not openly traded on an exchange. The Company uses the Black-Scholes model to value its derivative liabilities. This model takes into account inputs such as contract terms, including maturity and market parameters, including assumptions associated with interest rates, volatility and credit worthiness. The derivative assets and liabilities of the Company were $683 and $606,878 respectively as of September 30, 2017, and $0 and $1,075,833 respectively as of December 31, 2016, respectively. The change in the fair value of the derivative assets and liabilities for the nine months ended September 30, 2017 consisted of an increase of $61,744 associated with commodity derivatives, a decrease in derivative liabilities of $433,724 associated with warrants and the conversion features of convertible debt, and a reduction of $35,232 associated with the satisfaction of certain convertible debt and a gain recognized in the statement of operations and comprehensive gain in the amount of $495,468. e) Cash and Cash Equivalents Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At September 30, 2017 and December 31, 2016, the Company does not have any cash deposits in Company accounts in excess of FDIC insured limits. At September 30, 2017, the Company had $82,500 of cash held in escrow awaiting disbursement instructions from the estate of the noteholder of a secured promissory note in the amount of $75,000 plus interest, and $465,985 of cash in escrow, which funds were utilized by the Company to facilitate the oil and gas property acquisition in October 2017. f) Accounts receivable Accounts 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. g) Prepaid equity based compensation Prepaid equity-based expenses represent amounts paid in advance through the issuance of restricted shares of stock, for future contractual benefits to be received. These expenses paid in advance are recorded as prepaid equity-based compensation as a component of Stockholders Deficit and then amortized to the statements of operations and comprehensive loss over the life of the contract using the straight-line method. At September 30, 2017 and December 31, 2016, the balances of the prepaid equity-based compensation were comprised of the following: September 30, 2017 December 31, 2016 In March 2016, three one-year consulting agreements with three unrelated parties for services related to the petroleum industry for a combined total amount of $800,000. - 35,068 In February 2017, a one-year consulting agreement for services related to investor relations, market exposure and content development for a total amount of $44,160. 17,543 - In April 2017, a one-year consulting agreement comprised of four quarterly incremental installments for services related to analysis of potential oil and gas acquisitions, for an initial quarterly amount of $40,250. In July 2017, the second quarterly installment was made in the amount of $28,000. 5,478 - In June 2017, a six-month consulting agreement for services related to investor relations and social media for a total amount of $65,136. 27,051 - $ 50,072 $ 35,068 h) Oil and Gas Properties The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from continuing operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Companys oil and gas properties for the three and nine months ended September 30, 2017 and 2016 were as follows: Oil and Gas Properties by Geographical Cost Center Three months ended Nine months ended, September 30, September 30, Cost Center 2017 2016 2017 2016 Canada $ 21,073 6,860 $ 38,301 $ 12,272 United States 38,638 22,149 108,301 65,353 $ 59,711 $ 29,009 $ 146,602 $ 77,625 i) Limitation on Capitalized Costs Under the full-cost method of accounting, the Company is required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the Ceiling test). If the capitalized costs of its oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. j) Oil and Gas Reserves Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. k) Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. At September 30, 2017 and 2016, there were 10,145,834 and 12,229,167 common stock equivalents respectively, that were anti-dilutive and were not included in the calculation. l) Revenue Recognition All revenue is recognized when persuasive evidence of an arrangement exists, the service or sale is complete, the price is fixed or determinable and collectability is reasonably assured. Revenue is derived from the sale of crude oil and natural gas. Revenue from crude oil and natural gas sales is recognized when the product is delivered to the purchaser and collectability is reasonably assured. The Company follows the sales method of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers. m) Comprehensive Loss FASB ASC 220 Comprehensive Income, establishes standards for the reporting and presentation of comprehensive income and its components in the consolidated financial statements. For the nine months ended September 30, 2017 and 2016, comprehensive income (loss) was $1,446 and $148,663 respectively, and consisted primarily of unrealized gains and (losses) on available for sale securities. n) Income Taxes The Company accounts for income taxes under FASB Codification Topic 740-10-25 (ASC 740-10-25). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets likely. The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is subject to U.S federal jurisdiction income tax examinations for the tax years 2007 through 2016. In addition, the Company is subject to state and local income tax examinations for the tax years 2007 through 2016. o) Stock-Based Compensation The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. In accordance with guidance in ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Companys stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. The following table represents stock warrant activity as of and for the nine months ended September 30, 2017: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding December 31, 2016 5,720,834 0.19 3.6 years - Granted 1,475,000 0.30 - - Exercised - - - - Forfeited/expired/cancelled - - - Warrants Outstanding September 30, 2017 7,195,834 $ 0.21 3.8 years $ - Outstanding Exercisable December 31, 2016 5,720,834 $ 0.19 3.6 years $ - Outstanding Exercisable September 30, 2017 7,195,834 $ 0.21 3.8 years $ - p) Long-term Investment Management determines the appropriate classification of investment securities at the time of purchase. Securities are classified held-to-maturity when the Company has both the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securities that are bought and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Securities not classified as held-to-maturity or trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, the changes in the market value of available-for-sale securities, excluding other-than-temporary impairments, are reflected in Other Comprehensive Income, with the impairment losses, net of income taxes, charged to net income in the period in which it occurs. The fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. A decline in the market value of any available-for-sale or held-for-maturity security below cost that is deemed to be other-then-temporary results in a reduction in carrying amount to fair value. Impairments that are considered other-than-temporary are recognized as a loss in the consolidated statements of operations and comprehensive loss. The Company considers various factors in reviewing impairments, including the length of time and extent to which fair value has been less than the Companys cost basis, the financial condition and near-term prospects of the issuer, and the Companys intent and ability to hold the investments for a period of time sufficient to allow for any anticipated recovery in market value. As of September 30, 2017, and December 31, 2016, the Company had no trading and held-to-maturity securities. The Companys long-term investment consisted of 1,437,500 common shares of Tanager Energy Inc., as of December 31, 2016, which is traded on the TSX Venture Exchange (Toronto Stock Exchange). During the three months ended March 31, 2017, the Company sold these shares. The change in the fair value of this investment, recognized as an unrealized gain in other comprehensive income on the statement of operations and comprehensive loss was $1,446 and 148,663 for the nine months ended September 30, 2017 and 2016, respectively. q) Impairment of long-lived assets In accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the nine months ended September 30, 2017 and 2016. r) Foreign Currency Exchange An entity's functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the parent company is the U.S. Dollar. The reporting currency of the Company is the U.S. Dollar. The Company has oil and gas operations in Alberta, Canada in which the Canadian Dollar (CAD or CS herein) is the primary economic environment. The reporting currency of these consolidated financial statements is the U.S. Dollar. For financial reporting purposes, the operational results of the Company's oil and gas operations in Canada are prepared using the CAD, and are translated into the Company's reporting currency, the U.S. Dollar. Revenue and expenses applicable to the oil and gas operations in Alberta, Canada are translated using average rates prevailing during each reporting period. Gains or losses resulting from the settlement of foreign currency transactions are recorded as a separate component of accumulated other comprehensive loss in stockholders' deficit when realized. There have been no settlement transactions that resulted in the recognition of a foreign currency exchange gain or loss during the nine months ended September 30, 2017 and 2016. s) Convertible Notes Payable The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. The Company has evaluated the terms and conditions of its convertible notes under the guidance of ASC 815. The conversion feature did not meet the definition of indexed to a companys own stock provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. t) Derivative Liability We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense. u) Accounting for Asset Retirement Obligations Asset retirement obligations (ARO) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligations inception, with an offsetting increase to proved properties. The following table describes the changes in the Companys asset retirement obligations for the nine months ended September 30, 2017 and the year ended December 31, 2016: Nine months ended September 30, 2017 Year ended December 31, 2016 Asset retirement obligation beginning $ 833,017 $ 416,246 Oil and gas purchases 205,048 393,808 Accretion expense 29,167 22,963 Asset retirement obligation - ending $ 1,067,232 $ 833,017 v) Recent Accounting Pronouncements During the nine months ended September 30, 2017, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Companys consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations. w) Subsequent events The Company has evaluated all subsequent events from September 30, 2017, through the date of filing this report, and determined there are no additional items to disclose other than those disclosed in Note 8 below. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Note 3 - Related Party Transactions | During April 2015, the Company made an advance to Tanager Energy Inc., in conjunction with a joint investment in the second oil well of the Joffre Project. As of September 30, 2017, the balance owed by Tanager to the Company is $153,877. The Company has determined to reserve 50% of the balance and has reduced the amount shown as other receivable related party to $76,939 on the consolidated balance sheet. On May 16, 2017, Tom Simeo, formerly the Companys Executive Chairman and a Director, resigned from all positions with the Company. During the nine months ended September 30, 2017, Tom Simeo did not accrue payroll and made no advances to the Company. The Company paid a total of $20,643 against prior advances. Concurrent with his resignation, Mr. Simeo waived any remaining balance of prior advances previously payable to him. As of September 30, 2017, there are no remaining balances payable to Mr. Simeo. During the nine months ended September 30, 2017, the Companys CEO and Director, James Doris incurred expenses on behalf of, and made advances to the Company in the amount of $159,614 in order to provide the Company with funds to carry on its operations, and the Company made repayments of $336,794. These advances do not bear interest, are unsecured and have no specific terms of repayment. As of September 30, 2017, the amount due for advances and expenses paid on behalf of the Company is $193,757. The Company has not imputed interest as the amount is deemed immaterial. Additionally, during the nine months ended September 30, 2017, Mr. Doris made several loans to the Company totaling $196,855, all accruing interest at 12%, and payable on demand. As of September 30, 2017, the total amount due to Mr. Doris for advances and expenses paid on behalf of the Company and loans is $1,056,147. Accrued interest of $149,120 is included in accrued expenses and other current liabilities at September 30, 2017. |
Oil and Gas Properties
Oil and Gas Properties | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Note 4 - Oil and Gas Properties | The following table summarizes the Companys oil and gas activities by classification and geographical cost center for the nine months ended September 30, 2017: December 31, 2016 Additions Impairments September 30, 2017 Proved developed producing oil and gas properties Canada cost center $ 34,733 $ - $ - $ 34,733 United States cost center 1,787,840 565,048 - 2,352,888 Accumulated depreciation, depletion and amortization (57,200 ) (75,496 ) - (132,696 ) Proved developed producing oil and gas properties, net $ 1,765,373 $ 489,552 $ - $ 2,254,925 Undeveloped and non-producing oil and gas properties Canada cost center $ 371,481 $ - $ - $ 371,481 United States cost center 917,184 - - 917,184 Accumulated depreciation, depletion and amortization (51,176 ) (71,106 ) - (122,282 ) Undeveloped and non-producing oil and gas properties, net $ 1,237,489 $ (71,106 ) $ - $ 1,166,383 Total Oil and Gas Properties, Net $ 3,002,862 $ 418,446 $ - $ 3,421,308 The following table summarizes the Companys oil and gas activities by classification for the year ended December 31, 2016: December 31, 2015 Additions Impairments December 31, 2016 Proved developed producing oil and gas properties Canada cost center $ 33,082 $ 1,651 $ - $ 34,733 United States cost center - 2,838,943 (1,051,103 ) 1,787,840 Accumulated depreciation, depletion and amortization (2,093 ) (55,107 ) - (57,200 ) Proved developed producing oil and gas properties, net $ 30,989 $ 2,785,487 $ (1,051,103 ) $ 1,765,373 Undeveloped and non-producing oil and gas properties Canada cost center $ 518,269 $ (1,652 ) $ (145,136 ) $ 371,481 United States cost center - 1,456,414 (539,230 ) 917,184 Accumulated depreciation, depletion and amortization (32,788 ) (43,464 ) 25,076 (51,176 ) Undeveloped and non-producing oil and gas properties, net $ 485,481 $ 1,411,298 $ (659,290 ) $ 1,237,489 Total Oil and Gas Properties, Net $ 516,470 $ 2,092,625 $ (1,710,393 ) $ 3,002,862 On February 23, 2016, with an effective date of February 1, 2016, the Company closed on the acquisition of working interests in four leases with access to the mineral rights (oil and gas) concerning approximately 281 acres of property in Miami and Franklin Counties in eastern Kansas. This project produces oil from the Cherokee formation at a depth of approximately 600 feet. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by the Company. As consideration for this transaction, the Company paid $1,350,000 plus 4,650,000 shares of common stock valued at $.085 per share, or $395,250. The Company also purchased a 100% working interest (Net Revenue Interest of 83%) in certain Non-Producing Leases as follows: (i) three leases with access to the mineral rights (oil and gas) concerning approximately 270 acres of property in Miami and Franklin Counties in eastern Kansas; and (ii) 31 leases with access to the mineral rights (oil and gas) concerning approximately 5,500 acres of property in Cass and Bates Counties in Missouri. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by Viking. As consideration for this transaction, Viking agreed to issue the vendors 5,000,000 shares of common stock valued at $.085 per share or $425,000. To facilitate these acquisitions, the Company borrowed $1,625,000 from private lenders pursuant to a 15% Senior Secured Convertible Promissory Note (the "Note"), arranged through a licensed broker/dealer, with the primary terms of the loan being as follows: (i) Term Rate Security st Conversion Warrants On October 4, 2016, the Company, through Mid-Con Petroleum, LLC, completed an acquisition whereby the Company (i) increased its working interest in three existing oil and gas leases in Miami and Franklin Counties in Eastern Kansas, and (ii) acquired a working interest in four new oil and gas leases in the same region, comprising approximately 660 acres of property. As consideration for this transaction, the Company paid $920,857 plus 5,212,021 shares of common stock valued at $625,442. On September 11, 2017, the Company through Mid-Con Drilling, LLC, completed an acquisition of a 90% working interest in four new oil and gas leases in Anderson County in Eastern Kansas, comprising approximately 980 acres of property. To facilitate this acquisition, the Company executed a Promissory Note, dated September 8, 2017, through its wholly owned subsidiary, Mid-Con Drilling, LLC, in the amount of $256,982. The acquisition price for this acquisition was $360,000. |
Capital Stock and Additional Pa
Capital Stock and Additional Paid-in Capital | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Note 5 - Capital Stock and Additional Paid-in Capital | (a) Preferred Stock The Company is authorized to issue 5,000,000 shares of Preferred Stock, par value $0.001 per share (the Preferred Stock), of which 50,000 have been designated as Series C Preferred Stock (the Series C Preferred Stock). Each share of Series C Preferred Stock entitles the holder to two thousand (2,000) votes on all matters submitted to a vote of the stockholders of the Company. In the event the Company shall at any time on or after the date that Preferred Stock has been issued declare or pay any dividend on common stock payable in shares of common stock, or effect a subdivision or combination or consolidation of the outstanding shares of common stock (by reclassification or otherwise than by payment of a dividend in shares of common stock) into a greater or lesser number of shares of common stock, then in each such case the number of votes per share to which holders of shares of Series C Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction of the numerator of which is the number of shares of common stock outstanding immediately after such event and the denominator of which is the number of shares of common stock that were outstanding immediately prior to such event. Each share of Series C Preferred Stock shall be convertible, at the option of the holder, at any time after the date of issuance into one share of fully paid and non-assessable common stock. (b) Common Stock The Company is authorized to issue 100,000,000 shares of common stock, par value $0.001 per share. On January 12, 2016, the Company issued 300,926 common shares for convertible debt in the amount of $10,111. On March 16, 2016, the Company issued 1,000,000 common shares for services, valued at $102,500. On February 1, 2016, the Company authorized the issuance of 9,650,000 common shares as part of the consideration for the acquisition of the Oil and Gas properties made at that time. On March 21, 2016, the Company executed a one-year advisory services agreement requiring the issuance of 1,000,000 common shares for the contract. The shares are to be issued as 375,002 upon execution of the contract, with 56,818 shares being issued at the beginning of each month for the remaining eleven months. As of April 29, 2016, the Company, pursuant to a securities purchase agreement, sold 1,250,000 shares of its common stock at $0.15 per share. On August 18, 2016, the Company authorized the issuance of 156,250 common shares pursuant to an extension agreement on certain convertible notes that had become due. On September 28, 2016, the Company issued 2,400,000 common shares, at the current market value of $288,000 as part of the consideration for the acquisition of the Oil and Gas Properties acquired on October 4, 2016. During September 2016, the Company negotiated the payment of certain convertible notes, and committed to the issuance of 375,000 common shares at the current market value of $52,500 as additional interest. As of September 30, 2016, the Company, pursuant to a securities purchase agreement, sold $1,337,500 shares of its common stock at $0.15 per share. On October 4, 2016, the Company authorized the issuance of 2,752,021 common shares as part of the consideration for the acquisition of the Oil and Gas properties made at that time. On October 4, 2016, the Company issued 60,000 common shares as part of the consideration for the acquisition of the Oil and Gas properties made at that time. On October 21, 2016, the Company issued 1,400,000 common shares valued at $252,000 pursuant to an extension agreement on certain convertible notes that had become due. On October 21, 2016, the Company sold 187,500 common shares, pursuant to a securities purchase agreement, at $0.15 per share. During November 2016, the Company authorized the issuance of 508,335 common shares as additional discount on debt previously issued, and an amendment extending the due date of the debt. On December 30, 2016, the Company sold 66,667 common shares pursuant to a securities purchase agreement, at $0.15 per share. As of December 31, 2016, the Company, pursuant to a securities purchase agreement, sold $1,337,500 shares of its common stock at $0.15 per share. As of December 31, 2016, the Company authorized the issuance of 315,000 common shares for services. During January 2017, the Company issued 62,500 common shares for services. On January 9, 2017, the Company issued 3,000,000 common shares upon the execution of a six-month services contract. On January 25, 2017, the Company sold 333,333 common shares, pursuant to a securities purchase agreement, at $0.15 per share. On February 16, 2017, the Company sold 666,666 common shares pursuant to a securities purchase agreement at $0.15 per share. On March 23, 2017, the Company sold 2,059,443 common shares pursuant to a securities purchase agreement at $0.15 per share. On April 1, 2017, the Company issued 77,777 common shares as compensation for an extended maturity date on debt. On April 18, 2017, the Company issued 250,000 common shares pursuant to a one-year consulting agreement. On May 3, 2017, the Company issued 1,000,000 common shares for services. On May 3, 2017, the Company issued 59,625 common shares for services. On May 4, 2017, the Company issued 340,292 common shares for services. On May 4, 2017, the Company issued 21,750 common shares for services. On May 12, 2017, the Company issued 1,000,000 common shares for services On June 15, 2017, the Company issued 395,000 common shares upon the execution of a six-month consulting agreement. On July 18, 2017, the Company issued 250,000 common shares as a second quarterly payment a consulting agreement executed in April of 2017. On August 4, 2017, the Company issued 154,688 common shares for services. During July and August of 2017, pursuant to a private placement, the Company issued 590,000 common shares concurrently with raising $1,475,000. During August and September of 2017, pursuant to a separate private placement, the Company issued 1,837,500 common shares concurrently with raising $1,225,000. On August 30, 2017, the Company issued 176,258 common shares for services On September 30, 2017, the Company issued 612,500 common shares for services. |
Long Term Debt
Long Term Debt | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Note 6 - Long Term Debt | Long term debt consisted of the following at September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 On February 19, 2016, the Company issued a total of $1,625,000 15% convertible notes with a term expiring August 18, 2016 (the Maturity Date). The principal amounts of each note and interest is payable on the maturity date. Placement fees of $145,000 were subtracted from proceeds. The notes are convertible into common stock at any time, at the holders option, the conversion price shall be the lowest of (i) $0.15, (ii) 58% of the price of the Companys securities that are sold in any offering of the Companys securities in excess of $100,000, of (iii) the conversion price of any Equity converted on or prior to the Conversion Date. - 125,000 On April 29, 2016, the Company issued a total of $375,000 of 10% Secured Subordinated promissory notes with a term expiring January 12, 2017 (the Maturity Date), and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date. The balance shown is net of unamortized discount of $8,824 at December 31, 2016. - 366,176 On July 27, 2016, the Company issued a promissory note in the amount of $20,000, bearing interest at 12%, with an initial maturity date of August 27, 2016, and a provision for an extension of six additional terms of 30 days. - 20,000 As of December 31, 2016, the Company issued a total of $630,000 of 10% Secured promissory notes with a term expiring April 3, 2017 (the Maturity Date), and an original issue discount of thirty-seven and one-half percent (37.5%). The discount was modified to fifty percent (50%) retroactively with an extension of the maturity to June 2017. During the quarter ended March 31, 2017, the Company issued an additional $917,833 of 10% Secured promissory notes with terms expiring in June, August and September of 2017, and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the various maturity dates. The balance shown is net of unamortized discount of $0 and $208,064 at September 30, 2017 and December 31, 2016 respectively. At September 30, 2017, the funds necessary to satisfy this obligation are being held in escrow awaiting disbursement instructions from the estate of the noteholder. 75,000 421,936 On October 4, 2016, the Company issued a non-interest-bearing note, payable on demand in the amount of $203,000. This amount has been paid in full as of November 1, 2017. 203,000 203,000 On October 4, 2016, the Company closed on a revolver loan with Crossfirst Bank in the amount of $1,800,000, payable at $15,000 per month, interest at 10%, with all unpaid principal and accrued interest payable on September 30, 2018. The balance shown is net of unamortized discount of $13,826 and $24,167 at September 30, 2017 and December 31, 2016 respectively. 1,621,174 1,745,833 During July and August of 2017, the Company borrowed $1,475,000 from private lenders pursuant to a 10% Secured Convertible Promissory Note with a twelve-month maturity. The balance shown is net of unamortized discount of $400,710 and $0 at September 30, 2017 and December 31, 2016 respectively. 1,074,290 - During August and September of 2017, the Company borrowed $1,225,000 from private lenders pursuant to a 10% Secured Promissory Note with all principal and accrued interest payable on the maturity date of October 31, 2018. The balance shown is net of unamortized discount of $368,415 and $0 at September 30, 2017 and December 31, 2016 respectively. 856,585 - On September 8, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $256,983, payable interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025. 256,983 - 4,087,032 2,881,945 Less current portion (1,518,464 ) (1,302,476 ) $ 2,568,568 $ 1,579,469 |
Commitments and contingencies
Commitments and contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Note 7 - Commitments and contingencies | From time to time the Company may be a party to litigation matters involving claims against the Company. Management believes that there are no current matters that would have a material effect on the Companys consolidated financial position or results of operations. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2017 | |
Notes to Financial Statements | |
Note 8 - Subsequent Events | The Company has evaluated subsequent events from September 30, 2017, through the date of filing this Form 10-Q, and determined there are no additional items to disclose other than the below. On October 2, 2017, the Company through a wholly-owned subsidiary, Mid-Con Drilling, LLC (Mid-Con Drilling), executed a Promissory Note in favor of Cornerstone Bank (Cornerstone). The principal amount of the Note, which loan transaction formally closed on October 2, 2017, is $290,000, and the maturity date of the Note is October 2, 2025. For the first 12 months, the Note bears interest at Cornerstones corporate base rate (currently 4.5%) plus 1.0%, and thereafter the interest rate shall be 6% per annum. The Note is secured by a first-ranking security interest and mortgage against the assets acquired by the Company described below, and a guaranty from each of the Company and the Companys President and Chief Executive Officer, James Doris. $286,016 of the loan proceeds were used on October 2, 2017, as payment of a portion of the purchase price for a 100% working interest in six new oil and gas leases in Miami and Franklin Counties in Eastern Kansas purchased by Mid-Con Drilling effective October 1, 2017. Existing production from the acquired interests at closing was approximately twenty-two barrels of oil per day. The purchase included an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by Mid-Con Drilling. The leases produce oil from the Cherokee formation and offer the potential for several future drilling locations. The acquisition price for this transaction was $530,000. The balance of the purchase price was provided by the Company from cash on-hand via a recently completed private placement. On October 3, 2017, Mid-Con Drilling executed an additional Promissory Note in favor of Cornerstone Bank. The principal amount of the Note is $204,000, and the maturity date of the Note is October 3, 2025. For the first 12 months, the Note bears interest at Cornerstones corporate base rate (currently 4.5%) plus 1.0%, and thereafter the interest rate shall be 6% per annum. The Note is secured by a first-ranking security interest and mortgage against the assets acquired by the Company described below, and a guaranty from each of the Company and the Companys President and Chief Executive Officer, James Doris. $200,441 of the loan proceeds were used on October 4, 2017, as payment of a portion of the purchase price for an 80% working interest in six new oil and gas leases in Riley, Geary and Wabaunsee Counties in Kansas by Mid-Con Drilling. Existing production from the acquired interests at closing was approximately thirteen barrels of oil per day. The purchase included an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties and used in connection with oil and gas operations upon the leases attributable to the working interests purchased by Mid-Con Drilling. The leases produce oil from various zones, including the Conglomerate (at depths of 1,650 to 1,800 feet), Viola and Simpson Sandstone (at depths of 2,917 to 3,063 feet), and offer the potential for several future drilling locations. The acquisition price for this transaction was $400,000. The balance of the purchase price was provided by the Company from cash on-hand via a recently completed private placement. On or about October 19, 2017 the Company executed a consulting agreement pursuant to which the consultant agreed to among other things: (i) assess potential acquisition and investment opportunities; (ii) interview and provide input with respect to persons considered by the Company for advisory, director or officer positions; and (iii) review, critique and provide guidance with respect to the Companys strategic plan. In exchange for the services the consultant is to receive an equivalent of $5,000 per month in common shares in the capital stock of the Company. The number of common shares earned each month is to be calculated based on the average daily traded value of the common stock for the last 5 business days of the particular month, as reported on the exchange on which Companys shares are traded or any exchange upon which the common stock may be traded in the future. All common shares earned by the consultant pursuant to the agreement are to be issued by the Company on a quarterly basis. The Company may terminate the agreement for any reason upon 60 days written notice to the consultant, and the consultant may terminate the agreement at any time upon 30 days notice to the Company. On or about October 25, 2017 the Company executed a consulting agreement pursuant to which the consultant agreed to among other things: (i) assess potential acquisition and investment opportunities; (ii) interview and provide input with respect to persons considered by the Company for advisory, director or officer positions; (iii) review, critique and provide guidance with respect to the Companys strategic plan. In exchange for the services the consultant is to receive 50,000 common shares in the capital stock of the Company per month during the term of the agreement. All common shares earned by the consultant pursuant to the agreement are to be issued by the Company on a quarterly basis. The Company may terminate the agreement for any reason upon 60 days written notice to the consultant, and the consultant may terminate the agreement at any time upon 30 days notice to the Company. On November 10, 2017, Viking Energy Group, Inc. (the Company) entered into a Membership Interest Purchase Agreement with Black Rhino, LP (the Seller), to acquire some of the oil and gas business membership interests owned by the Seller in exchange for (i) making a $3,000,000 cash payment to the Seller at closing; (ii) issuing to the Seller 2,000,000 shares of the Companys common stock at closing; and (iii) granting the Seller a 1.5% over-riding royalty interest in (a) all existing oil and gas leases associated with the purchased interests, and (b) all new oil and gas wells drilled on some of the prospects identified by the Seller which expire on October 31, 2020. The scheduled closing date of the transaction is on or before December 22, 2017. The completion of the transaction is conditional upon the Company securing financing to satisfy the cash component to be paid to the Seller at closing, and there is no guaranty that such condition will be satisfied. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary Of Significant Accounting Policies Policies | |
Basis of Presentation | The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP) and the rules of the Securities and Exchange Commission (SEC) and should be read in conjunction with the audited financial statements and notes thereto contained in Vikings latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments (unless otherwise indicated), necessary for a fair presentation of the financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. |
Basis of Consolidation | The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiaries, Viking Oil & Gas (Canada) ULC, a Canadian corporation formed on March 8, 2016, to provide a base of operations for properties in Canada, Mid-Con Petroleum, LLC, formed on August 30, 2016, and Mid-Con Drilling, LLC, formed on August 25, 2017, both to provide a base of operations for properties in the Central United States. All significant intercompany transactions and balances have been eliminated upon consolidation. |
Use of Estimates in the Preparation of Financial Statements | The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. The Company's actual results could vary materially from management's estimates and assumptions. Significant areas requiring the use of management estimates relate to the determination of expected tax rates for future income tax recoveries, stock-based compensation, embedded derivative liabilities, asset retirement obligations and impairment of long-lived assets. The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized. |
Financial Instruments | ASC Topic 820-10, Fair Value Measurement requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for other receivable related party, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to directors, and convertible notes each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: · Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. · Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. · Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement. Assets and liabilities measured at fair value as of September 30, 2017 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ 1,446 Commodity Derivative - 683 - 61,744 $ - $ 683 $ - $ 69,190 Financial liabilities Derivative liabilities $ - $ - $ 606,878 $ 433,724 $ - $ - $ 606,878 $ 433,724 Assets and liabilities measured at fair value as of December 31, 2016 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 106,930 $ - $ - $ 156,978 $ 106,930 $ - $ - $ 156,978 Financial liabilities Derivative liabilities $ - $ - $ 1,075,833 $ 265,448 Commodity Derivative - 61,061 - (61,061 ) $ - $ 61,061 $ 1,075,833 $ 204,387 The Companys long-term investment consisted of 1,437,500 common shares of Tanager Energy Inc., as of December 31, 2016, which is traded on the TSX Venture Exchange (Toronto Stock Exchange). During the three months ended March 31, 2017, the Company sold these shares. The change in the fair value of this investment that has been recognized as an unrealized gain in other comprehensive income on the statement of operations and comprehensive loss was $1,446 for the nine months ended September 30, 2017, and $148,663 for the nine months ended September 30, 2016. The Company had commodity financial derivatives in place at September 30, 2017. The Company does not designate its commodities derivative instruments as hedges and therefore does not apply hedge accounting. Changes in fair value of derivative instruments subsequent to the initial measurement are recorded as change in fair value on derivative liability, in other income (expense). The estimated fair value amounts of the Companys commodity derivative instruments have been determined at discrete points in time based on relevant market information which resulted in the Company classifying such derivatives as Level 2. Although the Companys commodity derivative instruments are valued using public indices, the instruments themselves are traded with unrelated counterparties and are not openly traded on an exchange. The Company uses the Black-Scholes model to value its derivative liabilities. This model takes into account inputs such as contract terms, including maturity and market parameters, including assumptions associated with interest rates, volatility and credit worthiness. The derivative assets and liabilities of the Company were $683 and $606,878 respectively as of September 30, 2017, and $0 and $1,075,833 respectively as of December 31, 2016, respectively. The change in the fair value of the derivative assets and liabilities for the nine months ended September 30, 2017 consisted of an increase of $61,744 associated with commodity derivatives, a decrease in derivative liabilities of $433,724 associated with warrants and the conversion features of convertible debt, and a reduction of $35,232 associated with the satisfaction of certain convertible debt and a gain recognized in the statement of operations and comprehensive gain in the amount of $495,468. |
Cash and Cash Equivalents | Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At September 30, 2017 and December 31, 2016, the Company does not have any cash deposits in Company accounts in excess of FDIC insured limits. At September 30, 2017, the Company had $82,500 of cash held in escrow awaiting disbursement instructions from the estate of the noteholder of a secured promissory note in the amount of $75,000 plus interest, and $465,985 of cash in escrow, which funds were utilized by the Company to facilitate the oil and gas property acquisition in October 2017. |
Accounts receivable | Accounts 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. |
Prepaid equity based compensation | Prepaid equity-based expenses represent amounts paid in advance through the issuance of restricted shares of stock, for future contractual benefits to be received. These expenses paid in advance are recorded as prepaid equity-based compensation as a component of Stockholders Deficit and then amortized to the statements of operations and comprehensive loss over the life of the contract using the straight-line method. At September 30, 2017 and December 31, 2016, the balances of the prepaid equity-based compensation were comprised of the following: September 30, 2017 December 31, 2016 In March 2016, three one-year consulting agreements with three unrelated parties for services related to the petroleum industry for a combined total amount of $800,000. - 35,068 In February 2017, a one-year consulting agreement for services related to investor relations, market exposure and content development for a total amount of $44,160. 17,543 - In April 2017, a one-year consulting agreement comprised of four quarterly incremental installments for services related to analysis of potential oil and gas acquisitions, for an initial quarterly amount of $40,250. In July 2017, the second quarterly installment was made in the amount of $28,000. 5,478 - In June 2017, a six-month consulting agreement for services related to investor relations and social media for a total amount of $65,136. 27,051 - $ 50,072 $ 35,068 |
Oil and Gas Properties | The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from continuing operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Companys oil and gas properties for the three and nine months ended September 30, 2017 and 2016 were as follows: Oil and Gas Properties by Geographical Cost Center Three months ended Nine months ended, September 30, September 30, Cost Center 2017 2016 2017 2016 Canada $ 21,073 6,860 $ 38,301 $ 12,272 United States 38,638 22,149 108,301 65,353 $ 59,711 $ 29,009 $ 146,602 $ 77,625 |
Limitation on Capitalized Costs | Under the full-cost method of accounting, the Company is required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the Ceiling test). If the capitalized costs of its oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. |
Oil and Gas Reserves | Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. |
Loss per Share | Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. At September 30, 2017 and 2016, there were 10,145,834 and 12,229,167 common stock equivalents respectively, that were anti-dilutive and were not included in the calculation. |
Revenue Recognition | All revenue is recognized when persuasive evidence of an arrangement exists, the service or sale is complete, the price is fixed or determinable and collectability is reasonably assured. Revenue is derived from the sale of crude oil and natural gas. Revenue from crude oil and natural gas sales is recognized when the product is delivered to the purchaser and collectability is reasonably assured. The Company follows the sales method of accounting for oil and natural gas revenue, so it recognizes revenue on all natural gas or crude oil sold to purchasers. |
Comprehensive Loss | FASB ASC 220 Comprehensive Income, establishes standards for the reporting and presentation of comprehensive income and its components in the consolidated financial statements. For the nine months ended September 30, 2017 and 2016, comprehensive income (loss) was $1,446 and $148,663 respectively, and consisted primarily of unrealized gains and (losses) on available for sale securities. |
Income Taxes | The Company accounts for income taxes under FASB Codification Topic 740-10-25 (ASC 740-10-25). Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets likely. The Company did not incur any material impact to its financial condition or results of operations due to the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Company is subject to U.S federal jurisdiction income tax examinations for the tax years 2007 through 2016. In addition, the Company is subject to state and local income tax examinations for the tax years 2007 through 2016. |
Stock-Based Compensation | The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. In accordance with guidance in ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of stock warrants was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Companys stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. The following table represents stock warrant activity as of and for the nine months ended September 30, 2017: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding December 31, 2016 5,720,834 0.19 3.6 years - Granted 1,475,000 0.30 - - Exercised - - - - Forfeited/expired/cancelled - - - Warrants Outstanding September 30, 2017 7,195,834 $ 0.21 3.8 years $ - Outstanding Exercisable December 31, 2016 5,720,834 $ 0.19 3.6 years $ - Outstanding Exercisable September 30, 2017 7,195,834 $ 0.21 3.8 years $ - |
Long-term Investment | Management determines the appropriate classification of investment securities at the time of purchase. Securities are classified held-to-maturity when the Company has both the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are stated at amortized cost. Securities that are bought and held principally for the purpose of selling in the near term are classified as trading securities and reported at fair value, with unrealized gains and losses included in earnings. Securities not classified as held-to-maturity or trading are classified as available-for-sale. Available-for-sale securities are stated at fair value, the changes in the market value of available-for-sale securities, excluding other-than-temporary impairments, are reflected in Other Comprehensive Income, with the impairment losses, net of income taxes, charged to net income in the period in which it occurs. The fair value of securities is based on quoted market prices. If a quoted market price is not available, fair value is estimated using quoted market prices for similar securities. A decline in the market value of any available-for-sale or held-for-maturity security below cost that is deemed to be other-then-temporary results in a reduction in carrying amount to fair value. Impairments that are considered other-than-temporary are recognized as a loss in the consolidated statements of operations and comprehensive loss. The Company considers various factors in reviewing impairments, including the length of time and extent to which fair value has been less than the Companys cost basis, the financial condition and near-term prospects of the issuer, and the Companys intent and ability to hold the investments for a period of time sufficient to allow for any anticipated recovery in market value. As of September 30, 2017, and December 31, 2016, the Company had no trading and held-to-maturity securities. The Companys long-term investment consisted of 1,437,500 common shares of Tanager Energy Inc., as of December 31, 2016, which is traded on the TSX Venture Exchange (Toronto Stock Exchange). During the three months ended March 31, 2017, the Company sold these shares. The change in the fair value of this investment, recognized as an unrealized gain in other comprehensive income on the statement of operations and comprehensive loss was $1,446 and 148,663 for the nine months ended September 30, 2017 and 2016, respectively. |
Impairment of long-lived assets | In accordance with ASC 360, "Accounting for the Impairment or Disposal of Long-Lived Assets", the Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the nine months ended September 30, 2017 and 2016. |
Foreign Currency Exchange | An entity's functional currency is the currency of the primary economic environment in which it operates, normally that is the currency of the environment in which the entity primarily generates and expends cash. Management's judgment is essential to determine the functional currency by assessing various indicators, such as cash flows, sales price and market, expenses, financing and inter-company transactions and arrangements. The functional currency of the parent company is the U.S. Dollar. The reporting currency of the Company is the U.S. Dollar. The Company has oil and gas operations in Alberta, Canada in which the Canadian Dollar (CAD or CS herein) is the primary economic environment. The reporting currency of these consolidated financial statements is the U.S. Dollar. For financial reporting purposes, the operational results of the Company's oil and gas operations in Canada are prepared using the CAD, and are translated into the Company's reporting currency, the U.S. Dollar. Revenue and expenses applicable to the oil and gas operations in Alberta, Canada are translated using average rates prevailing during each reporting period. Gains or losses resulting from the settlement of foreign currency transactions are recorded as a separate component of accumulated other comprehensive loss in stockholders' deficit when realized. There have been no settlement transactions that resulted in the recognition of a foreign currency exchange gain or loss during the nine months ended September 30, 2017 and 2016. |
Convertible Notes Payable | The Company accounts for conversion options embedded in convertible notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. The Company has evaluated the terms and conditions of its convertible notes under the guidance of ASC 815. The conversion feature did not meet the definition of indexed to a companys own stock provided for in ASC 815 due to the down round protection feature. Therefore, the conversion feature requires bifurcation and liability classification. Additionally, the default put requires bifurcation because it is indexed to risks that are not associated with credit or interest risk. As a result, the compound embedded derivative comprises of (i) the embedded conversion feature and (i) the default put. Rather than bifurcating and recording the compound embedded derivative as a derivative liability, the Company elected to initially and subsequently measure the convertible note in its entirety at fair value, with changes in fair value recognized in earnings in accordance with ASC 815-15-25-4. |
Derivative Liability | We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense. |
Accounting for Asset Retirement Obligations | Asset retirement obligations (ARO) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligations inception, with an offsetting increase to proved properties. The following table describes the changes in the Companys asset retirement obligations for the nine months ended September 30, 2017 and the year ended December 31, 2016: Nine months ended September 30, 2017 Year ended December 31, 2016 Asset retirement obligation beginning $ 833,017 $ 416,246 Oil and gas purchases 205,048 393,808 Accretion expense 29,167 22,963 Asset retirement obligation - ending $ 1,067,232 $ 833,017 |
Recently Accounting Pronouncements | During the nine months ended September 30, 2017, there were several new accounting pronouncements issued by the Financial Accounting Standards Board. Each of these pronouncements, as applicable, has been or will be adopted by the Company. Management does not believe the adoption of any of these accounting pronouncements has had or will have a material impact on the Companys consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). This standard provides a single set of guidelines for revenue recognition to be used across all industries and requires additional disclosures. It is effective for annual and interim reporting periods beginning after December 15, 2017. This standard permits early adoption and permits the use of either the retrospective or cumulative effect transition method. We are currently evaluating the potential impact of this standard on our financial position and results of operations, as well as our selected transition method. Based on our preliminary assessment, we believe the new standard will not have a material impact on our financial position and results of operations, as we do not expect to change the manner or timing of recognizing revenue on a majority of our revenue transactions. In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). This standard requires all leases that have a term of over 12 months to be recognized on the balance sheet with the liability for lease payments and the corresponding right-of-use asset initially measured at the present value of amounts expected to be paid over the term. Recognition of the costs of these leases on the income statement will be dependent upon their classification as either an operating or a financing lease. Costs of an operating lease will continue to be recognized as a single operating expense on a straight-line basis over the lease term. Costs for a financing lease will be disaggregated and recognized as both an operating expense (for the amortization of the right-of-use asset) and interest expense (for interest on the lease liability). This standard will be effective for our interim and annual periods beginning January 1, 2019, and must be applied on a modified retrospective basis to leases existing at, or entered into after, the beginning of the earliest comparative period presented in the financial statements. Early adoption is permitted. We are currently evaluating the timing of adoption and the potential impact of this standard on our financial position, but we do not expect it to have a material impact on our results of operations. |
Subsequent events | The Company has evaluated all subsequent events from September 30, 2017, through the date of filing this report, and determined there are no additional items to disclose other than those disclosed in Note 8 below. |
Summary of Significant Accoun16
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Summary Of Significant Accounting Policies Tables | |
Financial Assets and liabilities measured at fair value | Assets and liabilities measured at fair value as of September 30, 2017 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ - $ - $ - $ 1,446 Commodity Derivative - 683 - 61,744 $ - $ 683 $ - $ 69,190 Financial liabilities Derivative liabilities $ - $ - $ 606,878 $ 433,724 $ - $ - $ 606,878 $ 433,724 Assets and liabilities measured at fair value as of December 31, 2016 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Long term investment $ 106,930 $ - $ - $ 156,978 $ 106,930 $ - $ - $ 156,978 Financial liabilities Derivative liabilities $ - $ - $ 1,075,833 $ 265,448 Commodity Derivative - 61,061 - (61,061 ) $ - $ 61,061 $ 1,075,833 $ 204,387 |
Schedule of Prepaid equity based compensation expenses | At September 30, 2017 and December 31, 2016, the balances of the prepaid equity-based compensation were comprised of the following: September 30, 2017 December 31, 2016 In March 2016, three one-year consulting agreements with three unrelated parties for services related to the petroleum industry for a combined total amount of $800,000. - 35,068 In February 2017, a one-year consulting agreement for services related to investor relations, market exposure and content development for a total amount of $44,160. 17,543 - In April 2017, a one-year consulting agreement comprised of four quarterly incremental installments for services related to analysis of potential oil and gas acquisitions, for an initial quarterly amount of $40,250. In July 2017, the second quarterly installment was made in the amount of $28,000. 5,478 - In June 2017, a six-month consulting agreement for services related to investor relations and social media for a total amount of $65,136. 27,051 - $ 50,072 $ 35,068 |
Depreciation, depletion and amortization expense | Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Companys oil and gas properties for the three and nine months ended September 30, 2017 and 2016 were as follows: Oil and Gas Properties by Geographical Cost Center Three months ended Nine months ended, September 30, September 30, Cost Center 2017 2016 2017 2016 Canada $ 21,073 6,860 $ 38,301 $ 12,272 United States 38,638 22,149 108,301 65,353 $ 59,711 $ 29,009 $ 146,602 $ 77,625 |
Stock-Based Compensation | The following table represents stock warrant activity as of and for the nine months ended September 30, 2017: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding December 31, 2016 5,720,834 0.19 3.6 years - Granted 1,475,000 0.30 - - Exercised - - - - Forfeited/expired/cancelled - - - Warrants Outstanding September 30, 2017 7,195,834 $ 0.21 3.8 years $ - Outstanding Exercisable December 31, 2016 5,720,834 $ 0.19 3.6 years $ - Outstanding Exercisable September 30, 2017 7,195,834 $ 0.21 3.8 years $ - |
Summury of changes in the Company's asset retirement obligations | The following table describes the changes in the Companys asset retirement obligations for the nine months ended September 30, 2017 and the year ended December 31, 2016: Nine months ended September 30, 2017 Year ended December 31, 2016 Asset retirement obligation beginning $ 833,017 $ 416,246 Oil and gas purchases 205,048 393,808 Accretion expense 29,167 22,963 Asset retirement obligation - ending $ 1,067,232 $ 833,017 |
Oil and Gas Properties (Tables)
Oil and Gas Properties (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Oil And Gas Properties Tables | |
Schedule of oil and gas activities | The following table summarizes the Companys oil and gas activities by classification and geographical cost center for the nine months ended September 30, 2017: December 31, 2016 Additions Impairments September 30, 2017 Proved developed producing oil and gas properties Canada cost center $ 34,733 $ - $ - $ 34,733 United States cost center 1,787,840 565,048 - 2,352,888 Accumulated depreciation, depletion and amortization (57,200 ) (75,496 ) - (132,696 ) Proved developed producing oil and gas properties, net $ 1,765,373 $ 489,552 $ - $ 2,254,925 Undeveloped and non-producing oil and gas properties Canada cost center $ 371,481 $ - $ - $ 371,481 United States cost center 917,184 - - 917,184 Accumulated depreciation, depletion and amortization (51,176 ) (71,106 ) - (122,282 ) Undeveloped and non-producing oil and gas properties, net $ 1,237,489 $ (71,106 ) $ - $ 1,166,383 Total Oil and Gas Properties, Net $ 3,002,862 $ 418,446 $ - $ 3,421,308 The following table summarizes the Companys oil and gas activities by classification for the year ended December 31, 2016: December 31, 2015 Additions Impairments December 31, 2016 Proved developed producing oil and gas properties Canada cost center $ 33,082 $ 1,651 $ - $ 34,733 United States cost center - 2,838,943 (1,051,103 ) 1,787,840 Accumulated depreciation, depletion and amortization (2,093 ) (55,107 ) - (57,200 ) Proved developed producing oil and gas properties, net $ 30,989 $ 2,785,487 $ (1,051,103 ) $ 1,765,373 Undeveloped and non-producing oil and gas properties Canada cost center $ 518,269 $ (1,652 ) $ (145,136 ) $ 371,481 United States cost center - 1,456,414 (539,230 ) 917,184 Accumulated depreciation, depletion and amortization (32,788 ) (43,464 ) 25,076 (51,176 ) Undeveloped and non-producing oil and gas properties, net $ 485,481 $ 1,411,298 $ (659,290 ) $ 1,237,489 Total Oil and Gas Properties, Net $ 516,470 $ 2,092,625 $ (1,710,393 ) $ 3,002,862 |
Long Term Debt (Tables)
Long Term Debt (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Long Term Debt Tables | |
Schedule of Long-term Debt | Long term debt consisted of the following at September 30, 2017 and December 31, 2016: September 30, 2017 December 31, 2016 On February 19, 2016, the Company issued a total of $1,625,000 15% convertible notes with a term expiring August 18, 2016 (the Maturity Date). The principal amounts of each note and interest is payable on the maturity date. Placement fees of $145,000 were subtracted from proceeds. The notes are convertible into common stock at any time, at the holders option, the conversion price shall be the lowest of (i) $0.15, (ii) 58% of the price of the Companys securities that are sold in any offering of the Companys securities in excess of $100,000, of (iii) the conversion price of any Equity converted on or prior to the Conversion Date. - 125,000 On April 29, 2016, the Company issued a total of $375,000 of 10% Secured Subordinated promissory notes with a term expiring January 12, 2017 (the Maturity Date), and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date. The balance shown is net of unamortized discount of $8,824 at December 31, 2016. - 366,176 On July 27, 2016, the Company issued a promissory note in the amount of $20,000, bearing interest at 12%, with an initial maturity date of August 27, 2016, and a provision for an extension of six additional terms of 30 days. - 20,000 As of December 31, 2016, the Company issued a total of $630,000 of 10% Secured promissory notes with a term expiring April 3, 2017 (the Maturity Date), and an original issue discount of thirty-seven and one-half percent (37.5%). The discount was modified to fifty percent (50%) retroactively with an extension of the maturity to June 2017. During the quarter ended March 31, 2017, the Company issued an additional $917,833 of 10% Secured promissory notes with terms expiring in June, August and September of 2017, and an original issue discount of fifty percent (50%). Interest is payable on the outstanding principal of these notes at 10% per annum on the various maturity dates. The balance shown is net of unamortized discount of $0 and $208,064 at September 30, 2017 and December 31, 2016 respectively. At September 30, 2017, the funds necessary to satisfy this obligation are being held in escrow awaiting disbursement instructions from the estate of the noteholder. 75,000 421,936 On October 4, 2016, the Company issued a non-interest-bearing note, payable on demand in the amount of $203,000. This amount has been paid in full as of November 1, 2017. 203,000 203,000 On October 4, 2016, the Company closed on a revolver loan with Crossfirst Bank in the amount of $1,800,000, payable at $15,000 per month, interest at 10%, with all unpaid principal and accrued interest payable on September 30, 2018. The balance shown is net of unamortized discount of $13,826 and $24,167 at September 30, 2017 and December 31, 2016 respectively. 1,621,174 1,745,833 During July and August of 2017, the Company borrowed $1,475,000 from private lenders pursuant to a 10% Secured Convertible Promissory Note with a twelve-month maturity. The balance shown is net of unamortized discount of $400,710 and $0 at September 30, 2017 and December 31, 2016 respectively. 1,074,290 - During August and September of 2017, the Company borrowed $1,225,000 from private lenders pursuant to a 10% Secured Promissory Note with all principal and accrued interest payable on the maturity date of October 31, 2018. The balance shown is net of unamortized discount of $368,415 and $0 at September 30, 2017 and December 31, 2016 respectively. 856,585 - On September 8, 2017, the Company closed on a Promissory Note with Cornerstone Bank in the amount of $256,983, payable interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025. 256,983 - 4,087,032 2,881,945 Less current portion (1,518,464 ) (1,302,476 ) $ 2,568,568 $ 1,579,469 |
Nature of Business and Going 19
Nature of Business and Going Concern (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||||
Nov. 30, 2014 | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 11, 2017a | Dec. 31, 2016USD ($) | Oct. 04, 2016a | Feb. 23, 2016a | Dec. 31, 2015USD ($) | |
Controlling purchasing percentage of ownerships | 50.00% | |||||||||
Net Loss | $ | $ (785,600) | $ 1,865,513 | $ (2,666,268) | $ (1,953,798) | ||||||
Area of oil and gas acquisition | a | 660 | 281 | ||||||||
Total stockholders'deficiency | $ | $ (3,049,707) | $ (3,049,707) | $ (2,866,174) | $ (1,277,693) | ||||||
Mid-Con Drilling, LLCb[Member] | ||||||||||
Area of oil and gas acquisition | a | 980 | |||||||||
Completed of acquisition | 90.00% | |||||||||
Sparta Ventures Corp. [Member] | ||||||||||
State of incorporation | Florida | |||||||||
Date of Incorporation | May 3, 1989 | |||||||||
SinoCubate, Inc. [Member] | ||||||||||
State of incorporation | Nevada | |||||||||
Date of Incorporation | Sep. 11, 2008 |
Summary of Significant Accoun20
Summary of Significant Accounting Policies (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Financial Assets | ||
Long term investment | $ 106,930 | |
Financial Liabilities | ||
Derivative Liabilities | 606,878 | 1,136,894 |
Quoted Prices in Active Markets for Identical Assets/Level 1 [Member] | ||
Financial Assets | ||
Long term investment | 106,930 | |
Commodity Derivative | ||
Financial Asset | 106,930 | |
Financial Liabilities | ||
Derivative Liabilities | ||
Commodity Derivative | ||
Financial Liabilities | ||
Significant Other Observable Inputs/Level 2 [Member] | ||
Financial Assets | ||
Long term investment | ||
Commodity Derivative | 683 | |
Financial Asset | 683 | |
Financial Liabilities | ||
Derivative Liabilities | ||
Commodity Derivative | 61,061 | |
Financial Liabilities | 61,061 | |
Significant Unobservable Inputs/Level 3 [Member] | ||
Financial Assets | ||
Long term investment | ||
Commodity Derivative | ||
Financial Asset | ||
Financial Liabilities | ||
Derivative Liabilities | 606,878 | 1,075,833 |
Commodity Derivative | ||
Financial Liabilities | 606,878 | 1,075,833 |
Total Gain Loss [Member] | ||
Financial Assets | ||
Long term investment | 1,446 | 156,978 |
Commodity Derivative | 61,744 | |
Financial Asset | 69,190 | 156,978 |
Financial Liabilities | ||
Derivative Liabilities | 433,724 | 265,448 |
Commodity Derivative | (61,061) | |
Financial Liabilities | $ 433,724 | $ 204,387 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Details 1) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Prepaid equity-based compensation | $ 50,072 | $ 35,068 |
Consulting agreements with 3 unrelated parties [Member] | In March, 2016 [Member] | ||
Prepaid equity-based compensation | 35,068 | |
Consulting agreement for services related to investor relations [Member] | In February 2017 [Member] | ||
Prepaid equity-based compensation | 17,543 | |
Consulting agreement comprised of four quarterly incremental installments for services [Member] | In April 2017 [Member] | ||
Prepaid equity-based compensation | 5,478 | |
Consulting agreement for services related to investor relations social Media [Member] | In June 2017 [Member] | ||
Prepaid equity-based compensation | $ 27,051 |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Details 2) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Amortization expense for the oil and gas properties | $ 59,711 | $ 29,009 | $ 146,602 | $ 77,625 |
Canada [Member] | ||||
Amortization expense for the oil and gas properties | 21,073 | 6,860 | 38,301 | 12,272 |
United States [Member] | ||||
Amortization expense for the oil and gas properties | $ 38,638 | $ 22,149 | $ 108,301 | $ 65,353 |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details 3) | 9 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
Number of Shares | |
Outstanding, Beginning | 5,720,834 |
Granted | 1,475,000 |
Exercised | |
Forfeited/expired/cancelled | |
Outstanding, Ending | 7,195,834 |
Outstanding Exercisable December 31, 2016 | 5,720,834 |
Outstanding Exercisable September 30, 2017 | 7,195,834 |
Weighted Average Exercise Price | |
Outstanding, Beginning | $ / shares | $ 0.19 |
Granted | $ / shares | 0.30 |
Exercised | $ / shares | |
Outstanding, Ending | $ / shares | 0.21 |
Outstanding Exercisable December 31, 2016 | $ / shares | 0.19 |
Outstanding Exercisable September 30, 2017 | $ / shares | $ 0.21 |
Weighted Average Remaining Contractual Life | |
Outstanding, Beginning | 3 years 22 days |
Outstanding, Ending | 3 years 29 days |
Outstanding Exercisable December 31, 2016 | 3 years 22 days |
Outstanding Exercisable September 30, 2017 | 3 years 29 days |
Aggregate Intrinsic Value | |
Outstanding, Beginning | $ | |
Granted | $ | |
Forfeited/expired/cancelled | $ | |
Outstanding, Ending | $ | |
Outstanding Exercisable December 31, 2016 | $ | |
Outstanding Exercisable September 30, 2017 | $ |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details 4) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
Summary Of Significant Accounting Policies Details 4 | ||
Asset retirement obligation – beginning | $ 833,017 | $ 416,246 |
Oil and gas purchases | 205,048 | 393,808 |
Accretion expense | 29,167 | 22,963 |
Asset retirement obligation - ending | $ 1,067,232 | $ 833,017 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | Apr. 18, 2017 | Jan. 09, 2017 | |
Common stock shares issued | 66,220,524 | 66,220,524 | 53,093,192 | 250,000 | 3,000,000 | ||
Unrealized gain (loss) on securities available-for-sale | $ (3,394) | $ 1,446 | $ 148,663 | ||||
Derivative Liabilities | 606,878 | 606,878 | $ 1,136,894 | ||||
Conversion features of new convertible debt | $ 433,724 | ||||||
Common stock equivalents as anti-dilutive | 10,145,834 | 12,229,167 | |||||
Derivative liability adjustment - satisfaction of convertible debt | $ 35,232 | 685,668 | |||||
Derivative (gain) loss | (40,370) | $ (2,765,013) | (495,468) | $ (833,418) | |||
Cash in escrow deposits | $ 465,985 | $ 465,985 | |||||
Leases term | 1 year | ||||||
March 2016, three one-year consulting agreements [Member] | |||||||
Principal amount | $ 800,000 | ||||||
February 2017, three one-year consulting agreements [Member] | |||||||
Principal amount | 44,160 | ||||||
April 2017, three one-year consulting agreements [Member] | |||||||
Principal amount | 28,000 | ||||||
Principal quarterly amount | 40,250 | ||||||
June 2017, three one-year consulting agreements [Member] | |||||||
Principal amount | $ 65,136 | ||||||
Tanager Energy, Inc. [Member] | |||||||
Common stock shares issued | 1,437,500 | 1,437,500 | |||||
Significant Unobservable Inputs/Level 3 [Member] | |||||||
Derivative Assets | $ 683 | $ 683 | 0 | ||||
Derivative Liabilities | 606,878 | 606,878 | 1,075,833 | ||||
Commodity Derivative | |||||||
Total Gain Loss [Member] | |||||||
Derivative Liabilities | 433,724 | 433,724 | $ 265,448 | ||||
Commodity Derivative | 61,744 | 61,744 | |||||
Promissory note [Member] | |||||||
Cash in escrow deposits | 82,500 | 82,500 | |||||
Secured promissory note | $ 75,000 | $ 75,000 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |
Nov. 30, 2014 | Sep. 30, 2017 | Dec. 31, 2016 | |
Other receivable - joint venture | $ 76,939 | $ 76,939 | |
Controlling purchasing percentage of ownerships | 50.00% | ||
Due to related party | $ 1,056,147 | $ 1,072,576 | |
Tanager Energy, Inc. [Member] | |||
Controlling purchasing percentage of ownerships | 50.00% | ||
Due to related party | $ 153,877 | ||
Mr. James A. Doris [Member] | |||
Advances to related party | 159,614 | ||
Repayments to related party | 336,794 | ||
Due to related party | 193,757 | ||
Accrued interest | $ 149,120 | ||
Interest rate | 12.00% | ||
Total loan payable | $ 196,855 | ||
Mr. Tom Simeo [Member] | |||
Advances to related party | $ 20,643 |
Oil and Gas Properties (Details
Oil and Gas Properties (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 | Dec. 31, 2015 |
Oil and gas properties, net | $ 2,254,925 | $ 1,765,373 | |
Total Oil and Gas Properties, Net | 3,421,308 | 3,002,862 | |
Proved Developed Producing [Member] | |||
Canada cost center | 34,733 | 34,733 | $ 33,082 |
United States cost center | 2,352,888 | 1,787,840 | |
Accumulated depreciation, depletion and amortization | (132,696) | (57,200) | (2,093) |
Oil and gas properties, net | 2,254,925 | 1,765,373 | 30,989 |
Undeveloped and Non-producing [Member] | |||
Canada cost center | 371,481 | 371,481 | 518,269 |
United States cost center | 917,184 | 917,184 | |
Accumulated depreciation, depletion and amortization | (122,282) | (51,176) | (32,788) |
Oil and gas properties, net | 1,166,383 | 1,237,489 | 485,481 |
Total Oil and Gas Properties, Net | 3,421,308 | 3,002,862 | $ 516,470 |
Adjustments Proved Developed Producing [Member] | |||
Canada cost center | 1,651 | ||
United States cost center | 565,048 | 2,838,943 | |
Accumulated depreciation, depletion and amortization | (75,496) | (55,107) | |
Oil and gas properties, net | 489,552 | 2,785,487 | |
Adjustments Undeveloped and non-producing [Member] | |||
Canada cost center | (1,652) | ||
United States cost center | 1,456,414 | ||
Accumulated depreciation, depletion and amortization | (71,106) | (43,464) | |
Oil and gas properties, net | (71,106) | 1,411,298 | |
Total Oil and Gas Properties, Net | 418,446 | 2,092,625 | |
Impairments Proved Developed Producing [Member] | |||
Canada cost center | |||
United States cost center | (1,051,103) | ||
Accumulated depreciation, depletion and amortization | |||
Oil and gas properties, net | (1,051,103) | ||
Impairments Undeveloped and non-producing [Member] | |||
Canada cost center | (145,136) | ||
United States cost center | (539,230) | ||
Accumulated depreciation, depletion and amortization | 25,076 | ||
Oil and gas properties, net | (659,290) | ||
Total Oil and Gas Properties, Net | $ (1,710,393) |
Oil and Gas Properties (Detai28
Oil and Gas Properties (Details Narrative) | Sep. 11, 2017USD ($)a | Sep. 30, 2017USD ($)$ / sharesshares | Apr. 18, 2017shares | Jan. 09, 2017shares | Dec. 31, 2016USD ($)$ / sharesshares | Oct. 04, 2016a | Feb. 23, 2016a |
Area of oil and gas acquisition | a | 660 | 281 | |||||
Common stock shares issued | shares | 66,220,524 | 250,000 | 3,000,000 | 53,093,192 | |||
Common stock, par value | $ / shares | $ 0.001 | $ 0.001 | |||||
Common stock value | $ 66,221 | $ 53,093 | |||||
Common stock exercise price | $ / shares | $ 0.30 | ||||||
Oil and Gas Properties [Member] | |||||||
Aggregate amount of additional paid-in capital | $ 1,350,000 | ||||||
Common stock shares issued | shares | 4,650,000 | ||||||
Common stock, par value | $ / shares | $ .085 | ||||||
Common stock value | $ 395,250 | ||||||
Acquired working interest | 100.00% | ||||||
Net revenue interest acquired | 83.00% | ||||||
Description of property acquisition | Three leases with access to the mineral rights (oil and gas) concerning approximately 270 acres of property in Miami and Franklin Counties in eastern Kansas; and (ii) 31 leases with access to the mineral rights (oil and gas) concerning approximately 5,500 acres of property in Cass and Bates Counties in Missouri | ||||||
Oil and Gas Properties [Member] | Vendors [Member] | |||||||
Common stock shares issued | shares | 5,000,000 | ||||||
Common stock, par value | $ / shares | $ .085 | ||||||
Common stock value | $ 425,000 | ||||||
Oil and Gas Properties [Member] | Senior Secured Convertible Promissory [Member] | |||||||
Common stock shares issued | shares | 4,062,500 | ||||||
Common stock, par value | $ / shares | $ 0.15 | ||||||
Borrowed amount | $ 1,625,000 | ||||||
Interest rate | 15.00% | ||||||
Common stock exercise price | $ / shares | $ 0.20 | ||||||
Purchase term | 5 years | ||||||
Loan term | 6 months | ||||||
Oil and Gas Properties [Member] | Anderson [Member] | |||||||
Area of oil and gas acquisition | a | 980 | ||||||
Acquired working interest | 90.00% | ||||||
Promissory note executed for acquition | $ 256,982 | ||||||
Acquisition price | $ 360,000 | ||||||
Oil and Gas Properties One [Member] | |||||||
Aggregate amount of additional paid-in capital | $ 920,857 | ||||||
Common stock shares issued | shares | 5,212,021 | ||||||
Common stock value | $ 625,442 |
Capital Stock and Additional 29
Capital Stock and Additional Paid-in Capital (Details Narrative) - USD ($) | Aug. 04, 2017 | May 12, 2017 | May 04, 2017 | May 03, 2017 | Oct. 04, 2016 | Feb. 01, 2016 | Jan. 12, 2016 | Aug. 30, 2017 | Jul. 18, 2017 | Jun. 15, 2017 | Mar. 23, 2017 | Feb. 16, 2017 | Jan. 31, 2017 | Jan. 25, 2017 | Dec. 30, 2016 | Nov. 30, 2016 | Oct. 21, 2016 | Sep. 30, 2016 | Sep. 28, 2016 | Apr. 29, 2016 | Mar. 21, 2016 | Mar. 16, 2016 | Sep. 30, 2017 | Dec. 31, 2016 | Jun. 30, 2017 | Apr. 18, 2017 | Jan. 09, 2017 | Aug. 18, 2016 |
Preferred stock Series, par value | $ 0.001 | $ 0.001 | ||||||||||||||||||||||||||
Preferred stock Series, authorized | 5,000,000 | 5,000,000 | ||||||||||||||||||||||||||
Series C preferred stock designated shares | 50,000 | |||||||||||||||||||||||||||
Voting rights | two thousand (2,000) votes | |||||||||||||||||||||||||||
Common stock, par value | $ 0.001 | $ 0.001 | ||||||||||||||||||||||||||
Common stock, authorized | 2,752,021 | 100,000,000 | 100,000,000 | 156,250 | ||||||||||||||||||||||||
Common stock shares issued | 66,220,524 | 53,093,192 | 250,000 | 3,000,000 | ||||||||||||||||||||||||
Common stock shares sold | 2,059,443 | 666,666 | 333,333 | 66,667 | 187,500 | 1,250,000 | ||||||||||||||||||||||
Sale of Stock, Price Per Share | $ 0.15 | $ 0.15 | $ 0.15 | $ 0.15 | $ 0.15 | $ 0.15 | ||||||||||||||||||||||
Shares issued in satisfaction of debt , shares | 300,926 | |||||||||||||||||||||||||||
Shares issued in satisfaction of debt , amount | $ 10,111 | $ 10,111 | ||||||||||||||||||||||||||
Common shares issued for services, shares | 154,688 | 1,000,000 | 176,258 | 250,000 | 395,000 | 62,500 | 1,000,000 | 612,500 | 315,000 | |||||||||||||||||||
Common shares issued for services, value | $ 102,500 | |||||||||||||||||||||||||||
Common shares issued for consideration for the acquisition, shares | 60,000 | 9,650,000 | 1,400,000 | 2,400,000 | ||||||||||||||||||||||||
Common shares issued for consideration for the acquisition, amount | $ 252,000 | $ 288,000 | ||||||||||||||||||||||||||
Common shares for advisory services agreement | 1,000,000 | |||||||||||||||||||||||||||
Common shares issued on execution of the contract | 375,002 | |||||||||||||||||||||||||||
Common shares issued at begnning of month | 56,818 | |||||||||||||||||||||||||||
Common shares issued for negotiated payment of convertible notes | 375,000 | |||||||||||||||||||||||||||
Additional interest | $ 52,500 | |||||||||||||||||||||||||||
Common shares issued as additional discount on debt | 508,335 | |||||||||||||||||||||||||||
Securities Purchase Agreement [Member] | ||||||||||||||||||||||||||||
Common stock value | $ 1,337,500 | $ 1,337,500 | ||||||||||||||||||||||||||
Sale of Stock, Price Per Share | $ 0.15 | $ 0.15 | ||||||||||||||||||||||||||
Stock Issue Activity One [Member] | ||||||||||||||||||||||||||||
Common shares issued for services, shares | 340,292 | 1,000,000 | ||||||||||||||||||||||||||
Stock Issue Activity Two [Member] | ||||||||||||||||||||||||||||
Common shares issued for services, shares | 21,750 | 59,625 | ||||||||||||||||||||||||||
During August and September of 2017 [Member] | Separate private placement [Member] | ||||||||||||||||||||||||||||
Common stock shares issued | 1,837,500 | |||||||||||||||||||||||||||
Common stock value | $ 1,225,000 | |||||||||||||||||||||||||||
During July and August of 2017 [Member] | Private Placement [Member] | ||||||||||||||||||||||||||||
Common stock shares issued | 590,000 | |||||||||||||||||||||||||||
Common stock value | $ 1,475,000 | |||||||||||||||||||||||||||
On April 1, 2017 [Member] | ||||||||||||||||||||||||||||
Common stock shares issued | 77,777 |
Long Term Debt (Details)
Long Term Debt (Details) - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Long term debt including current and non-current portion | $ 4,087,032 | $ 2,881,945 |
Less current portion | (1,518,464) | (1,302,476) |
Long term debt | 2,568,568 | 1,579,469 |
February 19, 2016, convertible promissory note [Member] | ||
Long term debt including current and non-current portion | 125,000 | |
April 29, 2016, convertible promissory note [Member] | ||
Long term debt including current and non-current portion | 366,176 | |
July 27, 2016 convertible promissory note [Member] | ||
Long term debt including current and non-current portion | 20,000 | |
December 31, 2016 convertible promissory note [Member] | ||
Long term debt including current and non-current portion | 75,000 | 421,936 |
October 4, 2016 convertible promissory note [Member] | ||
Long term debt including current and non-current portion | 203,000 | 203,000 |
October 4, 2016 convertible promissory note 1 [Member] | ||
Long term debt including current and non-current portion | 1,621,174 | 1,745,833 |
July and August of 2017 convertible promissory note 1 [Member] | ||
Long term debt including current and non-current portion | 1,074,290 | |
August and September of 2017 convertible promissory note [Member] | ||
Long term debt including current and non-current portion | 856,585 | |
September 8, 2017 convertible promissory note [Member] | ||
Long term debt including current and non-current portion | $ 256,983 |
Long Term Debt (Details Narrat
Long Term Debt (Details Narrative) - USD ($) | 9 Months Ended | 12 Months Ended |
Sep. 30, 2017 | Dec. 31, 2016 | |
July and August of 2017 convertible promissory note 1 [Member] | Crossfirst Bank [Member] | ||
Convertible promissory note | $ 1,475,000 | |
Interest rate | 10.00% | |
Unamortized discount | $ 400,710 | $ 0 |
August and September of 2017 convertible promissory note [Member] | Crossfirst Bank [Member] | ||
Convertible promissory note | $ 1,225,000 | |
Interest rate | 10.00% | |
Maturity date | Oct. 31, 2018 | |
Unamortized discount | $ 368,415 | 0 |
September 8, 2017 convertible promissory note [Member] | Crossfirst Bank [Member] | ||
Convertible promissory note | $ 256,983 | |
Interest rate | 6.00% | |
Maturity date | Sep. 8, 2025 | |
Interest payable, Description | Payable interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, | |
Monthly payments | $ 3,765 | |
October 4, 2016 convertible promissory note 1 [Member] | Crossfirst Bank [Member] | ||
Convertible promissory note | $ 1,800,000 | |
Interest rate | 10.00% | |
Maturity date | Sep. 30, 2018 | |
Unamortized discount | $ 13,826 | 24,167 |
Debt instrument periodic payment | 15,000 | |
October 4, 2016 convertible promissory note [Member] | ||
Convertible promissory note | 203,000 | |
December 31, 2016 convertible promissory note [Member] | ||
Convertible promissory note | $ 917,833 | $ 630,000 |
Interest rate | 10.00% | 10.00% |
Original issue discount, Percentage | 37.50% | |
Original issue discount, Description | The discount was modified to fifty percent (50%) retroactively | |
Maturity date | Apr. 3, 2017 | |
Unamortized discount | $ 0 | $ 208,064 |
Interest payable, Description | Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date | |
Amendment to maturity date description | Extension of the maturity to June 2017 | |
July 27, 2016 convertible promissory note [Member] | ||
Convertible promissory note | $ 20,000 | |
Interest rate | 12.00% | |
Maturity date | Aug. 27, 2016 | |
Amendment to maturity date description | a provision for an extension of six additional terms of 30 days | |
April 29, 2016, convertible promissory note [Member] | ||
Convertible promissory note | $ 375,000 | |
Interest rate | 10.00% | |
Original issue discount, Percentage | 50.00% | |
Maturity date | Jan. 12, 2017 | |
Unamortized discount | $ 8,824 | |
Interest payable, Description | Interest is payable on the outstanding principal of these notes at 10% per annum on the Maturity Date | |
February 19, 2016, convertible promissory note [Member] | ||
Convertible promissory note | $ 1,625,000 | |
Interest rate | 15.00% | |
Maturity date | Aug. 18, 2016 | |
Terms of conversion price | The conversion price shall be the lowest of (i) $0.15, (ii) 58% of the price of the Companys securities that are sold in any offering of the Companys securities in excess of $100,000, of (iii) the conversion price of any Equity converted on or prior to the Conversion Date | |
Private placement fees | $ 145,000 | |
Value of equity used for conversion price calculation | $ 100,000 |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) - USD ($) | Nov. 10, 2017 | Oct. 04, 2017 | Oct. 03, 2017 | Oct. 02, 2017 | Oct. 25, 2017 | Oct. 19, 2017 | Sep. 30, 2017 | Dec. 31, 2016 |
Loan principal amount | $ 4,087,032 | $ 2,881,945 | ||||||
Subsequent Event [Member] | Consulting agreement [Member] | ||||||||
Cash received in exchange of services | $ 5,000 | |||||||
Common shares received in exchange of services | 50,000 | |||||||
Subsequent Event [Member] | Cornerstone Bank [Member] | ||||||||
Loan principal amount | $ 204,000 | $ 290,000 | ||||||
Interest rate | 6.00% | 6.00% | ||||||
Subsequent Event [Member] | Miami and Franklin [Member] | Cornerstone Bank [Member] | ||||||||
Maturity date | Oct. 2, 2025 | |||||||
Interest payable, description | For the first 12 months, the Note bears interest at Cornerstones corporate base rate (currently 4.5%) plus 1.0% | |||||||
Loan proceeds | $ 286,016 | |||||||
Acquired working interest | 100.00% | |||||||
Acquisition price | $ 530,000 | |||||||
Subsequent Event [Member] | Riley, Geary and Wabaunsee [Member] | Cornerstone Bank [Member] | ||||||||
Maturity date | Oct. 3, 2025 | |||||||
Interest payable, description | For the first 12 months, the Note bears interest at Cornerstones corporate base rate (currently 4.5%) plus 1.0%, and thereafter the interest rate shall be 6% per annum. | |||||||
Loan proceeds | $ 200,441 | |||||||
Acquired working interest | 80.00% | |||||||
Acquisition price | $ 400,000 | |||||||
Leases, description | The leases produce oil from various zones, including the Conglomerate (at depths of 1,650 to 1,800 feet), Viola and Simpson Sandstone (at depths of 2,917 to 3,063 feet), and offer the potential for several future drilling locations. | |||||||
Subsequent Event [Member] | Equity Unit Purchase Agreements [Member] | Black Rhino LP [Member] | ||||||||
Maturity date | Oct. 31, 2020 | |||||||
Cash payment | $ 3,000,000 | |||||||
Common stock reserve for future issuance | 2,000,000 | |||||||
Royalty interest | 1.50% | |||||||
Closing date, description | The scheduled closing date of the transaction is on or before December 22, 2017 |