Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 13, 2014 | |
Document and Entity Information: | ' | ' |
Entity Registrant Name | 'Breitling Energy Corp | ' |
Entity Central Index Key | '0001229089 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 499,083,626 |
Consolidated_and_Combined_Bala
Consolidated and Combined Balance Sheets (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current assets | ' | ' |
Cash | $1,930,555 | $606,715 |
Other | ' | 898 |
Total current assets | 1,930,555 | 607,613 |
Other assets | ' | ' |
Equity investment | 62,862 | 3,561 |
Other property and equipment, net of depreciation | 158,495 | 153,621 |
Total other assets | 221,357 | 157,182 |
Total assets | 2,151,912 | 764,795 |
Current liabilities | ' | ' |
Accounts payable and accrued liabilities | 2,427,440 | 3,119,727 |
Joint interest revenues payable | ' | 151,153 |
Deferred revenue from third party contracts | ' | 4,609,041 |
Current asset retirement obligations | 24,770 | 16,495 |
Total current liabilities | 2,452,210 | 7,896,416 |
Commitments and contingencies | ' | ' |
Long-term liabilities | ' | ' |
Asset retirement obligations | 38,386 | 20,842 |
Stockholders' deficit | ' | ' |
Common stock, $.001 par value; 500,000,000 shares authorized; 499,083,626 and 498,883,626 shares issued and outstanding, respectively | 499,084 | 498,884 |
Additional paid in capital | 19,800 | ' |
Accumulated deficit | -857,568 | -7,651,347 |
Total stockholders' deficit | -338,684 | -7,152,463 |
Total liabilities and stockholders' deficit | $2,151,912 | $764,795 |
Consolidated_and_Combined_Bala1
Consolidated and Combined Balance Sheets (Parentheticals) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, shares issued | 499,083,626 | 498,883,626 |
Common Stock, shares outstanding | 499,083,626 | 498,883,626 |
Consolidated_and_Combined_Stat
Consolidated and Combined Statements of Operations (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues | ' | ' | ' | ' |
Third party drilling | $6,593,060 | $4,244,145 | $24,456,653 | $9,645,784 |
Gain on sale of oil and natural gas royalties | 9,579,685 | 6,178,362 | 24,323,814 | 14,041,732 |
Oil, natural gas, and related product sales | 309,060 | 190,441 | 644,419 | 432,820 |
Total revenues | 16,481,805 | 10,612,948 | 49,424,886 | 24,120,336 |
Expenses | ' | ' | ' | ' |
Third party drilling and completion | 8,467,587 | 1,689,365 | 18,491,676 | 3,839,465 |
General and administrative | 2,925,728 | 5,504,605 | 6,214,643 | 12,510,468 |
Marketing | 4,856,874 | 930,468 | 11,713,107 | 2,114,700 |
Professional fees | 204,165 | 1,859,409 | 5,079,510 | 4,225,928 |
Lease operating | 293,543 | 200,677 | 382,036 | 456,084 |
Depreciation and amortization | 9,313 | 3,705 | 38,993 | 11,113 |
Total expenses | 16,757,210 | 10,188,229 | 41,919,965 | 23,157,758 |
Operating (loss) income | ' | ' | ' | ' |
Operating (loss) income | -275,405 | 424,719 | 7,504,921 | 962,578 |
Other expense | ' | ' | ' | ' |
Interest expense | ' | 1,009 | ' | 2,294 |
(Loss) Income before income taxes | -275,405 | 423,710 | 7,504,921 | 960,284 |
Income tax expense | ' | ' | ' | ' |
Income tax provision | 483,824 | 7,697 | 711,142 | 17,493 |
Net (loss) income | ($759,229) | $416,013 | $6,793,779 | $942,791 |
Net (loss) income per basic and diluted common share | $0 | $0 | $0.01 | $0 |
Weighted average basic and diluted common shares outstanding | 499,083,626 | 498,883,626 | 499,083,626 | 498,883,626 |
Consolidated_and_Combined_Stat1
Consolidated and Combined Statements of Cash Flows (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities | ' | ' |
Net income | $6,793,779 | $942,791 |
Adjustments to reconcile net loss to net cash provided by operating activities: | ' | ' |
Depreciation and amortization | 38,993 | 11,113 |
Accretion of asset retirement obligation | 10,577 | 2,294 |
Additions to ARO charged to turnkey drilling costs | 15,242 | -11,000 |
Net (gain) loss from equity investment | -59,301 | 11,000 |
Increase (decrease) in cash attributable to changes in operating assets and liabilities: | ' | ' |
Other current assets | 898 | -8,150 |
Accounts payable and accrued liabilities | -692,287 | -559,823 |
Joint interest revenues payable | -151,153 | 39,414 |
Deferred revenues | -4,609,041 | 1,541,955 |
Net cash provided by operating activities | 1,337,130 | 1,969,594 |
Cash flows from investing activities | ' | ' |
Acquisition of other property and equipment | -33,290 | -121,725 |
Investment in equity investment | ' | -10,500 |
Net cash used in investing activities | -33,290 | -132,225 |
Cash flows from financing activities | ' | ' |
Proceeds from the exercise of warrants | 20,000 | ' |
Net increase in cash | 1,323,840 | 1,837,369 |
Cash, beginning of period | 606,715 | 4,668,839 |
Cash, end of period | $1,930,555 | $6,506,208 |
Basis_of_Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2014 | |
Basis of Presentation [Abstract] | ' |
Basis of Presentation | ' |
1. Basis of Presentation | |
In the opinion of management, the accompanying unaudited consolidated and combined financial statements include all necessary adjustments (consisting of normal recurring adjustments) and present fairly the consolidated financial position of Breitling Energy Corporation and its subsidiaries (the “Company” or “Breitling”) as of September 30, 2014, the results of their operations for the three and nine months ended September 30, 2014 and 2013 and the results of their cash flows for the nine months ended September 30, 2014 and 2013, in conformity with generally accepted accounting principles for interim financial information applied on a consistent basis. The results of operations for the three and nine months ended September 30, 2014 are not necessarily indicative of the results to be expected for the full year. | |
Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been omitted. These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K, as filed with the Securities and Exchange Commission on March 31, 2014, as well as all subsequent reports on Form 8-K and Schedule 14C. Certain reclassifications have been made to the consolidated financial statements for prior periods in order to conform to the current period presentation. | |
Principles of Consolidation and Combination | |
The consolidated and combined financial statements reflect the historical combined results of the Predecessors (defined below) prior to the reverse recapitalization completed on December 9, 2013, and the consolidated results of the Company thereafter. All intercompany and inter-entity transactions have been eliminated in the consolidation and combination. | |
Recently adopted accounting pronouncements | |
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented. |
Organization_and_Nature_of_Ope
Organization and Nature of Operations | 9 Months Ended |
Sep. 30, 2014 | |
Organization and Nature of Operations [Abstract] | ' |
Organization and Nature of Operations | ' |
2. Organization and Nature of Operations | |
Breitling Energy Corporation was incorporated in the State of Nevada on December 13, 2000 under the name “Folix Technologies, Inc.” On August 18, 2004, the Company changed its name to Dragon Gold Resources, Inc. On June 22, 2007, the Company changed its name to Edgeline Holdings, Inc. and on March 11, 2008 to Oncolin Therapeutics, Inc. On September 7, 2010, the Company changed its name to Bering Exploration, Inc. and on January 20, 2014, to Breitling Energy Corporation. | |
On December 9, 2013, the Company entered into an Asset Purchase Agreement with Breitling Oil and Gas Corporation, a Texas corporation (“O&G”) and Breitling Royalties Corporation, a Texas corporation (“Royalties,” and collectively with O&G, the “Predecessors”). Pursuant to the Purchase Agreement, the Company issued to the Predecessors 461,863,084 shares of the Company’s common stock, par value $.001 per share (“Common Stock”), in exchange for substantially all of the oil and gas assets owned by the Predecessors (the “Transaction”). In connection with the closing of the Transaction (the “Closing”), all of the Company’s outstanding convertible notes were converted into shares of Common Stock. The shares of Common Stock issued to the Predecessors represent approximately 92.5% of the shares of Common Stock outstanding following the Closing. The Transaction results in the owners of the Predecessors (the “accounting acquirer”) having actual or effective operating control of the Company after the Transaction, with the stockholders of the Company (the “legal acquirer”) continuing only as passive investors. The Closing did not affect the number of shares of Common Stock held by the Company’s existing public stockholders. | |
The Predecessors were considered the accounting acquirer for accounting purposes because they obtained effective control of the Company. The Predecessors did not have a change in control since the Predecessors’ operations comprised the ongoing operations of the combined entity, their senior management became the senior management of the combined entity, and their former owners own a majority of the voting interest in the combined entity and are able to elect a majority of the combined entity’s board of directors. Accordingly, the Transaction does not constitute the acquisition of a business for purposes of Financial Accounting Standards Board’s Accounting Standard Codification 805, “Business Combinations,” or ASC 805. As a result, the assets and liabilities of the Predecessors’ are carried at historical cost and the Company has not recorded any step-up in basis or any intangible assets or goodwill as a result of the Transaction. The historical financial statements presented herein for the periods prior to December 9, 2013 are those of the Predecessors. Historical financial statements for periods after December 9, 2013 include the combined business of the Company and the Predecessors |
Asset_Retirement_Obligation
Asset Retirement Obligation | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Asset Retirement Obligation [Abstract] | ' | ||||
Asset Retirement Obligation | ' | ||||
3. Asset Retirement Obligation | |||||
The following table presents a summary of the Company’s Asset Retirement Obligation: | |||||
Balance as of December 31, 2013 | $ | 37,337 | |||
Additions | 15,242 | ||||
Accretion | 10,577 | ||||
Balance as of September 30, 2014 | $ | 63,156 |
Commitment_and_Contingencies
Commitment and Contingencies | 9 Months Ended |
Sep. 30, 2014 | |
Commitment and Contingencies [Abstract] | ' |
Commitment and Contingencies | ' |
4. Commitment and Contingencies | |
Legal | |
From time to time, the Company may become subject to proceedings, lawsuits and other claims in the ordinary course of business including working interest rescissions and operator disputes. Such matters are subject to many uncertainties, and outcomes are not predictable with any assurance. As of September 30, 2014 and December 31, 2013, the Company accrued $166,000 to settle working interest rescissions. | |
Oil and Natural Gas Regulations | |
The Company is subject to various possible contingencies that arise primarily from interpretation of federal and state laws and regulations affecting the oil and natural gas industry. Such contingencies include differing interpretations as to the prices at which oil and natural gas sales may be made, the prices at which royalty owners may be paid for production from their leases, environmental issues and other matters. Although management believes that it has complied with the various laws and regulations, administrative rulings and interpretations thereof, adjustments could be required as new interpretations and regulations are issued. In addition, environmental matters are subject to regulation by various federal and state agencies. |
Income_Tax_Expense
Income Tax Expense | 9 Months Ended |
Sep. 30, 2014 | |
Income Tax Expense [Abstract] | ' |
Income Tax Expense | ' |
5. Income Tax Expense | |
For the three months ended September 30, 2014, we recorded an income tax expense of $483,824 compared to $7,697 during the same period last year. For the nine months ended September 30, 2014, we recorded an income tax expense of $711,142 compared to an expense of $17,493 during the 2013 period. | |
For the nine months ended September 30, 2014, the increase in income tax expense is primarily due to increased income, offset by the utilization of our net operating loss carryovers (“NOLs”). We continue to recognize a full valuation allowance against the deferred tax asset related to our NOLs until there is greater assurance of our ability to utilize these in the future. | |
Our effective tax rates were different than our federal statutory tax rate due to utilization of our deferred tax asset and Texas state margin taxes. Estimates of future taxable income can be significantly affected by changes in oil and natural gas prices, the timing, and amount, of future operating expenses and capital costs. |
Basis_of_Presentation_Policies
Basis of Presentation (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Basis of Presentation [Abstract] | ' |
Principles of Consolidation and Combination | ' |
Principles of Consolidation and Combination | |
The consolidated and combined financial statements reflect the historical combined results of the Predecessors (defined below) prior to the reverse recapitalization completed on December 9, 2013, and the consolidated results of the Company thereafter. All intercompany and inter-entity transactions have been eliminated in the consolidation and combination. | |
Recently adopted accounting pronouncements | ' |
Recently adopted accounting pronouncements | |
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board or other standard setting bodies that may have an impact on the Company’s accounting and reporting. The Company believes that such recently issued accounting pronouncements and other authoritative guidance for which the effective date is in the future either will not have an impact on its accounting or reporting or that such impact will not be material to its financial position, results of operations and cash flows when implemented. |
Asset_Retirement_Obligation_Ta
Asset Retirement Obligation (Tables) | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Asset Retirement Obligation [Abstract] | ' | ||||
Asset Retirement Obligation | ' | ||||
Balance as of December 31, 2013 | $ | 37,337 | |||
Additions | 15,242 | ||||
Accretion | 10,577 | ||||
Balance as of September 30, 2014 | $ | 63,156 |
Organization_and_Nature_of_Ope1
Organization and Nature of Operations (Details) (USD $) | 1 Months Ended | ||
Dec. 09, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Organization and Nature of Operations (Textual) | ' | ' | ' |
Common Stock, shares issued | 461,863,084 | 499,083,626 | 498,883,626 |
Common stock shares issued, percentage of stock outstanding | 92.50% | ' | ' |
Common stock par value | $0.00 | $0.00 | $0.00 |
Asset_Retirement_Obligation_De
Asset Retirement Obligation (Details) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Asset Retirement Obligation, Roll Forward Analysis [Roll Forward] | ' | ' |
Asset retirement obligations, beginning of period | $37,337 | ' |
Additions to asset retirement obligation | 15,242 | ' |
Accretion of asset retirement obligation | 10,577 | 2,294 |
Asset retirement obligations, end of period | $63,156 | ' |
Commitment_and_Contingencies_D
Commitment and Contingencies (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Commitment and Contingencies (Textual) | ' | ' |
Amount accrued to settle working interest rescissions | $166,000 | $166,000 |
Income_Tax_Expense_Details
Income Tax Expense (Details) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Tax Expense [Abstract] | ' | ' | ' | ' |
Income Tax Expense | $483,824 | $7,697 | $711,142 | $17,493 |