Cover
Cover - shares | 9 Months Ended | |
Jun. 30, 2020 | Aug. 13, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | GULFSLOPE ENERGY, INC. | |
Entity Central Index Key | 0001341726 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2020 | |
Entity File Number | 000-51638 | |
Entity Incorporation, State Code | DE | |
Amendment Flag | false | |
Current Fiscal Year End Date | --09-30 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 1,250,740,346 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2020 |
Condensed Balance Sheets (Unaud
Condensed Balance Sheets (Unaudited) - USD ($) | Jun. 30, 2020 | Sep. 30, 2019 |
Current Assets | ||
Cash | $ 1,059,737 | $ 1,138,919 |
Accounts Receivable | 341,675 | 8,493,308 |
Prepaid Expenses and Other Current Assets | 102,748 | 137,173 |
Total Current Assets | 1,504,160 | 9,769,400 |
Property and Equipment, net | 8,070 | 13,014 |
Oil and Natural Gas Properties, Full Cost Method of Accounting, Unproved Properties | 19,059,891 | 17,338,978 |
Other Non-Current Assets | 24,785 | 3,662,231 |
Operating Lease Right of Use Asset | 68,558 | |
Total Non-Current Assets | 19,161,304 | 21,014,223 |
Total Assets | 20,665,464 | 30,783,623 |
Current Liabilities | ||
Accounts Payable | 2,084,138 | 12,747,382 |
Related Party Payable | 410,544 | 365,904 |
Accrued Interest Payable | 2,725,253 | 2,282,217 |
Accrued Expenses and Other Payables | 268,862 | 1,949,360 |
Loans from Related Parties | 8,725,500 | 8,725,500 |
Notes Payable | 448,838 | 267,000 |
Convertible Notes Payable, net of Debt Discount | 2,904,649 | 1,197,966 |
Derivative Financial Instruments | 2,238,053 | 3,534,456 |
Current Portion of Operating Lease Liability | 60,955 | |
Other | 42,746 | |
Total Current Liabilities | 19,866,792 | 31,112,531 |
Operating Lease Liability, net of Current Portion | 14,831 | |
Total Non-Current Liabilities | 14,831 | |
Total Liabilities | 19,881,623 | 31,112,531 |
Commitments and Contingencies | ||
Stockholders' Equity (Deficit) | ||
Preferred Stock; par value ($0.001); Authorized 50,000,000 shares none issued or outstanding | ||
Common Stock; par value ($0.001); Authorized 1,500,000,000 shares; issued and outstanding 1,236,247,593 and 1,092,266,844 as of June 30, 2020 and September 30, 2019, respectively | 1,236,247 | 1,092,266 |
Additional Paid-in-Capital | 58,606,569 | 54,160,836 |
Accumulated Deficit | (59,058,975) | (55,582,010) |
Total Stockholders' Equity (Deficit) | 783,841 | (328,908) |
Total Liabilities and Stockholders' Equity (Deficit) | $ 20,665,464 | $ 30,783,623 |
Condensed Balance Sheets (Una_2
Condensed Balance Sheets (Unaudited) (Parenthetical) - $ / shares | Jun. 30, 2020 | Sep. 30, 2019 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 50,000,000 | 50,000,000 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized | 1,500,000,000 | 1,500,000,000 |
Common stock, issued | 1,236,247,593 | 1,092,266,844 |
Common stock, outstanding | 1,236,247,593 | 1,092,266,844 |
Condensed Statements of Operati
Condensed Statements of Operations (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenues | ||||
Impairment of Oil and Natural Gas Properties | 2,124,885 | $ 4,252,539 | $ 2,124,885 | $ 4,252,539 |
General and Administrative Expenses | 325,697 | 439,242 | 1,238,940 | 955,901 |
Net Loss from Operations | (2,450,582) | (4,691,781) | (3,363,825) | (5,208,440) |
Other Income/(Expenses): | ||||
Interest Expense, net | (1,108) | (1,709,833) | (15,927) | (1,730,842) |
Gain (Loss) on Debt Extinguishment | (18,269) | (1,617,036) | (5,099,340) | |
Gain (Loss) on Derivative Financial Instrument | (235,412) | (106,399) | 1,503,392 | (123,391) |
Net Loss Before Income Taxes | (2,705,371) | (6,508,013) | (3,493,396) | (12,162,013) |
Provision for Income Taxes | ||||
Net Loss | $ (2,705,371) | $ (6,508,013) | $ (3,493,396) | $ (12,162,013) |
Loss Per Share - Basic and Diluted (in dollars per share) | $ 0 | $ (0.01) | $ 0 | $ (0.01) |
Weighted Average Shares Outstanding - Basic and Diluted (in shares) | 1,233,094,593 | 1,090,288,822 | 1,162,730,812 | 946,785,438 |
Condensed Statements of Stockho
Condensed Statements of Stockholders' Equity (Deficit (unaudited) - USD ($) | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at beginning at Sep. 30, 2018 | $ 832,013 | $ 36,640,009 | $ (41,858,257) | $ (4,386,235) |
Balance at beginning (in shares) at Sep. 30, 2018 | 832,013,272 | |||
Stock based compensation | 1,217,213 | 1,217,213 | ||
Common stock issued for cash | $ 19,325 | 946,925 | 966,250 | |
Common stock issued for cash (in shares) | 19,325,000 | |||
Warrants issued for debt extension | 152,078 | 152,078 | ||
Warrants issued in debt transaction | 5,090,470 | 5,090,470 | ||
Stock issued for warrant exercise | $ 240,928 | 9,844,072 | 10,085,000 | |
Stock issued for warrant exercise (in shares) | 240,928,572 | |||
Net Loss | (12,162,013) | (12,162,013) | ||
Balance at end at Jun. 30, 2019 | $ 1,092,266 | 53,890,767 | (54,020,270) | 962,763 |
Balance at end (in shares) at Jun. 30, 2019 | 1,092,266,844 | |||
Balance at beginning at Mar. 31, 2019 | $ 1,089,433 | 52,794,028 | (47,512,257) | 6,371,204 |
Balance at beginning (in shares) at Mar. 31, 2019 | 1,089,433,510 | |||
Stock based compensation | 415,111 | 415,111 | ||
Warrants issued for debt extension | 152,078 | 152,078 | ||
Warrants issued in debt transaction | 447,383 | 447,383 | ||
Stock issued for warrant exercise | $ 2,833 | 82,167 | 85,000 | |
Stock issued for warrant exercise (in shares) | 2,833,334 | |||
Net Loss | (6,508,013) | (6,508,013) | ||
Balance at end at Jun. 30, 2019 | $ 1,092,266 | 53,890,767 | (54,020,270) | 962,763 |
Balance at end (in shares) at Jun. 30, 2019 | 1,092,266,844 | |||
Balance at beginning at Sep. 30, 2019 | $ 1,092,266 | 54,160,836 | (55,582,010) | $ (328,908) |
Balance at beginning (in shares) at Sep. 30, 2019 | 1,092,266,844 | 1,092,266,844 | ||
Cumulative adjustment upon ASC 842 adoption | 16,431 | $ 16,431 | ||
Stock based compensation | 968,257 | 968,257 | ||
Common stock issued for conversion of convertible note payable and accrued interest | $ 105,558 | 1,975,068 | 2,080,626 | |
Common stock issued for conversion of convertible note payable and accrued interest (in shares) | 105,557,528 | |||
Common stock registration costs | (15,398) | (15,398) | ||
Stock Issued to extinguish liability | $ 38,423 | 1,498,506 | 1,536,929 | |
Stock Issued to extinguish liability (in shares) | 38,423,221 | |||
Warrants issued for debt extension | 19,300 | 19,300 | ||
Net Loss | (3,493,396) | (3,493,396) | ||
Balance at end at Jun. 30, 2020 | $ 1,236,247 | 58,606,569 | (59,058,975) | $ 783,841 |
Balance at end (in shares) at Jun. 30, 2020 | 1,236,247,593 | 1,236,247,593 | ||
Balance at beginning at Mar. 31, 2020 | $ 1,212,337 | 57,988,449 | (56,353,604) | $ 2,847,182 |
Balance at beginning (in shares) at Mar. 31, 2020 | 1,212,337,346 | |||
Stock based compensation | 240,166 | 240,166 | ||
Common stock issued for conversion of convertible note payable and accrued interest | $ 23,910 | 358,654 | 382,564 | |
Common stock issued for conversion of convertible note payable and accrued interest (in shares) | 23,910,247 | |||
Warrants issued in debt transaction | 19,300 | 19,300 | ||
Net Loss | (2,705,371) | (2,705,371) | ||
Balance at end at Jun. 30, 2020 | $ 1,236,247 | $ 58,606,569 | $ (59,058,975) | $ 783,841 |
Balance at end (in shares) at Jun. 30, 2020 | 1,236,247,593 | 1,236,247,593 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
OPERATING ACTIVITIES | ||
Net Loss | $ (3,493,396) | $ (12,162,013) |
Adjustments to Reconcile Net Loss to Net Cash Used In Operating Activities: | ||
Impairment of Oil and Natural Gas Properties | 2,124,885 | 4,252,539 |
Capitalization of Interest Expense | (2,345,278) | (554,086) |
Depreciation | 4,944 | 3,884 |
Stock Based Compensation | 470,457 | 558,018 |
(Gain) Loss on Derivative Financial Instruments | (1,503,392) | 123,391 |
Debt Discount Amortization | 1,690,260 | 249,670 |
Non-cash interest expense | 32,539 | 1,726,149 |
Loss on Debt Extinguishment | 1,617,036 | 5,099,340 |
Changes in Operating Assets and Liabilities: | ||
Accounts Receivable | 4,261,064 | (11,552,257) |
Prepaid Expenses and Other Current Assets | 255,054 | 120,858 |
Deposits from Joint Interest Owners | (4,078,786) | |
Accounts Payable | (3,855,582) | 7,532,813 |
Accrued Expenses | 1,238,679 | |
Related Party Payable | 44,640 | 44,638 |
Accrued Interest | 604,951 | 370,490 |
Other | (27,834) | 8,788 |
Net Cash Used In Operating Activities | (119,652) | (7,017,885) |
INVESTING ACTIVITIES | ||
Insurance Proceeds Received | 1,190,469 | 660,629 |
Investments in Oil and Gas Properties | (1,546,210) | (9,762,984) |
Net Cash Provided By Investing Activities | (355,741) | (9,102,355) |
FINANCING ACTIVITIES | ||
Notes Payable Proceeds | 535,300 | 12,819,000 |
Proceeds from Exercise of Warrants | 85,000 | |
Payments on Note Payable | (139,089) | (105,644) |
Net Cash Provided By Financing Activities | 396,211 | 12,798,356 |
Net Increase Decrease in Cash | (79,182) | (3,321,884) |
Beginning Cash Balance | 1,138,919 | 5,621,814 |
Ending Cash Balance | 1,059,737 | 2,299,930 |
Supplemental Schedule of Cash Flow Activities: | ||
Cash Paid for Interest, Net of Amounts Capitalized | 5,272 | 3,903 |
Non-Cash Financing and Investing Activities: | ||
Prepaid Asset Financed by Note Payable | 220,629 | 146,310 |
Debt Issuance Costs in Accounts Payable | 555,923 | |
Stock-Based Compensation Capitalized to Oil and Gas properties | 497,800 | 659,646 |
Loans Extinguished through Exercise of Warrants | 10,000,000 | |
Oil and Gas Property Additions Included in Accounts Payable | 480,998 | 3,696,671 |
Funds Received from Capital Raise Transferred to Equity | 965,800 | |
Common Stock Issued upon Conversion of Convertible Notes Payable and Accrued Interest | 2,080,626 | |
Derivative Liability Related to Issued Convertible Note | 433,425 | 3,521,907 |
Reduction of Oil and Natural Gas Properties due to Credits Received | 2,053,195 | |
Accounts Receivable Recovery through Credits Received | 3,906,972 | |
Settlement of Accrued Expenses by Issuance of Common Stock | 1,613,775 | |
Accounts Receivable Exchanged for Working Interest in Oil and Natural Gas Properties | 3,629,789 | |
Warrants issued to extend maturity of debt instrument | $ 19,300 | $ 152,078 |
ORGANIZATION AND NATURE OF BUSI
ORGANIZATION AND NATURE OF BUSINESS | 9 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND NATURE OF BUSINESS | NOTE 1 – ORGANIZATION AND NATURE OF BUSINESS GulfSlope Energy, Inc. (the “Company“ or “GulfSlope“) is an independent oil and natural gas exploration company whose interests are concentrated in the United States Gulf of Mexico federal waters offshore Louisiana. The Company currently has under lease four federal Outer Continental Shelf blocks (referred to as “prospect,“ “portfolio“ or “leases“) and licensed three-dimensional (3-D) seismic data across its area of concentration. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES The condensed financial statements included herein are unaudited. However, these condensed financial statements include all adjustments (consisting of normal recurring adjustments), which, in the opinion of management are necessary for a fair presentation of financial position, results of operations and cash flows for the interim periods. The results of operations for interim periods are not necessarily indicative of the results to be expected for an entire year. The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the Company’s condensed financial statements and accompanying notes. Actual results could differ materially from those estimates. Certain information, accounting policies, and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP“) have been omitted pursuant to certain rules and regulations of the Securities and Exchange Commission (“SEC“). The condensed financial statements should be read in conjunction with the audited financial statements for the year ended September 30, 2019, which were included in the Company’s Annual Report on Form 10-K for the fiscal year ended September 30, 2019, and filed with the Securities and Exchange Commission on December 30, 2019. Cash GulfSlope considers highly liquid investments with original maturities to the Company of three months or less to be cash equivalents. There were no cash equivalents at June 30, 2020 and September 30, 2019. Liquidity/Going Concern The Company has incurred accumulated losses as of June 30, 2020 of $59.1 million, has negative working capital of $18.4 million and for the nine months ended June 30, 2020 generated losses of $3.5 million. Further losses are anticipated in developing our business. As a result, there exists substantial doubt about our ability to continue as a going concern. As of June 30, 2020, we had $1.06 million of unrestricted cash on hand. $0.8 million of this amount is for the payment of joint payables from drilling operations. The Company estimates that it will need to raise a minimum of $10.0 million to meet its obligations and planned expenditures. The $10.0 million is comprised primarily of capital project expenditures as well as general and administrative expenses. It does not include any amounts due under outstanding debt obligations, which amounted to $14.9 million of current principal and accrued interest as of June 30, 2020. The Company plans to finance operations and planned expenditures through the issuance of equity securities, debt financings and farm-out agreements, mergers or other transactions to include the cash settlement of the Company’s insurance claim. The Company also plans to extend the agreements associated with all loans, the accrued interest payable on these loans, as well as the Company’s accrued liabilities. There are no assurances that financing will be available with acceptable terms, if at all or that obligations can be extended. If the Company is not successful in obtaining financing or extending obligations, operations would need to be curtailed or ceased, or the Company would need to sell assets or consider alternative plans up to and including restructuring. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Accounts Receivable The Company records an accounts receivable for operations expense reimbursements due from joint interest partners. The Company estimates allowances for doubtful accounts based on the aged receivable balances and historical losses. If the Company determines any account to be uncollectible based on significant delinquency or other factors, the receivable and the underlying asset are assessed for recovery. As of June 30, 2020 and September 30, 2019, no allowance was recorded. Accounts receivable from oil and gas joint operations and joint ventures is $0.3 million and $8.5 million at June 30, 2020 and September 30, 2019, respectively. During the nine months ended June 30, 2020, approximately $3.6 million of accounts receivable from a joint interest partner was exchanged for an 5% additional working interest in the Tau and Canoe wells and accordingly $3.6 million was reclassified to oil and natural gas properties. Full Cost Method The Company uses the full cost method of accounting for its oil and gas exploration and development activities. Under the full cost method of accounting, all costs associated with successful and unsuccessful exploration and development activities are capitalized on a country-by-country basis into a single cost center (“full cost pool“). Such costs include property acquisition costs, geological and geophysical (“G&G“) costs, carrying charges on non-producing properties, costs of drilling both productive and non-productive wells. Overhead costs, which includes employee compensation and benefits including stock-based compensation, incurred that are directly related to acquisition, exploration and development activities are capitalized. Interest expense is capitalized related to unevaluated properties and wells in process during the period in which the Company is incurring costs and expending resources to get the properties ready for their intended purpose. For significant investments in unproved properties and major development projects that are not being currently depreciated, depleted, or amortized and on which exploration or development activities are in progress, interest costs are capitalized. Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full cost pool. Proved properties are amortized on a country-by-country basis using the units of production method (“UOP“), whereby capitalized costs are amortized over total proved reserves. The amortization base in the UOP calculation includes the sum of proved property, net of accumulated depreciation, depletion and amortization (“DD&A“), estimated future development costs (future costs to access and develop proved reserves), and asset retirement costs, less related salvage value. The costs of unproved properties and related capitalized costs (such as G&G costs) are withheld from the amortization calculation until such time as they are either developed or abandoned. Unproved properties and properties under development are reviewed for impairment at least quarterly and are determined through an evaluation that considers, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions. In countries where proved reserves exist, exploratory drilling costs associated with dry holes are transferred to proved properties immediately upon determination that a well is dry and amortized accordingly. In countries where a reserve base has not yet been established, impairments are charged to earnings. Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is performed quarterly, on a country-by-country basis, utilizing the average of prices in effect on the first day of the month for the preceding twelve-month period. The cost center ceiling is defined as the sum of (a) estimated future net revenues, discounted at 10% per annum, from proved reserves, (b) the cost of properties not being amortized, if any, and (c) the lower of cost or market value of unproved properties included in the cost being amortized. If such capitalized costs exceed the ceiling, the Company will record a write-down to the extent of such excess as a non-cash charge to earnings. Any such write-down will reduce earnings in the period of occurrence and results in a lower depreciation, depletion and amortization rate in future periods. A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling. The Company capitalizes exploratory well costs into oil and gas properties until a determination is made regarding the commerciality of the well. If sufficient proved reserves are found, the capitalized exploratory well costs are reclassified to proved properties. The well costs are charged to expense if the exploratory well is determined to be impaired, since we currently have no proved reserves. Due to a combination of the COVID-19 pandemic and related pressures on the global supply-demand balance for crude oil and related products, commodity prices have significantly declined in recent months, and oil and gas operators have reduced exploration budgets and activity. The Company has evaluated the effect of these factors on its business and the Company has determined that these factors will most likely cause a delay in the Company’s 2020 drilling program. The Company continues to monitor the economic environment and evaluate the impact on the business. Asset Retirement Obligations The Company’s asset retirement obligations will represent the present value of the estimated future costs associated with plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the seabed in accordance with the terms of oil and gas leases and applicable state and federal laws. Determining asset retirement obligations requires estimates of the costs of plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the sea bed as well as estimates of the economic lives of the oil and gas wells and future inflation rates. The resulting estimate of future cash outflows will be discounted using a credit-adjusted risk-free interest rate that corresponds with the timing of the cash outflows. Cost estimates will consider historical experience, third party estimates, the requirements of oil and natural gas leases and applicable local, state and federal laws, but do not consider estimated salvage values. Asset retirement obligations will be recognized when the wells drilled reach total depth or when the production equipment and facilities are installed or acquired with an associated increase in proved oil and gas property costs. Asset retirement obligations will be accreted each period through depreciation, depletion and amortization to their expected settlement values with any difference between the actual cost of settling the asset retirement obligations and recorded amount being recognized as an adjustment to proved oil and gas property costs. Cash paid to settle asset retirement obligations will be included in net cash provided by operating activities from continuing operations in the statements of cash flows. On a quarterly basis, when indicators suggest there have been material changes in the estimates underlying the obligation, the Company reassesses its asset retirement obligations to determine whether any revisions to the obligations are necessary. At least annually, the Company will assess all of its asset retirement obligations to determine whether any revisions to the obligations are necessary. Future revisions could occur due to changes in estimated costs or well economic lives, or if federal or state regulators enact new requirements regarding plugging and abandoning oil and natural gas wells. The Company drilled two well bores in 2018 and 2019 and these wellbores were both plugged with no further cost required and as such, the asset retirement obligation was completely extinguished. Derivative Financial Instruments The accounting treatment of derivative financial instruments requires that the Company the Company Basic and Dilutive Earnings Per Share Basic income (loss) per share (“EPS“) is computed by dividing net loss (the numerator) by the weighted average number of common shares outstanding for the period (denominator). Diluted EPS is computed by dividing net income (loss) by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, and convertible notes payable. The number of potential common shares outstanding relating to stock options and warrants, is computed using the treasury stock method. The number of potential common shares related to convertible notes payable is determined using the if-converted method. As the Company has incurred losses for the nine months ended June 30, 2020 and 2019, the potentially dilutive shares are anti-dilutive and are thus not added into the loss per share calculations. As of June 30, 2020 and 2019, there were 586,722,166 and 357,582,559 potentially dilutive shares, respectively. Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases,“ and in March 2019, the FASB issued ASU No. 2019-01, “Leases: Codification Improvements“, which updated the accounting guidance related to leases to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. They also clarify implementation issues. These updates are effective for public companies for annual periods beginning after December 15, 2018, including interim periods therein. Accordingly, the standard was adopted by the Company on October 1, 2019. The standard was applied utilizing a modified retrospective approach and is reflected in these financial statements. See Note 11. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718) The Company has evaluated all other recent accounting pronouncements and believes that none of them will have a significant effect on the Company’s financial statements. |
OIL AND NATURAL GAS PROPERTIES
OIL AND NATURAL GAS PROPERTIES | 9 Months Ended |
Jun. 30, 2020 | |
Oil and Gas Exploration and Production Industries Disclosures [Abstract] | |
OIL AND NATURAL GAS PROPERTIES | NOTE 3 – OIL AND NATURAL GAS PROPERTIES The Company currently has under lease four federal Outer Continental Shelf blocks and has licensed 2.2 million acres of three-dimensional (3-D) seismic data in its area of concentration. The Company, as the operator of two wells drilled in the Gulf of Mexico, has incurred tangible and intangible drilling costs for the wells in process and has billed its working interest partners for their respective share of the drilling costs to date. The intangible drilling and all other costs related to the first well have been impaired in the quarter ending June 30, 2020. The second well, Tau, was drilled to a measured depth of 15,254 feet, as compared to the originally permitted 29,857 foot measured depth. Producible hydrocarbon zones were not established to that depth, but hydrocarbon shows were encountered. Complex geomechanical conditions required two by-pass wellbores, one sidetrack wellbore, and eight casing strings to reach that depth. Equipment limitations prevented further drilling. In addition, the drilling rig had contractual obligations related to another operator. The Company elected to plug this well in a manner that would allow for re-entry at a later time. The Company is evaluating various options related to future operations in this wellbore and testing of the deeper Tau prospect. The Company plans to re-drill this prospect within the next twelve months, however, the impact of the CoVid In January 2019, the Tau well experienced an underground control of well event and as a result, the Company filed an insurance claim pursuant to its insurance policy with its insurance underwriters (the “Underwriters“). The total amount of the claim was approximately $10.8 million for 100% working interest after the insurance deductible amount. The Company received approximately $2.5 million of this amount and credited wells in process for approximately $0.9 million for the Company’s portion, and recorded an accrued payable for approximately $1.6 million, pending evaluation of distributions to the working interest owners. During the nine months ended June 30, 2020, the accrued payable was settled by the issuance to the working interest partner of approximately 38.4 million shares of the Company’s common stock. In May 2019, the Tau well experienced a second underground control of well event and as a result, the Company filed an insurance claim. The Underwriters have acknowledged confirmation of coverage, subject to the Policy terms and conditions, related to a subsurface well occurrence that happened during the drilling of the Company‘s Tau well on May 5, 2019, during drilling operations at a measured depth of 15,254 feet. The Company subsequently controlled the occurrence and ceased drilling operations and plugs were placed in the well to meet regulatory requirements prior to rig release. Pursuant to the Policy terms and conditions, the Underwriters were obligated to reimburse GulfSlope for qualified actual costs and expenses incurred to (i) regain control of the well, and (ii) restore or re-drill the well to 15,254 feet. Total costs and expenses to regain control of the well were estimated at approximately $4.8 million (net of deductible) for 100% working interest and approximately $4.8 million had been received as of June 30, 2020. GulfSlope’s share of this amount was approximately $1.2 million. Subsequent to the end of the reporting period, in July 2020, the Company reached agreement with the insurance Underwriters to accept a settlement in lieu of a re-drill (see Note 12 -Subsequent Events, for further discussion of this settlement). In November 2019, an agreement was reached with a working interest partner whereby the working interest partner re-conveyed to the Company their 5% interest in Tau and Canoe in exchange for the release of claims and the Company foregoing collection of accounts receivable owed by the working interest partner. As a result of this agreement approximately $3.6 million of accounts receivable was reclassed to oil and gas properties – unproved during the nine months ended June 30, 2020. As of June 30, 2020, the Company’s oil and natural gas properties consisted of unproved properties, wells in process and no proved reserves. During the three months ended June 30, 2020 and 2019, the Company capitalized approximately $1.2 million and $0.4 million of interest expense to oil and natural gas properties, respectively, and approximately $0.3 million and $0.3 million of general and administrative expenses, capitalized to oil and natural gas properties, respectively. During the nine months ended June 30, 2020 and 2019, the Company capitalized approximately $2.3 million and $0.6 million of interest expense to oil and natural gas properties, respectively, and approximately $0.7 million and $0.6 million of general and administrative expenses, capitalized to oil and natural gas properties, respectively. Conversely, during the nine months ended June 30, 2020, the Company received certain credits totaling approximately $2.1 million (net to the Company’s interest) which the Company applied against oil and natural gas properties in the Condensed Balance Sheet. During the three and nine months ended June 30, 2020 and 2019 the Company incurred impairment charges of approximately $2.1 million and $4.3 million, respectively resulting from the expiration of oil and natural gas leases. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Jun. 30, 2020 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 4 – RELATED PARTY TRANSACTIONS During April 2013 through September 2017, the Company entered into convertible promissory notes whereby it borrowed a total of $8,675,500 from John Seitz, the chief executive officer (“CEO“). The notes are due on demand, bear interest at the rate of 5% per annum, and $5,300,000 of the notes are convertible into shares of common stock at a conversion price equal to $0.12 per share of common stock (the then offering price of shares of common stock to unaffiliated investors). As of June 30, 2020, the total amount owed to John Seitz is $8,675,500. This amount is included in loans from related parties within the condensed balance sheets. There was approximately $2.4 million of unpaid interest associated with these loans included in accrued interest payable within the balance sheet as of June 30, 2020. On November 15, 2016, a family member of the CEO entered into a $50,000 convertible promissory note with associated warrants (“Bridge Financing“) under the same terms received by other investors (see Note 5). Domenica Seitz CPA, related to John Seitz, has provided accounting consulting services to the Company. During the three months ended June 30, 2020 and 2019, the services provided were valued at approximately $15,000, respectively. During the nine months ended June 30, 2020 and 2019, the services provided were valued at approximately $45,000, respectively. The amount owed to this related party totals approximately $339,000 and $294,000 as of June 30, 2020 and September 30, 2019, respectively. The Company has accrued these amounts, and they have been reflected in related party payable in the June 30, 2020 financial statements |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Jun. 30, 2020 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTE 5 – NOTES PAYABLE PPP Loan On April 16, 2020, GulfSlope Energy, Inc. (the “Company“) entered into a promissory note (the “Note“) evidencing an unsecured $100,300 loan under the Paycheck Protection Program (the “PPP Loan“). The Paycheck Protection Program was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act“) and is administered by the U.S. Small Business Administration. The PPP Loan is being made through Zions Bancorporation, N.A. dba Amegy Bank (the “Lender“). The PPP Loan is scheduled to mature on April 16, 2022 and has a 1.00% interest rate. No payments are due on the PPP Loan until November 16, 2020, although interest will continue to accrue during the deferment period. Beginning November 16, 2020, the Company will pay 18 equal monthly installments of principal and interest in the amount necessary to fully amortize the PPP Loan through the maturity date. Under the terms of the CARES Act, all or a portion of the PPP Loan may be forgiven. Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payroll costs and mortgage interest, rent or utility costs. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part. At June 30, 2020 accrued interest of approximately $200 was included in accrued interest payable in the June 30, 2020 financial statements. |
CONVERTIBLE NOTES PAYABLE
CONVERTIBLE NOTES PAYABLE | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
CONVERTIBLE NOTES PAYABLE | NOTE 6 – CONVERTIBLE NOTES PAYABLE Bridge Financing Notes Between June and November 2016, the Company issued eleven convertible promissory notes (“Bridge Financing Notes“) with associated warrants in a private placement to accredited investors for total gross proceeds of $837,000, including $222,000 from related parties. These notes had a maturity of one year (which has been extended at maturity to April 30, 2020 and was extended again during the nine months ended June 30, 2020 to April 30, 2021), an annual interest rate of 8% and can be converted at the option of the holder at a conversion price of $0.025 per share. In addition, the convertible notes will automatically convert if a qualified equity financing of at least $3 million occurs before maturity and such mandatory conversion price will equal the effective price per share paid in the qualified equity financing. The remaining note balances as of June 30, 2020 and September 30, 2019 were $277,000, with remaining unamortized debt discounts of approximately $16,000 and $100,000, respectively. Debt discount amortization for the three and nine months ended June 30, 2020 was approximately $17,000 and $103,000, respectively. Debt discount amortization for the three and nine months ended June 30, 2019 was approximately $9,000. Accrued interest as of June 30, 2020 related to these notes was approximately $88,000. As noted above, the maturity date related to these notes and associated warrants was extended to April 30, 2021. In consideration for the extension of the notes, the Company extended the term of the related warrants until April 30, 2021 and recognized $19,300 of additional debt discount which represented the incremental value of the modified warrants over the pre-modification warrants. Delek Note On March 1, 2019, the Company entered into a term loan agreement with Delek, where Delek agreed to provide the Company with multiple draw term loans in an aggregate stated principal amount of up to $11.0 million, of which $10.0 million was initially advanced and subsequently converted to equity through the exercise of a warrant. The maturity date of the facility was September 4, 2019, and until such time any loans would bear interest at a rate per annum equal to 5.0% or 7% upon the occurrence of default. Amounts outstanding under the Term Loan Agreement are secured by a security interest in substantially all of the properties and assets of the Company. On April 19, 2019, the Company borrowed the remaining $1.0 million under this agreement. The term loan facility expired as of September 4, 2019, and in October 2019, the Company signed a Post-Drilling Agreement with Delek modifying this arrangement. The Post-Drilling Agreement states that as payoff for the Company’s outstanding obligations of $1,000,000 plus accrued interest (and additional fees of approximately $200,000), the Company shall issue a convertible note payable to Delek in the amount of $1,220,548. The new note is convertible at the option of Delek at a conversion price of $0.05 per share, and in the event of default the conversion rate adjusts to 60% of the lowest volume weighted average price in the previous 20 trading days. Interest on the note accrues at 12% per annum (15% upon default) and the maturity of the note is October 22, 2020. The Company has a right to prepay all principal and accrued interest prior to maturity. As of June 30, 2020, the accrued interest payable related to this note was approximately $103,000. The Company accounted for the October 2019 transaction as an extinguishment of the prior note given the addition of the substantive conversion feature discussed above. In addition, The Company concluded that the embedded conversion feature within the note requires derivative accounting treatment under ASC 815, Derivatives and Hedging The fair value of the embedded conversion feature was determined utilizing a Geometric Brownian Motion Stock Path Based Monte Carlo Simulation that utilized the following key assumptions: October 17, 2019 June 30, 2020 Stock Price $ 0.041 $ 0.008 Fixed Exercise Price $ 0.050 $ 0.050 Volatility 138 % 184 % Term (Years) 1.00 0.30 Risk Free Rate 1.59 % 0.16 % June 2019 Convertible Debenture On June 21, 2019, the Company entered into a securities purchase agreement to borrow up to $3,000,000 through the issuance of convertible debentures (“Convertible Debentures”) and associated warrants. On June 21, 2019, approximately $2,100,000 (“Tranche 1”) of Convertible Debentures were purchased with other tranches closing on August 7, 2019 for $400,000 (“Tranche 2”) and November 6, 2019 (“Tranche 3”) for $500,000. All tranches accrue interest at eight percent per annum, and mature one year after each respective closing date, and are convertible at the option of the holder any time after issuance into common stock at a conversion rate of the lesser of: (1) $0.05 per share; or (2) 80% of the lowest volume weighted adjusted price (as reported by Bloomberg, LP) for the ten consecutive trading days immediately preceding conversion, and in the event of default the conversion rate adjusts to 60% of the lowest volume weighted average price in the previous 20 trading days. In addition, the holder received warrants to purchase an aggregate of 50 million shares of common stock at an exercise price of $0.04 per share. Such warrants expire on the fifth anniversary of issuance. In total the offering costs incurred related to this Convertible Debenture were approximately $398,000. The Company evaluated the conversion feature and concluded that it should be bifurcated and accounted for as a derivative liability due to the variable conversion feature which does not contain an explicit limit on the number of shares that are required to be issued upon conversion. In addition, the Company concluded the warrants required treatment as derivative liabilities as the Company could not assert it has sufficient authorized but unissued shares to settle the warrants upon exercise when taking into account other stock-based commitments including the Convertible Debentures. Accordingly, the embedded conversion feature and warrants were recorded at fair value at issuance and are subsequently remeasured to fair value each reporting period. The Company recognized gains of approximately $183,000 and $1,243,000 for the three and nine months ended June 30, 2020, related to the change in fair value of the embedded conversion feature and warrants, respectively. In June 2020, the Company extended the maturity dates of Tranche 1 and Tranche2 to August 21, 2020 in exchange for a cash payment of $50,000. The extension was treated as a modification for accounting purposes which resulted in the $50,000 being recognized as an additional debt discount allocated on a pro-rata basis between Tranche 1 and Tranche 2 and will be amortized using the effective interest method over the remaining life of the respective tranches. In addition, during the nine months ended June 30, 2020, the lender converted approximately $1,100,000 of principal of Tranche 1 and approximately $139,000 of accrued interest into common stock. The common stock issued was recorded at its fair value on the dates of conversion which totaled approximately $2.1 million and a loss on extinguishment of debt and related derivative liability was recognized for approximately $1.0 million. The fair value of the embedded conversion feature was determined utilizing a Geometric Brownian Motion Stock Path Based Monte Carlo Simulation that utilized the following key assumptions: Conversions for the nine months ended June 30, 2020 June 30, 2020 Stock Price $ 0.014 – 0.034 $ 0.008 Fixed Exercise Price $ 0.050 $ 0.05 Volatility 77-284% % 203 % Term (Years) 0.01 - 0.62 0.14 Risk Free Rate 0.13 – 1.62 % 0.16 % In addition to the fixed exercise price noted above, the model incorporates the variable conversion price which is simulated as 80% of the lowest trading price within the ten consecutive days preceding presumed conversion. The Company’s convertible promissory notes consisted of the following as of June 30, 2020. Notes Discount Notes, Net of Discount Convertible Notes Payable $ 3,347,549 $ (442,900) $ 2,904,649 Total $ 3,347,549 $ (442,900) $ 2,904,649 |
FAIR VALUE MEASUREMENT
FAIR VALUE MEASUREMENT | 9 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENT | NOTE 7 – FAIR VALUE MEASUREMENT Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are classified and disclosed in one of the following categories: Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. The Company considers active markets as those in which transactions for the assets or liabilities occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liability. This category includes those derivative instruments that the Company values using observable market data. Substantially all of these inputs are observable in the marketplace throughout the term of the derivative instrument, can be derived from observable data, or are supported by observable levels at which transactions are executed in the marketplace. Instruments in this category include non-exchange traded derivative financial instruments as well as warrants to purchase common stock and long-term incentive plan liabilities calculated using the Black-Scholes model to estimate the fair value as of the measurement date. Level 3: Measured based on prices or valuation models that require inputs that are both significant to the fair value measurement and less observable from objective sources (i.e. supported by little or no market activity). As required by ASC 820-10, financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. Fair Value on a Recurring Basis The following table sets forth by level within the fair value hierarchy the Company’s derivative financial instruments that were accounted for at fair value on a recurring basis as of June 30, 2020: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Total Fair Derivative Financial Instrument $ — $ 2,238,053 $ — $ 2,238,053 The change in derivative financial instruments for the nine months ended June 30, 2020 is as follows: September 30, 2019 balance $ 3,534,456 New derivative instruments issued 880,462 Derivative instruments converted/extinguished (673,473 ) Change in fair value (1,503,392 ) June 30, 2020 balance $ 2,238,053 Non-recurring fair value assessments include impaired oil and natural gas property assessments and stock-based compensation. During the nine months ended June 30, 2020, the Company recorded an impairment charge of $2,124,885 and stock-based compensation expense of approximately $968,000, of which approximately $498,000 was capitalized to oil and gas properties. |
COMMON STOCK_PAID IN CAPITAL
COMMON STOCK/PAID IN CAPITAL | 9 Months Ended |
Jun. 30, 2020 | |
Stockholders' Equity Note [Abstract] | |
COMMON STOCK/PAID IN CAPITAL | NOTE 8 – COMMON STOCK/PAID IN CAPITAL As discussed in Note 6, the Company issued approximately 106 million common shares with a fair value of approximately $2.1 million upon partial conversions of the notes and related accrued interest during the nine months ended June 30, 2020. The common shares were valued based upon the closing common share prices on the respective conversion dates. In addition, during the nine months ended June 30, 2020, the Company issued 38,423,221 common shares with a fair value of $1,536,929 to extinguish an accrued expense that totaled $1,613,775. The common shares were valued based upon the closing common share price on the date of settlement resulting in a gain on the extinguishment of the obligation of approximately $77,000. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | NOTE 9 – STOCK-BASED COMPENSATION During the nine months ended June 30, 2020, upon the passing of a member of the management team, the Company modified the vesting terms of a stock option grant previously made to this individual which vested the instrument immediately. The option was for three million shares and was originally granted in June 2018. The Company recorded approximately $8,000 in additional compensation expense related to this modification. Stock-based compensation cost is measured at the grant date, based on the estimated fair value of the award using the Black Scholes option pricing model, and is recognized over the vesting period. The Company recognized approximately $240,000 and $393,000 in stock-based compensation expense for the quarters ended June 30, 2020 and 2019, respectively. A portion of these costs, approximately $124,000 and $207,000 were capitalized to unproved properties for the three months ended June 30, 2020 and 2019, respectively, with the remainder recorded as general and administrative expenses for each respective period. The Company recognized approximately $968,000 and $802,000 in stock-based compensation expense for the nine months ended June 30, 2020 and 2019, respectively. For the nine months ended June 30, 2020 and 2019 approximately $498,000 and $542,000, respectively was capitalized to unproved properties. The Company did not issue any new stock option grants during the nine months ended June 30, 2020. The following table summarizes the Company’s stock option activity during the nine months ended June 30, 2020: Number of Options Weighted Average Weighted Average Remaining Outstanding at September 30, 2019 104,500,000 $ 0.0605 Granted — — Exercised — — Cancelled — — Outstanding at June 30, 2020 104,500,000 $ 0.0605 1.58 Vested and expected to vest 104,500,000 $ 0.0605 1.58 Exercisable at June 30, 2020 104,500,000 $ 0.0565 1.58 As of June 30, 2020, there was no unrecognized stock-based compensation expense. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 10 – COMMITMENTS AND CONTINGENCIES The Company reached an agreement in August 2018 for the settlement of approximately $1 million in debt. Payment of approximately $0.16 million in cash and 10 million shares of common stock was made. The agreement contains a provision that upon the sale of the common stock if the original debt is not fully satisfied, full payment will be made under a mutually agreed payment plan. If the stock is sold for a gain any surplus in excess of $1.3 million shall be a credit against future purchases. The agreement was determined to meet the definition of a derivative in accordance with ASC 815. At June 30, 2020, there is a derivative financial instrument liability recorded of approximately $0.8 million related to this agreement. In November 2019, the Company purchased a directors and officers’ insurance policy for approximately $241,000 and financed approximately $220,000 of the premium by executing a note payable at an interest rate of 5.6%. The balance of the note payable as of June 30, 2020, is approximately $82,000 and is included in the Notes Payable balance in the Condensed Balance Sheet. |
LEASES
LEASES | 9 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
LEASES | NOTE 11 – LEASES Effective October 1, 2019, we adopted ASU No. 2016-02, Leases (Topic 842), and all related amendments (“ASC 842“) using the modified retrospective approach. In July 2018, the FASB approved an optional transition method that removed the requirement to restate prior period financial statements upon adoption of the standard with a cumulative-effect adjustment to retained earnings in the period of adoption and we elected to apply this transition method. As a result, the comparative period information has not been restated and continues to be reported under the accounting standards in effect for the period presented. The adoption of ASC 842 had no impact to our previously reported results of operations or cash flows. The following table depicts the cumulative effect of the changes made to our September 30, 2019 balance sheet for the adoption of ASC 842 effective on October 1, 2019: Balance at September 30, 2019 Impact of Adoption of ASC 842 Adjusted Balance at October 1, 2019 Assets: Operating lease right of use assets $ — $ 104,363 $ 104,363 Current Liabilities: Other (Deferred Credit Office Lease) $ 42,746 $ (42,746) — Current portion of operating lease liabilities $ — $ 74,114 $ 74,114 Noncurrent Liabilities: Operating lease liabilities $ — $ 56,565 $ 56,565 Equity: Accumulated Deficit $ (55,582,010) $ 16,431 $ (55,565,581) The adoption of ASC 842 primarily resulted in the recognition of operating lease liabilities totaling $130,679, based upon the present value of the remaining minimum rental payments using discount rates as of the adoption date. In addition, we recorded corresponding right-of-use assets totaling $104,363 based upon the operating lease liabilities adjusted for deferred rent and lease incentives. In addition, we recorded a $16,431 cumulative effect of initially adopting ASC 842 as an adjustment to the opening balance of accumulated deficit. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Jun. 30, 2020 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS Due to a combination of the COVID-19 pandemic and related pressures on the global supply-demand balance for crude oil and related products, commodity prices have significantly declined in recent months, and oil and gas operators have reduced exploration budgets and activity. The Company has evaluated the effect of these factors on its business and the Company has determined that these factors will most likely cause a delay in the Company’s 2020 drilling program. The Company continues to monitor the economic environment and evaluate the impact on the business. On July 27, 2020, the Company entered into an agreement with holders of the Convertible Debentures to modify the existing arrangement. At the date of modification, the remaining principal under the Convertible debentures was $1.9 million. Pursuant to the modified agreement, the payment terms were changed to as follows: ● $50,000 on the date of the Agreement; ● $700,000 on or before August 21, 2020; ● $750,000 on or before September 30, 2020; and ● Any remaining principal amount outstanding on or before November 30, 2020. Upon the timely payment by the Company of the amounts set forth above, all other amounts due on the Debentures, including any interest or fees accrued or that will accrue or become due or payable on the Debentures, will be extinguished. In addition, the holder agreed to limit their conversion right to $300,000 of outstanding principal between the date of modification and November 30, 2020. The Company further agreed to reduce the exercise price on the warrants to purchase 50,000,000 shares of common stock held by the holder from $0.04 per share to $0.02 per share. The Company plans to use a portion of the proceeds from the insurance settlement, discussed below, to make the payments set forth above. On July 27, 2020, the Company entered into a settlement with the Underwriters of a well control events insurance policy covering certain claims associated with the drilling of the Company’s Tau Prospect during May 2019. In accordance with the settlement, in lieu of the insurer paying for the redrill of the well and for a complete release of any further liability under the insurance policy, the Company will receive $6,575,000 in cash net to its 25% working interest. Approximately $6.0 million of this amount has been received through the filing date of this report. The Company intends to apply the proceeds from the insurance settlement to pay amounts due on the Convertible Debentures and other payables, as well as fund other general corporate purposes including expenditures associated with the Company’s drilling program. |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Cash | Cash GulfSlope considers highly liquid investments with original maturities to the Company of three months or less to be cash equivalents. There were no cash equivalents at June 30, 2020 and September 30, 2019. |
Liquidity/Going Concern | Liquidity/Going Concern The Company has incurred accumulated losses as of June 30, 2020 of $59.1 million, has negative working capital of $18.4 million and for the nine months ended June 30, 2020 generated losses of $3.5 million. Further losses are anticipated in developing our business. As a result, there exists substantial doubt about our ability to continue as a going concern. As of June 30, 2020, we had $1.06 million of unrestricted cash on hand. $0.8 million of this amount is for the payment of joint payables from drilling operations. The Company estimates that it will need to raise a minimum of $10.0 million to meet its obligations and planned expenditures. The $10.0 million is comprised primarily of capital project expenditures as well as general and administrative expenses. It does not include any amounts due under outstanding debt obligations, which amounted to $14.9 million of current principal and accrued interest as of June 30, 2020. The Company plans to finance operations and planned expenditures through the issuance of equity securities, debt financings and farm-out agreements, mergers or other transactions to include the cash settlement of the Company’s insurance claim. The Company also plans to extend the agreements associated with all loans, the accrued interest payable on these loans, as well as the Company’s accrued liabilities. There are no assurances that financing will be available with acceptable terms, if at all or that obligations can be extended. If the Company is not successful in obtaining financing or extending obligations, operations would need to be curtailed or ceased, or the Company would need to sell assets or consider alternative plans up to and including restructuring. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
Accounts Receivable | Accounts Receivable The Company records an accounts receivable for operations expense reimbursements due from joint interest partners. The Company estimates allowances for doubtful accounts based on the aged receivable balances and historical losses. If the Company determines any account to be uncollectible based on significant delinquency or other factors, the receivable and the underlying asset are assessed for recovery. As of June 30, 2020 and September 30, 2019, no allowance was recorded. Accounts receivable from oil and gas joint operations and joint ventures is $0.3 million and $8.5 million at June 30, 2020 and September 30, 2019, respectively. During the nine months ended June 30, 2020, approximately $3.6 million of accounts receivable from a joint interest partner was exchanged for an 5% additional working interest in the Tau and Canoe wells and accordingly $3.6 million was reclassified to oil and natural gas properties. |
Full Cost Method | Full Cost Method The Company uses the full cost method of accounting for its oil and gas exploration and development activities. Under the full cost method of accounting, all costs associated with successful and unsuccessful exploration and development activities are capitalized on a country-by-country basis into a single cost center (“full cost pool“). Such costs include property acquisition costs, geological and geophysical (“G&G“) costs, carrying charges on non-producing properties, costs of drilling both productive and non-productive wells. Overhead costs, which includes employee compensation and benefits including stock-based compensation, incurred that are directly related to acquisition, exploration and development activities are capitalized. Interest expense is capitalized related to unevaluated properties and wells in process during the period in which the Company is incurring costs and expending resources to get the properties ready for their intended purpose. For significant investments in unproved properties and major development projects that are not being currently depreciated, depleted, or amortized and on which exploration or development activities are in progress, interest costs are capitalized. Proceeds from property sales will generally be credited to the full cost pool, with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. A significant alteration would typically involve a sale of 25% or more of the proved reserves related to a single full cost pool. Proved properties are amortized on a country-by-country basis using the units of production method (“UOP“), whereby capitalized costs are amortized over total proved reserves. The amortization base in the UOP calculation includes the sum of proved property, net of accumulated depreciation, depletion and amortization (“DD&A“), estimated future development costs (future costs to access and develop proved reserves), and asset retirement costs, less related salvage value. The costs of unproved properties and related capitalized costs (such as G&G costs) are withheld from the amortization calculation until such time as they are either developed or abandoned. Unproved properties and properties under development are reviewed for impairment at least quarterly and are determined through an evaluation that considers, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions. In countries where proved reserves exist, exploratory drilling costs associated with dry holes are transferred to proved properties immediately upon determination that a well is dry and amortized accordingly. In countries where a reserve base has not yet been established, impairments are charged to earnings. Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is performed quarterly, on a country-by-country basis, utilizing the average of prices in effect on the first day of the month for the preceding twelve-month period. The cost center ceiling is defined as the sum of (a) estimated future net revenues, discounted at 10% per annum, from proved reserves, (b) the cost of properties not being amortized, if any, and (c) the lower of cost or market value of unproved properties included in the cost being amortized. If such capitalized costs exceed the ceiling, the Company will record a write-down to the extent of such excess as a non-cash charge to earnings. Any such write-down will reduce earnings in the period of occurrence and results in a lower depreciation, depletion and amortization rate in future periods. A write-down may not be reversed in future periods even though higher oil and natural gas prices may subsequently increase the ceiling. The Company capitalizes exploratory well costs into oil and gas properties until a determination is made regarding the commerciality of the well. If sufficient proved reserves are found, the capitalized exploratory well costs are reclassified to proved properties. The well costs are charged to expense if the exploratory well is determined to be impaired, since we currently have no proved reserves. Due to a combination of the COVID-19 pandemic and related pressures on the global supply-demand balance for crude oil and related products, commodity prices have significantly declined in recent months, and oil and gas operators have reduced exploration budgets and activity. The Company has evaluated the effect of these factors on its business and the Company has determined that these factors will most likely cause a delay in the Company’s 2020 drilling program. The Company continues to monitor the economic environment and evaluate the impact on the business. |
Asset Retirement Obligations | Asset Retirement Obligations The Company’s asset retirement obligations will represent the present value of the estimated future costs associated with plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the seabed in accordance with the terms of oil and gas leases and applicable state and federal laws. Determining asset retirement obligations requires estimates of the costs of plugging and abandoning oil and natural gas wells, removing production equipment and facilities and restoring the sea bed as well as estimates of the economic lives of the oil and gas wells and future inflation rates. The resulting estimate of future cash outflows will be discounted using a credit-adjusted risk-free interest rate that corresponds with the timing of the cash outflows. Cost estimates will consider historical experience, third party estimates, the requirements of oil and natural gas leases and applicable local, state and federal laws, but do not consider estimated salvage values. Asset retirement obligations will be recognized when the wells drilled reach total depth or when the production equipment and facilities are installed or acquired with an associated increase in proved oil and gas property costs. Asset retirement obligations will be accreted each period through depreciation, depletion and amortization to their expected settlement values with any difference between the actual cost of settling the asset retirement obligations and recorded amount being recognized as an adjustment to proved oil and gas property costs. Cash paid to settle asset retirement obligations will be included in net cash provided by operating activities from continuing operations in the statements of cash flows. On a quarterly basis, when indicators suggest there have been material changes in the estimates underlying the obligation, the Company reassesses its asset retirement obligations to determine whether any revisions to the obligations are necessary. At least annually, the Company will assess all of its asset retirement obligations to determine whether any revisions to the obligations are necessary. Future revisions could occur due to changes in estimated costs or well economic lives, or if federal or state regulators enact new requirements regarding plugging and abandoning oil and natural gas wells. The Company drilled two well bores in 2018 and 2019 and these wellbores were both plugged with no further cost required and as such, the asset retirement obligation was completely extinguished. |
Derivative Financial Instruments | Derivative Financial Instruments The accounting treatment of derivative financial instruments requires that the Company the Company |
Basic and Dilutive Earnings Per Share | Basic and Dilutive Earnings Per Share Basic income (loss) per share (“EPS“) is computed by dividing net loss (the numerator) by the weighted average number of common shares outstanding for the period (denominator). Diluted EPS is computed by dividing net income (loss) by the weighted average number of common shares and potential common shares outstanding (if dilutive) during each period. Potential common shares include stock options, warrants, and convertible notes payable. The number of potential common shares outstanding relating to stock options and warrants, is computed using the treasury stock method. The number of potential common shares related to convertible notes payable is determined using the if-converted method. As the Company has incurred losses for the nine months ended June 30, 2020 and 2019, the potentially dilutive shares are anti-dilutive and are thus not added into the loss per share calculations. As of June 30, 2020 and 2019, there were 586,722,166 and 357,582,559 potentially dilutive shares, respectively. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU No. 2016-02, “Leases,“ and in March 2019, the FASB issued ASU No. 2019-01, “Leases: Codification Improvements“, which updated the accounting guidance related to leases to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. They also clarify implementation issues. These updates are effective for public companies for annual periods beginning after December 15, 2018, including interim periods therein. Accordingly, the standard was adopted by the Company on October 1, 2019. The standard was applied utilizing a modified retrospective approach and is reflected in these financial statements. See Note 11. In June 2018, the FASB issued ASU 2018-07, Compensation-Stock Compensation (Topic 718) The Company has evaluated all other recent accounting pronouncements and believes that none of them will have a significant effect on the Company’s financial statements. |
CONVERTIBLE NOTES PAYABLE (Tabl
CONVERTIBLE NOTES PAYABLE (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Debt Disclosure [Abstract] | |
Schedule of fair value of the embedded conversion feature | The fair value of the embedded conversion feature was determined utilizing a Geometric Brownian Motion Stock Path Based Monte Carlo Simulation that utilized the following key assumptions: October 17, 2019 June 30, 2020 Stock Price $ 0.041 $ 0.008 Fixed Exercise Price $ 0.050 $ 0.050 Volatility 138 % 184 % Term (Years) 1.00 0.30 Risk Free Rate 1.59 % 0.16 % The fair value of the embedded conversion feature was determined utilizing a Geometric Brownian Motion Stock Path Based Monte Carlo Simulation that utilized the following key assumptions: Conversions for the nine months ended June 30, 2020 June 30, 2020 Stock Price $ 0.014 – 0.034 $ 0.008 Fixed Exercise Price $ 0.050 $ 0.05 Volatility 77-284% % 203 % Term (Years) 0.01 - 0.62 0.14 Risk Free Rate 0.13 – 1.62 % 0.16 % |
Schedule of convertible promissory notes | The Company’s convertible promissory notes consisted of the following as of June 30, 2020. Notes Discount Notes, Net of Discount Convertible Notes Payable $ 3,347,549 $ (442,900) $ 2,904,649 Total $ 3,347,549 $ (442,900) $ 2,904,649 |
FAIR VALUE MEASUREMENT (Tables)
FAIR VALUE MEASUREMENT (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Fair Value Disclosures [Abstract] | |
Schedule of fair value on recurring basis | The following table sets forth by level within the fair value hierarchy the Company’s derivative financial instruments that were accounted for at fair value on a recurring basis as of June 30, 2020: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Other Unobservable Inputs (Level 3) Total Fair Derivative Financial Instrument $ — $ 2,238,053 $ — $ 2,238,053 The change in derivative financial instruments for the nine months ended June 30, 2020 is as follows: September 30, 2019 balance $ 3,534,456 New derivative instruments issued 880,462 Derivative instruments converted/extinguished (673,473 ) Change in fair value (1,503,392 ) June 30, 2020 balance $ 2,238,053 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Schedule for summary of stock options activity | The following table summarizes the Company’s stock option activity during the nine months ended June 30, 2020: Number of Options Weighted Average Weighted Average Remaining Outstanding at September 30, 2019 104,500,000 $ 0.0605 Granted — — Exercised — — Cancelled — — Outstanding at June 30, 2020 104,500,000 $ 0.0605 1.58 Vested and expected to vest 104,500,000 $ 0.0605 1.58 Exercisable at June 30, 2020 104,500,000 $ 0.0565 1.58 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Schedule of the cumulative effect of the changes made to our September 30, 2019 balance sheet for the adoption of ASC 842 | The following table depicts the cumulative effect of the changes made to our September 30, 2019 balance sheet for the adoption of ASC 842 effective on October 1, 2019: Balance at September 30, 2019 Impact of Adoption of ASC 842 Adjusted Balance at October 1, 2019 Assets: Operating lease right of use assets $ — $ 104,363 $ 104,363 Current Liabilities: Other (Deferred Credit Office Lease) $ 42,746 $ (42,746) — Current portion of operating lease liabilities $ — $ 74,114 $ 74,114 Noncurrent Liabilities: Operating lease liabilities $ — $ 56,565 $ 56,565 Equity: Accumulated Deficit $ (55,582,010) $ 16,431 $ (55,565,581) |
ORGANIZATION AND NATURE OF BU_2
ORGANIZATION AND NATURE OF BUSINESS (Details Narrative) | Jun. 30, 2020Number |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of leased federal outer continental shelf blocks | 4 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Aug. 31, 2021USD ($) | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)Numbershares | Jun. 30, 2019USD ($)Numbershares | Oct. 02, 2019USD ($) | Sep. 30, 2019USD ($) | |
General and Administrative Expenses | $ 325,697 | $ 439,242 | $ 1,238,940 | $ 955,901 | |||
Net Loss | (2,705,371) | $ (6,508,013) | (3,493,396) | $ (12,162,013) | |||
Accumulated losses | $ (59,058,975) | (59,058,975) | $ (55,565,581) | $ (55,582,010) | |||
Accounts receivable - joint interest partner | $ 3,600,000 | ||||||
Percentage of working interest | 5.00% | 5.00% | |||||
Antidilutive securities excluded from EPS calculation | shares | 586,722,166 | 357,582,559 | |||||
Number of wellbores drilled | Number | 2 | 2 | |||||
Amount of working capital | $ (18,400,000) | $ (18,400,000) | |||||
Short-term debt | 14,900,000 | 14,900,000 | |||||
Unrestricted cash | 1,059,737 | 1,059,737 | 1,138,919 | ||||
Payment of joint payables from drilling operations | 800,000 | ||||||
Subsequent Event [Member] | |||||||
Minimum capital which company estimated to raise to meet its obligations and planned expenditures | $ 10,000,000 | ||||||
Oil and Gas Joint Operations [Member] | |||||||
Accounts receivable, net | $ 300,000 | 300,000 | $ 8,500,000 | ||||
Accounts receivable - joint interest partner | $ 3,600,000 |
OIL AND NATURAL GAS PROPERTIES
OIL AND NATURAL GAS PROPERTIES (Details Narrative) | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||||
Nov. 30, 2019 | May 31, 2019ft | Jan. 31, 2019USD ($) | Jun. 30, 2020USD ($)Number | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)aNumberft | Jun. 30, 2019USD ($)Number | |
Acres of three-dimensional (3-D) seismic data | a | 2,200,000 | ||||||
Received insurance claim | $ 1,200,000 | ||||||
Wells in process | 900,000 | ||||||
Interest expense capitalized | $ 38,400,000 | $ 38,400,000 | |||||
Accrued payable | $ 1,238,679 | ||||||
Number of leased federal outer continental shelf blocks | Number | 4 | 4 | |||||
Number of wellbores drilled | Number | 2 | 2 | |||||
Accounts receivable reclassified to oil and gas properties - unproved | $ 3,600,000 | ||||||
Impairment charges | $ 2,124,885 | ||||||
Gulf of Mexico Wells [Member] | |||||||
Percent of working interest | 100.00% | 100.00% | 100.00% | ||||
Percent of working interest returned to company | 5.00% | ||||||
Estimated insurance claim | $ 10,800,000 | ||||||
Total depth of first drilled well | ft | 15,254 | ||||||
Depth of second drilled well | ft | 15,254 | ||||||
Depth of originally permitted second drilled well | ft | 29,857 | ||||||
Received insurance claim | $ 2,500,000 | ||||||
Total costs and expenses | $ 4,800,000 | ||||||
Number of wellbores drilled | Number | 2 | ||||||
Oil and Natural Gas Properties [Member] | |||||||
Amount of interest expense capitalized during period | $ 1,200,000 | $ 400,000 | $ 2,300,000 | $ 600,000 | |||
Amount of general and administrative expenses capitalized during period | $ 300,000 | $ 300,000 | $ 700,000 | 600,000 | |||
Number of leased federal outer continental shelf blocks | Number | 4 | 4 | |||||
Impairment charges | $ 2,100,000 | $ 4,300,000 | |||||
Credits to Company's interest in properties | $ 2,100,000 | $ 2,100,000 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Nov. 15, 2016 | Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Sep. 30, 2017 | Sep. 30, 2019 |
Debt face amount | $ 3,347,549 | $ 3,347,549 | |||||
John Seitz, CEO [Member] | Convertible Promissory Notes [Member] | |||||||
Debt face amount | $ 8,675,500 | ||||||
Interest rate | 5.00% | ||||||
Debt conversion, price per share | $ 0.12 | ||||||
Debt maturity date | due on demand | ||||||
Amount owed to related party | 8,675,500 | $ 8,675,500 | |||||
Value of stock issued in conversion of notes payable | $ 5,300,000 | ||||||
Accrued interest payable | 2,400,000 | 2,400,000 | |||||
Related party [Member] | Promissory Notes [Member] | |||||||
Proceeds from issuance of convertible notes and warrants | $ 50,000 | ||||||
Accounting Consulting Service [Member] | |||||||
Amount owed to related party | 339,000 | 339,000 | $ 294,000 | ||||
Accounting consulting services, included in related party payables | $ 15,000 | $ 15,000 | $ 45,000 | $ 45,000 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | ||
Apr. 16, 2020 | Jun. 30, 2020 | Sep. 30, 2019 | Nov. 30, 2016 | |
Principal amount | $ 3,347,549 | |||
Description of payment | In June 2020, the Company extended the maturity dates of Tranche 1 and Tranche2 to August 21, 2020 in exchange for a cash payment of $50,000. | |||
Unsecured Promissory Note [Member] | ||||
Principal amount | $ 100,300 | $ 277,000 | $ 277,000 | |
Maturity date | Apr. 16, 2022 | Apr. 30, 2021 | ||
Interest rate | 1.00% | 8.00% | ||
Description of payment | Beginning November 16, 2020, the Company will pay 18 equal monthly installments of principal and interest in the amount necessary to fully amortize the PPP Loan through the maturity date. |
CONVERTIBLE NOTES PAYABLE (Deta
CONVERTIBLE NOTES PAYABLE (Details) - Delek Note [Member] - Number | Jun. 30, 2020 | Oct. 17, 2019 |
Stock Price [Member] | ||
Debt, measurement input | 0.008 | 0.041 |
Fixed Exercise Price [Member] | ||
Debt, measurement input | 0.050 | 0.050 |
Price Volatility [Member] | ||
Debt, measurement input | 1.84 | 1.38 |
Expected Term [Member] | ||
Debt term | 3 months 18 days | 1 year |
Risk Free Interest Rate [Member] | ||
Debt, measurement input | 0.0016 | 0.0159 |
CONVERTIBLE NOTES PAYABLE (De_2
CONVERTIBLE NOTES PAYABLE (Details 1) - June 2019 Convertible Debenture [Member] | Jun. 30, 2020Number$ / shares |
Stock Price | $ / shares | $ 0.008 |
Minimum [Member] | |
Stock Price | $ / shares | 0.014 |
Maximum [Member] | |
Stock Price | $ / shares | $ 0.034 |
Fixed Exercise Price [Member] | |
Debt, measurement input | 0.050 |
Expected Term [Member] | |
Debt term | 1 month 20 days |
Expected Term [Member] | Minimum [Member] | |
Debt term | 4 days |
Expected Term [Member] | Maximum [Member] | |
Debt term | 7 months 13 days |
Risk Free Interest Rate [Member] | |
Debt, measurement input | 0.0016 |
Risk Free Interest Rate [Member] | Minimum [Member] | |
Debt, measurement input | 0.0013 |
Risk Free Interest Rate [Member] | Maximum [Member] | |
Debt, measurement input | 0.0162 |
Price Volatility [Member] | |
Debt, measurement input | 2.03 |
Price Volatility [Member] | Minimum [Member] | |
Debt, measurement input | 0.77 |
Price Volatility [Member] | Maximum [Member] | |
Debt, measurement input | 2.84 |
CONVERTIBLE NOTES PAYABLE (De_3
CONVERTIBLE NOTES PAYABLE (Details 2) | Jun. 30, 2020USD ($) |
Notes | $ 3,347,549 |
Discount | (442,900) |
Notes, Net of Discount | 2,904,649 |
Convertible Debentures [Member] | |
Notes | 3,347,549 |
Discount | (442,900) |
Notes, Net of Discount | $ 2,904,649 |
CONVERTIBLE NOTES PAYABLE (De_4
CONVERTIBLE NOTES PAYABLE (Details Narrative) | Nov. 04, 2019USD ($) | Aug. 07, 2019USD ($) | Jun. 21, 2019USD ($)$ / sharesshares | Mar. 01, 2019USD ($) | Apr. 16, 2020USD ($) | Oct. 31, 2019USD ($)$ / shares | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Nov. 30, 2016USD ($)Number$ / shares | Jun. 30, 2020USD ($)$ / shares | Jun. 30, 2019USD ($) | Sep. 30, 2019USD ($)$ / shares | Apr. 19, 2019USD ($) |
Common stock par value (in dollars per shares) | $ / shares | $ 0.001 | $ 0.001 | $ 0.001 | ||||||||||
Loss on Debt Extinguishment | $ (18,269) | $ (1,617,036) | $ (5,099,340) | ||||||||||
Principal amount | 3,347,549 | 3,347,549 | |||||||||||
Stock issued for extinguishment of debt | $ 1,536,929 | ||||||||||||
Percentage of variable conversion price | 80.00% | ||||||||||||
Amortization of debt discount | $ 1,690,260 | 249,670 | |||||||||||
Gain on change in fair value of warrants | $ 1,503,392 | (123,391) | |||||||||||
Description of payment | In June 2020, the Company extended the maturity dates of Tranche 1 and Tranche2 to August 21, 2020 in exchange for a cash payment of $50,000. | ||||||||||||
Bridge Financing Notes [Member] | |||||||||||||
Proceeds from issuance of convertible notes | $ 837,000 | ||||||||||||
Number of convertible promissory notes issued | Number | 11 | ||||||||||||
Maturity term | 1 year | ||||||||||||
Description of maturity | These notes had a maturity of one year (which has been extended at maturity to April 30, 2020 and was extended again during the nine months ended June 30, 2020 to April 30, 2021). | ||||||||||||
Interest rate | 1.00% | 8.00% | |||||||||||
Qualified equity financing amount | $ 3,000,000 | ||||||||||||
Remaining debt unamortized discount | $ 100,000 | ||||||||||||
Unamortized debt discount | 43,000 | $ 43,000 | |||||||||||
Debt amount converted | 17,000 | $ 9,000 | 103,000 | $ 9,000 | |||||||||
additional debt discount | 19,300 | ||||||||||||
Accrued interest amount converted | 88,000 | ||||||||||||
Principal amount | $ 100,300 | 277,000 | $ 277,000 | $ 277,000 | |||||||||
Maturity date | Apr. 16, 2022 | Apr. 30, 2021 | |||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.025 | ||||||||||||
Description of payment | Beginning November 16, 2020, the Company will pay 18 equal monthly installments of principal and interest in the amount necessary to fully amortize the PPP Loan through the maturity date. | ||||||||||||
Bridge Financing Notes [Member] | Related Parties [Member] | |||||||||||||
Proceeds from issuance of convertible notes | $ 222,000 | ||||||||||||
Unsecured Promissory Note [Member] | |||||||||||||
Remaining debt unamortized discount | 16,000 | $ 16,000 | |||||||||||
Securities Purchase Agreement [Member] | Convertible Debentures [Member] | |||||||||||||
Interest rate | 8.00% | ||||||||||||
Loss on Debt Extinguishment | 100,000 | ||||||||||||
Principal amount | $ 3,000,000 | ||||||||||||
Stock issued for extinguishment of debt | 2,100,000 | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.05 | ||||||||||||
Offering costs | 65,000 | ||||||||||||
Gain on change in fair value of embedded feature | 183,000 | 183,000 | |||||||||||
Gain on change in fair value of warrants | 1,243,000 | 1,243,000 | |||||||||||
Securities Purchase Agreement [Member] | Convertible Debentures [Member] | Warrants [Member] | |||||||||||||
Number of warrants issued | shares | 50,000,000 | ||||||||||||
Warrant exercise price (in dollars per share) | $ / shares | $ 0.04 | ||||||||||||
Conversion rate | 60.00% | ||||||||||||
Securities Purchase Agreement [Member] | Convertible Debentures [Member] | Tranche One [Member] | |||||||||||||
Purchase of convertible debentures | $ 2,100,000 | ||||||||||||
Accrued interest amount converted | 1,100,000 | ||||||||||||
Cumulative accrued interest | 139,000 | ||||||||||||
Percentage of variable conversion price | 80.00% | ||||||||||||
Maturity date | Jun. 21, 2020 | ||||||||||||
Offering costs | $ 398,000 | ||||||||||||
Securities Purchase Agreement [Member] | Convertible Debentures [Member] | Tranche Three [Member] | |||||||||||||
Purchase of convertible debentures | $ 500,000 | ||||||||||||
Securities Purchase Agreement [Member] | Convertible Debentures [Member] | Tranche Two [Member] | |||||||||||||
Purchase of convertible debentures | $ 400,000 | ||||||||||||
Post Drilling Agreement [Member] | Delek GOM Investments, LLC [Member] | |||||||||||||
Interest rate | 12.00% | ||||||||||||
Outstanding debt amount | $ 479,498 | ||||||||||||
Principal amount | 1,220,548 | ||||||||||||
Term Loan Payoff | $ 1,220,548 | ||||||||||||
Conversion price (in dollars per share) | $ / shares | $ 0.05 | ||||||||||||
Post Drilling Agreement [Member] | Delek GOM Investments, LLC [Member] | |||||||||||||
Accrued interest amount converted | $ 1,000,000 | ||||||||||||
Loss on Debt Extinguishment | $ 676,785 | ||||||||||||
Default interest rate | 15.00% | ||||||||||||
Maturity date | Oct. 22, 2020 | ||||||||||||
Legal fees | $ 200,000 | ||||||||||||
Conversion rate | 60.00% | ||||||||||||
Term Loan Agreement [Member] | Delek GOM Investments, LLC [Member] | |||||||||||||
Principal amount | $ 11,000,000 | $ 1,000,000 | |||||||||||
Initially advanced | $ 10,000,000 | ||||||||||||
Interest rate | 5.00% | ||||||||||||
Default interest rate | 7.00% | ||||||||||||
Maturity date | Sep. 4, 2019 | ||||||||||||
Post Drilling Agreement [Member] | Delek GOM Investments, LLC [Member] | |||||||||||||
Accrued interest payable | 103,000 | ||||||||||||
Post Drilling Agreement [Member] | Delek GOM Investments, LLC [Member] | |||||||||||||
Principal amount | $ 6,300 | $ 6,300 |
FAIR VALUE MEASUREMENT (Details
FAIR VALUE MEASUREMENT (Details) - USD ($) | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Change in fair value | $ (1,503,392) | $ 123,391 |
Recurring [Member] | ||
Derivative Financial Instrument, beginning | 3,534,456 | |
New derivative instruments issued | 880,462 | |
Derivative instruments converted/extinguished | (673,473) | |
Change in fair value | (1,503,392) | |
Derivative Financial Instrument, ending | 2,238,053 | |
Recurring [Member] | Significant Other Observable Inputs (Level 2) [Member] | ||
New derivative instruments issued | ||
Derivative Financial Instrument, ending | $ 2,238,053 |
FAIR VALUE MEASUREMENT (Detai_2
FAIR VALUE MEASUREMENT (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Fair Value Disclosures [Abstract] | ||||
Impairment charge | $ 2,124,885 | |||
Stock based compensation | $ 240,166 | $ 415,111 | 968,257 | $ 1,217,213 |
Fair value of oil and gas properties | $ 498,000 | $ 498,000 |
COMMON STOCK_PAID IN CAPITAL (D
COMMON STOCK/PAID IN CAPITAL (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Number of shares issued for partial conversions of the notes | 106,000,000 | ||
Number of shares issued for partial conversions of the notes, value | $ 2,100,000 | ||
Number of shares issued, value | $ 966,250 | ||
Gain on extinguishment of debt | $ (18,269) | (1,617,036) | $ (5,099,340) |
Stock Issued to extinguish liability | 1,536,929 | ||
Debt amount extinguised | 1,613,775 | ||
Common Stock [Member] | |||
Number of shares issued | 19,325,000 | ||
Number of shares issued, value | $ 19,325 | ||
Gain on extinguishment of debt | 77,000 | ||
Stock Issued to extinguish liability | $ 38,423 | ||
Stock Issued to extinguish liability (in shares) | 38,423,221 |
STOCK-BASED COMPENSATION (Detai
STOCK-BASED COMPENSATION (Details) | 9 Months Ended |
Jun. 30, 2020$ / sharesshares | |
Number of Options | |
Outstanding at beginning of period | shares | 104,500,000 |
Outstanding at end of period | shares | 104,500,000 |
Vested and expected to vest | shares | 104,500,000 |
Exercisable at end of period | shares | 104,500,000 |
Weighted Average Exercise Price | |
Outstanding at beginning of period | $ / shares | $ 0.0605 |
Outstanding at end of period | $ / shares | 0.0605 |
Vested and expected to vest | $ / shares | 0.0605 |
Exercisable at end of period | $ / shares | $ 0.0565 |
Weighted Average Remaining Contractual Term | |
Outstanding at end of period | 1 year 6 months 29 days |
Vested and expected to vest | 1 year 6 months 29 days |
Exercisable at end of period | 1 year 6 months 29 days |
STOCK-BASED COMPENSATION (Det_2
STOCK-BASED COMPENSATION (Details Narrative) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Share-based Payment Arrangement [Abstract] | ||||
Stock-based compensation expense | $ 240,000 | $ 393,000 | $ 968,000 | $ 802,000 |
Additional compensation expense | 8,000 | |||
Stock-based compensation expense capitalized to unproved properties | $ 124,000 | $ 207,000 | $ 498,000 | $ 542,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 1 Months Ended | ||
Nov. 30, 2019 | Aug. 31, 2018 | Jun. 30, 2020 | |
Principal amount | $ 3,347,549 | ||
Fair value liability | 800,000 | ||
Vendor [Member] | |||
Principal amount | $ 1,000,000 | ||
Repayment of debt | 160,000 | ||
Common stock issued to vendor for settlement of debt | 10,000,000 | ||
Vendor [Member] | Minimum [Member] | |||
Gain on sale of stock by vendor in excess of | $ 1,300,000 | ||
Directors and Officers [Member] | Note Payable [Member] | |||
Insurance policy | $ 241,000 | ||
Insurance policy premium | $ 220,000 | ||
Balance amount of debt | $ 82,000 | ||
Interest rate | 5.60% |
LEASES (Details)
LEASES (Details) - USD ($) | Jun. 30, 2020 | Oct. 02, 2019 | Sep. 30, 2019 |
Assets: | |||
Operating lease right of use assets | $ 68,558 | $ 104,363 | |
Current Liabilities: | |||
Other (Deferred Credit Office Lease) | $ 42,746 | ||
Current portion of operating lease liabilities | 60,955 | 74,114 | |
Noncurrent Liabilities: | |||
Operating lease liabilities | 14,831 | 56,565 | |
Equity: | |||
Accumulated Deficit | $ (59,058,975) | $ (55,565,581) | (55,582,010) |
Impact of Adoption of ASC 842 [Member] | |||
Assets: | |||
Operating lease right of use assets | 104,363 | ||
Current Liabilities: | |||
Other (Deferred Credit Office Lease) | (42,746) | ||
Current portion of operating lease liabilities | 74,114 | ||
Noncurrent Liabilities: | |||
Operating lease liabilities | 56,565 | ||
Equity: | |||
Accumulated Deficit | $ 16,431 |
LEASES (Details Narrative)
LEASES (Details Narrative) - USD ($) | Jun. 30, 2020 | Oct. 02, 2019 | Sep. 30, 2019 |
Operating lease right of use assets | $ 68,558 | $ 104,363 | |
Accumulated Deficit | $ (59,058,975) | $ (55,565,581) | $ (55,582,010) |
Impact of Adoption of ASC 842 [Member] | |||
Operating lease liabilities | 130,679 | ||
Operating lease right of use assets | 104,363 | ||
Accumulated Deficit | $ 16,431 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - USD ($) | 1 Months Ended | 9 Months Ended | |
Jul. 27, 2020 | Jun. 30, 2020 | Jun. 30, 2019 | |
Principal amount | $ 3,347,549 | ||
Description of payment | In June 2020, the Company extended the maturity dates of Tranche 1 and Tranche2 to August 21, 2020 in exchange for a cash payment of $50,000. | ||
Percentage of working interest | 5.00% | ||
Common Stock [Member] | |||
Number of shares purchased (in shares) | 19,325,000 | ||
Agreement [Member] | Subsequent Event [Member] | Common Stock [Member] | |||
Number of shares purchased (in shares) | 50,000,000 | ||
Decrese in warrant price | $ 0.02 | ||
Previous warrant excercise price | $ 0.04 | ||
Agreement [Member] | Convertible Debentures [Member] | Subsequent Event [Member] | |||
Principal amount | $ 1,900,000 | ||
Description of payment | Pursuant to the modified agreement, the payment terms were changed to as follows: ● $50,000 on the date of the Agreement; ● $700,000 on or before August 21, 2020; ● $750,000 on or before September 30, 2020; and ● Any remaining principal amount outstanding on or before November 30, 2020. | ||
Description of conversion rights | The holder agreed to limit their conversion right to $300,000 of outstanding principal between the date of modification and November 30, 2020. | ||
Settlement amount | $ 6,575,000 | ||
Percentage of working interest | 25.00% | ||
Transaction amount received | $ 6,000,000 |