Document_and_Entity_Informatio
Document and Entity Information | 6 Months Ended | |
Apr. 30, 2015 | Jun. 10, 2015 | |
Document And Entity Information | ||
Entity Registrant Name | BLACKSANDS PETROLEUM, INC. | |
Entity Central Index Key | 1308137 | |
Document Type | 10-Q | |
Document Period End Date | 30-Apr-15 | |
Amendment Flag | FALSE | |
Current Fiscal Year End Date | -21 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 20,078,343 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2015 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Apr. 30, 2015 | Oct. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $222,779 | $678,940 |
Accounts receivable | 12,299 | 210,577 |
Prepaid expenses | 225,805 | 522,073 |
Total Current Assets | 460,883 | 1,411,590 |
Oil and gas property costs (successful efforts method of accounting) | ||
Proved | 518,348 | 735,756 |
Other assets | 50,000 | 50,000 |
TOTAL ASSETS | 1,029,231 | 2,197,346 |
Current Liabilities: | ||
Note payable | 60,000 | 60,000 |
Notes payable - related party | 3,220,000 | |
Accounts payable | 118,575 | 129,400 |
Accrued expenses | 2,254,090 | 2,372,075 |
Total Current Liabilities | 5,652,665 | 2,561,475 |
Notes Payable, net of discount of $570,933 and $1,312,873 | 2,858,725 | 2,787,127 |
Notes payable to related party | 3,220,000 | |
Asset Retirement obligation | 93,938 | 91,707 |
Total Liabilities | 8,605,328 | 8,660,309 |
Stockholder's Deficiency: | ||
Series A - $.001 par value, 310,000 shares authorized, nil shares issued and outstanding | ||
Series B - $.001 par value; 2,217,281 shares authorized, 500,000 shares issued and outstanding | 500 | 500 |
Series C - $.001 par value; 1,750,000 shares authorized, 1,000,000 shares issued and outstanding | 1,000 | 1,000 |
Common stock - $0.001 par value; 100,000,000 shares authorized; 19,567,620 and 19,278,017 shares issued and outstanding at Apri 30, 2015 and October 31, 2014, respectivelyl | 19,568 | 19,278 |
Additional paid-in capital | 28,667,636 | 28,440,320 |
Accumulated deficit | -36,264,801 | -34,924,061 |
Total Stockholder's Deficiency | -7,576,097 | -6,462,963 |
TOTAL LIABILITIES AND STOCKHOLDER'S DEFICIENCY | $1,029,231 | $2,197,346 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Apr. 30, 2015 | Oct. 31, 2014 |
Current Liabilities: | ||
Notes Payable, net of discount | $570,933 | $1,312,873 |
Stockholders' Equity: | ||
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized shares | 10,000,000 | 10,000,000 |
Preferred stock Series A, par value | $0.00 | $0.00 |
Preferred stock Series A, authorized shares | 310,000 | 310,000 |
Preferred stock Series A, issued shares | 0 | 0 |
Preferred stock Series A, outstanding shares | 0 | 0 |
Preferred stock Series B, par value | $0.00 | $0.00 |
Preferred stock Series B, authorized shares | 2,217,281 | 2,217,281 |
Preferred stock Series B, issued shares | 500,000 | 500,000 |
Preferred stock Series B, outstanding shares | 500,000 | 500,000 |
Preferred stock Series C, par value | $0.00 | $0.00 |
Preferred stock Series C, authorized shares | 1,750,000 | 1,750,000 |
Preferred stock Series C, issued shares | 1,000,000 | 1,000,000 |
Preferred stock Series C, outstanding shares | 1,000,000 | 1,000,000 |
Common stock par value | $0.00 | $0.00 |
Common stock shares authorized | 100,000,000 | 100,000,000 |
Common stock shares issued | 19,567,620 | 19,278,017 |
Common stock shares outstanding | 19,567,620 | 19,278,017 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 6 Months Ended | ||
Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 | |
Revenue: | ||||
Oil and gas revenue | $140,918 | $268,403 | $274,473 | $596,700 |
Expenses: | ||||
Selling, general and administrative | 185,343 | 374,348 | 390,668 | 715,983 |
Depreciation and depletion | 129,263 | 98,776 | 178,043 | 296,577 |
Accretion | 1,096 | 5,497 | 2,231 | 13,941 |
Lease operating expenses | 127,473 | 121,791 | 302,949 | 300,571 |
Impairment of oil and gas property interest | 269,906 | 2,219,813 | ||
Total expenses | 443,175 | 600,412 | 1,143,797 | 3,546,885 |
Loss from Operations | -302,257 | -332,009 | -869,324 | -2,950,185 |
Other income and expense: | ||||
Interest expense | -238,584 | -663,747 | -471,415 | -1,172,204 |
Gain on sale of oil and gas properties | 23,653 | 645,323 | ||
Other income | 1,760,392 | 1,760,392 | ||
Total Other Income (Expense) | -238,584 | 1,120,298 | -471,415 | 1,233,511 |
Loss before provision for income taxes | -540,841 | 788,289 | -1,340,739 | -1,716,674 |
Provision for income taxes | ||||
Net Loss | -540,841 | 788,289 | -1,340,739 | -1,716,674 |
Preferred stock dividends | 11,250 | 22,500 | ||
Net loss attributable to common shareholders | ($552,091) | $788,289 | ($1,363,239) | ($1,716,674) |
Loss Per Share attributable to common shareholders Basic | -0.03 | 0.04 | -0.07 | -0.1 |
Loss per share attributable to common shareholders Diluted | -0.03 | 0.04 | -0.07 | -0.1 |
Weighted Average Shares Outstanding Basic | 19,403,984 | 17,722,485 | 19,348,169 | 17,720,983 |
Weighted Average Shares Outstanding Diluted | 19,403,984 | 18,028,257 | 19,348,169 | 17,720,983 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 6 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | ($1,340,739) | ($1,716,674) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Impairment of oil and gas property costs | 269,906 | 2,219,813 |
Equity compensation expense | 28,122 | |
Amortization of debt discount | 71,598 | 758,648 |
Depreciation, depletion and accretion | 180,274 | 310,518 |
Gain on sale of oil and gas properties | -645,323 | |
Changes in operating assets and liabilities: | ||
Accounts receivable | 198,278 | 225,370 |
Prepaid expense and other current assets | 296,267 | -20,223 |
Accounts payable | 98,264 | 336,875 |
Net cash flows from operating activities | -226,152 | 1,497,126 |
CASH FLOWS FROM INVESTING ACTIVITIES | ||
Oil and gas property costs | -230,009 | -2,522,220 |
Proceeds from the sale of Cabeza Creek | 50,000 | |
Net cash flows from investing activities | -230,009 | -2,472,220 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from notes payable | 2,000,000 | |
Net cash flows from financing activities | 2,000,000 | |
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | -456,161 | 1,024,906 |
CASH AND CASH EQUIVALENTS - Beginning of period | 678,940 | 1,335,237 |
CASH AND CASH EQUIVALENTS - End of period | 222,779 | 2,360,143 |
Supplemental Disclosures | ||
Cash paid for interest | 168,161 | 167,237 |
Cash paid for income taxes | ||
Supplemental non-cash activities | ||
Payment of accrued interest to related party through issuance of common stock | $227,783 |
The_Company_and_Summary_of_Sig
The Company and Summary of Significant Accounting Policies | 6 Months Ended |
Apr. 30, 2015 | |
Notes to Financial Statements | |
Note 1. The Company and Summary of Significant Accounting Policies | Blacksands Petroleum, Inc. (hereinafter referred to as the “Company”) was incorporated in the State of Nevada on October 12, 2004. Since August 2007, the Company has been engaged in the exploration, development, exploitation and production of oil and natural gas. The Company sells its oil and gas products primarily to domestic pipelines and refineries. Its operations are presently focused in the States of Texas and New Mexico. |
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in annual report on Form 10-K for the year ended October 31, 2014 filed with the SEC on February 11, 2015. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of 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. Notes to the consolidated financial statements which would substantially duplicate the disclosure contained in the audited financial statements as reported in the 2014 annual report on Form 10-K have been omitted. | |
Oil and Gas Properties | |
The Company follows the successful efforts method of accounting for its oil and natural gas properties. Oil and gas properties are periodically assessed to determine whether they have been impaired. Any impairment in value of unproved properties is charged to exploration expense. The costs of unproved properties, which are determined to be productive, are transferred to prove oil and gas properties and amortized on an equivalent unit-of-production basis. Exploratory expenses, including geological and geophysical expenses and delay rentals for unevaluated oil and gas properties, are charged to expense as incurred. Exploratory drilling costs are initially capitalized as unproved property but charged to expense if and when the well is determined not to have found proved oil and gas reserves. In accordance with ASC No. 935, exploratory drilling costs are evaluated within a one-year period after the completion of drilling. For proved properties, we compare expected undiscounted future cash flows at a producing field level to the unamortized capitalized cost of the asset. If the future undiscounted cash flows, based on our estimate of future natural gas and crude oil prices, operating costs, anticipated production from proved reserves and other relevant date, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is calculated by discounting the future cash flows at an appropriate risk-adjusted discount rate. | |
During the six months ended April 30, 2015 and 2014, the Company impaired its oil and gas properties by $269,906 and $2,219,813, respectively, which is reflected in the consolidated statement of operations. | |
The Company recorded income in the six months ended April 30, 2014 of $1,760,392 in connection with the transfer of some of the Company’s interest in three wells to PIE Holdings, LP. This income is included in the income statements as other income. | |
Going Concern | |
As shown in the accompanying consolidated financial statements, the Company has incurred an accumulated deficit of $36,264,801 through April 30, 2015. In addition, the Company had a working capital deficit of $5,191,782 and cash and cash equivalents of $222,779 at April 30, 2015. | |
The current rate of cash usage raises substantial doubt about the Company’s ability to continue as a going concern, absent the raising of additional capital, restructuring or extending the terms on its current debt and/or additional significant revenues from new oil production. The Company’s financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue in existence. |
Asset_Retirement_Obligation
Asset Retirement Obligation | 6 Months Ended | ||||
Apr. 30, 2015 | |||||
Notes to Financial Statements | |||||
Note 2. Asset Retirement Obligation | The following table summarizes the change in the asset retirement obligation (“ARO”) for the periods ended April 30, 2015: | ||||
Beginning balance at November 1 | $ | 91,707 | |||
Liabilities settled | -- | ||||
Liabilities incurred through acquisition of assets | -- | ||||
Liabilities settled through sale of assets | -- | ||||
Accretion expense | 2,231 | ||||
Ending balance at April 30 | $ | 93,938 | |||
The ARO reflects the estimated present value of the amount of dismantlement, removal, site reclamation and similar activities associated with the Company’s oil and gas properties. Inherent in the fair value calculation of the ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. |
Commitments_and_Contingencies
Commitments and Contingencies | 6 Months Ended |
Apr. 30, 2015 | |
Notes to Financial Statements | |
Note 3. Commitments and Contingencies | The Company, as an owner or lessee and operator of oil and gas properties, is subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company maintains insurance coverage, which it believes is customary in the industry, although the Company is not fully insured against all environmental risks. The Company is not aware of any environmental claims existing as of January 31, 2015, which have not been provided for, covered by insurance or otherwise have a material impact on its financial position or results of operations. There can be no assurance, however, that current regulatory requirements will not change, or past noncompliance with environmental laws will not be discovered on the Company’s properties. |
On January 26, 2015, David DeMarco, a former Chief Executive Officer and director of the Company, filed a complaint against the Company in the District Court of Harris County, Texas, alleging that pursuant to a contract for work performed and/or services rendered, Mr. DeMarco is due $151,000 in deferred compensation that accrued during his tenure as Chief Executive Officer of the Company. Service of process was effected on February 17, 2015. On May 5, 2015, the Company filed an answer to the complaint denying the allegations. The matter is currently in the discovery stage. The Company has reported $151,000 in accrued expenses. | |
On February 18, 2015, Dan A. Hughes, L.P. (“Hughes”) filed a complaint against the Company and its wholly owned subsidiary Blacksands Petroleum Texas, LLC (“Blacksands Texas”) in the District Court of the 156th Judicial District of Bee County, Texas, alleging that the Company and Blacksands Texas owe certain costs and expenses to Hughes in connection with Blacksands Texas’ interests in the Del Norte Prospect located in Grande County, Colorado, pursuant to the Letter Agreement and Operating Agreement by and between Blacksands Texas and Hughes, each dated September 9, 2010 (together, the “Hughes Agreements”). Hughes seeks to recover damages in the amount of $99,730 for the breach of contract in the amounts unpaid and due to Hughes, plus interest on such past due amounts, as well as all legal or equitable right and interest of Blacksands Texas in and to the Del Norte prospect. On May 5, 2015, the Company filed an answer to the complaint denying the allegations. | |
On February 18, 2015, Hughes filed a complaint against the Company and Blacksands Texas in the District Court of the 36th Judicial District of Bee County, Texas, alleging that the Company and Blacksands Texas owe certain costs and expenses in the amount of $1,166,301 to Hughes in connection with Blacksands Texas’ interests in the Pedrogosa Basin located in Hidalgo County, New Mexico, pursuant to the Hughes Agreements. Hughes seeks to recover damages for the breach of contract in the amounts unpaid and due to Hughes, plus interest on such past due amounts, as well as all legal or equitable right and interest of Blacksands Texas in and to the Pedrogosa Basin project. The claim is subject to an arbitration provision. On May 5, 2015, the Company filed an answer to the complaint denying the allegations and a motion to compel arbitration. | |
The Company has reported approximately $1,208,000 in accrued expenses for both Hughes litigation matters. |
Stockholders_Equity
Stockholders' Equity | 6 Months Ended | ||||||||
Apr. 30, 2015 | |||||||||
Notes to Financial Statements | |||||||||
Note 4. Stockholders' Equity | Issuance of Common Stock | ||||||||
In December 2014, 20,183 and 74,574 shares were issued to a related party for interest totaling $32,818 and $97,394 accruing for the month of July 2014 and for the quarter ended October 31, 2014, respectively. The Company has reported the excess of the fair market value of the shares issued over the accrued interests totaling $87,748 because the shares were issued to a related party. This amount is reflected as an increase in additional paid in capital. | |||||||||
In April 2015, 194,788 shares were issued to a related party for interest totaling $97,571 accruing for the quarter ended January 31, 2015. The Company has reported the excess of the fair market value of the shares issued over the accrued interests totaling $45,775 because the shares were issued to a related party. This amount is reflected as an increase in additional paid in capital. | |||||||||
Stock Options | |||||||||
A summary of the Company’s stock option activity and related information is as follows: | |||||||||
Number of Shares | Weighted Average Exercise Price | ||||||||
Outstanding at November 1, 2014 | 66,667 | $ | 3 | ||||||
Granted | - | - | |||||||
Exercised | - | - | |||||||
Cancelled | - | - | |||||||
Outstanding at April 30, 2015 | 66,667 | $ | 3 | ||||||
Exercisable at April 30, 2015 | 66,667 | $ | 3 | ||||||
During the six months ended April 30, 2015 and 2014, the Company recorded stock-based compensation of nil and $28,122, respectively, as general and administrative expenses. At April 30, 2015, the weighted average remaining life of the stock options is 5.12 years. There were no unamortized amount of stock-based compensation at April 30, 2015. |
Subsequent_Event
Subsequent Event | 6 Months Ended |
Apr. 30, 2015 | |
Notes to Financial Statements | |
Note 5. Subsequent Event | In June 2015, 510,723 shares were issued to a related party for interest totaling $94,218 shares for the quarter ended April 30, 2015. |
The_Company_and_Summary_of_Sig1
The Company and Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Apr. 30, 2015 | |
Company And Summary Of Significant Accounting Policies Policies | |
Oil and Gas Properties | The Company follows the successful efforts method of accounting for its oil and natural gas properties. Oil and gas properties are periodically assessed to determine whether they have been impaired. Any impairment in value of unproved properties is charged to exploration expense. The costs of unproved properties, which are determined to be productive, are transferred to prove oil and gas properties and amortized on an equivalent unit-of-production basis. Exploratory expenses, including geological and geophysical expenses and delay rentals for unevaluated oil and gas properties, are charged to expense as incurred. Exploratory drilling costs are initially capitalized as unproved property but charged to expense if and when the well is determined not to have found proved oil and gas reserves. In accordance with ASC No. 935, exploratory drilling costs are evaluated within a one-year period after the completion of drilling. For proved properties, we compare expected undiscounted future cash flows at a producing field level to the unamortized capitalized cost of the asset. If the future undiscounted cash flows, based on our estimate of future natural gas and crude oil prices, operating costs, anticipated production from proved reserves and other relevant date, are lower than the unamortized capitalized cost, the capitalized cost is reduced to fair value. Fair value is calculated by discounting the future cash flows at an appropriate risk-adjusted discount rate. |
During the six months ended April 30, 2015 and 2014, the Company impaired its oil and gas properties by $269,906 and $2,219,813, which is reflected in the consolidated statement of operations. | |
The Company recorded income in the six months ended April 30, 2014 of $1,760,392 in connection with the transfer of some of the Company’s interest in three wells to PIE Holdings, LP. This income is included in the income statements as other income. | |
Going Concern | As shown in the accompanying consolidated financial statements, the Company has incurred an accumulated deficit of $36,264,801 through April 30, 2015. In addition, the Company had a working capital deficit of $5,191,782 and cash and cash equivalents of $222,779 at April 30, 2015. |
The current rate of cash usage raises substantial doubt about the Company’s ability to continue as a going concern, absent the raising of additional capital, restructuring or extending the terms on its current debt and/or additional significant revenues from new oil production. The Company’s financial statements do not include any adjustments relating to the recoverability and classification of recorded assets, or the amounts and classification of liabilities that might be necessary in the event that the Company cannot continue in existence. | |
Asset_Retirement_Obligation_Ta
Asset Retirement Obligation (Tables) | 6 Months Ended | ||||
Apr. 30, 2015 | |||||
Asset Retirement Obligation Tables | |||||
Change in the asset retirement obligation | The following table summarizes the change in the asset retirement obligation (“ARO”) for the periods ended April 30, 2015: | ||||
Beginning balance at November 1 | $ | 91,707 | |||
Liabilities settled | -- | ||||
Liabilities incurred through acquisition of assets | -- | ||||
Liabilities settled through sale of assets | -- | ||||
Accretion expense | 2,231 | ||||
Ending balance at April 30 | $ | 93,938 |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 6 Months Ended | ||||||||
Apr. 30, 2015 | |||||||||
Stockholders Equity Tables | |||||||||
Stock Options Activity | A summary of the Company’s stock option activity and related information is as follows: | ||||||||
Number of Shares | Weighted Average Exercise Price | ||||||||
Outstanding at November 1, 2014 | 66,667 | $ | 3 | ||||||
Granted | - | - | |||||||
Exercised | - | - | |||||||
Cancelled | - | - | |||||||
Outstanding at April 30, 2015 | 66,667 | $ | 3 | ||||||
Exercisable at April 30, 2015 | 66,667 | $ | 3 |
The_Company_and_Summary_of_Sig2
The Company and Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 6 Months Ended | 7 Months Ended | |||
Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Apr. 30, 2014 | Apr. 30, 2015 | Oct. 31, 2014 | |
State of incorporation | State of Nevada | |||||
Date of incorporation | 12-Oct-04 | |||||
Impairment of oil and gas property interest | $269,906 | $2,219,813 | ||||
Accumulated deficit | 36,264,801 | 36,264,801 | 36,264,801 | 34,924,061 | ||
Working capital deficit | 5,191,782 | 5,191,782 | 5,191,782 | |||
Cash and cash equivalents | 222,779 | 222,779 | 222,779 | 678,940 | ||
PIE Holdings, LP [Member] | ||||||
Income recorded in connection with the transfer of some of the Companybs interest | $1,760,392 |
Asset_Retirement_Obligation_De
Asset Retirement Obligation (Details) (USD $) | 6 Months Ended |
Apr. 30, 2015 | |
Asset Retirement Obligation Details | |
Beginning balance | $91,707 |
Liabilities settled | |
Liabilities incurred through acquisition of assets | |
Liabilities transferred through sale of assets | |
Accretion expense | 2,231 |
Ending balance | $93,938 |
Stockholders_Equity_Details
Stockholders' Equity (Details) (USD $) | 6 Months Ended |
Apr. 30, 2015 | |
Number of Shares | |
Beginning Balance | 66,667 |
Granted | |
Exercised | |
Cancelled | |
Ending Balance | 66,667 |
Exercisable at April 30, 2015 | 66,667 |
Weighted Average Exercise Price | |
Beginning Balance | $3 |
Granted | |
Exercised | |
Cancelled | |
Ending Balance | $3 |
Exercisable at April 30, 2015 | $3 |
Stockholders_Equity_Details_Na
Stockholders' Equity (Details Narrative) (USD $) | 6 Months Ended | |
Apr. 30, 2015 | Apr. 30, 2014 | |
Stockholders Equity Details Narrative | ||
Stock-based compensation expenses | $0 | $28,122 |
Weighted average remaining life of the stock options | 5 years 1 month 13 days |