Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | May 12, 2020 | |
Document And Entity Information | ||
Entity Registrant Name | HOUSTON AMERICAN ENERGY CORP | |
Entity Central Index Key | 0001156041 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business Flag | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 87,007,145 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets (Un
Consolidated Balance Sheets (Unaudited) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
CURRENT ASSETS | ||
Cash | $ 2,922,349 | $ 97,915 |
Accounts receivable - oil and gas sales | 29,186 | 80,195 |
Prepaid expenses and other current assets | 93,255 | 39,505 |
TOTAL CURRENT ASSETS | 3,044,790 | 217,615 |
Oil and gas properties, full cost method | ||
Costs subject to amortization | 61,588,176 | 61,068,240 |
Costs not being amortized | 2,478,456 | 2,478,456 |
Office equipment | 90,004 | 90,004 |
Total | 64,156,636 | 63,633,534 |
Accumulated depletion, depreciation, amortization, and impairment | (57,787,084) | (57,267,145) |
PROPERTY AND EQUIPMENT, NET | 6,369,552 | 6,369,555 |
Cost method investment | 229,754 | 197,009 |
Right of use asset | 260,728 | 281,489 |
Other assets | 3,167 | 3,167 |
TOTAL ASSETS | 9,907,991 | 7,068,835 |
CURRENT LIABILITIES | ||
Accounts payable | 141,714 | 270,119 |
Accrued expenses | 1,166 | 447 |
Notes payable - related party, net of debt discount | 595,585 | |
Short-term lease liability | 101,454 | 97,890 |
TOTAL CURRENT LIABILITIES | 244,334 | 966,041 |
LONG-TERM LIABILITIES | ||
Lease liability, net of current portion | 192,553 | 219,410 |
Reserve for plugging and abandonment costs | 48,885 | 44,186 |
TOTAL LONG-TERM LIABILITIES | 241,438 | 263,596 |
TOTAL LIABILITIES | 485,772 | 1,229,637 |
COMMITMENTS AND CONTINGENCIES | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value $0.001; 10,000,000 shares authorized, | ||
Common stock, par value $0.001; 150,000,000 shares authorized 87,007,145 and 65,947,646 shares issued and outstanding, respectively | 87,007 | 65,947 |
Additional paid-in capital | 78,171,037 | 73,816,661 |
Subscription receivable | 58,575 | |
Accumulated deficit | (68,835,827) | (67,984,837) |
TOTAL SHAREHOLDERS' EQUITY | 9,422,219 | 5,839,198 |
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 9,907,991 | 7,068,835 |
Series A Convertible Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value $0.001; 10,000,000 shares authorized, | 1 | 1 |
Series B Convertible Preferred Stock [Member] | ||
SHAREHOLDERS' EQUITY | ||
Preferred stock, par value $0.001; 10,000,000 shares authorized, | $ 1 | $ 1 |
Consolidated Balance Sheets (_2
Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 87,007,145 | 65,947,646 |
Series A Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 2,000 | 2,000 |
Preferred stock, shares issued | 1,085 | 1,085 |
Preferred stock, shares outstanding | 1,085 | 1,085 |
Preferred stock liquidation share value | $ 1,085,000 | $ 1,085,000 |
Series B Convertible Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 835 | 835 |
Preferred stock, shares outstanding | 835 | 835 |
Preferred stock liquidation share value | $ 835,000 | $ 835,000 |
Consolidated Statements of Oper
Consolidated Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Statement [Abstract] | ||
OIL AND GAS REVENUE | $ 147,136 | $ 250,720 |
EXPENSES OF OPERATIONS | ||
Lease operating expense and severance tax | 81,234 | 149,227 |
General and administrative expense | 374,062 | 249,951 |
Depreciation and depletion | 90,822 | 92,529 |
Impairment of oil and gas properties | 429,116 | |
Total operating expenses | 975,234 | 491,707 |
Loss from operations | (828,098) | (240,987) |
OTHER (EXPENSE) INCOME, NET | ||
Interest income | 3,925 | 1,367 |
Interest expense | (26,817) | |
Total other (expense) income | (22,892) | 1,367 |
Net loss before taxes | (850,990) | (239,620) |
Income tax expense | ||
Net loss | (850,990) | (239,620) |
Dividends to Series A and B preferred shareholders | (57,600) | (57,600) |
Net loss attributable to common shareholders | $ (908,590) | $ (297,228) |
Basic and diluted loss per common share | $ (0.01) | $ 0 |
Based and diluted weighted average number of common shares outstanding | 85,575,142 | 62,425,140 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Shareholders' Equity (Unaudited) - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Subscription Receivable [Member] | Retained Earnings (Deficit) [Member] | Total |
Balance at Dec. 31, 2018 | $ 2 | $ 62,425 | $ 73,084,009 | $ (65,469,143) | $ 7,677,293 | |
Balance, shares at Dec. 31, 2018 | 1,920 | 62,425,140 | ||||
Stock-based compensation | 14,219 | 14,219 | ||||
Series A and Series B Preferred Stock dividends paid | (57,600) | (57,600) | ||||
Net loss | (239,620) | (239,620) | ||||
Balance at Mar. 31, 2019 | $ 2 | $ 62,425 | 73,040,628 | (65,708,763) | 7,394,292 | |
Balance, shares at Mar. 31, 2019 | 1,920 | 62,425,140 | ||||
Balance at Dec. 31, 2019 | $ 2 | $ 65,947 | 73,816,661 | (58,575) | (67,984,837) | 5,839,198 |
Balance, shares at Dec. 31, 2019 | 1,920 | 65,947,646 | ||||
Stock-based compensation | 57,442 | 57,442 | ||||
Series A and Series B Preferred Stock dividends paid | (57,600) | (57,600) | ||||
Issuance of common stock for cash, net | $ 21,060 | 4,354,534 | 58,575 | 4,434,169 | ||
Issuance of common stock for cash, net, shares | 21,059,499 | |||||
Net loss | (850,990) | (850,990) | ||||
Balance at Mar. 31, 2020 | $ 2 | $ 87,007 | $ 78,171,037 | $ (68,835,827) | $ 9,422,219 | |
Balance, shares at Mar. 31, 2020 | 1,920 | 87,007,145 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ||
Net loss | $ (850,990) | $ (239,620) |
Adjustments to reconcile net loss to net cash used in operations: | ||
Depreciation and depletion | 90,822 | 92,529 |
Impairment of oil and gas properties | 429,116 | |
Accretion of asset retirement obligation | 4,699 | 830 |
Stock-based compensation | 57,442 | 14,219 |
Amortization of right of use asset | 20,761 | 18,190 |
Amortization of debt discount | 23,467 | |
Changes in operating assets and liabilities: | ||
Decrease/(increase) in accounts receivable | 51,009 | (52,650) |
Increase in prepaid expenses and other current assets | (53,750) | (51,532) |
(Decrease)/increase in accounts payable and accrued expenses | (124,122) | 37,093 |
Decrease in operating lease liability | (26,857) | (20,130) |
Net cash used in operating activities | (378,402) | (202,071) |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Payments for the acquisition and development of oil and gas properties | (519,936) | (49,651) |
Payments for capital contribution for cost method investment | (32,745) | |
Net cash used in investing activities | (552,681) | (49,651) |
CASH FLOWS FROM FINANCING ACTIVITIES | ||
Repayments of notes payable - related party | (621,052) | |
Proceeds from issuance of common stock for cash, net of offering costs | 4,434,169 | |
Payment of preferred stock dividends | (57,600) | (57,600) |
Net cash provided by (used in) financing activities | 3,755,517 | (57,600) |
Increase (decrease) in cash | 2,824,434 | (309,322) |
Cash, beginning of period | 97,915 | 755,702 |
Cash, end of period | 2,922,349 | 446,380 |
SUPPLEMENTAL CASH FLOW INFORMATION | ||
Interest paid | 3,350 | |
Taxes paid |
Basis of Presentation and Signi
Basis of Presentation and Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Significant Accounting Policies | NOTE 1 – BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements of Houston American Energy Corp., a Delaware corporation (the “Company”), have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and with the instructions to Form 10-Q. They do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for a complete financial presentation. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation, have been included in the accompanying unaudited consolidated financial statements. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the full year. These unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and footnotes, which are included as part of the Company’s Form 10-K for the year ended December 31, 2019. Consolidation The accompanying consolidated financial statements include all accounts of the Company and its subsidiaries (HAEC Louisiana E&P, Inc., HAEC Oklahoma E&P, Inc., and HAEC Caddo Lake E&P, Inc.). All significant inter-company balances and transactions have been eliminated in consolidation. Liquidity and Capital Requirements The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these consolidated financial statements. The Company has incurred continuing losses since 2011, including a loss of $850,990 for the three months ended March 31, 2020. Additionally, as a result of the steep global economic slowdown that began in March 2020 as the coronavirus pandemic (“COVID-19”) spread, prices realized from oil and gas sales declined sharply over the last weeks of the quarter ended March 31, 2020, with such price declines expected to persist until governments worldwide are confident that the pandemic is adequately contained to permit renewed economic activity. Depending upon the duration of the pandemic and the resulting global economic slowdown, the Company may incur continuing declines in revenues and increased losses, associated from lower demand for energy and resulting depressed oil and gas prices. However, during the three months ended March 31, 2020, the Company raised a total, net of offering costs, of $4,434,169 in its ATM offering. As of March 31, 2020, there were no remaining funds available under the ATM Offering. The Company believes that it has the ability to fund, from cash on hand (as a result of the ATM funding received in the current period), its operating costs and anticipated drilling operations, as well as mitigate the immediate impact of COVID-19, for at least the next twelve months following the issuance of these financial statements. The actual timing and number of wells drilled during 2020 will be principally controlled by the operators of the Company’s acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond the Company’s control or that of its operators. With the steep decline in energy prices in March 2020, due at least in part to the economic effects of the coronavirus, drilling operations are expected to be deferred until at least the second half of 2020 pending clarity as to the timing of economic recovery from the effects of the coronavirus. In the event that the Company pursues additional acreage acquisitions or expands its drilling plans, the Company may be required to secure additional funding beyond our resources on hand. While the Company may, among other efforts, seek additional funding from “at-the-market” sales of common stock, and private sales of equity and debt securities, it presently does not have any commitments to provide additional funding, and there can be no assurance that the Company can secure the necessary capital to fund its share of drilling, acquisition or other costs on acceptable terms or at all. If, for any reason, the Company is unable to fund its share of drilling and completion costs, it would forego participation in one or more of such wells. In such event, the Company may be subject to penalties or to the possible loss of some of its rights and interests in prospects with respect to which it fails to satisfy funding obligations and it may be required to curtail operations and forego opportunities. Accounting Principles and Use of Estimates The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management reviews its estimates, including those related to such potential matters as litigation, environmental liabilities, income taxes and the related valuation allowance, determination of proved reserves of oil and gas and asset retirement obligations. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents and any marketable securities (if any). The Company had cash deposits of $2,631,585 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of March 31, 2020. The Company also had cash deposits of $2,713 in Colombian banks at March 31, 2020 that are not insured by the FDIC. The Company has not experienced any losses on its deposits of cash and cash equivalents. Loss per Share Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted in common shares that then shared in the earnings of the Company. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive. For the three months ended March 31, 2020 and 2019, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive: Three Months Ended March 31, 2020 2019 Series A Convertible Preferred Stock 5,425,000 5,425,000 Series B Convertible Preferred Stock 2,320,556 2,320,556 Stock warrants 1,230,000 50,000 Stock options 6,012,166 4,978,832 Total 14,987,722 12,774,388 Recently Issued Accounting Pronouncements The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. Subsequent Events The Company has evaluated all transactions from March 31, 2020 through the financial statement issuance date for subsequent event disclosure consideration. |
Revenue from Contracts with Cus
Revenue from Contracts with Customers | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contracts with Customers | NOTE 2 – REVENUE FROM CONTRACTS WITH CUSTOMERS Disaggregation of Revenue from Contracts with Customers The following table disaggregates revenue by significant product type for the three-month periods ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Oil sales $ 114,851 $ 173,777 Natural gas sales 10,058 27,788 Natural gas liquids sales 22,227 49,155 Total revenue from customers $ 147,136 $ 250,720 There were no significant contract liabilities or transaction price allocations to any remaining performance obligations as of March 31, 2020 or 2019. |
Oil and Gas Properties
Oil and Gas Properties | 3 Months Ended |
Mar. 31, 2020 | |
Oil and Gas Property [Abstract] | |
Oil and Gas Properties | NOTE 3 – OIL AND GAS PROPERTIES During the three months ended March 31, 2020, the Company invested $519,936, net, for the acquisition and development of oil and gas properties, consisting of cost of development of U.S. properties of $519,936, net, principally attributable to acreage in Yoakum County, Texas. Of the amount invested, the Company capitalized none to oil and gas properties not subject to amortization and capitalized $519,936 to oil and gas properties subject to amortization.The Company also invested $32,745 in Hupecol Meta relating to drilling operations in Colombia, reflected in the cost method investment asset. During the three months ended March 31, 2020, the Company recorded an impairment of oil and gas properties of $429,116 due to a full cost ceiling test write-down primarily relating to a decline in energy prices. Geographical Information The Company currently has properties in two geographical areas, the United States and Colombia. Revenues for the three months ended March 31, 2020 and long lived assets (net of depletion, amortization, and impairments) as of March 31, 2020 attributable to each geographical area are presented below: Three Months Ended As of Revenues Long Lived United States $ 147,136 $ 4,026,426 Colombia — 2,343,126 Total $ 147,136 $ 6,369,552 |
Stock-Based Compensation Expens
Stock-Based Compensation Expense | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation Expense | NOTE 4 – STOCK-BASED COMPENSATION EXPENSE In 2008, the Company adopted the Houston American Energy Corp. 2008 Equity Incentive Plan (the “2008 Plan”). The terms of the 2008 Plan, as amended in 2012 and 2013, allow for the issuance of up to 6,000,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock. In 2017, the Company adopted the Houston American Energy Corp. 2017 Equity Incentive Plan (the “2017 Plan” and, together with the 2008 Plan, the “Plans”). The terms of the 2017 Plan, allow for the issuance of up to 5,000,000 shares of the Company’s common stock pursuant to the grant of stock options and restricted stock. Persons eligible to participate in the Plans are key employees, consultants and directors of the Company. The Company periodically grants options to employees, directors and consultants under the Plans and is required to make estimates of the fair value of the related instruments and recognize expense over the period benefited, usually the vesting period. Stock Option Activity A summary of stock option activity and related information for the three months ended March 31, 2020 is presented below: Options Weighted- Aggregate Outstanding at January 1, 2020 6,012,166 $ 0.68 Granted — — Exercised — — Forfeited — — Outstanding at March 31, 2020 6,012,166 $ 0.68 $ — Exercisable at March 31, 2020 4,765,499 $ 0.79 $ — During the three months ended March 31, 2020, the Company recognized $57,442 of stock-based compensation expense attributable to the amortization of stock options. As of March 31, 2020, total unrecognized stock-based compensation expense related to non-vested stock options was approximately $118,167. The unrecognized expense is expected to be recognized over a weighted average period of 0.29 years and the weighted average remaining contractual term of the outstanding options and exercisable options at March 31, 2020 is 5.77 years and 4.91 years, respectively. Shares available for issuance under the 2008 Plan as of March 31, 2020 totaled 0. Shares available for issuance under the 2017 Plan, as of March 31, 2020, totaled 3,191,667. Stock-Based Compensation Expense The following table reflects total stock-based compensation recorded by the Company for the three months ended March 31, 2020 and 2019: Three Months Ended 2020 2019 Stock-based compensation expense included in general and administrative expense $ 57,442 $ 14,219 Earnings per share effect of share-based compensation expense – basic and diluted $ (0.00 ) $ (0.00 ) |
Capital Stock
Capital Stock | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Capital Stock | NOTE 5 – CAPITAL STOCK Common Stock - At-the-Market Offering In May 2019, the Company entered into an At-the-Market Issuance Sales Agreement (the “Sales Agreement”) with WestPark Capital, Inc. (“WestPark Capital”) pursuant to which the Company could sell, at its option, up to an aggregate of $5.2 million in shares of its common stock through WestPark Capital, as sales agent. Sales of shares under the Sales Agreement (the “2019 ATM Offering”) were made, in accordance with one or more placement notices delivered by the Company to WestPark Capital, which notices set parameters under which shares could be sold. The 2019 ATM Offering was made pursuant to a shelf registration statement by methods deemed to be “at the market,” as defined in Rule 415 promulgated under the Securities Act of 1933. The Company paid WestPark a commission in cash equal to 3% of the gross proceeds from the sale of shares in the 2019 ATM Offering. Additionally, the Company reimbursed WestPark Capital for $18,000 of expenses incurred in connection with the 2019 ATM Offering. During the three months ended March 31, 2020, in connection with the 2019 ATM Offering, the Company (1) sold an aggregate of 21,059,499 4,375,594, Series A Convertible Preferred Stock During the three months ended March 31, 2020 and 2019, the Company paid dividends on Series A Convertible Preferred Stock in the amount of $32,550. At March 31, 2020, there were 1,085 shares of Series A Convertible Preferred Stock issued and outstanding. Series B Convertible Preferred Stock During the three months ended March 31, 2020 and 2019, the Company paid dividends on Series B Convertible Preferred Stock in the amount of $25,050. At March 31, 2020, there were 835 shares of Series B Convertible Preferred Stock issued and outstanding. Warrants A summary of warrant activity and related information for 2020 is presented below: Warrants Weighted- Aggregate Outstanding at January 1, 2020 1,230,000 $ 0.21 Issued — — Exercised — — Expired — — Outstanding at March 31, 2020 1,230,000 $ 0.21 $ — Exercisable at March 31, 2020 1,230,000 $ 0.21 $ — |
Notes Payable - Related Party
Notes Payable - Related Party | 3 Months Ended |
Mar. 31, 2020 | |
Debt Disclosure [Abstract] | |
Notes Payable - Related Party | NOTE 6 – NOTES PAYABLE – RELATED PARTY In September 2019, the Company issued promissory notes (the “Bridge Loan Notes”) with a total principal amount of $621,052, an original issue discount of 5%, warrants (the “Bridge Loan Warrants”) to purchase 1,180,000 shares of the Company’s common stock, and a term of 120 days. The net proceeds received by the Company for the Bridge Loan Notes and Warrants was $590,000. The Bridge Loan Notes were recorded net of debt discount that consists of (i) $31,052 of original issue discount on the Bridge Loan Notes and (ii) the relative fair value of the Bridge Loan Warrants of $144,948. The debt discount is amortized over the life of the Bridge Loan Notes as additional interest expense. During the three months ended March 31, 2020, interest expense paid in cash totaled $3,350 and interest expense attributable to amortization of debt discount totaled $23,467. The Bridge Loan Note was repaid in full as of March 31, 2020. The holders of the Bridge Loan Notes were the CEO and a 10% shareholder of the Company. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 7 - COMMITMENTS AND CONTINGENCIES Lease Commitment The Company leases office facilities under an operating lease agreement that expires October 31, 2022. During the three months ended March 31, 2020, the operating cash outflows related to operating lease liabilities of $32,581 and the expense for the right of use asset for operating leases was $20,761. As of March 31, 2020, the Company’s operating lease had a weighted-average remaining term of 2.6 years and a weighted average discount rate of 12%. As of March 31, 2020, the lease agreement requires future payments as follows: Year Amount 2020 $ 98,137 2021 133,087 2022 112,551 2023 — Total future lease payments 343,775 Less: imputed interest (49,768 ) Present value of future operating lease payments 294,007 Less: current portion of operating lease liabilities (101,454 ) Operating lease liabilities, net of current portion $ 192,553 Right of use assets $ 260,728 Total base rental expense was $30,048 and $32,175 for the three months ended March 31, 2020 and March 31, 2019, respectively. The Company does not have any capital leases or other operating lease commitments. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events [Abstract] | |
Subsequent Events | NOTE 8 – SUBSEQUENT EVENTS |
Basis of Presentation and Sig_2
Basis of Presentation and Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Consolidation | Consolidation The accompanying consolidated financial statements include all accounts of the Company and its subsidiaries (HAEC Louisiana E&P, Inc., HAEC Oklahoma E&P, Inc., and HAEC Caddo Lake E&P, Inc.). All significant inter-company balances and transactions have been eliminated in consolidation. |
Liquidity and Capital Requirements | Liquidity and Capital Requirements The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these consolidated financial statements. The Company has incurred continuing losses since 2011, including a loss of $850,990 for the three months ended March 31, 2020. Additionally, as a result of the steep global economic slowdown that began in March 2020 as the coronavirus pandemic (“COVID-19”) spread, prices realized from oil and gas sales declined sharply over the last weeks of the quarter ended March 31, 2020, with such price declines expected to persist until governments worldwide are confident that the pandemic is adequately contained to permit renewed economic activity. Depending upon the duration of the pandemic and the resulting global economic slowdown, the Company may incur continuing declines in revenues and increased losses, associated from lower demand for energy and resulting depressed oil and gas prices. However, during the three months ended March 31, 2020, the Company raised a total, net of offering costs, of $4,434,169 in its ATM offering. As of March 31, 2020, there were no remaining funds available under the ATM Offering. The Company believes that it has the ability to fund, from cash on hand (as a result of the ATM funding received in the current period), its operating costs and anticipated drilling operations, as well as mitigate the immediate impact of COVID-19, for at least the next twelve months following the issuance of these financial statements. The actual timing and number of wells drilled during 2020 will be principally controlled by the operators of the Company’s acreage, based on a number of factors, including but not limited to availability of financing, performance of existing wells on the subject acreage, energy prices and industry condition and outlook, costs of drilling and completion services and equipment and other factors beyond the Company’s control or that of its operators. With the steep decline in energy prices in March 2020, due at least in part to the economic effects of the coronavirus, drilling operations are expected to be deferred until at least the second half of 2020 pending clarity as to the timing of economic recovery from the effects of the coronavirus. In the event that the Company pursues additional acreage acquisitions or expands its drilling plans, the Company may be required to secure additional funding beyond our resources on hand. While the Company may, among other efforts, seek additional funding from “at-the-market” sales of common stock, and private sales of equity and debt securities, it presently does not have any commitments to provide additional funding, and there can be no assurance that the Company can secure the necessary capital to fund its share of drilling, acquisition or other costs on acceptable terms or at all. If, for any reason, the Company is unable to fund its share of drilling and completion costs, it would forego participation in one or more of such wells. In such event, the Company may be subject to penalties or to the possible loss of some of its rights and interests in prospects with respect to which it fails to satisfy funding obligations and it may be required to curtail operations and forego opportunities. |
Accounting Principles and Use of Estimates | Accounting Principles and Use of Estimates The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America. In preparing financial statements, management makes informed judgments and estimates that affect the reported amounts of assets and liabilities as of the date of the financial statements and affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management reviews its estimates, including those related to such potential matters as litigation, environmental liabilities, income taxes and the related valuation allowance, determination of proved reserves of oil and gas and asset retirement obligations. Changes in facts and circumstances may result in revised estimates and actual results may differ from these estimates. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to a concentration of credit risk include cash, cash equivalents and any marketable securities (if any). The Company had cash deposits of $2,631,585 in excess of the FDIC’s current insured limit on interest bearing accounts of $250,000 as of March 31, 2020. The Company also had cash deposits of $2,713 in Colombian banks at March 31, 2020 that are not insured by the FDIC. The Company has not experienced any losses on its deposits of cash and cash equivalents. |
Loss Per Share | Loss per Share Basic loss per share is computed by dividing net loss available to common shareholders by the weighted average common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common shares were exercised or converted in common shares that then shared in the earnings of the Company. In periods in which the Company reports a net loss, dilutive securities are excluded from the calculation of diluted net loss per share amounts as the effect would be anti-dilutive. For the three months ended March 31, 2020 and 2019, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive: Three Months Ended March 31, 2020 2019 Series A Convertible Preferred Stock 5,425,000 5,425,000 Series B Convertible Preferred Stock 2,320,556 2,320,556 Stock warrants 1,230,000 50,000 Stock options 6,012,166 4,978,832 Total 14,987,722 12,774,388 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company does not expect the adoption of any recently issued accounting pronouncements to have a significant impact on its financial position, results of operations, or cash flows. |
Subsequent Events | Subsequent Events The Company has evaluated all transactions from March 31, 2020 through the financial statement issuance date for subsequent event disclosure consideration. |
Basis of Presentation and Sig_3
Basis of Presentation and Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Accounting Policies [Abstract] | |
Schedule of Computation of Diluted Net Loss Per Share | For the three months ended March 31, 2020 and 2019, the following convertible preferred stock and warrants and options to purchase shares of common stock were excluded from the computation of diluted net loss per share, as the inclusion of such shares would be anti-dilutive: Three Months Ended March 31, 2020 2019 Series A Convertible Preferred Stock 5,425,000 5,425,000 Series B Convertible Preferred Stock 2,320,556 2,320,556 Stock warrants 1,230,000 50,000 Stock options 6,012,166 4,978,832 Total 14,987,722 12,774,388 |
Revenue from Contracts with C_2
Revenue from Contracts with Customers (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue from Contract with Customer [Abstract] | |
Schedule of Disaggregates Revenue by Significant Product | The following table disaggregates revenue by significant product type for the three-month periods ended March 31, 2020 and 2019: Three Months Ended March 31, 2020 2019 Oil sales $ 114,851 $ 173,777 Natural gas sales 10,058 27,788 Natural gas liquids sales 22,227 49,155 Total revenue from customers $ 147,136 $ 250,720 |
Oil and Gas Properties (Tables)
Oil and Gas Properties (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Oil and Gas Property [Abstract] | |
Schedule of Revenues and Long Lived Assets Attributable to Geographical Area | Revenues for the three months ended March 31, 2020 and long lived assets (net of depletion, amortization, and impairments) as of March 31, 2020 attributable to each geographical area are presented below: Three Months Ended As of Revenues Long Lived United States $ 147,136 $ 4,026,426 Colombia — 2,343,126 Total $ 147,136 $ 6,369,552 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | A summary of stock option activity and related information for the three months ended March 31, 2020 is presented below: Options Weighted- Aggregate Outstanding at January 1, 2020 6,012,166 $ 0.68 Granted — — Exercised — — Forfeited — — Outstanding at March 31, 2020 6,012,166 $ 0.68 $ — Exercisable at March 31, 2020 4,765,499 $ 0.79 $ — |
Schedule of Stock-based Compensation | The following table reflects total stock-based compensation recorded by the Company for the three months ended March 31, 2020 and 2019: Three Months Ended 2020 2019 Stock-based compensation expense included in general and administrative expense $ 57,442 $ 14,219 Earnings per share effect of share-based compensation expense – basic and diluted $ (0.00 ) $ (0.00 ) |
Capital Stock (Tables)
Capital Stock (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Equity [Abstract] | |
Summary of Warrant Activity | A summary of warrant activity and related information for 2020 is presented below: Warrants Weighted- Aggregate Outstanding at January 1, 2020 1,230,000 $ 0.21 Issued — — Exercised — — Expired — — Outstanding at March 31, 2020 1,230,000 $ 0.21 $ — Exercisable at March 31, 2020 1,230,000 $ 0.21 $ — |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Payments Under Lease Agreement | As of March 31, 2020, the lease agreement requires future payments as follows: Year Amount 2020 $ 98,137 2021 133,087 2022 112,551 2023 — Total future lease payments 343,775 Less: imputed interest (49,768 ) Present value of future operating lease payments 294,007 Less: current portion of operating lease liabilities (101,454 ) Operating lease liabilities, net of current portion $ 192,553 Right of use assets $ 260,728 |
Basis of Presentation and Sig_4
Basis of Presentation and Significant Accounting Policies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Net loss | $ (850,990) | $ (239,620) |
Proceeds from ATM offering | 4,434,169 | |
Cash deposits | 2,631,585 | |
Current insured limit on interest bearing accounts | 250,000 | |
Colombian Banks [Member] | ||
Cash deposits | $ 2,713 |
Basis of Presentation and Sig_5
Basis of Presentation and Significant Accounting Policies - Schedule of Computation of Diluted Net Loss Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total | 14,987,722 | 12,774,388 |
Series A Convertible Preferred Stock [Member] | ||
Total | 5,425,000 | 5,425,000 |
Series B Convertible Preferred Stock [Member] | ||
Total | 2,320,556 | 2,320,556 |
Stock Warrants [Member] | ||
Total | 1,230,000 | 50,000 |
Stock Options [Member] | ||
Total | 6,012,166 | 4,978,832 |
Revenue from Contracts with C_3
Revenue from Contracts with Customers (Details Narrative) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Revenue from Contract with Customer [Abstract] | ||
Remaining performance obligations |
Revenue from Contracts with C_4
Revenue from Contracts with Customers - Schedule of Disaggregates Revenue by Significant Product (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total revenue from customers | $ 147,136 | $ 250,720 |
Oil Sales [Member] | ||
Total revenue from customers | 114,851 | 173,777 |
Natural Gas Sales [Member] | ||
Total revenue from customers | 10,058 | 27,788 |
Natural Gas Liquids Sales [Member] | ||
Total revenue from customers | $ 22,227 | $ 49,155 |
Oil and Gas Properties (Details
Oil and Gas Properties (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Investment in development of oil and gas properties | $ 519,936 | |
Impairment of oil and gas properties | 429,116 | |
Yoakum County, Texas [Member] | ||
Acquisition and development cost of oil and gas properties | 519,936 | |
Hupecol Meta [Member] | ||
Acquisition and development cost of oil and gas properties | $ 32,745 |
Schedule of Revenues and Long L
Schedule of Revenues and Long Lived Assets Attributable to Geographical Area (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Results of Operations for Oil and Gas Producing Activities, by Geographic Area [Line Items] | ||
Revenues | $ 147,136 | $ 250,720 |
Long Lived Assets, Net | 6,369,552 | |
United States [Member] | ||
Results of Operations for Oil and Gas Producing Activities, by Geographic Area [Line Items] | ||
Revenues | 147,136 | |
Long Lived Assets, Net | 4,026,426 | |
Colombia [Member] | ||
Results of Operations for Oil and Gas Producing Activities, by Geographic Area [Line Items] | ||
Revenues | ||
Long Lived Assets, Net | $ 2,343,126 |
Stock-Based Compensation Expe_2
Stock-Based Compensation Expense (Details Narrative) - USD ($) | 3 Months Ended | |||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2017 | Dec. 31, 2008 | |
Stock-based compensation | $ 57,442 | $ 14,219 | ||
Unrecognized share-based compensation expense related to non-vested stock options | $ 118,167 | |||
Weighted average period for unrecognition of compensation expense | 3 months 15 days | |||
Weighted average remaining contractual term of the outstanding options | 5 years 9 months 7 days | |||
Weighted average remaining contractual term of the exercisable options | 4 years 10 months 28 days | |||
2008 Equity Incentive Plan [Member] | ||||
Issuance of common stock, shares | 0 | |||
2008 Equity Incentive Plan [Member] | Maximum [Member] | ||||
Number of options authorized to purchase shares of common stock | 6,000,000 | |||
2017 Equity Incentive Plan [Member] | ||||
Issuance of common stock, shares | 3,191,667 | |||
2017 Equity Incentive Plan [Member] | Maximum [Member] | ||||
Number of options authorized to purchase shares of common stock | 5,000,000 |
Stock-Based Compensation Expe_3
Stock-Based Compensation Expense - Summary of Stock Option Activity (Details) | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Share-based Payment Arrangement [Abstract] | |
Options Outstanding at beginning of the period | shares | 6,012,166 |
Options Granted | shares | |
Options Exercised | shares | |
Options Forfeited | shares | |
Options Outstanding at end of the period | shares | 6,012,166 |
Options Outstanding Exercisable at end of the period | shares | 4,765,499 |
Weighted-Average Exercise Price Outstanding at beginning of the period | $ / shares | $ 0.68 |
Weighted-Average Exercise Price Granted | $ / shares | |
Weighted-Average Exercise Price Exercised | $ / shares | |
Weighted-Average Exercise Price Forfeited | $ / shares | |
Weighted-Average Exercise Price Outstanding at end of the period | $ / shares | 0.68 |
Weighted-Average Exercise Price Outstanding Exercisable at end of the period | $ / shares | $ 0.79 |
Aggregate Intrinsic Value Outstanding at end of the period | $ | |
Aggregate Intrinsic Value Outstanding Exercisable at end of the period | $ |
Stock-Based Compensation Expe_4
Stock-Based Compensation Expense - Schedule of Stock-based Compensation (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Share-based Payment Arrangement [Abstract] | ||
Stock-based compensation expense included in general and administrative expense | $ 57,442 | $ 14,219 |
Earnings per share effect of share-based compensation expense - basic and diluted | $ 0 | $ 0 |
Capital Stock (Details Narrativ
Capital Stock (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
May 31, 2019 | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | |
Subscription receivable | $ 58,575 | |||
Series A Convertible Preferred Stock [Member] | ||||
Dividends payable | $ 32,550 | $ 32,550 | ||
Preferred stock, shares issued | 1,085 | 1,085 | ||
Preferred stock, shares outstanding | 1,085 | 1,085 | ||
Series B Convertible Preferred Stock [Member] | ||||
Dividends payable | $ 25,050 | $ 25,050 | ||
Preferred stock, shares issued | 835 | 835 | ||
Preferred stock, shares outstanding | 835 | 835 | ||
Sales Agreement (2019 ATM Offering) [Member] | ||||
Subscription receivable | $ 58,575 | |||
Sales Agreement (2019 ATM Offering) [Member] | WestPark Capital, Inc [Member] | ||||
Sale of stock shares of common stock value | $ 5,200,000 | |||
Commission percentage | 3.00% | |||
Reimbursement of expenses connection with offering | $ 18,000 | |||
Number shares sold | 21,059,499 | |||
Commissions and expenses | $ 4,375,594 |
Capital Stock - Summary of Warr
Capital Stock - Summary of Warrant Activity (Details) | 3 Months Ended |
Mar. 31, 2020USD ($)$ / sharesshares | |
Equity [Abstract] | |
Warrants Outstanding, Beginning | 1,230,000 |
Warrants Outstanding, Issued | |
Warrants Outstanding, Exercised | |
Warrants Outstanding, Expired | |
Warrants Outstanding, Ending | 1,230,000 |
Warrants Outstanding, Exercisable | 1,230,000 |
Weighted-Average Exercise Price Outstanding, Beginning | $ / shares | $ 0.21 |
Weighted-Average Exercise Price, Issued | $ / shares | |
Weighted-Average Exercise Price, Exercised | $ / shares | |
Weighted-Average Exercise Price, Expired | $ / shares | |
Weighted-Average Exercise Price Outstanding, Ending | $ / shares | $ 0.21 |
Weighted-Average Exercise Price Outstanding, Exercisable | 0.21 |
Aggregate Intrinsic Value, Ending | $ | |
Aggregate Intrinsic Value, Exercisable | $ |
Notes Payable - Related Party (
Notes Payable - Related Party (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Sep. 30, 2019 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Amortization of debt discount | $ 23,467 | |||
Bridge Loan Notes [Member] | ||||
Note, face amount | $ 621,052 | |||
Original issue discount, percent | 5.00% | |||
Bridge loan, debt discount | 31,052 | $ 144,948 | ||
Interest expense | 3,350 | |||
Amortization of debt discount | $ 23,467 | |||
Bridge Loan Notes [Member] | Shareholder [Member] | ||||
Ownership percentage | 10.00% | |||
Bridge Loan Warrants [Member] | ||||
Number of warrant issued to purchase common stock | 1,180,000 | |||
Bridge Loan Notes and Warrants [Member] | ||||
Consideration received from warrants | $ 590,000 |
Commitments and Contingencies_2
Commitments and Contingencies (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease agreement expire date | Oct. 31, 2022 | |
Operating cash outflows related to operating lease liabilities | $ 32,581 | |
Amortization of right of use asset | $ 20,761 | $ 18,190 |
Operating lease, weighted average remaining lease term | 2 years 7 months 6 days | |
Weighted average discount rate | 12.00% | |
Rental expense | $ 30,048 | $ 32,175 |
Commitments and Contingencies -
Commitments and Contingencies - Schedule of Future Payments Under Lease Agreement (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Commitments and Contingencies Disclosure [Abstract] | ||
2020 | $ 98,137 | |
2021 | 133,087 | |
2022 | 112,551 | |
2023 | ||
Total future lease payments | 343,775 | |
Less: imputed interest | (49,768) | |
Present value of future operating lease payments | 294,007 | |
Less: current portion of operating lease liabilities | (101,454) | $ (97,890) |
Operating lease liabilities, net of current portion | 192,553 | 219,410 |
Right of use assets | $ 260,728 | $ 281,489 |