Cover
Cover - shares | 6 Months Ended | |
Jun. 30, 2023 | Jul. 27, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Jun. 30, 2023 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2023 | |
Current Fiscal Year End Date | --12-31 | |
Entity File Number | 000-52690 | |
Entity Registrant Name | PETROLIA ENERGY CORPORATION | |
Entity Central Index Key | 0001368637 | |
Entity Tax Identification Number | 86-1061005 | |
Entity Incorporation, State or Country Code | TX | |
Entity Address, Address Line One | 710 N. Post Oak Road | |
Entity Address, Address Line Two | Suite 400 | |
Entity Address, City or Town | Houston | |
Entity Address, State or Province | TX | |
Entity Address, Postal Zip Code | 77024 | |
City Area Code | 832 | |
Local Phone Number | 723-1266 | |
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 | 176,988,322 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | |
Current assets | |||
Cash | $ 926,228 | $ 1,425,335 | |
Held-for-trading securities | 336,103 | ||
Accounts receivable | 58 | 290 | |
Other current assets | 641 | 5,641 | |
Total current assets | 1,263,030 | 1,431,266 | |
Oil and gas, on the basis of full cost accounting | |||
Evaluated properties | 6,691,605 | 6,638,037 | |
Furniture, equipment & software | 155,293 | 155,293 | |
Less accumulated depreciation and depletion | (884,796) | (807,047) | |
Net property and equipment | 5,962,102 | 5,986,283 | |
Other assets | |||
Operating lease right-of-use asset | 20,311 | 23,086 | |
Notes receivable | 376,550 | ||
Other assets | 983,881 | 956,928 | |
Total Assets | 8,229,324 | 8,774,113 | |
Current liabilities | |||
Operating lease liability – current | 5,833 | 5,482 | |
Accrued liabilities | 1,199,411 | 1,151,328 | |
Accrued liabilities – related parties | 1,761,143 | 1,536,247 | |
Total current liabilities | 9,945,368 | 9,242,317 | |
Asset retirement obligations | 2,426,523 | 2,301,335 | |
Operating lease liability | 14,918 | 17,714 | |
Total Liabilities | 12,386,809 | 11,561,366 | |
Stockholders’ Deficit | |||
Common stock, $0.001 par value; 400,000,000 shares authorized; 176,988,322 and 176,988,322 shares issued and outstanding | 176,988 | 176,988 | |
Additional paid in capital | 60,245,657 | 60,244,255 | |
Accumulated other comprehensive income | (378,822) | (349,065) | |
Accumulated deficit | (64,355,004) | (63,013,127) | |
Total Stockholders’ Deficit | (4,157,485) | (2,787,253) | |
Total Liabilities and Stockholders’ Deficit | 8,229,324 | 8,774,113 | |
Series A Preferred Stock [Member] | |||
Stockholders’ Deficit | |||
Preferred stock, value | 199 | 199 | |
Series B Preferred Stock [Member] | |||
Stockholders’ Deficit | |||
Preferred stock, value | 152,397 | 152,397 | |
Series C Preferred Stock [Member] | |||
Stockholders’ Deficit | |||
Preferred stock, value | 1,100 | 1,100 | |
Nonrelated Party [Member] | |||
Current liabilities | |||
Accounts payable | 188,412 | 223,453 | |
Notes payable current portion | 142,082 | 398,837 | |
Related Party [Member] | |||
Current liabilities | |||
Accounts payable | 3,404,178 | 2,466,155 | |
Notes payable current portion | [1] | $ 3,244,309 | $ 3,460,815 |
[1]All notes are current liabilities (due within one year or less from June 30, 2023.) |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Jun. 30, 2023 | Dec. 31, 2022 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 400,000,000 | 400,000,000 |
Common stock, shares issued | 176,988,322 | 176,988,322 |
Common stock, shares outstanding | 176,988,322 | 176,988,322 |
Series A Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 199,100 | 199,100 |
Preferred stock, shares outstanding | 199,100 | 199,100 |
Series B Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 3 | 3 |
Preferred stock, shares issued | 3 | 3 |
Preferred stock, shares outstanding | 3 | 3 |
Series C Preferred Stock [Member] | ||
Preferred stock, par value | $ 0.10 | $ 0.10 |
Preferred stock, shares authorized | 50,000 | 50,000 |
Preferred stock, shares issued | 11,000 | 11,000 |
Preferred stock, shares outstanding | 11,000 | 11,000 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | |
Oil and gas sales | ||||
Oil and gas sales | $ 482,916 | $ 1,137,890 | $ 1,859,233 | $ 2,974,250 |
Total Revenue | 482,916 | 1,137,890 | 1,859,233 | 2,974,250 |
Operating expenses | ||||
Lease operating expense | 884,453 | 1,622,399 | 2,543,933 | 2,898,236 |
Production tax | 438 | |||
General and administrative expenses | 312,547 | 149,757 | 573,384 | 297,603 |
Depreciation, depletion and amortization | 18,270 | 60,682 | 63,076 | 113,198 |
Asset retirement obligation accretion | 46,926 | 43,420 | 95,131 | 85,898 |
Total operating expenses | 1,262,196 | 1,876,258 | 3,275,524 | 3,395,373 |
Loss from operations | (779,280) | (738,368) | (1,416,291) | (421,123) |
Other income (expenses) | ||||
Interest expense | (96,778) | (123,080) | (206,663) | (248,017) |
Unrealized gain (loss) | (83,334) | 165,117 | ||
Gain (loss) on disposition of asset | 259,659 | 259,659 | ||
Other income (expense) | 818 | 14,837 | 5,521 | |
Change in fair value of derivative liabilities | (146) | 17,339 | ||
Total other income (expenses) | 80,365 | (123,226) | 232,950 | (225,157) |
Net loss before taxes | (698,915) | (861,594) | (1,183,341) | (646,280) |
Series A Preferred Dividends | (109,374) | (44,798) | (154,172) | (89,595) |
Series C Preferred Dividends | (2,194) | (2,194) | (4,364) | (4,260) |
Net Loss Attributable to Common Stockholders | $ (810,483) | $ (908,586) | $ (1,341,877) | $ (740,135) |
Loss per share | ||||
Loss per share basic | $ 0 | $ (0.01) | $ (0.01) | $ 0 |
Loss per share diluted | $ 0 | $ (0.01) | $ (0.01) | $ 0 |
Weighted average number of common shares outstanding, basic | 176,988,322 | 176,988,322 | 176,988,322 | 176,988,322 |
Weighted average number of common shares outstanding, diluted | 176,988,322 | 176,988,322 | 176,988,322 | 176,988,322 |
Other comprehensive income, net of tax | ||||
Foreign currency translation adjustments | $ (24,720) | $ (62,759) | $ (29,757) | $ (32,902) |
Comprehensive income (loss) | $ (835,203) | $ (971,345) | $ (1,371,634) | $ (773,037) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Deficit (Unaudited) - USD ($) | Preferred Stock [Member] Series A Preferred Stock [Member] | Preferred Stock [Member] Series B Preferred Stock [Member] | Preferred Stock [Member] Series C Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Shares to be issued [Member] | AOCI Attributable to Parent [Member] | Retained Earnings [Member] | Total |
Balance, value at Dec. 31, 2021 | $ 199 | $ 152,397 | $ 850 | $ 176,988 | $ 60,216,722 | $ (269,155) | $ (61,339,161) | $ (1,061,160) | |
Balance, shares at Dec. 31, 2021 | 199,100 | 3 | 8,500 | 176,988,322 | |||||
Series A preferred dividends | (89,595) | (89,595) | |||||||
Series C preferred dividends | (4,260) | (4,260) | |||||||
Warrants issued as financing fee | 1,416 | 1,416 | |||||||
Other comprehensive income (loss) | (32,902) | (32,902) | |||||||
Net income (loss) | (646,280) | (646,280) | |||||||
Preferred Series C issued for cash | $ 250 | 24,750 | 25,000 | ||||||
Preferred Series C issued for cash, shares | 2,500 | ||||||||
Balance, value at Jun. 30, 2022 | $ 199 | $ 152,397 | $ 1,100 | $ 176,988 | 60,242,888 | (302,057) | (62,079,296) | (1,807,781) | |
Balance, shares at Jun. 30, 2022 | 199,100 | 3 | 11,000 | 176,988,322 | |||||
Balance, value at Mar. 31, 2022 | $ 199 | $ 152,397 | $ 1,100 | $ 176,988 | 60,242,189 | (239,298) | (61,170,710) | (87,135) | |
Balance, shares at Mar. 31, 2022 | 199,100 | 3 | 11,000 | 176,988,322 | |||||
Series A preferred dividends | (44,798) | (44,798) | |||||||
Series C preferred dividends | (2,194) | (2,194) | |||||||
Warrants issued as financing fee | 699 | 699 | |||||||
Other comprehensive income (loss) | (62,759) | (62,759) | |||||||
Net income (loss) | (861,594) | (861,594) | |||||||
Balance, value at Jun. 30, 2022 | $ 199 | $ 152,397 | $ 1,100 | $ 176,988 | 60,242,888 | (302,057) | (62,079,296) | (1,807,781) | |
Balance, shares at Jun. 30, 2022 | 199,100 | 3 | 11,000 | 176,988,322 | |||||
Balance, value at Dec. 31, 2022 | $ 199 | $ 152,397 | $ 1,100 | $ 176,988 | 60,244,255 | (349,065) | (63,013,127) | (2,787,253) | |
Balance, shares at Dec. 31, 2022 | 199,100 | 3 | 11,000 | 176,988,322 | |||||
Series A preferred dividends | (154,172) | (154,172) | |||||||
Series C preferred dividends | (4,364) | (4,364) | |||||||
Warrants issued as financing fee | 1,402 | 1,402 | |||||||
Other comprehensive income (loss) | (29,757) | (29,757) | |||||||
Net income (loss) | (1,183,341) | (1,183,341) | |||||||
Balance, value at Jun. 30, 2023 | $ 199 | $ 152,397 | $ 1,100 | $ 176,988 | 60,245,657 | (378,822) | (64,355,004) | (4,157,485) | |
Balance, shares at Jun. 30, 2023 | 199,100 | 3 | 11,000 | 176,988,322 | |||||
Balance, value at Mar. 31, 2023 | $ 199 | $ 152,397 | $ 1,100 | $ 176,988 | 60,244,913 | (354,102) | 63,544,521 | 3,323,026 | |
Balance, shares at Mar. 31, 2023 | 199,100 | 3 | 11,000 | 176,988,322 | |||||
Series A preferred dividends | (109,374) | (109,374) | |||||||
Series C preferred dividends | (2,194) | (2,194) | |||||||
Warrants issued as financing fee | 744 | 744 | |||||||
Other comprehensive income (loss) | (24,720) | (24,720) | |||||||
Net income (loss) | (698,915) | (698,915) | |||||||
Balance, value at Jun. 30, 2023 | $ 199 | $ 152,397 | $ 1,100 | $ 176,988 | $ 60,245,657 | $ (378,822) | $ (64,355,004) | $ (4,157,485) | |
Balance, shares at Jun. 30, 2023 | 199,100 | 3 | 11,000 | 176,988,322 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Cash Flows from Operating Activities | |||||
Net loss | $ (698,915) | $ (861,594) | $ (1,183,341) | $ (646,280) | |
Adjustment to reconcile net loss to net cash provided by (used in) operating activities: | |||||
Depletion, depreciation and amortization | 18,270 | 60,682 | 63,076 | 113,198 | |
Asset retirement obligation accretion | 46,926 | 43,420 | 95,131 | 85,898 | $ 173,603 |
Operating lease | 330 | (544) | |||
Amortization of debt discount | 27,715 | 27,715 | |||
Unrealized (gain) loss | 83,334 | (165,117) | |||
Change in fair value of derivative liabilities | 146 | (17,339) | |||
Warrants issued as financing fees | 1,402 | 1,416 | |||
Gain on sale of asset | (259,659) | (259,659) | |||
Changes in operating assets and liabilities | |||||
Accounts receivable | 238 | 5,601 | |||
Other current assets | 374 | (756) | |||
Other assets | (7,084) | 40,442 | |||
Accounts payable | (36,264) | 1,363,562 | |||
Accounts payable – related parties | 853,061 | (3,110) | |||
Accrued liabilities | 138,215 | 108,010 | |||
Accrued liabilities – related parties | (31,491) | 75,584 | |||
Net cash flows provided by (used in) operating activities | (503,414) | 1,153,397 | |||
Cash Flows from Investing Activities | |||||
Sale of securities | 475,440 | ||||
Cash flows provided by (used in) investing activities | 475,440 | ||||
Cash Flows from Financing Activities | |||||
Repayments on notes payable | (284,470) | (133,491) | |||
Repayments on related party notes payable | (216,506) | (4,813) | |||
Series C preferred stock | 25,000 | ||||
Cash flows provided by (used in) financing activities | (500,976) | (113,304) | |||
Changes in foreign exchange rate | 29,843 | (42) | |||
Net change in cash | (499,107) | 1,040,051 | |||
Cash at beginning of period | 1,425,335 | 14,058 | 14,058 | ||
Cash at end of period | $ 926,228 | $ 1,054,109 | 926,228 | 1,054,109 | $ 1,425,335 |
SUPPLEMENTAL DISCLOSURES | |||||
Interest paid | 32,868 | 99,195 | |||
Income taxes paid | |||||
NON-CASH INVESTING AND FINANCIAL DISCLOSURES | |||||
Series A preferred dividends accrued | 154,172 | 89,595 | |||
Series C preferred dividends accrued | 4,364 | 4,260 | |||
Accrued dividends moved from accrued liabilities related party to accrued liabilities | 212,444 | ||||
Note receivable converted to marketable securities | $ 380,563 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION AND BASIS OF PRESENTATION | NOTE 1. ORGANIZATION AND BASIS OF PRESENTATION Petrolia Energy Corporation (the “Company”, “Petrolia” or “PEC”) is in the business of oil and gas exploration, development, and production. Basis of Presentation The accompanying unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”) and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements and notes thereto contained in the Company’s latest Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the results of operations for the interim periods presented have been reflected herein. The results of operations for such interim periods are not necessarily indicative of operations for a full year. Notes to the consolidated financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2022, as reported in the Form 10-K, have been omitted. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Askarii Resources and Petrolia Canada Corporation. All significant intercompany balances and transactions have been eliminated upon consolidation. The Company accounts for its investment in companies in which it has significant influence by the equity method. The Company’s proportionate share of earnings is included in earnings and added to or deducted from the cost of the investment. Foreign currency translation The functional and reporting currency of the Company is the United States dollar. The functional currencies of the Company’s wholly-owned subsidiaries, Askarii Resources and Petrolia Canada Corporation are the United States dollar and the Canadian dollar, respectively. Transactions involving foreign currencies are converted into the Company’s functional currency using the exchange rates in effect at the time of the transactions. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the Company’s functional currency are translated using exchange rates at that date. Exchange gains and losses are included in net earnings. On consolidation, Petrolia Canada Corporation’s income statement amounts are translated at average exchange rates for the year, while the assets and liabilities are translated at year-end exchange rates. Translation adjustments are accumulated as a separate component of stockholders’ equity in other comprehensive income. Management estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing these financial statements include depreciation of furniture, equipment and software, asset retirement obligations (“AROs”) (Note 10), income taxes, and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom. Cash and cash equivalents The Company considers all highly liquid instruments purchased with an original maturity date of three months or less to be cash equivalents. As of December 31, 2022 and June 30, 2023, the Company did no Oil and gas properties The Company follows the full cost accounting method to account for oil and natural gas properties, whereby costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on nonproducing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to operations. The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves. The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful. All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the “cost ceiling”) equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the un-weighted arithmetic average of the first day of the month price for each month within the 12-month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period. Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that impairments of oil and gas properties could occur. In addition, it is reasonably possible that impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves. Furniture, equipment, and software Furniture, equipment, and software are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related asset, generally three to five years. Fully depreciated assets are retained in property and accumulated depreciation accounts until they are removed from service. Management performs ongoing evaluations of the estimated useful lives of the property and equipment for depreciation purposes. Maintenance and repairs are expensed as incurred. Management periodically reviews long-lived assets, other than oil and gas property, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. Derivative financial instruments The Company’s derivative financial instruments consist of warrants with an exercise price denominated in the Company’s functional currency. These derivative financial instruments are measured at their fair value at the end of each reporting period. Changes in fair value are recorded in net income. Asset retirement obligations The Company records a liability for Asset Retirement Obligations (“AROs”) associated with its oil and gas wells when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of oil and gas properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value. Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. Debt issuance costs Costs incurred in connection with the issuance of long-term debt are presented as a direct deduction from the carrying value of the related debt and amortized over the term of the related debt. Revenue recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers Revenue from contracts with customers The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company expects to receive in exchange for those products. Performance obligations and significant judgments The Company sells oil and natural gas products in the United States through a single reportable segment. The Company enters into contracts that generally include one type of distinct product in variable quantities and priced based on a specific index related to the type of product. The oil and natural gas is typically sold in an unprocessed state to processors and other third parties for processing and sale to customers. The Company recognizes revenue at a point in time when control of the oil or natural gas passes to the customer or processor, as applicable, discussed below. For oil sales, control is typically transferred to the customer upon receipt at the wellhead or a contractually agreed upon delivery point. Under our natural gas contracts with processors, control transfers upon delivery at the wellhead or the inlet of the processing entity’s system. For our other natural gas contracts, control transfers upon delivery to the inlet or to a contractually agreed upon delivery point. In the cases where the Company sells to a processor, management has determined that the Company is the principal in the arrangement and the processors are customers. The Company recognizes the revenue in these contracts based on the net proceeds received from the processor. Transfer of control drives the presentation of transportation and gathering costs within the accompanying consolidated statements of operations. Transportation and gathering costs incurred prior to control transfer are recorded within the transportation and gathering expense line item on the accompanying consolidated statements of operations, while transportation and gathering costs incurred subsequent to control transfer are recorded as a reduction to the related revenue. A portion of our product sales are short-term in nature. For those contracts, the Company uses the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 exempting us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. For our product sales that have a contract term greater than one year, the Company has utilized the practical expedient in ASC 606-10-50-14(a) which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to an unsatisfied performance obligation. Under these sales contracts, each unit of product represents a separate performance obligation; therefore, future volumes are unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required. The Company has no unsatisfied performance obligations at the end of each reporting period. Management does not believe that significant judgments are required with respect to the determination of the transaction price, including any variable consideration identified. There is a low level of uncertainty due to the precision of measurement and use of index-based pricing with predictable differentials. Additionally, any variable consideration identified is not constrained. Stock-based compensation The Company accounts for stock-based compensation to employees in accordance with FASB ASC 718, Stock-based compensation Income taxes Income taxes are accounted for pursuant to ASC 740, Income Taxes Uncertain tax positions are recognized in the financial statements only if that position is more likely than not to be sustained upon examination by taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in the income tax provision. There are currently no unrecognized tax benefits that if recognized would affect the tax rate. There was no The Company is required to file federal income tax returns in the United States and Canada, and in various state and local jurisdictions. The Company’s tax returns are subject to examination by taxing authorities in the jurisdictions in which it operates in accordance with the normal statutes of limitations in the applicable jurisdiction. Earnings (loss) per share Basic earnings (loss) per share have been calculated based on the weighted-average number of common shares outstanding. The treasury stock method is used to compute the dilutive effect of the Company’s share-based compensation awards. Under this method, the incremental number of shares used in computing diluted earnings per share (“EPS”) is the difference between the number of shares assumed issued and purchased using assumed proceeds. Diluted EPS amounts would include the effect of outstanding stock options, warrants, and other convertible securities if including such potential shares of common stock is dilutive. Basic and diluted earnings per share are the same in all periods presented as all outstanding instruments are anti-dilutive. Concentration of credit risk The Company is subject to credit risk resulting from the concentration of its oil receivables with significant purchasers. Two purchasers accounted for all of the Company’s oil sales revenues for 2023 and 2022. The Company does not require collateral. While the Company believes its recorded receivables will be collected, in the event of default the Company would follow normal collection procedures. The Company does not believe the loss of a purchaser would materially impact its operating results as oil is a fungible product with a well-established market and numerous purchasers. At times, the Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management monitors the credit ratings and concentration of risk with these financial institutions on a continuing basis to safeguard cash deposits. Fair Value of Financial Instruments Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of June 30, 2023, the amounts reported for cash, accrued interest and other expenses, notes payable, convertible notes, and derivative liability approximate the fair value because of their short maturities. We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows: ● Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment; ● Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and ● Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows as of June 30, 2023, and December 31, 2022. SCHEDULE OF DERIVATIVE LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS June 30, 2023 Level 1 Level 2 Level 3 Total ARO liabilities — — 2,426,523 2,426,523 December 31, 2022 ARO liabilities — — 2,301,335 2,301,335 The carrying value of cash, accounts receivable, other current assets, accounts payable, accounts payable – related parties, accrued liabilities and accrued liabilities – related parties, as reflected in the consolidated balance sheets, approximate fair value, due to the short-term maturity of these instruments. The carrying value of notes payable approximates their fair value due to immaterial changes in market interest rates and the Company’s credit risk since issuance of the instruments or due to their short-term nature. Derivative liabilities are remeasured at fair value every reporting period. Our derivative liabilities are considered level 3 financial instruments. Related parties The Audit Committee approves all material related party transactions. The Audit Committee is provided with the details of each new, existing or proposed related party transaction, including the terms of the transaction, the business purpose of the transaction, and the benefits to the Company and the relevant related party. In determining whether to approve a related party transaction, the following factors are considered: (1) if the terms are fair to the Company, (2) if there are business reasons to enter into the transaction, (3) if the transaction would impair independence of an outside Director, or (4) if the transaction would present an improper conflict of interest for any Director or executive officer. Any member of the Audit Committee who has an interest in the transaction will abstain from voting on the approval of the related party transaction. Business combinations In January 2017, the FASB issued ASU 2017-01 Business Combinations Clarifying the Definition of a Business Reclassifications Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net loss, working capital or equity previously reported. Recent accounting pronouncements The Company has evaluated all the recent accounting pronouncements through the filing date and believes that none of them will have a material effect on the Company. |
GOING CONCERN
GOING CONCERN | 6 Months Ended |
Jun. 30, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
GOING CONCERN | NOTE 3. GOING CONCERN The Company has suffered recurring losses from operations and currently has a working capital deficit. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company plans to generate profits by reducing overhead costs and reworking its existing oil or gas wells, funding permitting. The Company may need to raise funds through either the sale of its securities, issuance of corporate bonds, joint venture agreements and/or bank financing to accomplish its goals. If additional financing is not available when needed, we may need to cease operations. The Company may not be successful in raising the capital needed to drill and/or rework existing oil wells. Any additional wells that the Company may drill may be non-productive. Since the Company has an oil producing asset, its goal is to increase the production rate by optimizing its current infrastructure. The accompanying financial statements have been prepared assuming the Company will continue as a going concern; no adjustments to the financial statements have been made to account for this uncertainty. |
NOTES RECEIVABLE
NOTES RECEIVABLE | 6 Months Ended |
Jun. 30, 2023 | |
Notes Receivable | |
NOTES RECEIVABLE | NOTE 4. NOTES RECEIVABLE On February 16, 2022, Petrolia Canada Corporation (PCC), a wholly-owned subsidiary of the Company entered into a Purchase and Sale Agreement (PSA) and Debt Settlement Agreement (DSA) with Prospera Energy, Inc. (Prospera) whereby PCC sold its 28 510,000 8 two years The debenture was convertible at PCC’s option into common shares of Prospera at a conversion price of $ 0.05 (CAD) per share in the first year, from March 1, 2022 to March 31, 2023 and $ 0.10 (CAD) in the second year from April 1, 2023 to March 31, 2024. Applicable interest was payable in cash or shares of Prospera at the current market price. The convertible debenture was converted into equity of Prospera in February and March of 2023, as discussed below in Note 5. |
HELD FOR TRADING SECURITIES
HELD FOR TRADING SECURITIES | 6 Months Ended |
Jun. 30, 2023 | |
Held For Trading Securities | |
HELD FOR TRADING SECURITIES | NOTE 5. HELD FOR TRADING SECURITIES We measure all equity investments that do not result in consolidation and are not accounted for under the equity method at fair value with the change in fair value included in net income. When equity investments are sold, the change in fair value will become a gain or loss realized on disposition of asset. We use quoted market prices to determine the fair value of equity securities with readily determinable fair values. As discussed in Note 4, on February 16, 2022, PCC entered into a Purchase and Sale Agreement and Debt Settlement Agreement with Prospera. In January of 2023, the Company converted $ 210,000 (CAD) ($ 157,315 USD using prevailing rates at that date) of our debenture from Prospera into shares of Prospera Common stock at a conversion rate of $ 0.05 (CAD) per share. In late March of 2023, the Company converted $ 300,000 (CAD) ($ 223,248 USD using prevailing rates at that date) of the debenture from Prospera into shares of Prospera common stock at a conversion rate of $ 0.05 (CAD) per share. The conversion was completed in early April of 2023. |
EVALUATED PROPERTIES
EVALUATED PROPERTIES | 6 Months Ended |
Jun. 30, 2023 | |
Extractive Industries [Abstract] | |
EVALUATED PROPERTIES | NOTE 6. EVALUATED PROPERTIES The Company’s current properties can be summarized as follows. SCHEDULE OF COMPANY’S CURRENT PROPERTIES Cost Canadian properties United States properties Total As of December 31, 2021 $ 2,492,403 $ 4,304,622 $ 6,797,025 Dispositions — 375 375 Foreign currency translation (159,363 ) — (159,363 ) As of December 31, 2022 $ 2,333,040 $ 4,304,997 $ 6,638,037 Foreign currency translations 53,568 — 53,568 As of June 30, 2023 $ 2,386,608 $ 4,304,997 $ 6,691,605 Accumulated depletion As of December 31, 2021 $ 387,409 $ 61,551 $ 448,960 Depletion 237,067 — 237,067 Foreign currency translation (34,273 ) — (34,273 ) As of December 31, 2022 $ 590,203 $ 61,551 $ 651,754 Depletion 63,076 — 63,076 Foreign currency translation 14,673 — 14,673 As of June 30, 2023 $ 667,952 $ 61,551 $ 729,503 Net book value as of December 31, 2022 $ 1,742,837 $ 4,243,446 $ 5,986,283 Net book value as of June 30, 2023 $ 1,718,656 $ 4,234,446 $ 5,962,102 U.S. Properties – Slick Unit Dutcher Sand (“SUDS”) Field The Slick Unit Dutcher Sand (SUDS) field is located in Creek County, Oklahoma. Petrolia owns a 100 76.5 2,530 1,670 East unit is approximately 860 acres. As of December 31, 2022, SUDS total estimated net proved reserves were approximately 346 thousand barrels of oil equivalent (MBoe) and total estimated net probable reserves were approximately 153 thousand barrels of oil equivalent (MBoe). On January 13, 2023, the Company received an Incident and Complaint Investigation Report issued by the Oklahoma Corporation Commission (OCC) due to a mineral owner complaint. The OCC issued a plug or produce order for SUDS West unit and SUDS East unit. The Company has received two extensions of time and is working with the OCC to implement a production plan to bring both units into compliance. The SUDS field is currently shut-in while the Company completes a review of the land and lease records and subsurface geology. PEC is finalizing a SUDS capital budget with the intent to commence further field development in the third quarter of 2023. U.S. Properties – Twin Lakes San Andres Unit (“TLSAU”) Field The Twin Lakes San Andres Unit (TLSAU) field is located in Chaves County, New Mexico. As of December 31, 2022, it was determined that PEC does not own any TLSAU leases, and therefore has no reserves. It is estimated that PEC has 29 wells that need to be plugged and abandoned, plus surface remediated. The estimated cost of the TLSAU well plugging and abandonment, and surface remediation obligations are approximately $ 1.2 PEC has recently plugged TLSAU wells #018 and #029 and is currently completing the surface remediation for these two wells. Utikuma Field On May 1, 2020, Petrolia Energy Corporation acquired a 50 % working interest in approximately 28,000 acres located in the Utikuma Lake area in Alberta, Canada. The property is an oil-weighted asset historically producing approximately 500 barrels of oil per day (bpd) of light oil. The working interest was acquired from Blue Sky Resources Ltd (“Blue Sky”) an affiliated party transaction. Zel C. Khan, the Company’s former Chief Executive Officer, is related to the ownership of Blue Sky. Zel Khan is currently the VP of Operations of Blue Sky, the operator of Petrolia Canada Corporation’s Utikuma field. Blue Sky acquired a 100 The total purchase price of the property was $2,000,000 (CAD), with $1,000,000 of that total due initially. The additional $1,000,000 was contingent on the future price of West Texas Intermediate (WTI) crude. At the time the WTI price exceeded $50/bbl, the Company would pay an additional $750,000 CAD. In addition, at the time the WTI price exceeded $57/bbl the Company would pay an additional $250,000 CAD (for a cumulative contingent total of $1,000,000 CAD). The price of WTI crude exceeded $50 per barrel (bbl) on January 6, 2021 and exceeded $57/bbl on February 8, 2021. The additional payments due were netted with the accounts receivable balance from previous Joint Interest Billing statements from Blue Sky Resources (BSR). The total USD value of the addition was $787,250, using prevailing exchange rates on the respective dates. Included in the terms of the agreement, the Company also funded their portion of the Alberta Energy Regulator (“AER”) bond fund requirement of $763,754 CAD ($576,852 USD), necessary for the wells to continue in production after the acquisition. Additional funds in the amount of $490,624 CAD ($370,562 USD) remain in the other current asset balance for future payments to BSR, related to the acquisition On May 5, 2023, the Company was notified by BSR, the operator of our Utikuma asset that the Province of Alberta has declared a state of emergency due to wildfires in Alberta. We were informed that because of wildfires in the vicinity of our oilfield assets, the field was shut in and all personnel were evacuated. The Utikuma field incurred some damage from the wildfires, though some of the wells have recently been returned to production. |
LEASES
LEASES | 6 Months Ended |
Jun. 30, 2023 | |
Leases | |
LEASES | NOTE 7. LEASES Our adoption of ASU 2016-02, Leases (Topic 842), and subsequent ASUs related to Topic 842, requires us to recognize substantially all leases on the balance sheet as a right-of-use (ROU) asset and a corresponding lease liability. The guidance also requires additional disclosures as detailed below. We adopted this standard on the effective date of January 1, 2019 and used this effective date as the date of initial application. Under this application method, we were not required to restate prior period financial information or provide Topic 842 disclosures for prior periods. We elected the ‘package of practical expedients,’ which permitted us to not reassess our prior conclusions related to lease identification, lease classification, and initial direct costs, and we did not elect the use of hindsight. Lease ROU assets and liabilities are recognized at commencement date of the lease, based on the present value of lease payments over the lease term. The lease ROU asset also includes any lease payments made and excludes any lease incentives. When readily determinable, we use the implicit rate in determining the present value of lease payments. When leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date, including the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet. Lease expense for short-term leases is recognized on a straight-line basis over the lease term. As of June 30, 2023, we did not have any short-term leases. The tables below present financial information associated with our lease. SCHEDULE OF FINANCIAL INFORMATION LEASE Balance Sheet Classification June 30, 2023 December 31, 2022 Right-of-use assets Other long-term assets $ 20,311 $ 23,086 Current lease liabilities Other current liabilities 5,833 5,482 Non-current lease liabilities Other long-term liabilities 14,918 17,714 As of June 30, 2023, the maturities of our lease liability are as follows: SCHEDULE OF MATURITIES LEASE LIABILITY 2023 $ 2,164 2024 5,714 2025 6,472 2026 5,987 Total $ 20,337 Less imputed interest (26 ) Present value of lease liabilities $ 20,311 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 8. NOTES PAYABLE The following table summarizes the Company’s notes payable: SCHEDULE OF NOTES PAYABLE Interest rate Date of maturity June 30, 2023 December 31, 2022 Credit note I (ii) 10 % January 1, 2020 $ 142,439 $ 426,909 Discount on credit note I (13,857 ) (41,572 ) Lee Lytton On Demand 3,500 3,500 M. Hortwitz 10 % October 14, 2016 10,000 10,000 $ 142,082 (i) $ 398,837 (i) All notes are current liabilities (due within one year or less from June 30, 2023). (ii) On January 2, 2020, the Company entered into a loan agreement in the amount of $ 1,000,000 120,000 10 June 30, 2020 5,000,000 0.10 January 2, 2023 266,674 11,111 5,000,000 0.05 January 6, 2023 166,289 4,614 300,000 284,471 15,529 The following is a schedule of future minimum repayments of notes payable as of June 30, 2023: SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF NOTES PAYABLE 2023 $ 155,939 Thereafter — Total $ 155,939 |
RELATED PARTY NOTES PAYABLE
RELATED PARTY NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Notes Payable | |
RELATED PARTY NOTES PAYABLE | NOTE 9. RELATED PARTY NOTES PAYABLE The following table summarizes the Company’s related party notes payable: SCHEDULE OF RELATED PARTY NOTES PAYABLE Interest rate Date of maturity June 30, 2023 December 31, 2022 Quinten Beasley 10 % October 14, 2016 5,000 5,000 Blue Sky Resources (ii) 3.5 % December 31, 2021 178,923 178,923 Blue Sky Resources (iii) 10 % December 31, 2021 150,000 150,000 Blue Sky Resources (iv) 10 % December 31, 2022 2,085,432 2,085,432 Ivar Siem (v) 9 % December 31, 2021 278,435 278,435 Mark Allen (vi) 9 % September 2, 2021 55,000 55,000 Mark Allen (vii) 12 % June 30, 2020 200,000 200,000 Mark Allen (viii) 9 % June 30, 2021 24,619 241,125 Joel Oppenheim (ix) 10 % December 31, 2021 266,900 266,900 $ 3,244,309 (i) $ 3,460,815 (i) All notes are current liabilities (due within one year or less from June 30, 2023.) (ii) On February 9, 2018, the Company entered into a Revolving Line of Credit Agreement (“LOC”) for $ 200,000 500,000 25 3.5 (iii) On February 3, 2022, Joel Oppenheim, a former Board member, assigned $ 150,000 (iv) On December 1, 2021, the Company signed an amended loan agreement with a third party for $ 2,085,432 10 December 31, 2022 25 (v) On August 15, 2019, the Company entered into a loan agreement in the amount of $ 75,000 12 100,000 12 1,250,000 0.08 5,000,000 0.10 50,000 0 200,000 0.10 March 1, 2022 278,435 9 December 21, 2021 (vi) On April 15, 2020, the Company entered into an agreement with Mark Allen, the Company’s Chief Executive Officer, that included a funding clause where the Company borrowed $ 55,000 9 September 2, 2021 (vii) During 2019, the Company entered into a loan agreement in the amount of $ 200,000 12 June 30, 2020 2,500,000 0.08 10,000,000 0.10 (viii) On January 3, 2020, the Company entered into a loan agreement in the amount of $ 100,000 10 June 1, 2020 400,000 0.10 January 3, 2023 31,946 1,775 125,000 10 June 1, 2020 750,000 0.10 February 14, 2022 38,249 1,903 245,938 9 June 30, 2021 233,844 216,506 17,338 (ix) Various shareholder advances were provided by Joel Oppenheim during 2018 and 2019. There were no formal documents drawn. Interest rates were applied based on other similar loan agreements entered into by the Company during that period. On February 12, 2021, the Company entered into an amended loan agreement in the amount of $ 416,900 10 150,000 The following is a schedule of future minimum repayments of related party notes payable as of June 30, 2023: SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF RELATED PARTY NOTES PAYABLE 2023 $ 3,244,309 Thereafter — Total $ 3,244,309 |
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS | 6 Months Ended |
Jun. 30, 2023 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATIONS | NOTE 10. ASSET RETIREMENT OBLIGATIONS The Company has a number of oil and gas wells in production and will have AROs once the wells are permanently removed from service. The primary obligations involve the removal and disposal of surface equipment, plugging and abandoning the wells and site restoration. The Company is the operator of certain wells located in New Mexico, at the Twin Lakes San Andres Unit (“TLSAU”) Field. TLSAU is located 45 miles from Roswell, Chaves County, New Mexico. On March 4, 2021, the Company received a letter from the Commissioner of Public Lands of the State of New Mexico, which was sent to us and certain other parties notifying such parties of certain non-compliance with the laws and regulations that it administers. The deficiencies are currently in the process of being settled by a third party agreeing to plug six wells, including at least two Company operated wells (TLSAU wells #316 and #037). The scope of the matter above included only 240 acres of the 640 acres of The New Mexico State Land Office (SLO) lease. The Commissioner of Public Lands of the State of New Mexico could still file suit and require the plugging and surface remediation of all wells in section 36. On April 8, 2021, the State of New Mexico Energy, Minerals and Natural Resources Department Oil Conservation Division (“OCD”) sent the Company a Notice of Violation alleging that the Company was not in compliance with certain New Mexico Oil and Gas Act regulations (the “NMAC”), associated with required reporting, inactive wells and financial assurance requirements, plugging certain abandoned wells, providing required financial assurance in connection with plugging expenses, and proposing to assess certain civil penalties in the amount of an aggregate of approximately $ 35,100 On April 8, 2021, the State of New Mexico Energy, Minerals and Natural Resources Department, Oil Conservation Division (the “OCD”) issued a Notice of Violation (the “NOV”) to Petrolia alleging that the Company violated four regulations under Title 19, Chapter 15 of the New Mexico Administrative Code (the “NMAC”) by: (i) failing to file production reports for certain wells, (ii) exceeding the number of inactive wells allowed, (iii) failing to provide financial assurance in the amount required, and (iv) failing to provide additional financial assurance in the amount required. The Company acknowledged the violations alleged in the NOV and requested an informal resolution. On December 30, 2021, to resolve this matter, Petrolia entered into a Stipulated Final Order ( the “SFO”) in Case No. 21982 with the OCD whereby Petrolia among other things agreed to: (i) submit appropriate forms for wells identified on the SFO Inactive Well List, (ii) plug the specific TLSAU wells listed in section 8 (c) and (d) of the SFO, as well as submit all required information and forms specified in the SFO, (iii) open an escrow account meeting the terms listed in the SFO, (iv) deposit funds into an escrow account within the timeframe described in the SFO, and (v) provide the OCD with a report proposing deadlines for bringing all remaining wells into compliance. The Company recognized an additional liability of $ 792,000 The Company entered into a settlement agreement on July 27, 2020 with Moon Company, Trustee of the O’Brien Mineral Trust pursuant to which nine leases totaling approximately 3,800 acres of the 4,880 acre Twin Lakes San Andres Unit were terminated as a part of the settlement agreement. Pursuant to this settlement agreement, the Company no longer has the right to produce oil, gas, or other hydrocarbons and any other minerals from the mineral estate encumbered by the leases and owned by the trustee of the O’Brien Mineral Trust. AROs associated with the retirement of tangible long-lived assets are recognized as liabilities with an increase to the carrying amounts of the related long-lived assets in the period incurred. The fair value of AROs is recognized as of the acquisition date of the working interest. The cost of the tangible asset, including the asset retirement cost, is depleted over the life of the asset. AROs are recorded at estimated fair value, measured by reference to the expected future cash outflows required to satisfy the retirement obligations discounted at the Company’s credit-adjusted risk-free interest rate. Accretion expense is recognized over time as the discounted liabilities are accreted to their expected settlement value. If estimated future costs of AROs change, an adjustment is recorded to both the ARO and the long-lived asset. Revisions to estimated AROs can result from changes in retirement cost estimates, revisions to estimated discount rates and changes in the estimated timing of abandonment. For the purpose of determining the fair value of AROs incurred during the years presented, the Company used the following assumptions: SCHEDULE OF FAIR VALUE OF ASSET RETIREMENT OBLIGATIONS June 30, 2023 Inflation rate 1.92 2.15 % Estimated asset life 12 21 The following table shows the change in the Company’s ARO liability: SCHEDULE OF CHANGE IN ASSET RETIREMENT OBLIGATIONS Canadian properties United States properties Total Asset retirement obligations, December 31, 2021 $ 1,186,297 $ 1,070,730 $ 2,257,027 Accretion expense 145,191 28,412 173,603 Disposition — (47,624 ) (47,624 ) Foreign currency translation (81,671 ) — (81,671 ) Asset retirement obligations, December 31, 2022 $ 1,249,816 $ 1,051,518 $ 2,301,335 Accretion expense 76,501 18,630 95,131 Foreign currency translation 30,058 — 30,058 Asset retirement obligations, June 30, 2023 $ 1,356,374 $ 1,070,148 $ 2,426,523 |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
EQUITY | NOTE 11. EQUITY Preferred stock The holders of Series A Preferred Stock are entitled to receive cumulative dividends at a rate of 9 % per annum. The Preferred Stock will automatically convert into common stock when the Company’s common stock market price equals or exceeds $ 0.28 per share for 30 consecutive days. At conversion, the value of each dollar of preferred stock (based on a $10 per share price) will convert into 7.1429 common shares (which results in a $0.14 per common share conversion rate) . The Series A Preferred Stock also automatically converts into common stock on the five-year anniversary of the filing of the designation of the Series A Preferred Stock with the Texas Secretary of State (which filing date was May 3, 2017). This automatic conversion should have occurred on May 3, 2022. We are in the process of informing the Series A Preferred shareholders of the automatic conversion of their Preferred shares to common shares. It is anticipated that the new common shares will be issued in early August 2023, after which shareholders will be notified of the conversion details. The previously accrued dividends through May 3, 2022 bear a default interest rate of 12% when they are not paid. In the first half of 2023, Series A Preferred Stock dividends in the amount of $ 154,172 have been accrued to account for the default rate, as well as regular quarterly dividends accrued in error after May 3, 2022. The holders of Series B Preferred Stock do not accrue dividends and have no conversion rights. For so long as any shares of Series B Preferred Stock remain issued and outstanding, the holders thereof, voting separately as a class, have the right to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders of the Company and upon any action taken by stockholders of the Company with or without a meeting) equal to sixty percent (60%) of the total vote. No shares of Series B Preferred Stock held by any person who is not then a member of the Board of Directors of the Company shall have any voting rights. The holders of Series C Preferred Stock are entitled to receive cumulative dividends at a rate of 8 the value of each dollar of Series C Preferred Stock (based on a $10 per share price) will convert into 100 common shares (which results in a $0.01 per common share conversion rate) In accordance with the terms of the Series C Preferred Stock, cumulative dividends of $ 4,364 4,260 Common stock The common stock of Petrolia Energy Corporation is currently not publicly traded. Warrants On September 24, 2015, the Board of Directors of the Company approved the adoption of the 2015 Stock Incentive Plan (the “Plan”). The Plan provides an opportunity, subject to approval of our Board of Directors, of individual grants and awards, for any employee, officer, director or consultant of the Company. The maximum aggregate number of shares of common stock which may be issued pursuant to awards under the Plan, as amended on November 7, 2017, was 40,000,000 Continuity of the Company’s common stock purchase warrants issued and outstanding is as follows: SCHEDULE OF COMMON STOCK PURCHASE WARRANTS ISSUED AND OUTSTANDING Warrants Weighted Average Exercise Price Outstanding at year ended December 31, 2021 29,700,000 0.13 Granted 1,000,000 0.10 Expired (6,730,000 ) 0.11 Outstanding at year ended December 31, 2022 23,970,000 0.13 Granted 500,000 0.10 Expired (8,000,000 ) 0.19 Outstanding at June 30, 2023 16,470,000 $ 0.10 As of June 30, 2023, the weighted-average remaining contractual life of warrants outstanding was 0.70 0.81 As of June 30, 2023, the intrinsic value of warrants outstanding is $ 0.00 0.00 The table below summarizes warrant issuances during the six months ended June 30, 2023, and year ended December 31, 2022: SCHEDULE OF WARRANTS ISSUANCE DURING PERIOD June 30, 2023 December 31, 2022 Warrants granted: Pursuant to financing arrangements 500,000 1,000,000 Total 500,000 1,000,000 The warrants were valued using the Black Scholes Option Pricing Model with the range of assumptions outlined below. Expected life was determined based on historical data of the Company. SCHEDULE OF FAIR VALUE OF ASSUMPTION OF WARRANTS June 30, 2023 December 31, 2022 Risk-free interest rate 4.49 % 2.49 4.22 % Expected life 3.0 3.0 Expected dividend rate 0 % 0 % Expected volatility 360 % 267 299 % |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 12. RELATED PARTY TRANSACTIONS On January 31, 2022, Board Member Leo Womack purchased 2,500 25,000 |
SEGMENT REPORTING
SEGMENT REPORTING | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | NOTE 13. SEGMENT REPORTING The Company has a single SCHEDULE OF LONG-LIVED ASSETS Canada United States Total Three months ended June 30, 2022 Revenue $ 1,137,890 $ — $ 1,137,890 Production costs (1,525,407 ) (96,992 ) (1,622,399 ) Depreciation, depletion, amortization, and accretion (96,934 ) (7,168 ) (104,102 ) Results of operations from producing activities $ (484,451 ) $ (104,160 ) $ (588,611 ) Six months ended June 30, 2022 Revenue $ 2,968,171 $ 6,079 $ 2,974,250 Production costs (2,789,296 ) (109,378 ) (2,898,674 ) Depreciation, depletion, amortization, and accretion (184,124 ) (14,972 ) (199,096 ) Results of operations from producing activities $ (5,249 ) $ (118,271 ) $ (123,520 ) Total long-lived assets, June 30, 2022 $ 1,960,436 $ 4,243,071 $ 6,203,507 Three months ended June 30, 2023 Revenue $ 482,916 $ — $ 482,916 Production costs (880,758 ) (3,695 ) (884,453 ) Depreciation, depletion, amortization, and accretion (57,221 ) (7,975 ) (65,196 ) Results of operations from producing activities $ (455,063 ) $ (11,670 ) $ (466,733 ) Six months ended June 30, 2023 Revenue $ 1,859,233 $ — $ 1,859,233 Production costs (2,532,093 ) (11,840 ) (2,543,933 ) Depreciation, depletion, amortization, and accretion 139,577 ) (18,630 ) (158,207 ) Results of operations from producing activities $ (812,437 ) $ (30,470 ) $ (842,907 ) Total long-lived assets, June 30, 2023 $ 1,718,656 $ 4,243,446 $ 5,962,102 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 14. SUBSEQUENT EVENTS All shares of the Series A Preferred Stock are being converted to common shares of stock. The Company determined that this conversion automatically occurred on May 3, 2022, per the terms of the Certificate of Designations of Petrolia Energy Corporation Establishing the Designations, Preferences, Limitations and Relative Rights of Its Series A Convertible Preferred Stock, filed with the Secretary of State of Texas on May 3, 2017. The accrued dividends on the Series A Preferred Stock were adjusted. They stopped accruing on May 3, 2022, however the unpaid dividends accrued interest at a rate of 12 All outstanding shares of Petrolia’s Series A Preferred Stock automatically converted into common stock of the Company pursuant to Section 3.2 of that certain Certificate of Designations of Petrolia Energy Corporation Establishing the Designations, Preferences, Limitations and Relative Rights of Its Series A Convertible Preferred Stock filed by the Company with the Secretary of State of Texas on May 3, 2017. Specifically, (a) Section 3.2 of the Designation provides that “[e]ach share of Series A Preferred Stock and all Accrued Dividends thereon, shall automatically and without any required action by any Holder, be converted into that number of fully-paid, non-assessable shares of Common Stock as determined by dividing the Original Issue Price of each share of Series A Preferred and all Accrued Dividends thereon by the Conversion Price, on the Automatic Conversion Date”; and (b) Section 15.1 of the Designation provides that “Automatic Conversion Date” means “the first to occur of (i) the Holders of a majority of the shares of Series A Preferred Stock then outstanding consenting to an Automatic Conversion; (ii) the closing of Qualified Public Offering; (iii) the five year anniversary of the date that this Designation is filed with the Secretary of State of Texas; and (iv) the date that the average closing price per share of the Corporation’s Common Stock as reported on a national securities exchange, NASDAQ, the OTCQX, the OTCQB, or the OTC Pink market, equals or exceeds $ 0.28 |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
Principles of consolidation | Principles of consolidation The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Askarii Resources and Petrolia Canada Corporation. All significant intercompany balances and transactions have been eliminated upon consolidation. The Company accounts for its investment in companies in which it has significant influence by the equity method. The Company’s proportionate share of earnings is included in earnings and added to or deducted from the cost of the investment. |
Foreign currency translation | Foreign currency translation The functional and reporting currency of the Company is the United States dollar. The functional currencies of the Company’s wholly-owned subsidiaries, Askarii Resources and Petrolia Canada Corporation are the United States dollar and the Canadian dollar, respectively. Transactions involving foreign currencies are converted into the Company’s functional currency using the exchange rates in effect at the time of the transactions. At the balance sheet date, monetary assets and liabilities that are denominated in currencies other than the Company’s functional currency are translated using exchange rates at that date. Exchange gains and losses are included in net earnings. On consolidation, Petrolia Canada Corporation’s income statement amounts are translated at average exchange rates for the year, while the assets and liabilities are translated at year-end exchange rates. Translation adjustments are accumulated as a separate component of stockholders’ equity in other comprehensive income. |
Management estimates | Management estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates made in preparing these financial statements include depreciation of furniture, equipment and software, asset retirement obligations (“AROs”) (Note 10), income taxes, and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows therefrom. |
Cash and cash equivalents | Cash and cash equivalents The Company considers all highly liquid instruments purchased with an original maturity date of three months or less to be cash equivalents. As of December 31, 2022 and June 30, 2023, the Company did no |
Oil and gas properties | Oil and gas properties The Company follows the full cost accounting method to account for oil and natural gas properties, whereby costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on nonproducing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to operations. The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves. The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful. All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the “cost ceiling”) equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the un-weighted arithmetic average of the first day of the month price for each month within the 12-month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period. Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that impairments of oil and gas properties could occur. In addition, it is reasonably possible that impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves. |
Furniture, equipment, and software | Furniture, equipment, and software Furniture, equipment, and software are stated at cost, less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the related asset, generally three to five years. Fully depreciated assets are retained in property and accumulated depreciation accounts until they are removed from service. Management performs ongoing evaluations of the estimated useful lives of the property and equipment for depreciation purposes. Maintenance and repairs are expensed as incurred. Management periodically reviews long-lived assets, other than oil and gas property, for impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company recognizes an impairment loss when the sum of expected undiscounted future cash flows is less than the carrying amount of the asset. The amount of impairment is measured as the difference between the asset’s estimated fair value and its book value. |
Derivative financial instruments | Derivative financial instruments The Company’s derivative financial instruments consist of warrants with an exercise price denominated in the Company’s functional currency. These derivative financial instruments are measured at their fair value at the end of each reporting period. Changes in fair value are recorded in net income. |
Asset retirement obligations | Asset retirement obligations The Company records a liability for Asset Retirement Obligations (“AROs”) associated with its oil and gas wells when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of oil and gas properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value. Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. |
Debt issuance costs | Debt issuance costs Costs incurred in connection with the issuance of long-term debt are presented as a direct deduction from the carrying value of the related debt and amortized over the term of the related debt. |
Revenue recognition | Revenue recognition In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09, Revenue from Contracts with Customers Revenue from contracts with customers The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product to a customer. Revenue is measured based on the consideration the Company expects to receive in exchange for those products. Performance obligations and significant judgments The Company sells oil and natural gas products in the United States through a single reportable segment. The Company enters into contracts that generally include one type of distinct product in variable quantities and priced based on a specific index related to the type of product. The oil and natural gas is typically sold in an unprocessed state to processors and other third parties for processing and sale to customers. The Company recognizes revenue at a point in time when control of the oil or natural gas passes to the customer or processor, as applicable, discussed below. For oil sales, control is typically transferred to the customer upon receipt at the wellhead or a contractually agreed upon delivery point. Under our natural gas contracts with processors, control transfers upon delivery at the wellhead or the inlet of the processing entity’s system. For our other natural gas contracts, control transfers upon delivery to the inlet or to a contractually agreed upon delivery point. In the cases where the Company sells to a processor, management has determined that the Company is the principal in the arrangement and the processors are customers. The Company recognizes the revenue in these contracts based on the net proceeds received from the processor. Transfer of control drives the presentation of transportation and gathering costs within the accompanying consolidated statements of operations. Transportation and gathering costs incurred prior to control transfer are recorded within the transportation and gathering expense line item on the accompanying consolidated statements of operations, while transportation and gathering costs incurred subsequent to control transfer are recorded as a reduction to the related revenue. A portion of our product sales are short-term in nature. For those contracts, the Company uses the practical expedient in Accounting Standards Codification (“ASC”) 606-10-50-14 exempting us from disclosure of the transaction price allocated to remaining performance obligations if the performance obligation is part of a contract that has an original expected duration of one year or less. For our product sales that have a contract term greater than one year, the Company has utilized the practical expedient in ASC 606-10-50-14(a) which states the Company is not required to disclose the transaction price allocated to remaining performance obligations if the variable consideration is allocated entirely to an unsatisfied performance obligation. Under these sales contracts, each unit of product represents a separate performance obligation; therefore, future volumes are unsatisfied, and disclosure of the transaction price allocated to remaining performance obligations is not required. The Company has no unsatisfied performance obligations at the end of each reporting period. Management does not believe that significant judgments are required with respect to the determination of the transaction price, including any variable consideration identified. There is a low level of uncertainty due to the precision of measurement and use of index-based pricing with predictable differentials. Additionally, any variable consideration identified is not constrained. |
Stock-based compensation | Stock-based compensation The Company accounts for stock-based compensation to employees in accordance with FASB ASC 718, Stock-based compensation |
Income taxes | Income taxes Income taxes are accounted for pursuant to ASC 740, Income Taxes Uncertain tax positions are recognized in the financial statements only if that position is more likely than not to be sustained upon examination by taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in the income tax provision. There are currently no unrecognized tax benefits that if recognized would affect the tax rate. There was no The Company is required to file federal income tax returns in the United States and Canada, and in various state and local jurisdictions. The Company’s tax returns are subject to examination by taxing authorities in the jurisdictions in which it operates in accordance with the normal statutes of limitations in the applicable jurisdiction. |
Earnings (loss) per share | Earnings (loss) per share Basic earnings (loss) per share have been calculated based on the weighted-average number of common shares outstanding. The treasury stock method is used to compute the dilutive effect of the Company’s share-based compensation awards. Under this method, the incremental number of shares used in computing diluted earnings per share (“EPS”) is the difference between the number of shares assumed issued and purchased using assumed proceeds. Diluted EPS amounts would include the effect of outstanding stock options, warrants, and other convertible securities if including such potential shares of common stock is dilutive. Basic and diluted earnings per share are the same in all periods presented as all outstanding instruments are anti-dilutive. |
Concentration of credit risk | Concentration of credit risk The Company is subject to credit risk resulting from the concentration of its oil receivables with significant purchasers. Two purchasers accounted for all of the Company’s oil sales revenues for 2023 and 2022. The Company does not require collateral. While the Company believes its recorded receivables will be collected, in the event of default the Company would follow normal collection procedures. The Company does not believe the loss of a purchaser would materially impact its operating results as oil is a fungible product with a well-established market and numerous purchasers. At times, the Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management monitors the credit ratings and concentration of risk with these financial institutions on a continuing basis to safeguard cash deposits. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value of financial instruments requires disclosure of the fair value information, whether or not recognized in the balance sheet, where it is practicable to estimate that value. As of June 30, 2023, the amounts reported for cash, accrued interest and other expenses, notes payable, convertible notes, and derivative liability approximate the fair value because of their short maturities. We adopted ASC Topic 820 for financial instruments measured as fair value on a recurring basis. ASC Topic 820 defines fair value, established a framework for measuring fair value in accordance with accounting principles generally accepted in the United States and expands disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. The hierarchy is broken down into three levels based on the observability of inputs as follows: ● Level 1 — Valuations based on quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. Valuation adjustments and block discounts are not applied to Level 1 instruments. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment; ● Level 2 — Valuations based on one or more quoted prices in markets that are not active or for which all significant inputs are observable, either directly or indirectly; and ● Level 3 — Valuations based on inputs that are unobservable and significant to the overall fair value measurement. We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows as of June 30, 2023, and December 31, 2022. SCHEDULE OF DERIVATIVE LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS June 30, 2023 Level 1 Level 2 Level 3 Total ARO liabilities — — 2,426,523 2,426,523 December 31, 2022 ARO liabilities — — 2,301,335 2,301,335 The carrying value of cash, accounts receivable, other current assets, accounts payable, accounts payable – related parties, accrued liabilities and accrued liabilities – related parties, as reflected in the consolidated balance sheets, approximate fair value, due to the short-term maturity of these instruments. The carrying value of notes payable approximates their fair value due to immaterial changes in market interest rates and the Company’s credit risk since issuance of the instruments or due to their short-term nature. Derivative liabilities are remeasured at fair value every reporting period. Our derivative liabilities are considered level 3 financial instruments. |
Related parties | Related parties The Audit Committee approves all material related party transactions. The Audit Committee is provided with the details of each new, existing or proposed related party transaction, including the terms of the transaction, the business purpose of the transaction, and the benefits to the Company and the relevant related party. In determining whether to approve a related party transaction, the following factors are considered: (1) if the terms are fair to the Company, (2) if there are business reasons to enter into the transaction, (3) if the transaction would impair independence of an outside Director, or (4) if the transaction would present an improper conflict of interest for any Director or executive officer. Any member of the Audit Committee who has an interest in the transaction will abstain from voting on the approval of the related party transaction. |
Business combinations | Business combinations In January 2017, the FASB issued ASU 2017-01 Business Combinations Clarifying the Definition of a Business |
Reclassifications | Reclassifications Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net loss, working capital or equity previously reported. |
Recent accounting pronouncements | Recent accounting pronouncements The Company has evaluated all the recent accounting pronouncements through the filing date and believes that none of them will have a material effect on the Company. |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Accounting Policies [Abstract] | |
SCHEDULE OF DERIVATIVE LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS | We measure certain financial instruments at fair value on a recurring basis. Assets and liabilities measured at fair value on a recurring basis are as follows as of June 30, 2023, and December 31, 2022. SCHEDULE OF DERIVATIVE LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS June 30, 2023 Level 1 Level 2 Level 3 Total ARO liabilities — — 2,426,523 2,426,523 December 31, 2022 ARO liabilities — — 2,301,335 2,301,335 |
EVALUATED PROPERTIES (Tables)
EVALUATED PROPERTIES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Extractive Industries [Abstract] | |
SCHEDULE OF COMPANY’S CURRENT PROPERTIES | The Company’s current properties can be summarized as follows. SCHEDULE OF COMPANY’S CURRENT PROPERTIES Cost Canadian properties United States properties Total As of December 31, 2021 $ 2,492,403 $ 4,304,622 $ 6,797,025 Dispositions — 375 375 Foreign currency translation (159,363 ) — (159,363 ) As of December 31, 2022 $ 2,333,040 $ 4,304,997 $ 6,638,037 Foreign currency translations 53,568 — 53,568 As of June 30, 2023 $ 2,386,608 $ 4,304,997 $ 6,691,605 Accumulated depletion As of December 31, 2021 $ 387,409 $ 61,551 $ 448,960 Depletion 237,067 — 237,067 Foreign currency translation (34,273 ) — (34,273 ) As of December 31, 2022 $ 590,203 $ 61,551 $ 651,754 Depletion 63,076 — 63,076 Foreign currency translation 14,673 — 14,673 As of June 30, 2023 $ 667,952 $ 61,551 $ 729,503 Net book value as of December 31, 2022 $ 1,742,837 $ 4,243,446 $ 5,986,283 Net book value as of June 30, 2023 $ 1,718,656 $ 4,234,446 $ 5,962,102 |
LEASES (Tables)
LEASES (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Leases | |
SCHEDULE OF FINANCIAL INFORMATION LEASE | The tables below present financial information associated with our lease. SCHEDULE OF FINANCIAL INFORMATION LEASE Balance Sheet Classification June 30, 2023 December 31, 2022 Right-of-use assets Other long-term assets $ 20,311 $ 23,086 Current lease liabilities Other current liabilities 5,833 5,482 Non-current lease liabilities Other long-term liabilities 14,918 17,714 |
SCHEDULE OF MATURITIES LEASE LIABILITY | As of June 30, 2023, the maturities of our lease liability are as follows: SCHEDULE OF MATURITIES LEASE LIABILITY 2023 $ 2,164 2024 5,714 2025 6,472 2026 5,987 Total $ 20,337 Less imputed interest (26 ) Present value of lease liabilities $ 20,311 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Debt Disclosure [Abstract] | |
SCHEDULE OF NOTES PAYABLE | The following table summarizes the Company’s notes payable: SCHEDULE OF NOTES PAYABLE Interest rate Date of maturity June 30, 2023 December 31, 2022 Credit note I (ii) 10 % January 1, 2020 $ 142,439 $ 426,909 Discount on credit note I (13,857 ) (41,572 ) Lee Lytton On Demand 3,500 3,500 M. Hortwitz 10 % October 14, 2016 10,000 10,000 $ 142,082 (i) $ 398,837 (i) All notes are current liabilities (due within one year or less from June 30, 2023). (ii) On January 2, 2020, the Company entered into a loan agreement in the amount of $ 1,000,000 120,000 10 June 30, 2020 5,000,000 0.10 January 2, 2023 266,674 11,111 5,000,000 0.05 January 6, 2023 166,289 4,614 300,000 284,471 15,529 |
SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF NOTES PAYABLE | The following is a schedule of future minimum repayments of notes payable as of June 30, 2023: SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF NOTES PAYABLE 2023 $ 155,939 Thereafter — Total $ 155,939 |
RELATED PARTY NOTES PAYABLE (Ta
RELATED PARTY NOTES PAYABLE (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Related Party Notes Payable | |
SCHEDULE OF RELATED PARTY NOTES PAYABLE | The following table summarizes the Company’s related party notes payable: SCHEDULE OF RELATED PARTY NOTES PAYABLE Interest rate Date of maturity June 30, 2023 December 31, 2022 Quinten Beasley 10 % October 14, 2016 5,000 5,000 Blue Sky Resources (ii) 3.5 % December 31, 2021 178,923 178,923 Blue Sky Resources (iii) 10 % December 31, 2021 150,000 150,000 Blue Sky Resources (iv) 10 % December 31, 2022 2,085,432 2,085,432 Ivar Siem (v) 9 % December 31, 2021 278,435 278,435 Mark Allen (vi) 9 % September 2, 2021 55,000 55,000 Mark Allen (vii) 12 % June 30, 2020 200,000 200,000 Mark Allen (viii) 9 % June 30, 2021 24,619 241,125 Joel Oppenheim (ix) 10 % December 31, 2021 266,900 266,900 $ 3,244,309 (i) $ 3,460,815 (i) All notes are current liabilities (due within one year or less from June 30, 2023.) (ii) On February 9, 2018, the Company entered into a Revolving Line of Credit Agreement (“LOC”) for $ 200,000 500,000 25 3.5 (iii) On February 3, 2022, Joel Oppenheim, a former Board member, assigned $ 150,000 (iv) On December 1, 2021, the Company signed an amended loan agreement with a third party for $ 2,085,432 10 December 31, 2022 25 (v) On August 15, 2019, the Company entered into a loan agreement in the amount of $ 75,000 12 100,000 12 1,250,000 0.08 5,000,000 0.10 50,000 0 200,000 0.10 March 1, 2022 278,435 9 December 21, 2021 (vi) On April 15, 2020, the Company entered into an agreement with Mark Allen, the Company’s Chief Executive Officer, that included a funding clause where the Company borrowed $ 55,000 9 September 2, 2021 (vii) During 2019, the Company entered into a loan agreement in the amount of $ 200,000 12 June 30, 2020 2,500,000 0.08 10,000,000 0.10 (viii) On January 3, 2020, the Company entered into a loan agreement in the amount of $ 100,000 10 June 1, 2020 400,000 0.10 January 3, 2023 31,946 1,775 125,000 10 June 1, 2020 750,000 0.10 February 14, 2022 38,249 1,903 245,938 9 June 30, 2021 233,844 216,506 17,338 (ix) Various shareholder advances were provided by Joel Oppenheim during 2018 and 2019. There were no formal documents drawn. Interest rates were applied based on other similar loan agreements entered into by the Company during that period. On February 12, 2021, the Company entered into an amended loan agreement in the amount of $ 416,900 10 150,000 |
SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF RELATED PARTY NOTES PAYABLE | The following is a schedule of future minimum repayments of related party notes payable as of June 30, 2023: SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF RELATED PARTY NOTES PAYABLE 2023 $ 3,244,309 Thereafter — Total $ 3,244,309 |
ASSET RETIREMENT OBLIGATIONS (T
ASSET RETIREMENT OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Asset Retirement Obligation Disclosure [Abstract] | |
SCHEDULE OF FAIR VALUE OF ASSET RETIREMENT OBLIGATIONS | For the purpose of determining the fair value of AROs incurred during the years presented, the Company used the following assumptions: SCHEDULE OF FAIR VALUE OF ASSET RETIREMENT OBLIGATIONS June 30, 2023 Inflation rate 1.92 2.15 % Estimated asset life 12 21 |
SCHEDULE OF CHANGE IN ASSET RETIREMENT OBLIGATIONS | The following table shows the change in the Company’s ARO liability: SCHEDULE OF CHANGE IN ASSET RETIREMENT OBLIGATIONS Canadian properties United States properties Total Asset retirement obligations, December 31, 2021 $ 1,186,297 $ 1,070,730 $ 2,257,027 Accretion expense 145,191 28,412 173,603 Disposition — (47,624 ) (47,624 ) Foreign currency translation (81,671 ) — (81,671 ) Asset retirement obligations, December 31, 2022 $ 1,249,816 $ 1,051,518 $ 2,301,335 Accretion expense 76,501 18,630 95,131 Foreign currency translation 30,058 — 30,058 Asset retirement obligations, June 30, 2023 $ 1,356,374 $ 1,070,148 $ 2,426,523 |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Equity [Abstract] | |
SCHEDULE OF COMMON STOCK PURCHASE WARRANTS ISSUED AND OUTSTANDING | Continuity of the Company’s common stock purchase warrants issued and outstanding is as follows: SCHEDULE OF COMMON STOCK PURCHASE WARRANTS ISSUED AND OUTSTANDING Warrants Weighted Average Exercise Price Outstanding at year ended December 31, 2021 29,700,000 0.13 Granted 1,000,000 0.10 Expired (6,730,000 ) 0.11 Outstanding at year ended December 31, 2022 23,970,000 0.13 Granted 500,000 0.10 Expired (8,000,000 ) 0.19 Outstanding at June 30, 2023 16,470,000 $ 0.10 |
SCHEDULE OF WARRANTS ISSUANCE DURING PERIOD | The table below summarizes warrant issuances during the six months ended June 30, 2023, and year ended December 31, 2022: SCHEDULE OF WARRANTS ISSUANCE DURING PERIOD June 30, 2023 December 31, 2022 Warrants granted: Pursuant to financing arrangements 500,000 1,000,000 Total 500,000 1,000,000 |
SCHEDULE OF FAIR VALUE OF ASSUMPTION OF WARRANTS | The warrants were valued using the Black Scholes Option Pricing Model with the range of assumptions outlined below. Expected life was determined based on historical data of the Company. SCHEDULE OF FAIR VALUE OF ASSUMPTION OF WARRANTS June 30, 2023 December 31, 2022 Risk-free interest rate 4.49 % 2.49 4.22 % Expected life 3.0 3.0 Expected dividend rate 0 % 0 % Expected volatility 360 % 267 299 % |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 6 Months Ended |
Jun. 30, 2023 | |
Segment Reporting [Abstract] | |
SCHEDULE OF LONG-LIVED ASSETS | SCHEDULE OF LONG-LIVED ASSETS Canada United States Total Three months ended June 30, 2022 Revenue $ 1,137,890 $ — $ 1,137,890 Production costs (1,525,407 ) (96,992 ) (1,622,399 ) Depreciation, depletion, amortization, and accretion (96,934 ) (7,168 ) (104,102 ) Results of operations from producing activities $ (484,451 ) $ (104,160 ) $ (588,611 ) Six months ended June 30, 2022 Revenue $ 2,968,171 $ 6,079 $ 2,974,250 Production costs (2,789,296 ) (109,378 ) (2,898,674 ) Depreciation, depletion, amortization, and accretion (184,124 ) (14,972 ) (199,096 ) Results of operations from producing activities $ (5,249 ) $ (118,271 ) $ (123,520 ) Total long-lived assets, June 30, 2022 $ 1,960,436 $ 4,243,071 $ 6,203,507 Three months ended June 30, 2023 Revenue $ 482,916 $ — $ 482,916 Production costs (880,758 ) (3,695 ) (884,453 ) Depreciation, depletion, amortization, and accretion (57,221 ) (7,975 ) (65,196 ) Results of operations from producing activities $ (455,063 ) $ (11,670 ) $ (466,733 ) Six months ended June 30, 2023 Revenue $ 1,859,233 $ — $ 1,859,233 Production costs (2,532,093 ) (11,840 ) (2,543,933 ) Depreciation, depletion, amortization, and accretion 139,577 ) (18,630 ) (158,207 ) Results of operations from producing activities $ (812,437 ) $ (30,470 ) $ (842,907 ) Total long-lived assets, June 30, 2023 $ 1,718,656 $ 4,243,446 $ 5,962,102 |
SCHEDULE OF DERIVATIVE LIABILIT
SCHEDULE OF DERIVATIVE LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Platform Operator, Crypto-Asset [Line Items] | ||
ARO liabilities | $ 2,426,523 | $ 2,301,335 |
Fair Value, Inputs, Level 1 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
ARO liabilities | ||
Fair Value, Inputs, Level 2 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
ARO liabilities | ||
Fair Value, Inputs, Level 3 [Member] | ||
Platform Operator, Crypto-Asset [Line Items] | ||
ARO liabilities | $ 2,426,523 | $ 2,301,335 |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2022 | Dec. 31, 2022 | |
Accounting Policies [Abstract] | ||||
Cash equivalents | $ 0 | $ 0 | ||
Income tax, interest or penalties | $ 0 | $ 0 | $ 0 |
NOTES RECEIVABLE (Details Narra
NOTES RECEIVABLE (Details Narrative) | Feb. 16, 2022 $ / shares | Mar. 31, 2023 $ / shares | Mar. 31, 2023 $ / shares | Jan. 31, 2023 $ / shares | Feb. 16, 2022 CAD ($) |
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Debt Instrument, Convertible, Conversion Price | (per share) | $ 0.05 | $ 0.10 | $ 0.05 | $ 0.05 | |
Debt Settlememnt Agreement [Member] | |||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | |||||
Working interest rate | 28% | ||||
Convertible debt | $ 510,000 | ||||
Interest rate | 8% | ||||
Debt instrument term | 2 years |
HELD FOR TRADING SECURITIES (De
HELD FOR TRADING SECURITIES (Details Narrative) | 1 Months Ended | |||||
Jan. 31, 2023 USD ($) | Jan. 31, 2023 CAD ($) $ / shares | Mar. 31, 2023 USD ($) $ / shares | Mar. 31, 2023 CAD ($) | Mar. 31, 2023 $ / shares | Feb. 16, 2022 $ / shares | |
Held For Trading Securities | ||||||
Debt Conversion, Converted Instrument, Amount | $ 210,000 | $ 300,000 | ||||
[custom:DebtConvertedToMarketableSecurities] | $ 157,315 | $ 223,248 | ||||
Debt Instrument, Convertible, Conversion Price | (per share) | $ 0.05 | $ 0.10 | $ 0.05 | $ 0.05 |
SCHEDULE OF COMPANY_S CURRENT P
SCHEDULE OF COMPANY’S CURRENT PROPERTIES (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | ||
Evaluated properties, beginning balance | $ 6,638,037 | $ 6,797,025 |
Cost, Disposition | 375 | |
Cost, Foreign currency translation | 53,568 | (159,363) |
Evaluated properties, ending balance | 6,691,605 | 6,638,037 |
Oil and Gas Property, Full Cost Method, Depletion, beginning balance | 651,754 | 448,960 |
Accumulated depletion, Depletion | 63,076 | 237,067 |
Accumulated depletion, Foreign currency translation | 14,673 | (34,273) |
Oil and Gas Property, Full Cost Method, Depletion, ending balance | 729,503 | 651,754 |
Net book value as at ending balance | 5,962,102 | 5,986,283 |
Canadian Properties [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Evaluated properties, beginning balance | 2,333,040 | 2,492,403 |
Cost, Disposition | ||
Cost, Foreign currency translation | 53,568 | (159,363) |
Evaluated properties, ending balance | 2,386,608 | 2,333,040 |
Oil and Gas Property, Full Cost Method, Depletion, beginning balance | 590,203 | 387,409 |
Accumulated depletion, Depletion | 63,076 | 237,067 |
Accumulated depletion, Foreign currency translation | 14,673 | (34,273) |
Oil and Gas Property, Full Cost Method, Depletion, ending balance | 667,952 | 590,203 |
Net book value as at ending balance | 1,718,656 | 1,742,837 |
US Properties [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Evaluated properties, beginning balance | 4,304,997 | 4,304,622 |
Cost, Disposition | 375 | |
Cost, Foreign currency translation | ||
Evaluated properties, ending balance | 4,304,997 | 4,304,997 |
Oil and Gas Property, Full Cost Method, Depletion, beginning balance | 61,551 | 61,551 |
Accumulated depletion, Depletion | ||
Accumulated depletion, Foreign currency translation | ||
Oil and Gas Property, Full Cost Method, Depletion, ending balance | 61,551 | 61,551 |
Net book value as at ending balance | $ 4,234,446 | $ 4,243,446 |
EVALUATED PROPERTIES (Details N
EVALUATED PROPERTIES (Details Narrative) $ in Millions | 6 Months Ended | ||
May 01, 2020 a | Jun. 30, 2023 a | Dec. 31, 2022 USD ($) | |
Net property balance | $ | $ 1.2 | ||
Oil and Gas, Developed Acreage, Gross | 28,000 | ||
Blue Sky [Member] | |||
Business combination, description | The total purchase price of the property was $2,000,000 (CAD), with $1,000,000 of that total due initially. The additional $1,000,000 was contingent on the future price of West Texas Intermediate (WTI) crude. At the time the WTI price exceeded $50/bbl, the Company would pay an additional $750,000 CAD. In addition, at the time the WTI price exceeded $57/bbl the Company would pay an additional $250,000 CAD (for a cumulative contingent total of $1,000,000 CAD). The price of WTI crude exceeded $50 per barrel (bbl) on January 6, 2021 and exceeded $57/bbl on February 8, 2021. The additional payments due were netted with the accounts receivable balance from previous Joint Interest Billing statements from Blue Sky Resources (BSR). The total USD value of the addition was $787,250, using prevailing exchange rates on the respective dates. Included in the terms of the agreement, the Company also funded their portion of the Alberta Energy Regulator (“AER”) bond fund requirement of $763,754 CAD ($576,852 USD), necessary for the wells to continue in production after the acquisition. Additional funds in the amount of $490,624 CAD ($370,562 USD) remain in the other current asset balance for future payments to BSR, related to the acquisition | East unit is approximately 860 acres. | |
Increased working interest | 50% | ||
Vermilion Energy Inc [Member] | |||
Increased working interest | 100% | ||
SUDS Properties LLC [Member] | |||
Assets working interest | 100% | ||
Net revenue interest, percentage | 76.50% | ||
Area of land | 2,530 | ||
Twin Lakes San Andres Unit [Member] | |||
Area of land | 1,670 |
SCHEDULE OF FINANCIAL INFORMATI
SCHEDULE OF FINANCIAL INFORMATION LEASE (Details) - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 |
Leases | ||
Right-of-use assets | $ 20,311 | $ 23,086 |
Current lease liabilities | 5,833 | 5,482 |
Non-current lease liabilities | $ 14,918 | $ 17,714 |
SCHEDULE OF MATURITIES LEASE LI
SCHEDULE OF MATURITIES LEASE LIABILITY (Details) | Jun. 30, 2023 USD ($) |
Leases | |
2023 | $ 2,164 |
2024 | 5,714 |
2025 | 6,472 |
2026 | 5,987 |
Total | 20,337 |
Less imputed interest | (26) |
Present value of lease liabilities | $ 20,311 |
SCHEDULE OF NOTES PAYABLE (Deta
SCHEDULE OF NOTES PAYABLE (Details) - USD ($) | 6 Months Ended | |||
Jun. 30, 2023 | Dec. 31, 2022 | |||
Nonrelated Party [Member] | ||||
Short-Term Debt [Line Items] | ||||
Notes payable | $ 142,082 | [1] | $ 398,837 | |
Credit Note One [Member] | ||||
Short-Term Debt [Line Items] | ||||
Interest rate | [2] | 10% | ||
Date of maturity | [2] | Jan. 01, 2020 | ||
Notes payable | [2] | $ 142,439 | 426,909 | |
Discount On Credit Note One [Member] | ||||
Short-Term Debt [Line Items] | ||||
Discount | (13,857) | (41,572) | ||
Lee Lytton [Member] | ||||
Short-Term Debt [Line Items] | ||||
Notes payable | $ 3,500 | 3,500 | ||
Date of maturity | On Demand | |||
M Horowitz [Member] | ||||
Short-Term Debt [Line Items] | ||||
Interest rate | 10% | |||
Date of maturity | Oct. 14, 2016 | |||
Notes payable | $ 10,000 | $ 10,000 | ||
[1]All notes are current liabilities (due within one year or less from June 30, 2023).[2]On January 2, 2020, the Company entered into a loan agreement in the amount of $ 1,000,000 120,000 10 June 30, 2020 5,000,000 0.10 January 2, 2023 266,674 11,111 5,000,000 0.05 January 6, 2023 166,289 4,614 300,000 284,471 15,529 |
SCHEDULE OF NOTES PAYABLE (De_2
SCHEDULE OF NOTES PAYABLE (Details) (Parenthetical) | 6 Months Ended | |||||||
Oct. 30, 2020 USD ($) $ / shares shares | Jan. 02, 2020 USD ($) shares | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Feb. 28, 2020 USD ($) shares | Feb. 28, 2020 $ / shares | Jan. 02, 2020 $ / shares | ||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Amortization of debt discount | $ 27,715 | $ 27,715 | ||||||
Mark Allen [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Debt interest rate | [1] | 9% | ||||||
Debt instrument maturity date | [1] | Sep. 02, 2021 | ||||||
Loan Agreement [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Debt face amount | $ 1,000,000 | $ 50,000 | ||||||
Origination fee | $ 120,000 | |||||||
Debt interest rate | 10% | 0% | ||||||
Debt instrument maturity date | Jun. 30, 2020 | |||||||
Warrants to acquire of common stock | shares | 5,000,000 | 5,000,000 | 200,000 | |||||
Warrant exercise price | (per share) | $ 0.05 | $ 0.10 | $ 0.10 | |||||
Warrant expiry date | Jan. 06, 2023 | Jan. 02, 2023 | Mar. 01, 2022 | |||||
Debt instrument, unamortized discount | $ 166,289 | $ 266,674 | ||||||
Amortization of debt discount | $ 4,614 | $ 11,111 | ||||||
Accured interest | $ 300,000 | |||||||
Pricipal amount | 284,471 | |||||||
Interest | 15,529 | |||||||
Loan Agreement [Member] | Mark Allen [Member] | ||||||||
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items] | ||||||||
Accured interest | 233,844 | |||||||
Pricipal amount | 216,506 | |||||||
Interest | $ 17,338 | |||||||
[1]On April 15, 2020, the Company entered into an agreement with Mark Allen, the Company’s Chief Executive Officer, that included a funding clause where the Company borrowed $ 55,000 9 September 2, 2021 |
SCHEDULE OF FUTURE MINIMUM REPA
SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF NOTES PAYABLE (Details) | Jun. 30, 2023 USD ($) |
Short-Term Debt [Line Items] | |
2023 | $ 155,939 |
Notes Payable [Member] | |
Short-Term Debt [Line Items] | |
Thereafter | |
Total | $ 155,939 |
SCHEDULE OF RELATED PARTY NOTES
SCHEDULE OF RELATED PARTY NOTES PAYABLE (Details) - USD ($) | 6 Months Ended | |||||
Jun. 30, 2023 | Dec. 31, 2022 | Feb. 03, 2022 | ||||
Quinten Beasley [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | 10% | |||||
Date of maturity | Oct. 14, 2016 | |||||
Notes payable - related party | $ 5,000 | $ 5,000 | ||||
Blue Sky Resources [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | [1] | 3.50% | ||||
Date of maturity | [1] | Dec. 31, 2021 | ||||
Notes payable - related party | [1] | $ 178,923 | 178,923 | |||
Blue Sky Resources One [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | [2] | 10% | ||||
Date of maturity | [2] | Dec. 31, 2021 | ||||
Notes payable - related party | [2] | $ 150,000 | 150,000 | |||
Blue Sky Resources Two [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | [3] | 10% | ||||
Date of maturity | [3] | Dec. 31, 2022 | ||||
Notes payable - related party | [3] | $ 2,085,432 | 2,085,432 | |||
Ivar Siem [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | [4] | 9% | ||||
Date of maturity | [4] | Dec. 31, 2021 | ||||
Notes payable - related party | [4] | $ 278,435 | 278,435 | |||
Mark Allen [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | [5] | 9% | ||||
Date of maturity | [5] | Sep. 02, 2021 | ||||
Notes payable - related party | [5] | $ 55,000 | 55,000 | |||
Mark Allen One [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | [6] | 12% | ||||
Date of maturity | [6] | Jun. 30, 2020 | ||||
Notes payable - related party | [6] | $ 200,000 | 200,000 | |||
Mark Allen Two [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | [7] | 9% | ||||
Date of maturity | [7] | Jun. 30, 2021 | ||||
Notes payable - related party | [7] | $ 24,619 | 241,125 | |||
Joel Oppenheim [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Interest rate | [8] | 10% | ||||
Date of maturity | [8] | Dec. 31, 2021 | ||||
Notes payable - related party | $ 266,900 | [8] | 266,900 | [8] | $ 150,000 | |
Related Party [Member] | ||||||
Defined Benefit Plan Disclosure [Line Items] | ||||||
Notes payable - related party | [9] | $ 3,244,309 | $ 3,460,815 | |||
[1]On February 9, 2018, the Company entered into a Revolving Line of Credit Agreement (“LOC”) for $ 200,000 500,000 25 3.5 150,000 2,085,432 10 December 31, 2022 25 75,000 12 100,000 12 1,250,000 0.08 5,000,000 0.10 50,000 0 200,000 0.10 March 1, 2022 278,435 9 December 21, 2021 55,000 9 September 2, 2021 200,000 12 June 30, 2020 2,500,000 0.08 10,000,000 0.10 100,000 10 June 1, 2020 400,000 0.10 January 3, 2023 31,946 1,775 125,000 10 June 1, 2020 750,000 0.10 February 14, 2022 38,249 1,903 245,938 9 June 30, 2021 233,844 216,506 17,338 416,900 10 150,000 |
SCHEDULE OF RELATED PARTY NOT_2
SCHEDULE OF RELATED PARTY NOTES PAYABLE (Details) (Parenthetical) | 6 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||
Dec. 02, 2021 USD ($) | Jan. 02, 2021 USD ($) | Oct. 30, 2020 USD ($) $ / shares shares | Apr. 15, 2020 USD ($) | Feb. 14, 2020 USD ($) $ / shares shares | Jan. 03, 2020 USD ($) shares | Jan. 02, 2020 USD ($) shares | Dec. 04, 2019 USD ($) $ / shares shares | Jun. 30, 2023 USD ($) | Jun. 30, 2022 USD ($) | Dec. 31, 2019 USD ($) $ / shares shares | Mar. 31, 2023 $ / shares | Mar. 31, 2023 $ / shares | Jan. 31, 2023 $ / shares | Dec. 31, 2022 USD ($) | Feb. 16, 2022 $ / shares | Feb. 03, 2022 USD ($) | Feb. 12, 2021 USD ($) | Feb. 28, 2020 USD ($) shares | Feb. 28, 2020 $ / shares | Jan. 03, 2020 $ / shares | Jan. 02, 2020 $ / shares | Aug. 15, 2019 USD ($) | Apr. 12, 2018 USD ($) | Feb. 19, 2018 | Feb. 09, 2018 USD ($) | ||||
Conversion price | (per share) | $ 0.10 | $ 0.05 | $ 0.05 | $ 0.05 | |||||||||||||||||||||||||
Amortization of debt discount | $ 27,715 | $ 27,715 | |||||||||||||||||||||||||||
Joel Oppenheim [Member] | |||||||||||||||||||||||||||||
Notes payable - related party | $ 266,900 | [1] | $ 266,900 | [1] | $ 150,000 | ||||||||||||||||||||||||
Debt interest rate | [1] | 10% | |||||||||||||||||||||||||||
Debt maturity date | [1] | Dec. 31, 2021 | |||||||||||||||||||||||||||
Ivar Siem [Member] | |||||||||||||||||||||||||||||
Notes payable - related party | [2] | $ 278,435 | $ 278,435 | ||||||||||||||||||||||||||
Debt interest rate | [2] | 9% | |||||||||||||||||||||||||||
Debt maturity date | [2] | Dec. 31, 2021 | |||||||||||||||||||||||||||
Mark M Allen [Member] | |||||||||||||||||||||||||||||
Debt instrument face amount | $ 55,000 | ||||||||||||||||||||||||||||
Debt interest rate | 9% | ||||||||||||||||||||||||||||
Debt maturity date | Sep. 02, 2021 | ||||||||||||||||||||||||||||
Revolving Line Of Credit Agreement [Member] | Jovian Petroleum Corporation [Member] | |||||||||||||||||||||||||||||
Revolving line of credit | 25% | 3.50% | |||||||||||||||||||||||||||
Revolving Line Of Credit Agreement [Member] | Jovian Petroleum Corporation [Member] | |||||||||||||||||||||||||||||
Revolving line of credit | $ 500,000 | $ 200,000 | |||||||||||||||||||||||||||
Amended Loan Agreement [Member] | |||||||||||||||||||||||||||||
Debt instrument face amount | $ 2,085,432 | ||||||||||||||||||||||||||||
Debt interest rate | 10% | ||||||||||||||||||||||||||||
Debt maturity date | Dec. 31, 2022 | ||||||||||||||||||||||||||||
Assets working interest | 25% | ||||||||||||||||||||||||||||
Loan Agreement [Member] | |||||||||||||||||||||||||||||
Debt instrument face amount | $ 1,000,000 | $ 50,000 | |||||||||||||||||||||||||||
Debt interest rate | 10% | 0% | |||||||||||||||||||||||||||
Debt maturity date | Jun. 30, 2020 | ||||||||||||||||||||||||||||
Warrant exercise price | (per share) | $ 0.05 | $ 0.10 | $ 0.10 | ||||||||||||||||||||||||||
Warrant to purchase of common stock | shares | 5,000,000 | 5,000,000 | 200,000 | ||||||||||||||||||||||||||
Warrant maturity date | Jan. 06, 2023 | Jan. 02, 2023 | Mar. 01, 2022 | ||||||||||||||||||||||||||
Amortization of debt discount | $ 4,614 | $ 11,111 | |||||||||||||||||||||||||||
Loan Agreement [Member] | Ivar Siem [Member] | |||||||||||||||||||||||||||||
Debt instrument face amount | $ 278,435 | $ 100,000 | $ 75,000 | ||||||||||||||||||||||||||
Debt interest rate | 9% | 12% | 12% | ||||||||||||||||||||||||||
Debt maturity date | Dec. 21, 2021 | ||||||||||||||||||||||||||||
Shares issued on conversion of debt | shares | 1,250,000 | ||||||||||||||||||||||||||||
Conversion price | $ / shares | $ 0.08 | ||||||||||||||||||||||||||||
Loan Agreement [Member] | Ivar Siem [Member] | Warrant [Member] | |||||||||||||||||||||||||||||
Shares issued on conversion of debt | shares | 5,000,000 | ||||||||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 0.10 | ||||||||||||||||||||||||||||
Loan Agreement [Member] | Mark M Allen [Member] | |||||||||||||||||||||||||||||
Debt instrument face amount | $ 245,938 | $ 125,000 | $ 100,000 | $ 200,000 | |||||||||||||||||||||||||
Debt interest rate | 9% | 10% | 10% | 12% | |||||||||||||||||||||||||
Debt maturity date | Jun. 30, 2021 | Jun. 01, 2020 | Jun. 01, 2020 | Jun. 30, 2020 | |||||||||||||||||||||||||
Shares issued on conversion of debt | shares | 2,500,000 | ||||||||||||||||||||||||||||
Conversion price | $ / shares | $ 0.08 | ||||||||||||||||||||||||||||
Warrant exercise price | (per share) | $ 0.10 | $ 0.10 | |||||||||||||||||||||||||||
Warrant to purchase of common stock | shares | 750,000 | 400,000 | |||||||||||||||||||||||||||
Warrant maturity date | Feb. 14, 2022 | Jan. 03, 2023 | |||||||||||||||||||||||||||
Amortization of debt discount | $ 38,249 | $ 31,946 | |||||||||||||||||||||||||||
Amortization of debt | $ 1,903 | $ 1,775 | |||||||||||||||||||||||||||
Loan Agreement [Member] | Mark M Allen [Member] | Warrant [Member] | |||||||||||||||||||||||||||||
Shares issued on conversion of debt | shares | 10,000,000 | ||||||||||||||||||||||||||||
Warrant exercise price | $ / shares | $ 0.10 | ||||||||||||||||||||||||||||
Loan Agreement [Member] | Blue Sky Resource [Member] | |||||||||||||||||||||||||||||
Debt instrument face amount | $ 150,000 | $ 416,900 | |||||||||||||||||||||||||||
Debt interest rate | 10% | ||||||||||||||||||||||||||||
[1]Various shareholder advances were provided by Joel Oppenheim during 2018 and 2019. There were no formal documents drawn. Interest rates were applied based on other similar loan agreements entered into by the Company during that period. On February 12, 2021, the Company entered into an amended loan agreement in the amount of $ 416,900 10 150,000 75,000 12 100,000 12 1,250,000 0.08 5,000,000 0.10 50,000 0 200,000 0.10 March 1, 2022 278,435 9 December 21, 2021 |
SCHEDULE OF FUTURE MINIMUM RE_2
SCHEDULE OF FUTURE MINIMUM REPAYMENTS OF RELATED PARTY NOTES PAYABLE (Details) - Related Party [Member] - USD ($) | Jun. 30, 2023 | Dec. 31, 2022 | |
Defined Benefit Plan Disclosure [Line Items] | |||
2023 | $ 3,244,309 | ||
Thereafter | |||
Total | [1] | $ 3,244,309 | $ 3,460,815 |
[1]All notes are current liabilities (due within one year or less from June 30, 2023.) |
SCHEDULE OF FAIR VALUE OF ASSET
SCHEDULE OF FAIR VALUE OF ASSET RETIREMENT OBLIGATIONS (Details) | 6 Months Ended |
Jun. 30, 2023 | |
Minimum [Member] | |
Inflation rate | 1.92% |
Estimated asset life | 12 years |
Maximum [Member] | |
Inflation rate | 2.15% |
Estimated asset life | 21 years |
SCHEDULE OF CHANGE IN ASSET RET
SCHEDULE OF CHANGE IN ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||
Asset retirement obligations at beginning of period | $ 2,301,335 | $ 2,257,027 | $ 2,257,027 | ||
Accretion expense | $ 46,926 | $ 43,420 | 95,131 | 85,898 | 173,603 |
Disposition | (47,624) | ||||
Foreign currency translation | 30,058 | (81,671) | |||
Asset retirement obligations at end of period | 2,426,523 | 2,426,523 | 2,301,335 | ||
Canadian Properties [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Asset retirement obligations at beginning of period | 1,249,816 | 1,186,297 | 1,186,297 | ||
Accretion expense | 76,501 | 145,191 | |||
Disposition | |||||
Foreign currency translation | 30,058 | (81,671) | |||
Asset retirement obligations at end of period | 1,356,374 | 1,356,374 | 1,249,816 | ||
US Properties [Member] | |||||
Property, Plant and Equipment [Line Items] | |||||
Asset retirement obligations at beginning of period | 1,051,518 | $ 1,070,730 | 1,070,730 | ||
Accretion expense | 18,630 | 28,412 | |||
Disposition | (47,624) | ||||
Foreign currency translation | |||||
Asset retirement obligations at end of period | $ 1,070,148 | $ 1,070,148 | $ 1,051,518 |
ASSET RETIREMENT OBLIGATIONS (D
ASSET RETIREMENT OBLIGATIONS (Details Narrative) - USD ($) | Apr. 08, 2021 | Jun. 30, 2023 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 |
Asset Retirement Obligation Disclosure [Abstract] | |||||
Legal penalties | $ 35,100 | ||||
Asset retirement obligations additional liabilities | $ 2,426,523 | $ 2,301,335 | $ 2,257,027 | $ 792,000 |
SCHEDULE OF COMMON STOCK PURCHA
SCHEDULE OF COMMON STOCK PURCHASE WARRANTS ISSUED AND OUTSTANDING (Details) - $ / shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Equity [Abstract] | ||
Warrants Outstanding, Beginning balance | 23,970,000 | 29,700,000 |
Weighted Average Exercise Price, Beginning balance | $ 0.13 | $ 0.13 |
Warrants, Granted | 500,000 | 1,000,000 |
Weighted Average Exercise Price, Granted | $ 0.10 | $ 0.10 |
Warrants, Expired | (8,000,000) | (6,730,000) |
Weighted Average Exercise Price, Expired | $ 0.19 | $ 0.11 |
Warrants Outstanding, Ending balance | 16,470,000 | 23,970,000 |
Weighted Average Exercise Price, Ending balance | $ 0.10 | $ 0.13 |
SCHEDULE OF WARRANTS ISSUANCE D
SCHEDULE OF WARRANTS ISSUANCE DURING PERIOD (Details) - shares | 6 Months Ended | 12 Months Ended |
Jun. 30, 2023 | Dec. 31, 2022 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Number of warrants granted | 500,000 | 1,000,000 |
Warrant [Member] | Finance Arrangement [Member] | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Number of warrants granted | 500,000 | 1,000,000 |
SCHEDULE OF FAIR VALUE OF ASSUM
SCHEDULE OF FAIR VALUE OF ASSUMPTION OF WARRANTS (Details) | Jun. 30, 2023 | Dec. 31, 2022 |
Measurement Input, Risk Free Interest Rate [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 4.49 | |
Measurement Input, Risk Free Interest Rate [Member] | Minimum [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 2.49 | |
Measurement Input, Risk Free Interest Rate [Member] | Maximum [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 4.22 | |
Measurement Input, Expected Term [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Expected life | 3 years | 3 years |
Measurement Input, Expected Dividend Rate [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 0 | 0 |
Measurement Input, Price Volatility [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 360 | |
Measurement Input, Price Volatility [Member] | Minimum [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 267 | |
Measurement Input, Price Volatility [Member] | Maximum [Member] | ||
Fair Value Measurement Inputs and Valuation Techniques [Line Items] | ||
Warrants measurement input | 299 |
EQUITY (Details Narrative)
EQUITY (Details Narrative) - USD ($) | 6 Months Ended | 12 Months Ended | ||
Nov. 07, 2017 | Jun. 30, 2023 | Dec. 31, 2022 | Jun. 30, 2022 | |
Warrant [Member] | ||||
Class of Stock [Line Items] | ||||
Issuance of common stock related shares | 40,000,000 | |||
Warrants outstanding, weighted-average remaining contractual life | 8 months 12 days | 9 months 21 days | ||
Warrants outstanding, intrinsic value | $ 0 | $ 0 | ||
Series A Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Preferred stock, dividend rate | 9% | |||
Preferred Stock, Convertible, Conversion Price | $ 0.28 | |||
Preferred stock conversion, description | the value of each dollar of preferred stock (based on a $10 per share price) will convert into 7.1429 common shares (which results in a $0.14 per common share conversion rate) | |||
Accrued dividends interest rate | 12% | |||
Cumulative cash dividends | $ 154,172 | |||
Series C Preferred Stock [Member] | ||||
Class of Stock [Line Items] | ||||
Preferred stock, dividend rate | 8% | |||
Preferred stock conversion, description | the value of each dollar of Series C Preferred Stock (based on a $10 per share price) will convert into 100 common shares (which results in a $0.01 per common share conversion rate) | |||
Cumulative cash dividends | $ 4,364 | $ 4,260 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - Leo Womack [Member] - Series C Preferred Stock [Member] | Jan. 31, 2022 USD ($) shares |
Deferred Compensation Arrangement with Individual, Excluding Share-Based Payments and Postretirement Benefits [Line Items] | |
Preferred stock, shares issued | shares | 2,500 |
Preferred stock for cash | $ | $ 25,000 |
SCHEDULE OF LONG-LIVED ASSETS (
SCHEDULE OF LONG-LIVED ASSETS (Details) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2023 | Jun. 30, 2022 | Jun. 30, 2023 | Jun. 30, 2022 | Dec. 31, 2022 | |
Segment Reporting Information [Line Items] | |||||
Total long-lived assets | $ 5,962,102 | $ 5,962,102 | $ 5,986,283 | ||
Operating Segments [Member] | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 482,916 | $ 1,137,890 | 1,859,233 | $ 2,974,250 | |
Production costs | (884,453) | (1,622,399) | (2,543,933) | (2,898,674) | |
Depreciation, depletion, amortization, and accretion | (65,196) | (104,102) | (158,207) | (199,096) | |
Results of operations from producing activities | (466,733) | (588,611) | (842,907) | (123,520) | |
Total long-lived assets | 5,962,102 | 6,203,507 | 5,962,102 | 6,203,507 | |
Depreciation, depletion, amortization, and accretion | 65,196 | 104,102 | 158,207 | 199,096 | |
Operating Segments [Member] | CANADA | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 482,916 | 1,137,890 | 1,859,233 | 2,968,171 | |
Production costs | (880,758) | (1,525,407) | (2,532,093) | (2,789,296) | |
Depreciation, depletion, amortization, and accretion | (57,221) | (96,934) | (139,577) | (184,124) | |
Results of operations from producing activities | (455,063) | (484,451) | (812,437) | (5,249) | |
Total long-lived assets | 1,718,656 | 1,960,436 | 1,718,656 | 1,960,436 | |
Depreciation, depletion, amortization, and accretion | 57,221 | 96,934 | 139,577 | 184,124 | |
Operating Segments [Member] | UNITED STATES | |||||
Segment Reporting Information [Line Items] | |||||
Revenue | 6,079 | ||||
Production costs | (3,695) | (96,992) | (11,840) | (109,378) | |
Depreciation, depletion, amortization, and accretion | (7,975) | (7,168) | (18,630) | (14,972) | |
Results of operations from producing activities | (11,670) | (104,160) | (30,470) | (118,271) | |
Total long-lived assets | 4,243,446 | 4,243,071 | 4,243,446 | 4,243,071 | |
Depreciation, depletion, amortization, and accretion | $ 7,975 | $ 7,168 | $ 18,630 | $ 14,972 |
SEGMENT REPORTING (Details Narr
SEGMENT REPORTING (Details Narrative) | 6 Months Ended |
Jun. 30, 2023 Integer | |
Segment Reporting [Abstract] | |
Number of reportable segments | 1 |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) | May 03, 2022 $ / shares |
Price per share | $ 0.28 |
Series A Preferred Stock [Member] | |
Accrued interest rate percentage | 12% |