Document_And_Entity_Informatio
Document And Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Apr. 11, 2014 | Jun. 30, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Central Index Key | '0001321516 | ' | ' |
Entity Registrant Name | 'United American Petroleum Corp. | ' | ' |
Document Type | '10-K | ' | ' |
Current Fiscal Year End Date | '--12-31 | ' | ' |
Amendment Flag | 'false | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Current Reporting Status | 'Yes | ' | ' |
Entity Voluntary Filers | 'No | ' | ' |
Entity Well-known Seasoned Issuer | 'No | ' | ' |
Document Period End Date | 31-Dec-13 | ' | ' |
Entity Public Float | ' | ' | $4,877,902 |
Entity Common Stock, Shares Outstanding | ' | 97,418,383 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Cash | $557,298 | $572,784 |
Accounts receivable, net of allowance for uncollectible accounts | 119,052 | 133,258 |
Related party receivables | 99,536 | 13,196 |
Total current assets | 775,886 | 719,238 |
Evaluated, net of accumulated depletion of $236,614 and $137,120 as of December 31, 2013 and December 31, 2012, respectively | 1,139,435 | 1,054,322 |
Unevaluated | ' | 261,975 |
TOTAL ASSETS | 1,915,321 | 2,035,535 |
Accounts payable and accrued liabilities | 1,150,116 | 407,284 |
Convertible note payable, net of debt discount of $26,758 and $0 | 131,027 | ' |
Embedded derivative liability | 139,508 | ' |
Deferred gain on sale of assets | 17,500 | ' |
Other payable | 582,278 | 451,939 |
Total current liabilities | 2,020,429 | 859,223 |
Asset retirement obligation | 112,727 | 69,316 |
TOTAL LIABILITIES | 2,133,156 | 928,539 |
Preferred Stock, Series B, $0.001 par value, 1,000 shares authorized, 1,000 shares issued and 1,000 share outstanding and no shares issued and outstanding, respectively | 1 | 1 |
Common stock, $0.001 par value, 100,000,000 shares authorized, 86,875,192 shares issued and 86,875,192 and 50,339,542 shares | 86,876 | 50,339 |
Additional paid-in capital | 8,301,499 | 8,313,299 |
Accumulated deficit | -8,606,211 | -7,256,643 |
Total stockholders' equity (deficit) | -217,835 | 1,106,996 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $1,915,321 | $2,035,535 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Condensed Consolidated Balance Sheets Parenthetical | ' | ' |
Accumulated depletion of evaluted oil and gas properties | $236,614 | $137,120 |
Debt discount | $26,758 | $0 |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 1,000 | 1,000 |
Preferred stock, shares issued | 1,000 | 0 |
Preferred stock, shares outstanding | 1,000 | 0 |
Common stock par value | $0.00 | $0.00 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 86,875,192 | 50,339,542 |
Common stock, shares outstanding | 86,875,192 | 50,339,542 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
REVENUE | ' | ' |
Oil and Gas sales | $704,704 | $512,088 |
Operator Income | 31,909 | 39,207 |
TOTAL REVENUE | 736,613 | 551,295 |
OPERATING EXPENSES | ' | ' |
Lease operating expenses | 927,982 | 400,174 |
Bad debt expense | 226,986 | ' |
Accretion expense | 12,745 | 3,514 |
Depletion expense | 99,494 | 113,985 |
Share based compensation | 50,760 | ' |
Legal settlement loss | 93,526 | ' |
General and administrative | 698,897 | 828,141 |
TOTAL OPERATING EXPENSES | 2,110,390 | 1,345,814 |
NET LOSS BEFORE OTHER EXPENSE | -1,373,777 | -794,519 |
OTHER INCOME (EXPENSE) | ' | ' |
Interest expense | -358,060 | -2,252,915 |
(Gain) loss on embedded derivatives | 382,269 | -3,030,218 |
[us-gaap:NonoperatingIncomeExpense] | 24,209 | -5,283,133 |
NET LOSS | ($1,349,568) | ($6,077,652) |
LOSS PER SHARE - BASIC | ($0.02) | ($0.13) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - BASIC | 54,958,682 | 47,633,640 |
LOSS PER SHARE - DILUTED | ($0.02) | ($0.13) |
WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING - DILUTED | 54,958,682 | 47,633,640 |
CONSOLIDATED_STATEMENTS_OF_STO
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance, beginning at Dec. 31, 2011 | $44,000 | $487,739 | ($1,178,991) | ($647,252) |
Balance, beginning, shares at Dec. 31, 2011 | 44,000,000 | ' | ' | ' |
Relative fair value of warrants issued with Debt | ' | 290,459 | ' | 290,459 |
Common stock issued for conversion of debt and accrued interest | 6,035 | 3,011,236 | ' | 3,017,271 |
Common stock issued for conversion of debt and accrued interest, shares | 6,034,542 | ' | ' | 6,034,542 |
Reclassification of derivative liability to additional paid-in capital due to conversion of related notes payable | ' | 4,493,670 | ' | 4,493,670 |
Shares issued for services | 304 | 30,195 | ' | 30,500 |
Shares issued for services, shares | 305,000 | ' | ' | ' |
Net loss for the period | ' | ' | -6,077,652 | -6,077,652 |
Balance, ending at Dec. 31, 2012 | 50,339 | 8,313,299 | -7,256,643 | 1,106,996 |
Balance, ending, shares at Dec. 31, 2012 | 50,339,542 | ' | ' | ' |
Common stock issued for conversion of debt and accrued interest | 35,972 | 168,166 | ' | 204,139 |
Common stock issued for conversion of debt and accrued interest, shares | 35,971,650 | ' | ' | ' |
Reclassification of detachable warrants to derivative liability | ' | -447,128 | ' | -447,128 |
Reclassification of derivative liability to additional paid-in capital due to conversion of related notes payable | ' | 216,966 | ' | 216,966 |
Shares issued for services | 564 | 50,196 | ' | 50,760 |
Shares issued for services, shares | 564,000 | ' | ' | ' |
Net loss for the period | ' | ' | -1,349,568 | -1,349,568 |
Balance, ending at Dec. 31, 2013 | $86,875 | $8,301,499 | ($8,606,211) | ($217,835) |
Balance, ending, shares at Dec. 31, 2013 | 86,875,192 | ' | ' | ' |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOW (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Statement of Cash Flows [Abstract] | ' | ' |
Net loss | ($1,349,568) | ($6,077,652) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Bad debt expense | 226,986 | ' |
Accretion expense | 12,745 | 3,514 |
Depletion expense | 99,494 | 113,985 |
Share based compensation | 50,760 | 30,501 |
Amortization of debt discount | 296,930 | 2,176,996 |
(Gain) loss on embedded derivatives | -382,269 | 3,030,218 |
Penalty on convertible note payable | 51,750 | ' |
Reduction in full cost pool due to operator income from owned wells | 127,679 | ' |
Legal settlement loss | 93,526 | ' |
Change in assets and liabilities | ' | ' |
Accounts receivable | -212,780 | -97,853 |
Related party receivable | -86,340 | 12,522 |
Other receivable | ' | 160,302 |
Accounts payable and accrued expenses | 621,854 | 189,582 |
Deferred gain on sale of assets | 17,500 | ' |
Accrued interest | 16,908 | 75,939 |
Other payable | 130,339 | 20,788 |
Net cash used in operating activities | -284,486 | -361,158 |
CASH FLOWS USED IN INVESTING ACTIVITIES: | ' | ' |
Acquisition of oil and gas properties | ' | -274,527 |
Net cash used in investing activities | ' | -274,527 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ' | ' |
Proceeds from convertible notes | 269,000 | 615,000 |
Net cash provided by financing activities | 269,000 | 615,000 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | -15,486 | -20,685 |
CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 572,784 | 593,469 |
CASH AND CASH EQUIVALENTS - END OF PERIOD | 557,298 | 572,784 |
NON CASH TRANSACTIONS: | ' | ' |
Change in asset retirement liability (new wells) | 86,015 | 9,790 |
Change in asset retirement liability (change in estimate) | 55,349 | ' |
Discount from derivative liabilities | 282,334 | 324,541 |
Discount to additional paid-in capital from relative fair value of warrants | 13,196 | 290,429 |
Conversion of convertible notes payable | 204,138 | 2,800,000 |
Conversion of accrued interest | ' | 217,272 |
Settlement of derivative liabilities to additional paid-in capital | 216,966 | 4,493,670 |
Reclassification of detachable warrants to derivative liability | $447,128 | ' |
Nature_of_Operations_and_Basis
Nature of Operations and Basis of Presentation | 12 Months Ended | ||
Dec. 31, 2013 | |||
Nature Of Operations And Basis Of Presentation | ' | ||
Nature of Operations and Basis of Presentation | ' | ||
1 | Nature of Operations and Basis of Presentation | ||
Nature of Operations | |||
We (“United American Petroleum Corp. “the Company”, “we”, “us” or “our”) are an exploration company engaged in the acquisition, exploration, development and production of oil and gas properties. Our principal business is the acquisition of leasehold interests in petroleum and natural gas rights, either directly or indirectly, and the exploitation and development of properties subject to these leases. Our primary focus is to develop our properties that have potential for near-term production. We also provide operational expertise for several third party well owners out of our operational base in Austin, Texas. We currently have proved reserves in the State of Texas. | |||
On January 13, 2011, the Company formed a wholly owned subsidiary, UAP Management, LLC, a Texas limited liability company, for the purpose of managing the Gabriel Rosser, LP. | |||
On January 13, 2011, the Company formed a wholly owned subsidiary, United Operating, LLC, a Texas limited liability company, for the purpose of operating and managing the various interests acquired from Patriot Minerals, LLC. | |||
Basis of Presentation | |||
The accompanying consolidated financial statements include United American Petroleum Corp. and its wholly-owned subsidiaries. All significant intercompany transactions have been eliminated. The accompanying financial statements have been prepared in accordance with the Generally Accepted Accounting Principles in the United States of America (“GAAP”). We made certain reclassifications to prior-period amounts to conform to the current presentation. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 12 Months Ended | ||
Dec. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
Summary of Significant Accounting Policies | ' | ||
2 | Summary of Significant Accounting Policies | ||
Use of Estimates | |||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could materially differ from those estimates. | |||
Principles of consolidation | |||
The accompanying consolidated financial statements include the accounts of United American Petroleum and our wholly owned subsidiary, United Operating LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||
Cash and Cash Equivalents | |||
All highly liquid investments purchased with an original maturity of three months or less at the time of acquisition are considered to be cash equivalents. | |||
Fair Value of Financial Instruments | |||
The Company is required to estimate the fair value of all financial instruments included on its balance sheet. The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short period to maturity of these instruments. | |||
Receivables and Allowance for Doubtful Accounts | |||
The Company collects its receivables on its working interests in oil and gas properties from well operators. As such, the Company generally has relatively few customers. These receivables are unsecured and the Company performs ongoing credit evaluations of the well operators’ financial condition whenever necessary. We regularly review collectability and establish or adjust an allowance for uncollectible amounts as necessary using the specific identification method, and we write off receivables after all means of collections have been exhausted and the potential for recovery is remote. We recognize an allowance for uncollectible account of $199,813 and $0 for the periods ending December 31, 2013 and 2012, respectively. We recorded bad debt expense of $226,986 and $0 for the periods ended December 31, 2013 and 2012, respectively. We wrote off receivables of $27,173 and $0 for the periods ended December 31, 2013 and 2012, respectively. | |||
Revenue Recognition- Oil and Gas | |||
The Company recognizes oil and gas revenue from interests in producing wells using the “sales method.” Under this method of accounting, revenues are recognized based on volumes sold, which may differ from the volume to which we are entitled based on our working interest. An imbalance is recognized as a liability only when the estimated remaining reserves will not be sufficient to enable the under–produced owner(s) to recoup its entitled share through future production. Under the sales method, no receivables are recorded where we have taken less than our share of production. Our net imbalance position at December 31, 2013 and December 31, 2012, was immaterial. | |||
Revenue Recognition – Administrative Income | |||
The Company will record revenue for administrative income in accordance with ASC 605. The criteria for recognition are as follows: | |||
1) | Persuasive evidence of an arrangement exists; | ||
2) | Delivery has occurred or services have been rendered; | ||
3) | The seller’s price to the buyer is fixed or determinable, and | ||
4) | Collectability is reasonably assured. | ||
Determination of criteria (3) and (4) will be based on management’s judgments regarding the fixed nature of the selling prices of the services performed and the collectability of those amounts. | |||
The Company operates certain wells where the Company also has an ownership interest. For these partially owned wells, no administrative income is recognized. Rather, operating fees received from other well interest owners are recorded as a reduction to the full cost pool per the full cost rules. | |||
Oil and Gas Properties | |||
The Company follows the full cost method of accounting for its investments in oil and gas properties. Under the full cost method, all costs associated with the exploration of properties are capitalized into appropriate cost centers within the full cost pool. Internal costs that are capitalized are limited to those costs that can be directly identified with acquisition, exploration, and development activities undertaken and do not include any costs related to production, general corporate overhead, or similar activities. Cost centers are established on a country-by-country basis. | |||
Capitalized costs within the cost centers are amortized on the unit-of-production basis using proved oil and gas reserves. The cost of investments in unproved properties and major development projects are excluded from capitalized costs to be amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such a determination is made, the properties are assessed annually to ascertain whether impairment has occurred. The costs of drilling exploratory dry holes are included in the amortization base immediately upon determination that the well is dry. | |||
Capitalized costs within the cost centers are amortized on the unit-of-production basis using proved oil and gas reserves. The cost of investments in unproved properties and major development projects are excluded from capitalized costs to be amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such a determination is made, the properties are assessed annually to ascertain whether impairment has occurred. The costs of drilling exploratory dry holes are included in the amortization base immediately upon determination that the well is dry. | |||
For each cost center, capitalized costs are subject to an annual ceiling test, in which the costs shall not exceed the cost center ceiling. The cost center ceiling is equal to i) the present value of estimated future net revenues computed by applying current prices of oil and gas reserves (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; plus ii) the cost of properties not being amortized; plus iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less iv) income tax effects related to differences between the book and tax basis of the properties. If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the cost center ceiling, the excess is charged to expense and separately disclosed during the period in which the excess occurs. | |||
Asset Retirement Obligations | |||
ASC 410, Asset Retirement and Environmental Obligations addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Specifically, ASC 410 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. In addition, the asset retirement cost is capitalized as part of the asset’s carrying value and subsequently allocated to expense over the asset’s useful life. | |||
Fair Value of Financial Instruments | |||
Accounting standards regarding fair value of financial instruments define fair value, establish a three-level hierarchy which prioritizes and defines the types of inputs used to measure fair value, and establish disclosure requirements for assets and liabilities presented at fair value on the consolidated balance sheets. | |||
Fair value is the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants. A liability is quantified at the price it would take to transfer the liability to a new obligor, not at the amount that would be paid to settle the liability with the creditor. | |||
The three-level hierarchy is as follows: | |||
● | Level 1 inputs consist of unadjusted quoted prices for identical instruments in active markets | ||
● | Level 2 inputs consist of quoted prices for similar instruments | ||
● | Level 3 valuations are derived from inputs which are significant and unobservable and have the lowest priority | ||
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. We have determined that certain warrants outstanding during the period and certain convertible notes covered by these financial statements qualify as derivative financial instruments under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock.” See Note 6 – Fair Value for more details. | |||
The fair value of these warrants and derivative liabilities was determined using the Black Scholes Model with any change in fair value during the period recorded in earnings as “Gain on derivative warrant liability.” Significant inputs used to calculate the fair value of the warrants include expected volatility, risk-free interest rate and dividend yield. | |||
Recoverability of Long-Lived Assets | |||
The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. | |||
Events relating to recoverability may include significant unfavorable changes in business conditions or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets would be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell. | |||
Share-Based Compensation | |||
The Company accounts for share-based compensation to employees in accordance with Accounting Standards Codification subtopic 718-10, Stock Compensation (“ASC 718-10”). This requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values. | |||
As of December 31, 2013, there were no outstanding employee stock options. | |||
The Company accounts for share-based compensation to non-employees in accordance with Accounting Standards Codification subtopic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). This requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees. | |||
On September 13, 2013, the Company’s Board of Directors approved the Company’s 2013 Stock Plan for Officers, Directors, and Consultants (the “2013 Plan”). The 2013 Plan provided for the issuance of a total of up to 2,000,000 shares of common stock, options, restricted share units, share appreciation rights and other share based awards to acquire common stock to employees, directors and consultants. A total of 564,000 shares were issued under the 2013 Plan during the year ended December 31, 2013. | |||
Income Taxes | |||
The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”). ASC 740-10 requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized. | |||
Basic and Diluted Earnings (Loss) Per Share | |||
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed in the same way as basic earnings (loss) per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive. | |||
Property and Equipment | |||
Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. | |||
The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow: | |||
Asset Category | Depreciation Period | ||
Furniture and Fixtures | 5 Years | ||
Automobiles | 5 Years | ||
Equipment | 10 Years |
Going_Concern
Going Concern | 12 Months Ended | ||
Dec. 31, 2013 | |||
Going Concern | ' | ||
Going Concern | ' | ||
3 | Going Concern | ||
The Company has incurred a net loss and negative operating cash flows since inception through December 31, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s management is implementing plans to sustain the Company’s cash flow from operating activities and/or acquire additional capital funding. The consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
Related_Party_Receivable
Related Party Receivable | 12 Months Ended | ||
Dec. 31, 2013 | |||
Related Party Transactions [Abstract] | ' | ||
Related Party Transactions | ' | ||
4 | Related Party Receivable | ||
As of December 31, 2013, the Company had a related party receivable in the amount of $99,536 due from a Company with working interest amounts payable. This is a $86,340 increase from an amount of $13,196 as of December 31, 2012. Our directors are also officers in this Company. |
Convertible_Notes_and_Detached
Convertible Notes and Detached Warrants | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Convertible Notes And Detached Warrants | ' | ||||||||||||||
Convertible Notes Payable and Detached Warrants | ' | ||||||||||||||
5 | Convertible Notes and Detached Warrants | ||||||||||||||
Credit Facility – January 31, 2013 | |||||||||||||||
On January 31, 2013, we entered into a Note Purchase Agreement with an investor pursuant to which the investor agreed to lend the Company up to $400,000 in multiple installments in exchange for a senior secured convertible promissory note with a conversion price equal to 60% of the lowest trading price per share during the previous 25 trading days. The first installment of $55,000 was delivered less a fee of $5,000 on the date of the Purchase Agreement. The second installment of $25,000 was delivered in April 2013. The notes mature on January 31, 2014, or upon default, whichever is earlier and bear interest at an annual rate of 12%. As described in Note 5, the embedded conversion feature qualified for liability classification at fair value. As a result, the Company recorded a full discount of $55,000 to the note payable on issuance of the first installment, and a full discount of $25,000 to the note payable on issuance of the second installment. As of December 31, 2013, there was $26,453 in outstanding principal and $18,333 in outstanding original interest discount (OID) on this note. | |||||||||||||||
Conversions | |||||||||||||||
The holder of the convertible note exercised a portion of the conversion rights of the note in the following installments during the year ended December 31, 2013: | |||||||||||||||
Date | Shares | Price | Amount | ||||||||||||
8/13/13 | 250,000 | 0.03 | $ | 7,500 | |||||||||||
9/9/13 | 300,000 | 0.0265 | $ | 7,950 | |||||||||||
9/26/13 | 600,000 | 0.0116 | $ | 6,960 | |||||||||||
10/16/13 | 1,200,000 | 0.0055 | $ | 6,600 | |||||||||||
10/31/13 | 1,500,000 | 0.004 | $ | 6,000 | |||||||||||
11/13/13 | 2,200,000 | 0.00275 | $ | 6,050 | |||||||||||
12/3/13 | 2,700,000 | 0.0015 | $ | 4,050 | |||||||||||
12/17/13 | 2,750,000 | 0.00125 | $ | 3,438 | |||||||||||
Total | 11,500,000 | 48,548 | |||||||||||||
As a result of the exercise of the conversion option of the note, the Company fully amortized the remaining balance of the associated debt discount of $55,000 recognizing interest expense for the same amount. | |||||||||||||||
Convertible Note – February 19, 2013 | |||||||||||||||
On February 19, 2013, we entered into a credit facility with an investor unrelated to the investor described above pursuant to which the investor lent $103,500 to us in a single installment ($87,000 of proceeds net of legal fees) in exchange for a convertible promissory note with a conversion price equal to the average lowest trading price per share during the previous 10 trading days. The embedded conversion option cannot be exercised until 180 days from the date of the note and as such, was not priced until exercisable. The total number of conversion shares is calculated by dividing the amount of the notes by the conversion price. | |||||||||||||||
In May of 2013, we did not comply with the timely filing requirement on this loan. Pursuant to the promissory note, a penalty of 50% of the outstanding principal amount equaling $51,750 was added to the balance of the note. This additional sum will be eligible for conversion at the same terms as the original principal balance. | |||||||||||||||
The holder of the convertible note exercised a portion of the conversion rights of the note in the following installments during the year ended December 31, 2013. Note that the December 26, 2013 conversion of 200,000 shares was a conversion of accrued interest; all of the other conversions were on the principal amount. | |||||||||||||||
Date | Shares | Price | Amount | ||||||||||||
8/26/13 | 478,469 | 0.0418 | $ | 20,000 | |||||||||||
9/6/13 | 840,336 | 0.0357 | $ | 30,000 | |||||||||||
9/26/13 | 1,034,483 | 0.0145 | $ | 15,000 | |||||||||||
10/7/13 | 1,492,537 | 0.0134 | $ | 20,000 | |||||||||||
10/21/13 | 1,851,852 | 0.0081 | $ | 15,000 | |||||||||||
10/31/13 | 2,508,772 | 0.0057 | $ | 14,300 | |||||||||||
11/11/13 | 2,511,364 | 0.0044 | $ | 11,050 | |||||||||||
11/26/13 | 2,733,333 | 0.003 | $ | 8,200 | |||||||||||
12/2/13 | 2,760,000 | 0.0025 | $ | 6,900 | |||||||||||
12/9/13 | 2,742,856 | 0.0021 | $ | 5,760 | |||||||||||
12/19/13 | 2,758,824 | 0.0017 | $ | 4,690 | |||||||||||
12/26/13 | 2,558,824 | 0.0017 | $ | 4,350 | |||||||||||
12/26/13 | 200,000 | 0.0017 | $ | 340 | |||||||||||
Total | 24,471,650 | $ | 155,590 | ||||||||||||
Convertible Note – April 22, 2013 | |||||||||||||||
On April 22, 2013, we entered into a credit facility with an investor unrelated to the investor described above pursuant to which the investor lent $63,000 (minus fees of $3,000) to us in a single installment in exchange for a convertible promissory note with a conversion price equal to 60% of the average lowest trading price per share during 5 of the previous 10 trading days. The embedded conversion option cannot be exercised until 180 days from the date of the note and as such, will not be priced until exercisable. The total number of conversion shares is calculated by dividing the amount of the notes by the conversion price. | |||||||||||||||
On September 23, 2013 the investor lent an additional $50,000 in a single installment (minus fees of $3,000) under the same terms agreement and terms as the previous installment made April 22, 2013. | |||||||||||||||
Credit Facility – October 14, 2011 | |||||||||||||||
On October 14, 2011, we entered into a Note and Warrant Purchase Agreement with an investor pursuant to which the investor agreed to lend the Company up to $1,500,000 in multiple installments in exchange for a senior secured convertible promissory note with a conversion price of $0.50 per share and five-year warrants to acquire shares of common stock at an exercise price of $1.00 per share in the amount of each installment. The first installment of $400,000 was delivered on the date of the Purchase Agreement and we issued 400,000 warrants to the investor in | |||||||||||||||
connection with the first installment. The notes mature on October 14, 2014, or upon default, whichever is earlier and bear interest at an annual rate of 10%. | |||||||||||||||
The second installment of $550,000 was delivered on November 29, 2011 and we issued 550,000 warrants in connection with the second installment. | |||||||||||||||
The third installment of $25,000 was delivered on December 19, 2011 and we issued 25,000 warrants in connection with the third installment. | |||||||||||||||
The fourth installment of $150,000 was delivered on February 10, 2012 and we issued 150,000 warrants in connection with the fourth installment. | |||||||||||||||
The fifth installment of $250,000 was delivered on March 30, 2012 and we issued 250,000 warrants in connection with the fifth installment. | |||||||||||||||
The sixth installment of $215,000 was delivered on June 4, 2012 and we issued 430,000 warrants in connection with the sixth installment. | |||||||||||||||
Detachable Warrants | |||||||||||||||
On October 14, 2011, the Company determined a relative fair value of $157,388 for the detachable warrants for the first installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 108.61%, risk free rate of 1.12% and an expected term of approximately 5 years. | |||||||||||||||
On November 29, 2011, the Company determined a relative fair value of $209,317 for the detachable warrants for the second installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 109.19%, risk free rate of .93% and an expected term of approximately 5 years. | |||||||||||||||
On December 19, 2011, the Company determined a relative fair value of $13,788 for the detachable warrants for the third installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 109.32%, risk free rate of .82% and an expected term of approximately 5 years. | |||||||||||||||
As described in Note 5, during fiscal year 2012, these notes associated with the second financing were converted into share of common stock. | |||||||||||||||
Conversions | |||||||||||||||
On June 7, 2012, the Company issued 3,314,062 shares of common stock to one investor who elected to convert the outstanding principal amount of $1,590,000 and all of the accrued interest due on its convertible promissory notes dated October 14, 2011, November 29, 2011, December 19, 2011, February 10, 2012, March 30, 2012 and June 4, 2012 at a conversion price of $0.50 per share as provided in the note agreement. Therefore, the note was fully converted as of December 31, 2012 and no longer outstanding debt. | |||||||||||||||
Credit Facility – December 31, 2010 | |||||||||||||||
On December 31, 2010, the Company entered into a credit facility with one investor pursuant to which the investor agreed to lend up to $2,250,000 to us in multiple installments in exchange for a senior secured convertible promissory note with a conversion price of $0.50 per share and five-year warrants to acquire shares of common stock at an exercise price of $1.00 per share in the amount of each installment. The credit facility provides that the investor will lend additional installments to us in amounts as requested by us; provided however, that we provide the proposed use of proceeds for each requested amount. The investor shall have sole discretion in determining whether the proposed use of proceeds meets those requirements. The notes mature on December 31, 2013, or upon default, whichever is earlier and bear interest at an annual rate of 10%. | |||||||||||||||
Detachable Warrants | |||||||||||||||
On December 31, 2010, the Company determined a relative fair value of $45,434 for the detachable warrants for the first installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of: -0-%, volatility of 94.1%, risk free rate: 2.01% and an expected term of 5 years. | |||||||||||||||
On January 20, 2011, the Company determined a relative fair value of $78,062 for the detachable warrants for the second installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of: -0-%, volatility of 104.65%, risk free rate: 2.06% and an expected term of 5 years. | |||||||||||||||
On March 9, 2011, the Company determined a relative fair value of $106,132 for the detachable warrants for the third installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 105.22%, risk free rate of 2.16% and an expected term of approximately 5 years. | |||||||||||||||
On June 20, 2011, the Company determined a relative fair value of $29,276 for the detachable warrants for the fourth installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 105.87%, risk free rate of 1.55% and an expected term of approximately 5 years. | |||||||||||||||
On June 30, 2011, the Company determined a relative fair value of $45,233 for the detachable warrants for the fifth installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 107.39%, risk free rate of 1.76% and an expected term of approximately 5 years. | |||||||||||||||
Conversions | |||||||||||||||
During fiscal year 2012, these notes associated with the first financing were converted into share of common stock, as follows: | |||||||||||||||
On April 13, 2012, the Company issued 1,240,000 shares of common stock to one investor who elected to convert the outstanding principal amount of $620,000 due on its convertible promissory note date December 31, 2010 at a conversion price of $0.50 per share as provided in the note agreement. | |||||||||||||||
On June 1, 2012, the Company issued 1,180,000 shares of common stock to one investor who elected to convert the outstanding principal amount of $590,000 due on its convertible promissory notes dated January 1, 2011, March 9, 2011, June 20, 2011 and June 30, 2011 at a conversion price of $0.50 per share as provided in the note agreement. | |||||||||||||||
On June 11, 2012, the Company issued 300,481 shares of common stock to one investor who elected to convert all of their accrued interest in the amount of $150,240 on its convertible notes from its first financing at a conversion price of $0.50 per share as provided in the note agreement. Therefore, as of December 31, 2012 the December 31, 2010 credit facility was fully converted and no longer outstanding debt. | |||||||||||||||
As described in Note 6, the Company issued convertible notes with detachable warrants. The Company accounted for these detachable warrants in accordance with ASC 470-20, which requires that the Company calculate the relative fair value of the warrants at the grant date and record the relative fair value as a discount to the related note payable with an offset to additional paid-in capital. The Company amortizes the debt discount associated with the warrants over the life of the convertible notes using the effective interest method. | |||||||||||||||
On February 10, 2012, the Company determined a relative fair value of $61,354 for the detachable warrants for the fourth installment of the convertible notes. In calculating the relative fair value of the warrants, the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 110.77%, risk free rate of 1.04% and an expected term of approximately 5 years. | |||||||||||||||
On March 30, 2012, the Company determined a relative fair value of $130,853 for the detachable warrants for the fifth installment of the convertible notes. In calculating the relative fair value of the warrants, the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 110.64%, risk free rate of 1.04% and an expected term of approximately 5 years. | |||||||||||||||
On June 4, 2012, the Company determined a relative fair value of $97,313 for the detachable warrants for the fifth installment of the convertible notes. In calculating the relative fair value of the warrants the Company used the Black Scholes Option Pricing Model based upon the following assumptions: dividend yield of -0-%, volatility of 112.94%%, risk free rate of 0.27% and an expected term of approximately 4.69 years. | |||||||||||||||
Warrant Summary | |||||||||||||||
An overall summary of warrant activity for the period from December 31, 2012 through December 31, 2013 is presented below: | |||||||||||||||
Number of | Weighted | Weighted | |||||||||||||
Warrants | Average | Average | |||||||||||||
Exercise | Remaining | ||||||||||||||
Price | Contract Term | ||||||||||||||
Outstanding December 31, 2011 | 2,185,000 | $ | 1 | 3.45 years | |||||||||||
Issued | 615,000 | $ | 1 | 4.17 years | |||||||||||
Exercised | — | — | — | ||||||||||||
Outstanding December 31, 2012 | 2,800,000 | $ | 1 | 3.68 years | |||||||||||
Issued | — | $ | — | — | |||||||||||
Exercised | — | — | — | ||||||||||||
Outstanding December 31, 2013 | 2,800,000 | $ | 1 | 2.61 years | |||||||||||
Exercisable, December 31, 2013 | 2,800,000 | $ | 1 | 2.61 years | |||||||||||
Shares Reserved for Future Issuance | |||||||||||||||
The Company has reserved shares for future issuance upon of its warrants as follows: | |||||||||||||||
Warrants | 2,800,000 | ||||||||||||||
Reserved shares at December 31, 2013 | 2,800,000 | ||||||||||||||
Fair_Value
Fair Value | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | ' | ||||||||||||||||||||||||||||
Fair Value | ' | ||||||||||||||||||||||||||||
6 | Fair Value | ||||||||||||||||||||||||||||
The Company measures fair value in accordance with a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described below: | |||||||||||||||||||||||||||||
Level 1 | Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities; | ||||||||||||||||||||||||||||
Level 2 | Quoted prices in markets that are not active, or inputs that are observable, either directly or indirectly, for substantially the full term of the asset or liability; and | ||||||||||||||||||||||||||||
Level 3 | Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (supported by little or no market activity). | ||||||||||||||||||||||||||||
As described in Note 5, the Company issued a convertible note with certain reset provisions, The Company accounted for these reset provisions in accordance with ASC 815-40, which requires that the Company bifurcate the embedded conversion option as liability at the grant date and to record changes in fair value relating to the | |||||||||||||||||||||||||||||
conversion option liability in the statement of operations as of each subsequent balance sheet date. The debt discount related to the convertible note is amortized over the life of the note using the effective interest method. | |||||||||||||||||||||||||||||
The conversion options embedded in these instruments contain no explicit limit to the number of shares to be issued upon settlement and as a result are classified as liabilities under ASC 815. Additionally, because the number of shares to be issued upon settlement is indeterminate, all other share settle-able instruments must also be classified as liabilities. As a result, the Company measured its outstanding warrants on December 31, 2013 at fair value and re-classified these amounts from additional paid-in capital to derivative liabilities. | |||||||||||||||||||||||||||||
The following table sets forth the Company’s consolidated financial assets and liabilities measured at fair value by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. | |||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
LIABILITIES: | |||||||||||||||||||||||||||||
Conversion option liability | — | — | — | 139,508 | |||||||||||||||||||||||||
The following is a reconciliation of the conversion option liability and detachable warrant liability for which Level 3 inputs were used in determining fair value: | |||||||||||||||||||||||||||||
Beginning balance January 1, 2013 | $ | — | |||||||||||||||||||||||||||
Additions due to detachable warrant liability | 447,128 | ||||||||||||||||||||||||||||
Additions due to new convertible debt | 351,829 | ||||||||||||||||||||||||||||
Reclassification of derivative liabilities to additional paid-in capital due to | (216,966 | ) | |||||||||||||||||||||||||||
conversion of related notes payable | |||||||||||||||||||||||||||||
Mark to market of debt derivative | (442,483 | ) | |||||||||||||||||||||||||||
Debt derivative as of December 31, 2013 | $ | 139,508 | |||||||||||||||||||||||||||
During the year ended December 31, 2013, the gain on embedded derivatives of $382,269 in the condensed consolidated statement of operations consisted of a gain on the change in fair value of $442,483 and a loss of $60,214 which was the amount by which the embedded derivative liabilities exceeded the principal of the related notes payable on the date the notes were issued. | |||||||||||||||||||||||||||||
During the year ended December 31, 2012, the loss on embedded derivatives in the condensed consolidated statement of operations consisted of a loss on the change in fair value of $2,326,032 and a loss of $704,186 which was the amount by which the embedded derivative liabilities exceeded the principal of the related notes payable on the date the notes were issued. | |||||||||||||||||||||||||||||
The Company’s conversion option liabilities are valued using pricing models and the Company generally uses similar models to value similar instruments. Where possible, the Company verifies the values produced by its pricing models to market prices. Valuation models require a variety of inputs, including contractual terms, market prices, yield curves, credit spreads, measures of volatility and correlations of such inputs. These consolidated financial liabilities do not trade in liquid markets, and as such, model inputs cannot generally be verified and do involve significant management judgment. Such instruments are typically classified within Level 3 of the fair value hierarchy. | |||||||||||||||||||||||||||||
January 31, 2013 Convertible Note Installments | |||||||||||||||||||||||||||||
As described in Note 5, we entered into a Note Purchase Agreement on January 31, 2013. The Company converted shares in several installments, and determined a fair value for the conversion option liability at each conversion, recognizing a non-cash loss included in other income (expense). | |||||||||||||||||||||||||||||
The table below shows the Black Scholes Option Pricing Model inputs used by the Company to value the derivative, as well as the determined value of the option liability and the amount of loss (gain) recognized at each conversion date: | |||||||||||||||||||||||||||||
Date | Shares | Principal on Valuation Date | Volatility | Dividend Yield | Risk free | Expected Term | Fair value of | ||||||||||||||||||||||
Rate | (in years) | Conversion option | |||||||||||||||||||||||||||
Liability | |||||||||||||||||||||||||||||
8/13/13 | 250,000 | $ | 7,500 | 175.5 | % | 0 | % | 0.03 | % | 0.47 | $ | 13,317 | |||||||||||||||||
9/9/13 | 300,000 | $ | 7,950 | 178.8 | % | 0 | % | 0.04 | % | 0.39 | $ | 7,563 | |||||||||||||||||
9/26/13 | 600,000 | $ | 6,960 | 193.5 | % | 0 | % | 0.07 | % | 0.35 | $ | 6,672 | |||||||||||||||||
10/16/13 | 1,200,000 | $ | 6,600 | 218.7 | % | 0 | % | 0.03 | % | 0.29 | $ | 6,438 | |||||||||||||||||
10/31/13 | 1,500,000 | $ | 6,000 | 222 | % | 0 | % | 0.05 | % | 0.25 | $ | 6,041 | |||||||||||||||||
11/13/13 | 2,200,000 | $ | 6,050 | 256 | % | 0 | % | 0.06 | % | 0.22 | $ | 7,336 | |||||||||||||||||
12/3/13 | 2,700,000 | $ | 4,050 | 346.2 | % | 0 | % | 0.06 | % | 0.16 | $ | 5,191 | |||||||||||||||||
12/17/13 | 2,750,000 | $ | 3,438 | 349.9 | % | 0 | % | 0.07 | % | 0.12 | $ | 3,413 | |||||||||||||||||
February 19, 2013 Convertible Note Installments | |||||||||||||||||||||||||||||
As described in Note 5, we entered into a credit facility on February 19, 2013. The investor lent $103,500 to us in a single installment (minus fees of $16,500) in exchange for a convertible promissory note with a conversion price equal to the average lowest trading price per share during the previous 10 trading days. | |||||||||||||||||||||||||||||
The table below shows the Black Scholes Option Pricing Model inputs used by the Company to value the derivative, as well as the determined value of the option liability and the amount of loss (gain) recognized at each conversion date: | |||||||||||||||||||||||||||||
Date | Shares | Principal on Valuation Date | Volatility | Dividend | Risk free | Expected Term | Fair value of | ||||||||||||||||||||||
Yield | Rate | (in years) | Conversion option | ||||||||||||||||||||||||||
Liability | |||||||||||||||||||||||||||||
8/26/13 | 478,469 | $ | 20,000 | 178 | % | 0% | 0.07 | % | 0.48 | $ | 32,737 | ||||||||||||||||||
9/6/13 | 840,336 | $ | 30,000 | 177.3 | % | 0% | 0.05 | % | 0.45 | $ | 28,336 | ||||||||||||||||||
9/26/13 | 1,034,483 | $ | 15,000 | 186.5 | % | 0% | 0.03 | % | 0.4 | $ | 14,460 | ||||||||||||||||||
10/7/13 | 1,492,537 | $ | 20,000 | 180.2 | % | 0% | 0.06 | % | 0.37 | $ | 18,265 | ||||||||||||||||||
10/21/13 | 1,851,852 | $ | 15,000 | 196.9 | % | 0% | 0.04 | % | 0.33 | $ | 12,781 | ||||||||||||||||||
10/31/13 | 2,508,772 | $ | 14,300 | 209.9 | % | 0% | 0.04 | % | 0.3 | $ | 14,867 | ||||||||||||||||||
11/11/13 | 2,511,364 | $ | 11,050 | 225.5 | % | 0% | 0.06 | % | 0.27 | $ | 7,995 | ||||||||||||||||||
11/26/13 | 2,733,333 | $ | 8,200 | 246.9 | % | 0% | 0.07 | % | 0.23 | $ | 6,208 | ||||||||||||||||||
12/2/13 | 2,760,000 | $ | 6,900 | 272.9 | % | 0% | 0.05 | % | 0.22 | $ | 5,427 | ||||||||||||||||||
12/9/13 | 2,742,856 | $ | 5,760 | 297.8 | % | 0% | 0.07 | % | 0.2 | $ | 5,930 | ||||||||||||||||||
12/19/13 | 2,758,824 | $ | 4,690 | 334.9 | % | 0% | 0.06 | % | 0.17 | $ | 9,030 | ||||||||||||||||||
12/26/13 | 2,588,824 | $ | 4,350 | 353.8 | % | 0% | 0.07 | % | 0.15 | $ | 4,929 | ||||||||||||||||||
December 31, 2010 Convertible Note Installments (First Financing) | |||||||||||||||||||||||||||||
On April 13, 2012, the Company converted a $620,000 convertible note into 1,240,000 shares of common stock. On the conversion date, the Company determined a fair value of $1,280,115 for the conversion option liability for this convertible note using the Black Scholes Option Pricing Model based upon the following: dividend yield of -0-%, volatility of 108.17%, risk free rate of 0.27% and an expected term of approximately 1.72 years. The Company recognized a non-cash loss included in other income (expense) of $982,960 preceding conversion during fiscal year 2012. | |||||||||||||||||||||||||||||
On June 1, 2012, the Company converted $590,000 of its convertible notes into 1,180,000 shares of common stock. On the conversion date, the Company determined a fair value of $955,179 for these convertible notes using the Black Scholes Option Pricing Model based upon the following: dividend yield of -0-%, volatility of 111.24%, | |||||||||||||||||||||||||||||
risk free rate of 0.25% and an expected term of approximately 1.58 years. The Company recognized a non-cash loss included in other income (expense) of $668,692 preceding conversion during fiscal year 2012. | |||||||||||||||||||||||||||||
During fiscal year 2012, the Company recognized a reduction of embedded derivative from the first installment of its convertible notes in the amount of $2,235,294. This amount was recorded to additional paid-in capital. | |||||||||||||||||||||||||||||
October 14, 2011 Convertible Note Installments (Second Financing) | |||||||||||||||||||||||||||||
On June 7, 2012, the Company converted $1,590,000 of its convertible notes into 3,180,000 shares of common stock. On the conversion date, the Company determined a fair value of $2,258,375 for these convertible notes using the Black Scholes Option Pricing Model based upon the following: dividend yield of -0-%, volatility of 102.93%, risk free rate of 0.27% and an expected term of approximately 2.35 years. The Company recognized a non-cash loss included in other expense of $674,380 preceding conversion for the nine months ended September 30, 2012. | |||||||||||||||||||||||||||||
During fiscal year 2012, the Company recognized a reduction of embedded derivative from the second installment of its convertible notes in the amount of $2,258,375. This amount was recorded to additional paid-in capital. | |||||||||||||||||||||||||||||
Oil_and_Gas_Properties
Oil and Gas Properties | 12 Months Ended | ||
Dec. 31, 2013 | |||
Extractive Industries [Abstract] | ' | ||
Oil and Gas Properties | ' | ||
7 | Oil and Gas Properties | ||
During the twelve months ended December 31, 2013 and 2012, the Company proposed workover procedures to third party working interest owners on properties for which the Company has ownership. Third party working interests owners were allowed to avoid liability associated with the procedures by conveying their working interests and net royalty interests to the Company. Certain third party working interest partners conveyed various working interests and net royalty interests in their properties. The Company has assumed production revenues, lease operating expenses and asset retirement obligations associated with the conveyance of the working interests and net royalty interests. | |||
During 2012, United American Petroleum Corp. performed drilling and completion procedures on the McKenzie, Marcee and Gabriel Rosser properties of $27,225, $44,792 and $177,000. No drilling was performed during the year ended December 31, 2013. | |||
During 2012, United American Petroleum Corp. entered and closed a purchase and sale agreement to purchase an undivided working interest rights for the RP Wilson lease for $25,000 providing that United American Petroleum Corp. would purchase a 28% working interest, and a 26% revenue interest to certain existing wells and to certain leases located in Texas. |
Other_Payable
Other Payable | 12 Months Ended | ||
Dec. 31, 2013 | |||
Other Payable | ' | ||
Other Payable | ' | ||
8 | Other Payable | ||
As of December 31, 2013, United Operating, LLC received cash in the amount of $582,278 to perform work on behalf of various working interest owners including repairs, drilling and production related costs. These funds are restricted solely for use in drilling and workovers. |
Asset_Retirement_Obligation
Asset Retirement Obligation | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Asset Retirement Obligation [Abstract] | ' | ||||||||
Asset Retirement Obligation | ' | ||||||||
9 | Asset Retirement Obligation | ||||||||
The Company accounts for its future asset retirement obligations by recording the fair value of the liability during the period in which it was incurred. The associated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset. The Company depletes the amount added to proved oil and gas property costs and gathering assets using the units-of-production method. The Company’s asset retirement obligation consists of costs related to the plugging of wells, removal of facilities and equipment and site restoration on its oil and gas properties and gathering assets. The asset retirement liability is allocated to operating expense using a systematic and rational method. The information below reconciles the value of the asset retirement obligation for the periods presented. | |||||||||
Year ended | Year ended | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Beginning of the period | $ | 69,316 | $ | 56,012 | |||||
New wells | 86,015 | 9,790 | |||||||
Change in estimate | (55,349 | ) | — | ||||||
Accretion expense | 12,745 | 3,514 | |||||||
Balance at end of the period | $ | 112,727 | $ | 69,316 |
Equity
Equity | 12 Months Ended | ||
Dec. 31, 2013 | |||
Equity [Abstract] | ' | ||
Equity | ' | ||
10 | Equity | ||
As described in Note 6 during the year ended December 31, 2013, certain notes payables were converted into 35,971,650 shares of common stock. | |||
Fiscal Year 2013 | |||
As of December 31, 2013, the Company had 86,875,192 shares of common stock issued and outstanding. | |||
Fiscal Year 2012 | |||
As of December 31, 2012, the Company had 50,339,542 shares of common stock issued and outstanding. | |||
Share-based Compensation | |||
On August 20, 2013 directors of the Company approved the share-based compensation plan for a consultant of 564,000 shares of common stock as share based compensation. These shares were issued at a market price of $0.09 per share. | |||
On December 21, 2012 directors of the Company approved share based compensation plan for an employee, an advisor and independent investor relations advisor of 80,000, 125,000 and 100,000 shares of common stock as share based compensation. These shares were issued at a market price of $0.09 per share. During the twelve months ended December 31, 2012, the Company recognized $30,500 as share based compensation expense. | |||
On December 26, 2012, the Company issued 500 shares of Series B Preferred Stock, each to Michael Carey, its Chief Executive Officer, President and Director, and Ryan Hudson, its Chief Operating Officer, Secretary and Director (1,000 shares of Series B Preferred Stock in aggregate), in consideration for services rendered to the Company as the Company’s Chief Executive Officer, President and Director, and Chief Operating Officer, Secretary and Director, respectively. The Company has evaluated the fair value of the share based compensation is $1. |
Income_taxes
Income taxes | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Income taxes | ' | ||||||||
11 | Income Taxes | ||||||||
As of December 31, 2013, our deferred tax asset amounting to $522,374 primarily related to our net operating loss carryforward of $2,004,723. A 100% valuation allowance has been established using an effective tax rate of 35% due to the uncertainty of the utilization of the operating losses in future periods. As a result, the deferred tax asset was reduced to zero and no income tax benefit was recorded. The net operating loss carryforward will begin to expire in 2031. | |||||||||
The following table sets forth the components of our deferred tax balance as of December 31, 2013 and 2012. | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Beginning of year NOL | (778,338 | ) | (1,099,282 | ) | |||||
Current year NOL | (2,004,723 | ) | (794,519 | ) | |||||
Loss on MTM - embedded derivatives | 728,124 | 956,964 | |||||||
Depletion amortization and accretion | 426,782 | 117,499 | |||||||
Stock compensation | 91,760 | 41,000 | |||||||
End of year NOL | (1,536,395 | ) | (778,338 | ) | |||||
Tax rate | x 34 | % | x 34 | % | |||||
Deferred tax asset | (522,374 | ) | (264,635 | ) | |||||
Valuation allowance | 522,374 | 264,635 | |||||||
Net deferred tax asset | — | — | |||||||
Section 382 of the Internal Code allows post-change corporations to use pre-change net operating losses, but limit the amount of losses that may be used annually to a percentage of the entity value of the corporation at the date of | |||||||||
the ownership change. The applicable percentage is the federal long-term tax-exempt rate for the month during which the change in ownership occurs. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||
Dec. 31, 2013 | |||
Commitments and Contingencies Disclosure [Abstract] | ' | ||
Commitments and Contingencies | ' | ||
12 | Commitments and Contingencies | ||
Litigation. A case was filed by Nottus Energy, as plaintiff, against Slate Holdings, Inc., Quality Architectural Element, Inc., United American Petroleum Corp. and Carlos Sandoval, as defendants. This case is for termination of a portion of an oil and gas lease operated by Slate Holdings, in which we own a working interest. The plaintiff was granted a final judgment in this case on July 3, 2013 and awarded damages of $93,525.94. A settlement offer has been submitted to all of the defendants by plaintiff and we have agreed to accept the offer, but it is dependent on the other working interest owners accepting it as well. | |||
On our financial statements for the year ended December 31, 2013 we have recorded the total $93,525.94 final judgment as a legal loss accrual, due to our belief that a payout of this amount is probable. |
Supplemental_Oil_and_Gas_Activ
Supplemental Oil and Gas Activities | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Extractive Industries [Abstract] | ' | ||||||||
Supplemental Oil and Gas Activities | ' | ||||||||
13 | Supplemental Oil and Gas Reserve Information (Unaudited) | ||||||||
In accordance with US GAAP for disclosures about oil and gas producing activities, and SEC rules for oil and gas reporting disclosures, we are making the following disclosures about our crude oil and natural gas reserves and exploration and production activities. | |||||||||
Reserves. There are numerous uncertainties inherent in estimating quantities of proved crude oil and natural gas reserves. Crude oil and natural gas reserves engineering is a subjective process of estimating underground accumulations of crude oil and natural gas that cannot be precisely measured. The accuracy of any reserves estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserves estimates are often different from the quantities of crude oil and natural gas that are ultimately recovered. | |||||||||
Reserves Estimates. Our proved reserve information as of December 31, 2013 and December 31, 2012 was estimated by Mire and Associates, Inc. (“Mire”), independent petroleum engineers. In accordance with SEC guidelines, Mire’s estimates of future net revenues from our properties, and the PV-10 and standardized measure thereof, were determined to be economically producible under existing economic conditions, which requires the use of the 12-month average price for each product, calculated as the unweighted arithmetic average of the first-day-of-the-month price for the period January 1, 2013 through December 31, 2013, except where such guidelines permit alternate treatment, including the use of fixed and determinable contractual price escalations. | |||||||||
The technical persons at Mire are responsible for preparing the reserves estimates presented herein and meets the requirements regarding qualifications, independence, objectivity, and confidentiality set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. Michael Carey, our Chief Executive Officer and a director, acted as the liaison with the technical persons at Mire. | |||||||||
Definitions. The following definitions apply to the terms used in the paragraphs above: | |||||||||
Reserves Estimate: The determination of an estimate of a quantity of oil or gas reserves that are thought to exist at a certain date, considering existing prices and reservoir conditions. | |||||||||
Proved Oil and Gas Reserves Proved oil and gas reserves are those quantities of oil and gas, which, by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be economically producible—from a given date forward, from known reservoirs, and under existing economic conditions, operating methods, and government regulations—prior to the time at which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether deterministic or probabilistic methods are used for the estimation. The project to produce the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. | |||||||||
Developed Oil and Gas Reserves Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared with the cost of a new well. | |||||||||
Undeveloped Oil and Gas Reserves Proved undeveloped oil and gas reserves (PUDs) are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells where a relatively major expenditure is required for recompletion. Undrilled locations can be classified as having undeveloped reserves only if a development plan has been adopted indicating that they are scheduled to be drilled within five years, unless the specific circumstances, justify a longer time. | |||||||||
For complete definitions of proved natural gas, natural gas liquids and crude oil reserves, refer to SEC Regulation S-X, Rule 4-10(a)(6), (22) and (31). | |||||||||
Oil and Gas Reserve Information. The following reserve quantities for our proved reserves located in the State of Texas in the United States have been estimated as of December 31, 2013. The determination of oil and gas reserves is based on estimates, which are highly complex and interpretive. The estimates are subject to continuing change as additional information becomes available. | |||||||||
At December 31, | At December 31, | ||||||||
Reserve Category | 2013 | 2012 | |||||||
Proved Developed: | |||||||||
Crude Oil (Bbls) | 87,730 | 61,180 | |||||||
Natural Gas (Mcf) | — | 29,360 | |||||||
Total Oil Equivalent (BOE) | 87,730 | 66,073 | |||||||
Proved Undeveloped: | |||||||||
Crude Oil (Bbls) | 14,340 | — | |||||||
Natural Gas (Mcf) | — | — | |||||||
Total Oil Equivalent (BOE) | 14,340 | — | |||||||
The following table sets forth purchase, production and reserve adjustment activities for the three year period ended December 31, 2013. | |||||||||
Natural Gas | |||||||||
Reserved Quantity | Oil (BBLS) | (MCF) | |||||||
Balance, December 31, 2011 | 38,330 | 49,406 | |||||||
Purchases | — | — | |||||||
Production | (5,823 | ) | (1,404 | ) | |||||
Adjustments to existing reserves | 28,673 | (18,642 | ) | ||||||
Balance, December 31, 2012 | 61,180 | 29,360 | |||||||
Purchases | — | — | |||||||
Production | (7,123 | ) | — | ||||||
Adjustments to existing reserves | 48,013 | (29,360 | ) | ||||||
Balance, December 31, 2013 | 102,070 | — | |||||||
Capitalized Costs Relating to Oil and Gas Producing Activities. Aggregate capitalized costs relating to crude oil and natural gas producing activities are as follows: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Unproved Oil and Gas Properties | — | 261,975 | |||||||
Proved Oil and Gas Properties | 1,376,049 | 1,191,442 | |||||||
Total Oil and Gas Properties | 1,376,049 | 1,453,417 | |||||||
Accumulated DD&A | (236,614 | ) | (137,120 | ) | |||||
Net Capitalized Costs | 1,139,435 | 1,316,297 | |||||||
Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves. The following information is based on our best estimate of the required data for the Standardized Measure of Discounted Future Net Cash Flows in accordance with US GAAP. This information is not the fair value nor does it represent the expected present value of future cash flows of our proved oil and gas reserves. | |||||||||
The standardized measure of discounted future net cash flows is provided using the 12-month unweighted arithmetic average and were held constant throughout the life of the properties. The oil price used as of December 31, 2013 was $96.94 per bbl of oil and $3.67 per MMbtu of natural gas. Future production costs are based on year-end costs and include severance and ad valorem taxes. Each property that is leased by us is also charged with field-level overhead in the reserve calculation. The present value of future cash inflows is based on a 10% discount rate, which is required by the standards. | |||||||||
Standardized Measure of Future Net Cash Flows: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Future cash flows | $ | 9,657,990 | $ | 5,962,350 | |||||
Future production and development costs | (4,603,210 | ) | (3,484,120 | ) | |||||
Future income taxes | — | — | |||||||
Future net cash flows before discount | 5,054,780 | 2,478,230 | |||||||
10% discount to percent value | (2,609,220 | ) | (1,133,720 | ) | |||||
Standardized measure of discounted future net cash flows | $ | 2,445,560 | $ | 1,344,510 | |||||
Changes in the Standard Measure of Discounted Cash Flows: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Standardized measure of discounted future net cash flows beginning of period | $ | 1,344,510 | $ | 1,131,050 | |||||
Purchases of reserves in place | — | — | |||||||
Extension and discoveries, net of future production and development costs | — | 112,227 | |||||||
Sales of oil and gas produced, net of production costs | 223,278 | (111,914 | ) | ||||||
Accretion of discount | 134,451 | 113,105 | |||||||
Revisions of previous quantity estimates | 1,281,061 | 1,465,199 | |||||||
Net change in prices and production costs | (537,740 | ) | (1,186,254 | ) | |||||
Net change in income taxes | — | — | |||||||
Changes in timing and other | — | (178,903 | ) | ||||||
Standardized measure of discounted future net cash flows end of period | 2,445,560 | 1,344,510 |
Subsequent_Events
Subsequent Events | 12 Months Ended | |
Dec. 31, 2013 | ||
Subsequent Events [Abstract] | ' | |
Subsequent Events | ' | |
14 | Subsequent Events | |
In January 2014, Asher submitted a conversion request under one of its Convertible Notes; however, the Company did not have sufficient shares of authorized common stock to honor the conversion request. Asher issued us a notice of default; however, Asher immediately waived the default provided that we began the process to increase our number of authorized shares. We have begun this process; however, the shares are not yet authorized. Consequently, Asher reissued the notice of default to us. As a result, an adverse result to the Company from this claim is probable, and the amount of the claim could be up to $102,810, representing the additional amount due under the Notes in the event of a default. | ||
In January 2014, JMJ submitted a conversion request under one of its Convertible Notes; however, the Company was unable to comply with this request due to insufficient authorized shares of common stock. The lack of authorized shares constituted a default pursuant to the Note. The Company promptly notified JMJ of its inability to honor the conversion request. The Company is currently working to increase the number of authorized shares by March 15, 2014. The Company is not currently in compliance with this undertaking; however, we have remained in contact with JMJ. JMJ has not expressed an intention to assert the remedies set forth in the Note at this time. As a result, we believe that the probability of an adverse result to the Company from this claim is remote. | ||
On February 26, 2014, the Company completed the sale of a 46% working interest (comprising a 34.5% net revenue interest) in an oil, gas and mineral lease covering 430 acres in Duval County, Texas, to RTO Exploration, LLC (“Buyer”) for the purchase price of $400,000. In addition to the purchase price, the Buyer paid a $10,000 non-refundable option payment to the Company. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 12 Months Ended | ||
Dec. 31, 2013 | |||
Accounting Policies [Abstract] | ' | ||
Use of Estimates | ' | ||
Use of Estimates | |||
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reported periods. Actual results could materially differ from those estimates. | |||
Principles of Consolidation | ' | ||
Principles of consolidation | |||
The accompanying consolidated financial statements include the accounts of United American Petroleum and our wholly owned subsidiary, United Operating LLC. All significant intercompany accounts and transactions have been eliminated in consolidation. | |||
Cash and Cash Equivalents | ' | ||
Cash and Cash Equivalents | |||
All highly liquid investments purchased with an original maturity of three months or less at the time of acquisition are considered to be cash equivalents. | |||
Fair Value of Financial Instruments | ' | ||
Fair Value of Financial Instruments | |||
The Company is required to estimate the fair value of all financial instruments included on its balance sheet. The carrying value of cash, accounts receivable, accounts payable and accrued liabilities approximate their fair value due to the short period to maturity of these instruments. | |||
Receivables and Allowance for Doubtful Accounts | ' | ||
Receivables and Allowance for Doubtful Accounts | |||
The Company collects its receivables on its working interests in oil and gas properties from well operators. As such, the Company generally has relatively few customers. These receivables are unsecured and the Company performs ongoing credit evaluations of the well operators’ financial condition whenever necessary. We regularly review collectability and establish or adjust an allowance for uncollectible amounts as necessary using the specific identification method, and we write off receivables after all means of collections have been exhausted and the potential for recovery is remote. We recognize an allowance for uncollectible account of $199,813 and $0 for the periods ending December 31, 2013 and 2012, respectively. We recorded bad debt expense of $226,986 and $0 for the periods ended December 31, 2013 and 2012, respectively. We wrote off receivables of $27,173 and $0 for the periods ended December 31, 2013 and 2012, respectively. | |||
Revenue Recognition- Oil and Gas | ' | ||
Revenue Recognition- Oil and Gas | |||
The Company recognizes oil and gas revenue from interests in producing wells using the “sales method.” Under this method of accounting, revenues are recognized based on volumes sold, which may differ from the volume to which we are entitled based on our working interest. An imbalance is recognized as a liability only when the estimated remaining reserves will not be sufficient to enable the under–produced owner(s) to recoup its entitled share through future production. Under the sales method, no receivables are recorded where we have taken less than our share of production. Our net imbalance position at December 31, 2013 and December 31, 2012, was immaterial. | |||
Revenue Recognition - Administrative Income | ' | ||
Revenue Recognition – Administrative Income | |||
The Company will record revenue for administrative income in accordance with ASC 605. The criteria for recognition are as follows: | |||
1) | Persuasive evidence of an arrangement exists; | ||
2) | Delivery has occurred or services have been rendered; | ||
3) | The seller’s price to the buyer is fixed or determinable, and | ||
4) | Collectability is reasonably assured. | ||
Determination of criteria (3) and (4) will be based on management’s judgments regarding the fixed nature of the selling prices of the services performed and the collectability of those amounts. | |||
The Company operates certain wells where the Company also has an ownership interest. For these partially owned wells, no administrative income is recognized. Rather, operating fees received from other well interest owners are recorded as a reduction to the full cost pool per the full cost rules. | |||
Oil and Gas Properties | ' | ||
Oil and Gas Properties | |||
The Company follows the full cost method of accounting for its investments in oil and gas properties. Under the full cost method, all costs associated with the exploration of properties are capitalized into appropriate cost centers within the full cost pool. Internal costs that are capitalized are limited to those costs that can be directly identified with acquisition, exploration, and development activities undertaken and do not include any costs related to production, general corporate overhead, or similar activities. Cost centers are established on a country-by-country basis. | |||
Capitalized costs within the cost centers are amortized on the unit-of-production basis using proved oil and gas reserves. The cost of investments in unproved properties and major development projects are excluded from capitalized costs to be amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such a determination is made, the properties are assessed annually to ascertain whether impairment has occurred. The costs of drilling exploratory dry holes are included in the amortization base immediately upon determination that the well is dry. | |||
Capitalized costs within the cost centers are amortized on the unit-of-production basis using proved oil and gas reserves. The cost of investments in unproved properties and major development projects are excluded from capitalized costs to be amortized until it is determined whether or not proved reserves can be assigned to the properties. Until such a determination is made, the properties are assessed annually to ascertain whether impairment has occurred. The costs of drilling exploratory dry holes are included in the amortization base immediately upon determination that the well is dry. | |||
For each cost center, capitalized costs are subject to an annual ceiling test, in which the costs shall not exceed the cost center ceiling. The cost center ceiling is equal to i) the present value of estimated future net revenues computed by applying current prices of oil and gas reserves (with consideration of price changes only to the extent provided by contractual arrangements) to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; plus ii) the cost of properties not being amortized; plus iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; less iv) income tax effects related to differences between the book and tax basis of the properties. If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the cost center ceiling, the excess is charged to expense and separately disclosed during the period in which the excess occurs. | |||
Asset Retirement Obligations | ' | ||
Asset Retirement Obligations | |||
ASC 410, Asset Retirement and Environmental Obligations addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. Specifically, ASC 410 requires that the fair value of a liability for an asset retirement obligation be recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. In addition, the asset retirement cost is capitalized as part of the asset’s carrying value and subsequently allocated to expense over the asset’s useful life. | |||
Fair Value of Financial Instruments | ' | ||
Fair Value of Financial Instruments | |||
Accounting standards regarding fair value of financial instruments define fair value, establish a three-level hierarchy which prioritizes and defines the types of inputs used to measure fair value, and establish disclosure requirements for assets and liabilities presented at fair value on the consolidated balance sheets. | |||
Fair value is the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants. A liability is quantified at the price it would take to transfer the liability to a new obligor, not at the amount that would be paid to settle the liability with the creditor. | |||
The three-level hierarchy is as follows: | |||
● | Level 1 inputs consist of unadjusted quoted prices for identical instruments in active markets | ||
● | Level 2 inputs consist of quoted prices for similar instruments | ||
● | Level 3 valuations are derived from inputs which are significant and unobservable and have the lowest priority | ||
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. We have determined that certain warrants outstanding during the period and certain convertible notes covered by these financial statements qualify as derivative financial instruments under the provisions of FASB ASC Topic No. 815-40, “Derivatives and Hedging – Contracts in an Entity’s Own Stock.” See Note 6 – Fair Value for more details. | |||
The fair value of these warrants and derivative liabilities was determined using the Black Scholes Model with any change in fair value during the period recorded in earnings as “Gain on derivative warrant liability.” Significant inputs used to calculate the fair value of the warrants include expected volatility, risk-free interest rate and dividend yield. | |||
Recoverability of Long-Lived Assets | ' | ||
Recoverability of Long-Lived Assets | |||
The Company has adopted Accounting Standards Codification subtopic 360-10, Property, Plant and Equipment (“ASC 360-10”). ASC 360-10 requires that long-lived assets and certain identifiable intangibles held and used by the Company be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. | |||
Events relating to recoverability may include significant unfavorable changes in business conditions or a forecasted inability to achieve break-even operating results over an extended period. The Company evaluates the recoverability of long-lived assets based upon forecasted undiscounted cash flows. Should impairment in value be indicated, the carrying value of intangible assets would be adjusted, based on estimates of future discounted cash flows resulting from the use and ultimate disposition of the asset. ASC 360-10 also requires assets to be disposed of be reported at the lower of the carrying amount or the fair value less costs to sell. | |||
Share-Based Compensation | ' | ||
Share-Based Compensation | |||
The Company accounts for share-based compensation to employees in accordance with Accounting Standards Codification subtopic 718-10, Stock Compensation (“ASC 718-10”). This requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including employee stock options and employee stock purchases related to an Employee Stock Purchase Plan based on the estimated fair values. | |||
As of December 31, 2013, there were no outstanding employee stock options. | |||
The Company accounts for share-based compensation to non-employees in accordance with Accounting Standards Codification subtopic 505-50, Equity-Based Payments to Non-Employees (“ASC 505-50”). This requires the measurement and recognition of compensation expense for all share-based payment awards made to non-employees. | |||
On September 13, 2013, the Company’s Board of Directors approved the Company’s 2013 Stock Plan for Officers, Directors, and Consultants (the “2013 Plan”). The 2013 Plan provided for the issuance of a total of up to 2,000,000 shares of common stock, options, restricted share units, share appreciation rights and other share based awards to acquire common stock to employees, directors and consultants. A total of 564,000 shares were issued under the 2013 Plan during the year ended December 31, 2013. | |||
Income taxes | ' | ||
Income Taxes | |||
The Company has adopted Accounting Standards Codification subtopic 740-10, Income Taxes (“ASC 740-10”). ASC 740-10 requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the financial statement or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. Valuation allowances are established, when necessary, to reduce deferred tax assets to amounts that are expected to be realized. | |||
Basic and Diluted Earnings (Loss) Per Share | ' | ||
Basic and Diluted Earnings (Loss) Per Share | |||
Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed in the same way as basic earnings (loss) per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive. | |||
Property and Equipment | ' | ||
Property and Equipment | |||
Property and equipment is recorded at cost and depreciated over the estimated useful lives of the assets using principally the straight-line method. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value and proceeds realized. Ordinary maintenance and repairs are charged to expense as incurred, and replacements and betterments are capitalized. | |||
The range of estimated useful lives used to calculated depreciation for principal items of property and equipment are as follow: | |||
Asset Category | Depreciation Period | ||
Furniture and Fixtures | 5 Years | ||
Automobiles | 5 Years | ||
Equipment | 10 Years |
Convertible_Notes_and_Detached1
Convertible Notes and Detached Warrants (Tables) | 12 Months Ended | ||||||||||||||
Dec. 31, 2013 | |||||||||||||||
Schedule of warrant activitiy | ' | ||||||||||||||
An overall summary of warrant activity for the period from December 31, 2012 through December 31, 2013 is presented below: | |||||||||||||||
Number of | Weighted | Weighted | |||||||||||||
Warrants | Average | Average | |||||||||||||
Exercise | Remaining | ||||||||||||||
Price | Contract Term | ||||||||||||||
Outstanding December 31, 2011 | 2,185,000 | $ | 1 | 3.45 years | |||||||||||
Issued | 615,000 | $ | 1 | 4.17 years | |||||||||||
Exercised | — | — | — | ||||||||||||
Outstanding December 31, 2012 | 2,800,000 | $ | 1 | 3.68 years | |||||||||||
Issued | — | $ | — | — | |||||||||||
Exercised | — | — | — | ||||||||||||
Outstanding December 31, 2013 | 2,800,000 | $ | 1 | 2.61 years | |||||||||||
Exercisable, December 31, 2013 | 2,800,000 | $ | 1 | 2.61 years | |||||||||||
Schedule of reserved shares for future issuance | ' | ||||||||||||||
The Company has reserved shares for future issuance upon of its warrants as follows: | |||||||||||||||
Warrants | 2,800,000 | ||||||||||||||
Reserved shares at December 31, 2013 | 2,800,000 | ||||||||||||||
Convertible Note 2/19/2013 | ' | ||||||||||||||
Schedule of convertible notes exercised in installemts of the conversion rights | ' | ||||||||||||||
The holder of the convertible note exercised a portion of the conversion rights of the note in the following installments during the year ended December 31, 2013. Note that the December 26, 2013 conversion of 200,000 shares was a conversion of accrued interest; all of the other conversions were on the principal amount. | |||||||||||||||
Date | Shares | Price | Amount | ||||||||||||
8/26/13 | 478,469 | 0.0418 | $ | 20,000 | |||||||||||
9/6/13 | 840,336 | 0.0357 | $ | 30,000 | |||||||||||
9/26/13 | 1,034,483 | 0.0145 | $ | 15,000 | |||||||||||
10/7/13 | 1,492,537 | 0.0134 | $ | 20,000 | |||||||||||
10/21/13 | 1,851,852 | 0.0081 | $ | 15,000 | |||||||||||
10/31/13 | 2,508,772 | 0.0057 | $ | 14,300 | |||||||||||
11/11/13 | 2,511,364 | 0.0044 | $ | 11,050 | |||||||||||
11/26/13 | 2,733,333 | 0.003 | $ | 8,200 | |||||||||||
12/2/13 | 2,760,000 | 0.0025 | $ | 6,900 | |||||||||||
12/9/13 | 2,742,856 | 0.0021 | $ | 5,760 | |||||||||||
12/19/13 | 2,758,824 | 0.0017 | $ | 4,690 | |||||||||||
12/26/13 | 2,558,824 | 0.0017 | $ | 4,350 | |||||||||||
12/26/13 | 200,000 | 0.0017 | $ | 340 | |||||||||||
Total | 24,471,650 | $ | 155,590 | ||||||||||||
Credit Facility 1/31/2013 | ' | ||||||||||||||
Schedule of convertible notes exercised in installemts of the conversion rights | ' | ||||||||||||||
The holder of the convertible note exercised a portion of the conversion rights of the note in the following installments during the year ended December 31, 2013: | |||||||||||||||
Date | Shares | Price | Amount | ||||||||||||
8/13/13 | 250,000 | 0.03 | $ | 7,500 | |||||||||||
9/9/13 | 300,000 | 0.0265 | $ | 7,950 | |||||||||||
9/26/13 | 600,000 | 0.0116 | $ | 6,960 | |||||||||||
10/16/13 | 1,200,000 | 0.0055 | $ | 6,600 | |||||||||||
10/31/13 | 1,500,000 | 0.004 | $ | 6,000 | |||||||||||
11/13/13 | 2,200,000 | 0.00275 | $ | 6,050 | |||||||||||
12/3/13 | 2,700,000 | 0.0015 | $ | 4,050 | |||||||||||
12/17/13 | 2,750,000 | 0.00125 | $ | 3,438 | |||||||||||
Total | 11,500,000 | 48,548 |
Fair_Value_Tables
Fair Value (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2013 | |||||||||||||||||||||||||||||
Investments, Debt and Equity Securities [Abstract] | ' | ||||||||||||||||||||||||||||
Schedule of consolidated financial assets and liabilities measured at fair value | ' | ||||||||||||||||||||||||||||
The following table sets forth the Company’s consolidated financial assets and liabilities measured at fair value by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. | |||||||||||||||||||||||||||||
Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||
LIABILITIES: | |||||||||||||||||||||||||||||
Conversion option liability | — | — | — | 139,508 | |||||||||||||||||||||||||
Reconciliation of the conversion option liability and detachable warrant liability for Level 3 inputs | ' | ||||||||||||||||||||||||||||
The following is a reconciliation of the conversion option liability and detachable warrant liability for which Level 3 inputs were used in determining fair value: | |||||||||||||||||||||||||||||
Beginning balance January 1, 2013 | $ | — | |||||||||||||||||||||||||||
Additions due to detachable warrant liability | 447,128 | ||||||||||||||||||||||||||||
Additions due to new convertible debt | 351,829 | ||||||||||||||||||||||||||||
Reclassification of derivative liabilities to additional paid-in capital due to | (216,966 | ) | |||||||||||||||||||||||||||
conversion of related notes payable | |||||||||||||||||||||||||||||
Mark to market of debt derivative | (442,483 | ) | |||||||||||||||||||||||||||
Debt derivative as of December 31, 2013 | $ | 139,508 | |||||||||||||||||||||||||||
Schedule of inputs used to value derivaties, option liability and amount of loss(gain) recognized at each conversion date | ' | ||||||||||||||||||||||||||||
The table below shows the Black Scholes Option Pricing Model inputs used by the Company to value the derivative, as well as the determined value of the option liability and the amount of loss (gain) recognized at each conversion date: | |||||||||||||||||||||||||||||
Date | Shares | Principal on Valuation Date | Volatility | Dividend Yield | Risk free | Expected Term | Fair value of | ||||||||||||||||||||||
Rate | (in years) | Conversion option | |||||||||||||||||||||||||||
Liability | |||||||||||||||||||||||||||||
8/13/13 | 250,000 | $ | 7,500 | 175.5 | % | 0 | % | 0.03 | % | 0.47 | $ | 13,317 | |||||||||||||||||
9/9/13 | 300,000 | $ | 7,950 | 178.8 | % | 0 | % | 0.04 | % | 0.39 | $ | 7,563 | |||||||||||||||||
9/26/13 | 600,000 | $ | 6,960 | 193.5 | % | 0 | % | 0.07 | % | 0.35 | $ | 6,672 | |||||||||||||||||
10/16/13 | 1,200,000 | $ | 6,600 | 218.7 | % | 0 | % | 0.03 | % | 0.29 | $ | 6,438 | |||||||||||||||||
10/31/13 | 1,500,000 | $ | 6,000 | 222 | % | 0 | % | 0.05 | % | 0.25 | $ | 6,041 | |||||||||||||||||
11/13/13 | 2,200,000 | $ | 6,050 | 256 | % | 0 | % | 0.06 | % | 0.22 | $ | 7,336 | |||||||||||||||||
12/3/13 | 2,700,000 | $ | 4,050 | 346.2 | % | 0 | % | 0.06 | % | 0.16 | $ | 5,191 | |||||||||||||||||
12/17/13 | 2,750,000 | $ | 3,438 | 349.9 | % | 0 | % | 0.07 | % | 0.12 | $ | 3,413 | |||||||||||||||||
February 19, 2013 Convertible Note Installments | |||||||||||||||||||||||||||||
The table below shows the Black Scholes Option Pricing Model inputs used by the Company to value the derivative, as well as the determined value of the option liability and the amount of loss (gain) recognized at each conversion date: | |||||||||||||||||||||||||||||
Date | Shares | Principal on Valuation Date | Volatility | Dividend | Risk free | Expected Term | Fair value of | ||||||||||||||||||||||
Yield | Rate | (in years) | Conversion option | ||||||||||||||||||||||||||
Liability | |||||||||||||||||||||||||||||
8/26/13 | 478,469 | $ | 20,000 | 178 | % | 0% | 0.07 | % | 0.48 | $ | 32,737 | ||||||||||||||||||
9/6/13 | 840,336 | $ | 30,000 | 177.3 | % | 0% | 0.05 | % | 0.45 | $ | 28,336 | ||||||||||||||||||
9/26/13 | 1,034,483 | $ | 15,000 | 186.5 | % | 0% | 0.03 | % | 0.4 | $ | 14,460 | ||||||||||||||||||
10/7/13 | 1,492,537 | $ | 20,000 | 180.2 | % | 0% | 0.06 | % | 0.37 | $ | 18,265 | ||||||||||||||||||
10/21/13 | 1,851,852 | $ | 15,000 | 196.9 | % | 0% | 0.04 | % | 0.33 | $ | 12,781 | ||||||||||||||||||
10/31/13 | 2,508,772 | $ | 14,300 | 209.9 | % | 0% | 0.04 | % | 0.3 | $ | 14,867 | ||||||||||||||||||
11/11/13 | 2,511,364 | $ | 11,050 | 225.5 | % | 0% | 0.06 | % | 0.27 | $ | 7,995 | ||||||||||||||||||
11/26/13 | 2,733,333 | $ | 8,200 | 246.9 | % | 0% | 0.07 | % | 0.23 | $ | 6,208 | ||||||||||||||||||
12/2/13 | 2,760,000 | $ | 6,900 | 272.9 | % | 0% | 0.05 | % | 0.22 | $ | 5,427 | ||||||||||||||||||
12/9/13 | 2,742,856 | $ | 5,760 | 297.8 | % | 0% | 0.07 | % | 0.2 | $ | 5,930 | ||||||||||||||||||
12/19/13 | 2,758,824 | $ | 4,690 | 334.9 | % | 0% | 0.06 | % | 0.17 | $ | 9,030 | ||||||||||||||||||
12/26/13 | 2,588,824 | $ | 4,350 | 353.8 | % | 0% | 0.07 | % | 0.15 | $ | 4,929 | ||||||||||||||||||
Asset_Retirement_Obligation_Ta
Asset Retirement Obligation (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Asset Retirement Obligation Disclosure [Abstract] | ' | ||||||||
Schedule of asset retirement obligation | ' | ||||||||
The information below reconciles the value of the asset retirement obligation for the periods presented. | |||||||||
Year ended | Year ended | ||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Beginning of the period | $ | 69,316 | $ | 56,012 | |||||
New wells | 86,015 | 9,790 | |||||||
Change in estimate | (55,349 | ) | — | ||||||
Accretion expense | 12,745 | 3,514 | |||||||
Balance at end of the period | $ | 112,727 | $ | 69,316 |
Income_taxes_Tables
Income taxes (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Income Tax Disclosure [Abstract] | ' | ||||||||
Schedule of components of our deferred tax balance | ' | ||||||||
The following table sets forth the components of our deferred tax balance as of December 31, 2013 and 2012. | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Beginning of year NOL | (778,338 | ) | (1,099,282 | ) | |||||
Current year NOL | (2,004,723 | ) | (794,519 | ) | |||||
Loss on MTM - embedded derivatives | 728,124 | 956,964 | |||||||
Depletion amortization and accretion | 426,782 | 117,499 | |||||||
Stock compensation | 91,760 | 41,000 | |||||||
End of year NOL | (1,536,395 | ) | (778,338 | ) | |||||
Tax rate | x 34 | % | x 34 | % | |||||
Deferred tax asset | (522,374 | ) | (264,635 | ) | |||||
Valuation allowance | 522,374 | 264,635 | |||||||
Net deferred tax asset | — | — |
Supplemental_Oil_and_Gas_Activ1
Supplemental Oil and Gas Activities (Tables) | 12 Months Ended | ||||||||
Dec. 31, 2013 | |||||||||
Extractive Industries [Abstract] | ' | ||||||||
Schedule of proved developed and undeveloped oil and gas reserves | ' | ||||||||
The following reserve quantities for our proved reserves located in the State of Texas in the United States have been estimated as of December 31, 2013. The determination of oil and gas reserves is based on estimates, which are highly complex and interpretive. The estimates are subject to continuing change as additional information becomes available. | |||||||||
At December 31, | At December 31, | ||||||||
Reserve Category | 2013 | 2012 | |||||||
Proved Developed: | |||||||||
Crude Oil (Bbls) | 87,730 | 61,180 | |||||||
Natural Gas (Mcf) | — | 29,360 | |||||||
Total Oil Equivalent (BOE) | 87,730 | 66,073 | |||||||
Proved Undeveloped: | |||||||||
Crude Oil (Bbls) | 14,340 | — | |||||||
Natural Gas (Mcf) | — | — | |||||||
Total Oil Equivalent (BOE) | 14,340 | — | |||||||
Schedule of purchase, production and reserve adjustment activities | ' | ||||||||
The following table sets forth purchase, production and reserve adjustment activities for the three year period ended December 31, 2013. | |||||||||
Natural Gas | |||||||||
Reserved Quantity | Oil (BBLS) | (MCF) | |||||||
Balance, December 31, 2011 | 38,330 | 49,406 | |||||||
Purchases | — | — | |||||||
Production | (5,823 | ) | (1,404 | ) | |||||
Adjustments to existing reserves | 28,673 | (18,642 | ) | ||||||
Balance, December 31, 2012 | 61,180 | 29,360 | |||||||
Purchases | — | — | |||||||
Production | (7,123 | ) | — | ||||||
Adjustments to existing reserves | 48,013 | (29,360 | ) | ||||||
Balance, December 31, 2013 | 102,070 | — | |||||||
Schedule of aggregate capitalized costs relating to crude oil and natural gas producing activities | ' | ||||||||
Capitalized Costs Relating to Oil and Gas Producing Activities. Aggregate capitalized costs relating to crude oil and natural gas producing activities are as follows: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Unproved Oil and Gas Properties | — | 261,975 | |||||||
Proved Oil and Gas Properties | 1,376,049 | 1,191,442 | |||||||
Total Oil and Gas Properties | 1,376,049 | 1,453,417 | |||||||
Accumulated DD&A | (236,614 | ) | (137,120 | ) | |||||
Net Capitalized Costs | 1,139,435 | 1,316,297 | |||||||
Schedule of standardized measure of future net cash flows | ' | ||||||||
Standardized Measure of Future Net Cash Flows: | |||||||||
31-Dec-13 | 31-Dec-12 | ||||||||
Future cash flows | $ | 9,657,990 | $ | 5,962,350 | |||||
Future production and development costs | (4,603,210 | ) | (3,484,120 | ) | |||||
Future income taxes | — | — | |||||||
Future net cash flows before discount | 5,054,780 | 2,478,230 | |||||||
10% discount to percent value | (2,609,220 | ) | (1,133,720 | ) | |||||
Standardized measure of discounted future net cash flows | $ | 2,445,560 | $ | 1,344,510 | |||||
Schedule of changes in standardized measure of discounted cash flows | ' | ||||||||
Changes in the Standard Measure of Discounted Cash Flows: | |||||||||
December 31, | December 31, | ||||||||
2013 | 2012 | ||||||||
Standardized measure of discounted future net cash flows beginning of period | $ | 1,344,510 | $ | 1,131,050 | |||||
Purchases of reserves in place | — | — | |||||||
Extension and discoveries, net of future production and development costs | — | 112,227 | |||||||
Sales of oil and gas produced, net of production costs | 223,278 | (111,914 | ) | ||||||
Accretion of discount | 134,451 | 113,105 | |||||||
Revisions of previous quantity estimates | 1,281,061 | 1,465,199 | |||||||
Net change in prices and production costs | (537,740 | ) | (1,186,254 | ) | |||||
Net change in income taxes | — | — | |||||||
Changes in timing and other | — | (178,903 | ) | ||||||
Standardized measure of discounted future net cash flows end of period | 2,445,560 | 1,344,510 |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Allowance for uncollectible accounts | $199,813 | $0 |
Bad debt expense | 226,986 | ' |
Write off receivables | $27,173 | $0 |
2013 Plan | ' | ' |
Shares authorized under plan | 2,000,000 | ' |
Shares issued under plan | 564,000 | ' |
Automobiles | ' | ' |
Depreciation period | '5 years | ' |
Equipment | ' | ' |
Depreciation period | '10 years | ' |
Furniture and Fixtures | ' | ' |
Depreciation period | '5 years | ' |
Related_Party_Receivable_Detai
Related Party Receivable (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Related Party Receivable Details Narrative | ' | ' |
Related party receivables | $99,536 | $13,196 |
Increase in related party receivable | $86,340 | ' |
Convertible_Notes_and_Detached2
Convertible Notes and Detached Warrants (Details Narrative) (USD $) | 12 Months Ended | 9 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | 0 Months Ended | 12 Months Ended | |||||||||||||||||||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2013 | Dec. 31, 2013 | Dec. 31, 2013 | Jun. 07, 2012 | Jun. 04, 2012 | Mar. 30, 2012 | Feb. 10, 2012 | Dec. 19, 2011 | Nov. 29, 2011 | Oct. 14, 2011 | Dec. 31, 2012 | Dec. 31, 2011 | Jun. 11, 2012 | Jun. 04, 2012 | Jun. 01, 2012 | Apr. 13, 2012 | Mar. 30, 2012 | Feb. 10, 2012 | Jun. 30, 2011 | Jun. 20, 2011 | Mar. 09, 2011 | Jan. 20, 2011 | Dec. 30, 2010 | Dec. 31, 2010 | |
Convertible Note 2/19/2013 | Convertible Note 4/22/2013 | Credit Facility 1/31/2013 | Credit Facility 10/14/2011 | Credit Facility 10/14/2011 | Credit Facility 10/14/2011 | Credit Facility 10/14/2011 | Credit Facility 10/14/2011 | Credit Facility 10/14/2011 | Credit Facility 10/14/2011 | Credit Facility 10/14/2011 | Credit Facility 10/14/2011 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | Credit Facility 12/31/2010 | |||
Date of issuance | ' | ' | ' | ' | 31-Jan-13 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30-Dec-10 |
Maturity date | ' | ' | ' | ' | 31-Jan-14 | ' | ' | ' | ' | ' | ' | ' | ' | 14-Oct-14 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30-Dec-13 |
Interest rate | ' | ' | ' | ' | 12.00% | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10.00% | ' |
Borrowing capacity | ' | ' | ' | ' | $400,000 | ' | ' | ' | ' | ' | ' | ' | ' | $1,500,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $2,250,000 | ' |
Debt fee | ' | ' | ' | ' | 5,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Discount on issuance | 26,758 | 0 | ' | ' | 25,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
First installment | ' | ' | 103,500 | 63,000 | 55,000 | ' | ' | ' | ' | ' | ' | ' | ' | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
First installment, date | ' | ' | ' | 22-Apr-13 | ' | ' | ' | ' | ' | ' | ' | ' | ' | 14-Oct-11 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Second installment | ' | ' | ' | 47,000 | 25,000 | ' | ' | ' | ' | ' | ' | ' | ' | 550,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Second installment, date | ' | ' | ' | 23-Sep-13 | 22-Apr-13 | ' | ' | ' | ' | ' | ' | ' | ' | 19-Nov-11 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Third installment | ' | ' | ' | ' | 47,000 | ' | ' | ' | ' | ' | ' | ' | ' | 25,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Third installment, date | ' | ' | ' | ' | 23-Sep-13 | ' | ' | ' | ' | ' | ' | ' | ' | 19-Dec-11 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fourth installment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 150,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fourth installment, date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 10-Feb-12 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fifth installment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fifth installment, date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30-Mar-12 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sixth installment | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 215,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Sixth installment, date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 4-Jun-12 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Warrants issued for installment payment | ' | ' | ' | ' | ' | ' | 430,000 | 250,000 | 150,000 | 25,000 | 550,000 | 400,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Fair value of warrants issued | ' | ' | ' | ' | ' | ' | ' | ' | ' | 13,788 | 209,317 | 157,388 | ' | ' | ' | 97,313 | ' | ' | 130,853 | 61,534 | 45,233 | 29,276 | 106,132 | 78,062 | 45,434 | ' |
Dividend Yield | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% | 0.00% | 0.00% | ' | ' | ' | 0.00% | ' | ' | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | 0.00% | ' |
Volatility | ' | ' | ' | ' | ' | ' | ' | ' | ' | 109.32% | 109.19% | 108.61% | ' | ' | ' | 112.94% | ' | ' | 110.64% | 110.77% | 107.39% | 105.87% | 105.22% | 104.65% | 94.10% | ' |
Risk Free Rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.82% | 0.93% | 1.12% | ' | ' | ' | 0.27% | ' | ' | 1.04% | 1.04% | 1.76% | 1.55% | 2.16% | 2.06% | 2.01% | ' |
Expected Term | ' | ' | ' | ' | ' | ' | ' | ' | ' | '5 years | '5 years | '5 years | ' | ' | ' | '4 years 8 months | ' | ' | '5 years | '5 years | '5 years | '5 years | '5 years | '5 years | '5 years | ' |
Conversion price, percentage of trading price | ' | ' | ' | ' | 60.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion price, number of trading days to compute conversion price | ' | ' | ' | '10 days | '25 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Embedded conversion option can be exercised, earliest number of days from issuance | ' | ' | '180 days | '180 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion price, number of days for average price | ' | ' | '10 days | '5 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion, shares issued | ' | ' | ' | ' | ' | 3,314,062 | ' | ' | ' | ' | ' | ' | ' | ' | 300,481 | ' | 1,180,000 | 1,240,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Total principal amount converted | ' | ' | ' | ' | ' | 1,590,000 | ' | ' | ' | ' | ' | ' | ' | ' | 150,240 | ' | 590,000 | 620,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Debt conversion price | ' | ' | ' | ' | ' | $0.50 | ' | ' | ' | ' | ' | ' | ' | $0.50 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.50 | ' |
Amortization of debt discount, recognized as interest expense | 296,930 | 2,176,996 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Penalty percentage | ' | ' | 50.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Penalty amount | ' | ' | 51,750 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Total proceeds from credit facility, net of legal fees | ' | ' | $87,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Exercise price of warrants | 1 | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1 | ' |
Convertible_Notes_and_Detached3
Convertible Notes and Detached Warrants (Details 2) (January 31, 2013 Convertible Note, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Debt conversion, shares issued | 11,500,000 |
Total principal amount converted | $48,548 |
8/13/13 | ' |
Debt conversion, shares issued | 250,000 |
Debt conversion price | $0.03 |
Total principal amount converted | 7,500 |
9/9/13 | ' |
Debt conversion, shares issued | 300,000 |
Debt conversion price | $0.03 |
Total principal amount converted | 7,950 |
9/26/13 | ' |
Debt conversion, shares issued | 600,000 |
Debt conversion price | $0.01 |
Total principal amount converted | 6,960 |
10/16/13 | ' |
Debt conversion, shares issued | 1,200,000 |
Debt conversion price | $0.01 |
Total principal amount converted | 6,600 |
10/31/13 | ' |
Debt conversion, shares issued | 1,500,000 |
Debt conversion price | $0.00 |
Total principal amount converted | 6,000 |
11/13/13 | ' |
Debt conversion, shares issued | 2,200,000 |
Debt conversion price | $0.00 |
Total principal amount converted | 6,050 |
12/3/13 | ' |
Debt conversion, shares issued | 2,700,000 |
Debt conversion price | $0.00 |
Total principal amount converted | 4,050 |
12/17/13 | ' |
Debt conversion, shares issued | 2,750,000 |
Debt conversion price | $0.00 |
Total principal amount converted | $3,438 |
Convertible_Notes_and_Detached4
Convertible Notes and Detached Warrants (Details 3) (February 19, 2013 Convertible Note, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Debt conversion, shares issued | 24,471,650 |
Total principal amount converted | $155,590 |
8/26/13 | ' |
Debt conversion, shares issued | 478,469 |
Debt conversion price | $0.04 |
Total principal amount converted | 20,000 |
9/6/13 | ' |
Debt conversion, shares issued | 840,336 |
Debt conversion price | $0.04 |
Total principal amount converted | 30,000 |
9/26/13 | ' |
Debt conversion, shares issued | 1,034,483 |
Debt conversion price | $0.01 |
Total principal amount converted | 15,000 |
10/7/13 | ' |
Debt conversion, shares issued | 1,492,537 |
Debt conversion price | $0.01 |
Total principal amount converted | 20,000 |
10/21/13 | ' |
Debt conversion, shares issued | 1,851,852 |
Debt conversion price | $0.01 |
Total principal amount converted | 15,000 |
10/31/13 | ' |
Debt conversion, shares issued | 2,508,772 |
Debt conversion price | $0.01 |
Total principal amount converted | 14,300 |
11/11/13 | ' |
Debt conversion, shares issued | 2,511,364 |
Debt conversion price | $0.00 |
Total principal amount converted | 11,050 |
11/26/13 | ' |
Debt conversion, shares issued | 2,733,333 |
Debt conversion price | $0.00 |
Total principal amount converted | 8,200 |
12/2/13 | ' |
Debt conversion, shares issued | 2,760,000 |
Debt conversion price | $0.00 |
Total principal amount converted | 6,900 |
12/9/13 | ' |
Debt conversion, shares issued | 2,742,856 |
Debt conversion price | $0.00 |
Total principal amount converted | 5,760 |
12/19/13 | ' |
Debt conversion, shares issued | 2,758,824 |
Debt conversion price | $0.00 |
Total principal amount converted | 4,690 |
12/26/13 | ' |
Debt conversion, shares issued | 2,558,824 |
Debt conversion price | $0.00 |
Total principal amount converted | 4,350 |
12/26/2013 #2 | ' |
Debt conversion, shares issued | 200,000 |
Debt conversion price | $0.00 |
Total principal amount converted | $340 |
Convertible_Notes_and_Detached5
Convertible Notes and Detached Warrants (Details 4) (USD $) | 12 Months Ended | ||
Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Convertible Notes And Detached Warrants Details 4 | ' | ' | ' |
Number of Warrants, outstanding, beginning | 2,800,000 | 2,185,000 | ' |
Number of Warrants, issued | ' | 615,000 | ' |
Number of Warrants, outstanding, ending | 2,800,000 | 2,800,000 | 2,185,000 |
Number of Warrants, exercisable, ending | 2,800,000 | ' | ' |
Weighted Average Exercise Price, outstanding, beginning | $1 | $1 | ' |
Weighted Average Exercise Price, issued | ' | $1 | ' |
Weighted Average Exercise Price, outstanding, ending | 1 | 1 | ' |
Weighted Average Exercise Price, exercisable, ending | $1 | $1 | $1 |
Weighted Average Remaining Contract Term, issued | ' | '4 years 2 months | ' |
Weighted Average Remaining Contract Term, outstanding | '2 years 7 months 10 days | '3 years 7 months 12 days | '3 years 5 months 10 days |
Weighted Average Remaining Contract Term, exercisable | '2 years 7 months 10 days | ' | ' |
Convertible_Notes_and_Detached6
Convertible Notes and Detached Warrants (Details 5) | Dec. 31, 2013 |
Convertible Notes And Detached Warrants Details 5 | ' |
Warrants | 2,800,000 |
Reserved shares at December 31, 2013 | 2,800,000 |
Fair_Value_Details_Narrative
Fair Value (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Fair Value Details Narrative | ' | ' |
Gain in change in fair value of embedded derivative | $442,483 | ' |
Loss in change in fair value of embedded derivative | ' | 2,326,032 |
Loss for embedded derivative liabilities exceeded the principal of the related notes payable | ($60,214) | ($704,186) |
Fair_Value_Details
Fair Value (Details) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Conversion Option Liability | $139,508 | ' |
Level 3 | ' | ' |
Conversion Option Liability | $139,508 | ' |
Fair_Value_Details_1
Fair Value (Details 1) (USD $) | 12 Months Ended |
Dec. 31, 2013 | |
Fair Value Details 1 | ' |
Conversion option liability and detachable warrant liability, beginning | ' |
Additions due to deatachable warrant liability | 447,128 |
Additions due to new convertible debt | 351,829 |
Reclassification of derivative liabilities to additional paid-in capital due to conversion of related notes payable | -216,966 |
Mark to market of debt derivative | -442,483 |
Conversion option liability and detachable warrant liability, ending | $139,508 |
Fair_Value_Details_2
Fair Value (Details 2) (January 31, 2013 Convertible Note, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
8/13/13 | ' |
Fair value of conversion option liability | $13,317 |
Dividend Yield | 0.00% |
Volatility | 175.50% |
Risk Free Rate | 0.08% |
Expected Term | '5 months 20 days |
Principal on valuation date | 7,500 |
9/9/13 | ' |
Fair value of conversion option liability | 7,563 |
Dividend Yield | 0.00% |
Volatility | 178.80% |
Risk Free Rate | 0.04% |
Expected Term | '4 months 20 days |
Principal on valuation date | 7,950 |
9/26/13 | ' |
Fair value of conversion option liability | 6,672 |
Dividend Yield | 0.00% |
Volatility | 193.50% |
Risk Free Rate | 0.00% |
Expected Term | '4 months 6 days |
Principal on valuation date | 696 |
10/16/13 | ' |
Fair value of conversion option liability | 6,438 |
Dividend Yield | 0.00% |
Volatility | 218.70% |
Risk Free Rate | 0.10% |
Expected Term | '3 months 14 days |
Principal on valuation date | 6,600 |
10/31/13 | ' |
Fair value of conversion option liability | 6,041 |
Dividend Yield | 0.00% |
Volatility | 222.00% |
Risk Free Rate | 0.04% |
Expected Term | '3 months |
Principal on valuation date | 6,000 |
11/13/13 | ' |
Fair value of conversion option liability | 7,366 |
Dividend Yield | 0.00% |
Volatility | 256.00% |
Risk Free Rate | 0.08% |
Expected Term | '2 months 20 days |
Principal on valuation date | 6,050 |
12/3/13 | ' |
Fair value of conversion option liability | 5,191 |
Dividend Yield | 0.00% |
Volatility | 346.20% |
Risk Free Rate | 0.04% |
Expected Term | '1 month 27 days |
Principal on valuation date | 4,050 |
12/17/13 | ' |
Fair value of conversion option liability | 3,413 |
Dividend Yield | 0.00% |
Volatility | 349.90% |
Risk Free Rate | 0.02% |
Expected Term | '1 month 15 days |
Principal on valuation date | $3,438 |
Fair_Value_Details_3
Fair Value (Details 3) (February 19, 2013 Convertible Note, USD $) | 12 Months Ended |
Dec. 31, 2013 | |
8/26/13 | ' |
Fair value of conversion option liability | $32,737 |
Dividend Yield | 0.00% |
Volatility | 178.00% |
Risk Free Rate | 0.07% |
Expected Term | '5 months 21 days |
Principal on valuation date | 20,000 |
9/6/13 | ' |
Fair value of conversion option liability | 28,336 |
Dividend Yield | 0.00% |
Volatility | 177.30% |
Risk Free Rate | 0.05% |
Expected Term | '5 months 14 days |
Principal on valuation date | 30,000 |
9/26/13 | ' |
Fair value of conversion option liability | 14,460 |
Dividend Yield | 0.00% |
Volatility | 186.50% |
Risk Free Rate | 0.03% |
Expected Term | '4 months 24 days |
Principal on valuation date | 15,000 |
10/7/13 | ' |
Fair value of conversion option liability | 18,265 |
Dividend Yield | 0.00% |
Volatility | 180.20% |
Risk Free Rate | 0.06% |
Expected Term | '4 months 13 days |
Principal on valuation date | 20,000 |
10/21/13 | ' |
Fair value of conversion option liability | 12,781 |
Dividend Yield | 0.00% |
Volatility | 196.90% |
Risk Free Rate | 0.04% |
Expected Term | '3 months 29 days |
Principal on valuation date | 15,000 |
10/31/13 | ' |
Fair value of conversion option liability | 14,867 |
Dividend Yield | 0.00% |
Volatility | 209.90% |
Risk Free Rate | 0.04% |
Expected Term | '3 months 17 days |
Principal on valuation date | 14,300 |
11/11/13 | ' |
Fair value of conversion option liability | 7,995 |
Dividend Yield | 0.00% |
Volatility | 222.50% |
Risk Free Rate | 0.06% |
Expected Term | '3 months 7 days |
Principal on valuation date | 11,050 |
11/26/13 | ' |
Fair value of conversion option liability | 6,208 |
Dividend Yield | 0.00% |
Volatility | 246.90% |
Risk Free Rate | 0.07% |
Expected Term | '2 months 27 days |
Principal on valuation date | 8,200 |
12/2/13 | ' |
Fair value of conversion option liability | 5,427 |
Dividend Yield | 0.00% |
Volatility | 272.90% |
Risk Free Rate | 0.05% |
Expected Term | '2 months 18 days |
Principal on valuation date | 6,900 |
12/9/13 | ' |
Fair value of conversion option liability | 5,930 |
Dividend Yield | 0.00% |
Volatility | 297.80% |
Risk Free Rate | 0.07% |
Expected Term | '2 months 11 days |
Principal on valuation date | 5,760 |
12/19/13 | ' |
Fair value of conversion option liability | 9,030 |
Dividend Yield | 0.00% |
Volatility | 334.90% |
Risk Free Rate | 0.06% |
Expected Term | '2 months 1 day |
Principal on valuation date | 4,690 |
12/26/13 | ' |
Fair value of conversion option liability | 4,929 |
Dividend Yield | 0.00% |
Volatility | 353.80% |
Risk Free Rate | 0.07% |
Expected Term | '1 month 24 days |
Principal on valuation date | $4,350 |
Oil_and_Gas_Properties_Details
Oil and Gas Properties (Details Narrative) (USD $) | 12 Months Ended |
Dec. 31, 2012 | |
Purchase of working interest (percent) | 28.00% |
Purchase of revenue interest to certain existing wells and to certain leases (percent) | 26.00% |
Consideration paid for working interest | $25,000 |
McKenzie Property | ' |
Drilling and completion procedures performed | 27,225 |
Marcee Property | ' |
Drilling and completion procedures performed | 44,792 |
Gabriel Rosser Property | ' |
Drilling and completion procedures performed | $177,000 |
Asset_Retirement_Obligation_De
Asset Retirement Obligation (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Asset Retirement Obligation Details | ' | ' |
Beginning of the period | $69,316 | $56,012 |
New wells | 86,015 | 9,790 |
Change in estimate | -55,349 | ' |
Accretion expense | 12,745 | 3,514 |
Balance at end of the period | $112,727 | $69,316 |
Other_Payables_Details_Narrati
Other Payables (Details Narrative) (USD $) | Dec. 31, 2013 |
Payables and Accruals [Abstract] | ' |
Advances from working interest owners | $582,278 |
Equity_Details_Narrative
Equity (Details Narrative) (USD $) | 0 Months Ended | 12 Months Ended | 0 Months Ended | |||||||
Dec. 26, 2013 | Dec. 21, 2013 | Aug. 20, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 21, 2012 | Dec. 21, 2012 | Dec. 21, 2012 | Dec. 26, 2013 | Dec. 26, 2013 | |
Employee | Advisor | Investor Relations Advisor | Chief Executive Officer | Chief Operating Officer | ||||||
Series B Preferred Stock | Series B Preferred Stock | |||||||||
Shares issued for services, shares | ' | ' | 564,000 | ' | ' | 80,000 | 125,000 | 100,000 | 500 | 500 |
Shares issued for services, market price per share | ' | ' | $0.09 | ' | ' | $0.09 | $0.09 | $0.09 | ' | ' |
Allocated share based compensation | $1 | $30,500 | ' | $50,760 | ' | ' | ' | ' | ' | ' |
Income_taxes_Details_Narrative
Income taxes (Details Narrative) | 12 Months Ended |
Dec. 31, 2013 | |
Income Tax Disclosure [Abstract] | ' |
Operating loss carryforward valuation allowance (percent) | 100.00% |
Effective tax rate | 35.00% |
Income_taxes_Details
Income taxes (Details) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Income Tax Disclosure [Abstract] | ' | ' |
Beginning of year NOL | ($778,338) | $1,099,282 |
Current year NOL | -2,004,723 | -794,519 |
Loss on MTM - embedded derivatives | 728,124 | 956,964 |
Depletion amortiztion and accretion | 426,782 | 117,499 |
Stock Compensation | 91,760 | 41,000 |
End of year NOL | -1,536,395 | -778,338 |
Tax rate | 34.00% | 34.00% |
Deferred tax asset | -522,374 | -264,635 |
Valuation allowance | 522,374 | 264,635 |
Net deferred tax asset | ' | ' |
Commitments_and_Contingencies_
Commitments and Contingencies (Details Narrative) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Commitments and Contingencies Disclosure [Abstract] | ' | ' |
Date of awarded damages | 3-Jul-13 | ' |
Awarded damages | $93,526 | ' |
Legal loss accrual | $93,526 | ' |
Supplemental_Oil_and_Gas_Activ2
Supplemental Oil and Gas Activities (Details Narrative) | 12 Months Ended |
Dec. 31, 2013 | |
Discount rate | 10.00% |
Crude Oil | ' |
Prices used for standardized measue of future net cash flows | 96.94 |
Natural Gas | ' |
Prices used for standardized measue of future net cash flows | 3.67 |
Supplemental_Oil_and_Gas_Activ3
Supplemental Oil and Gas Activities (Details) | Dec. 31, 2013 | Dec. 31, 2012 |
Boe | Boe | |
Reserve Category | ' | ' |
Total Oil Equivalent, developed (BOE) | 87,730 | 66,073 |
Total Oil Equivalent, undeveloped (BOE) | 14,340 | ' |
Crude Oil | ' | ' |
Reserve Category | ' | ' |
Proved Developed, reserves | 87,730 | 61,180 |
Proved Undeveloped | 14,340 | ' |
Natural Gas | ' | ' |
Reserve Category | ' | ' |
Proved Developed, reserves | ' | 29,630 |
Supplemental_Oil_and_Gas_Activ4
Supplemental Oil and Gas Activities (Details 1) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
MBbls | MBbls | |
Crude Oil | ' | ' |
Balance, beginning | 61,008 | 38,003 |
Production | -7,123 | -5,823 |
Adjustment to existing reserves | 48,013 | 28,673 |
Balance, ending | 102,070 | 61,008 |
Natural Gas | ' | ' |
Balance, beginning | 29,360 | 49,406 |
Production | ' | 1,404 |
Adjustment to existing reserves | -29,360 | -18,642 |
Balance, ending | ' | 29,360 |
Supplemental_Oil_and_Gas_Activ5
Supplemental Oil and Gas Activities (Details 2) (USD $) | Dec. 31, 2013 | Dec. 31, 2012 |
Supplemental Oil And Gas Activities Details 2 | ' | ' |
Unproved Oil and Gas Properties | ' | $261,975 |
Proved Oil and Gas Properties | 1,376,049 | 1,191,442 |
Total Oil and Gas Properties | 1,376,049 | 1,453,417 |
Accumulated DD&A | -236,614 | -137,120 |
Net Capitalized Costs | $1,139,435 | $1,316,297 |
Supplemental_Oil_and_Gas_Activ6
Supplemental Oil and Gas Activities (Details 3) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Supplemental Oil And Gas Activities Details 3 | ' | ' |
Future cash flows | $9,657,990 | $5,962,350 |
Future production and development costs | -4,603,210 | -3,484,120 |
Future net cash flows before discount | 5,054,780 | 2,478,230 |
10% discount to percent value | -2,609,220 | -1,133,720 |
Standardized measure of discounted future net cash flows | $2,445,560 | $1,344,510 |
Supplemental_Oil_and_Gas_Activ7
Supplemental Oil and Gas Activities (Details 4) (USD $) | 12 Months Ended | |
Dec. 31, 2013 | Dec. 31, 2012 | |
Supplemental Oil And Gas Activities Details 4 | ' | ' |
Standardized measure of discounted future net cash flows beginning of period | $1,344,510 | $1,131,050 |
Extension and discoveries, net of future production and development costs | ' | 112,227 |
Sales of oil and gas produced, net of production costs | 223,278 | -111,914 |
Accretion of discount | 134,451 | 113,105 |
Revisions of previous quantity estimates | 1,281,061 | 1,465,199 |
Net change in prices and production costs | -537,740 | -1,186,254 |
Standardized measure of discounted future net cash flows end of period | $2,445,560 | $1,344,510 |
Subsequent_Events_Details_Narr
Subsequent Events (Details Narrative) (USD $) | 2 Months Ended | |
Feb. 26, 2014 | Jan. 31, 2014 | |
acre | ||
Subsequent Events [Abstract] | ' | ' |
Event date | 26-Feb-14 | ' |
Sale of working interest, percent | 46.00% | ' |
Sale of working interest consisting of net revenue interest, percent | 34.50% | ' |
Number of acres in oil, gas and mineral lease | 400 | ' |
Sales price of working interest | $400,000 | ' |
Non-refundable option payment paid by buyer | 10,000 | ' |
Additional amount due on convertible note due to default | ' | $102,810 |