Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Jul. 31, 2018 | Oct. 29, 2018 | Jan. 31, 2018 | |
Document And Entity Information | |||
Entity Registrant Name | Amazing Energy Oil & Gas, Co. | ||
Entity Central Index Key | 1,375,618 | ||
Document Type | 10-K | ||
Document Period End Date | Jul. 31, 2018 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --07-31 | ||
Is Entity a Well-known Seasoned Issuer? | No | ||
Is Entity a Voluntary Filer? | No | ||
Is Entity's Reporting Status Current? | Yes | ||
Entity Filer Category | Non-accelerated Filer | ||
Entity Public Float | $ 14,937,900 | ||
Entity Common Stock, Shares Outstanding | 84,095,232 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2,018 | ||
Entity Emerging Growth Company | false | ||
Entity Small Business | true | ||
Entity Ex Transition Period | false | ||
Entity Shell Company | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Jul. 31, 2018 | Jul. 31, 2017 |
Current assets: | ||
Cash and cash equivalents | $ 523,695 | $ 756,603 |
Receivable from working interest owners | 33,954 | 64,392 |
Production revenue receivable | 48,188 | 39,901 |
Prepaid expenses | 40,000 | 67,843 |
Total current assets | 645,837 | 928,739 |
Oil and gas properties, net | 5,422,989 | 3,869,489 |
Unevaluated property costs | 3,079,492 | 2,049,593 |
Property and equipment, net | 434,528 | 545,812 |
Other assets | 78,600 | 76,622 |
TOTAL ASSETS | 9,661,446 | 7,470,255 |
Current liabilities: | ||
Accounts payable | 295,015 | 139,821 |
Payable to related party | 25,038 | |
Promissory notes, related party | 311,730 | 430,892 |
Note payable | 50,000 | |
Notes payable, related parties | 347,500 | |
Note payable on acquisition, related party | 104,167 | |
Equipment note payable | 10,247 | 10,006 |
Due to working interest owners | 389,562 | 421,423 |
Accrued interest payable, related parties | 400,805 | 244,009 |
Total current liabilities | 1,432,397 | 1,747,818 |
Long term liabilities: | ||
Promissory notes, related party | 2,769,440 | 2,650,278 |
Equipment note payable | 22,847 | 34,981 |
Asset retirement obligation | 258,575 | 183,397 |
Total liabilities | 4,483,259 | 4,616,474 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, par value $0.001 per share; 3,000,000,000 shares authorized; 83,975,232 issued and outstanding at July 31, 2018 66,581,040 issued and outstanding at July 31, 2017 | 83,977 | 66,581 |
Additional paid-in capital | 37,637,323 | 28,814,857 |
Accumulated deficit | (32,543,703) | (26,028,247) |
Total stockholders' equity | 5,178,187 | 2,853,781 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | 9,661,446 | 7,470,255 |
Series A Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, no par value, 10,000,000 shares authorized; Series A, par value $0.01, 9,000 shares issued and outstanding Series B, par value $0.01, 50,000 shares issued and outstanding | 90 | 90 |
Series B Preferred Stock [Member] | ||
Stockholders' equity: | ||
Preferred stock, no par value, 10,000,000 shares authorized; Series A, par value $0.01, 9,000 shares issued and outstanding Series B, par value $0.01, 50,000 shares issued and outstanding | $ 500 | $ 500 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jul. 31, 2018 | Jul. 31, 2017 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Common stock, par value (in dollars per share) | $ .001 | $ 0.001 |
Common stock, shares authorized | 3,000,000,000 | 3,000,000,000 |
Common stock, shares issued | 83,975,232 | 66,581,040 |
Common stock, shares outstanding | 83,975,232 | 66,581,040 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares issued | 9,000 | 9,000 |
Preferred stock, shares outstanding | 9,000 | 9,000 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares issued | 50,000 | 50,000 |
Preferred stock, shares outstanding | 50,000 | 50,000 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Revenue | ||
Oil and gas sales | $ 362,245 | $ 276,502 |
Oilfield service revenue | 84,389 | 124,618 |
Total Gross Revenue | 446,634 | 401,120 |
Operating Expense | ||
Production costs | 130,056 | 436,604 |
Depreciation, depletion and amortization | 342,426 | 301,124 |
General and administrative expense | 6,286,876 | 822,336 |
Accretion expense | 9,449 | 9,396 |
Gain on sale of mineral rights | (170,000) | |
Total Operating Expenses | 6,768,807 | 1,399,460 |
Loss from operations | (6,322,173) | (998,340) |
Other (income) expense | ||
Interest income | (13,946) | (3,175) |
Financing fees associated with debt modification | 105,800 | |
Interest expense | 7,276 | |
Interest expense, related parties | 207,229 | 264,567 |
Total other (income) expense | 193,283 | 374,468 |
Loss before taxes | (6,515,456) | (1,372,808) |
Provision for income taxes | ||
Net loss | (6,515,456) | (1,372,808) |
Deemed capital distribution on acquisition of common control entity | (423,648) | |
Net loss attributable to common stockholders | $ (6,515,456) | $ (1,796,456) |
Loss per share: | ||
Basic and Diluted | $ (0.092) | $ (0.030) |
Weighted average shares outstanding: | ||
Basic and Diluted | 70,733,286 | 64,437,390 |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance at Jul. 31, 2016 | $ 590 | $ 59,840 | $ 27,638,956 | $ (24,655,439) | $ 3,043,947 |
Beginning Balance (in shares) at Jul. 31, 2016 | 59,000 | 59,839,456 | |||
Issuance of common stock for cash | $ 6,250 | 1,629,962 | 1,636,212 | ||
Issuance of common stock for cash (in shares) | 6,249,959 | ||||
Issuance of common stock for services | $ 31 | 12,344 | 12,375 | ||
Issuance of common stock for services (in shares) | 31,625 | ||||
Acquisition of common control entity | (571,745) | (571,745) | |||
Common shares issued for debt modification | $ 460 | 105,340 | 105,800 | ||
Common shares issued for debt modification (in shares) | 460,000 | ||||
Net loss | (1,372,808) | (1,372,808) | |||
Ending Balance at Jul. 31, 2017 | $ 590 | $ 66,581 | 28,814,857 | (26,028,247) | 2,853,781 |
Ending Balance (in shares) at Jul. 31, 2017 | 59,000 | 66,581,040 | |||
Issuance of common stock for cash | $ 12,920 | 3,217,080 | 3,230,000 | ||
Issuance of common stock for cash (in shares) | 12,920,008 | ||||
Issuance of common stock for services | $ 857 | 534,343 | 535,200 | ||
Issuance of common stock for services (in shares) | 856,628 | ||||
Issuance of common stock for oil and gas properties | $ 3,619 | 1,732,810 | 1,736,429 | ||
Issuance of common stock for oil and gas properties (in shares) | 3,617,556 | ||||
Stock purchase warrants issued for oil and gas properties | 77,961 | 77,961 | |||
Stock purchase warrants issued for services | 1,038,587 | 1,038,587 | |||
Stock Options issued for services | 2,221,685 | 2,221,685 | |||
Net loss | (6,515,456) | (6,515,456) | |||
Ending Balance at Jul. 31, 2018 | $ 590 | $ 83,977 | $ 37,637,323 | $ (32,543,703) | $ 5,178,187 |
Ending Balance (in shares) at Jul. 31, 2018 | 59,000 | 83,975,232 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Cash Flows From Operating Activities | ||
Net loss | $ (6,515,456) | $ (1,372,808) |
Adjustments to reconcile net loss to net cash from operations: | ||
Stock and warrant based compensation | 3,795,472 | 12,375 |
Accretion expense | 9,449 | 9,396 |
Depreciation, depletion and amortization | 342,426 | 301,124 |
Bad debt expense | 31,404 | |
Gain on sale of leasehold interest | (170,000) | |
Financing fees associated with debt modification | 105,800 | |
Change in: | ||
Receivable from working interest owners | 30,438 | (24,454) |
Production revenue receivable | (8,287) | (2,858) |
Other assets | (1,978) | |
Prepaid expenses | 27,843 | (6,760) |
Accounts payable and accrued liabilities | 155,194 | (66,802) |
Due to working interest owners | (6,823) | (1,442) |
Accrued interest payable | 156,796 | 223,685 |
Net cash from operating activities | (2,014,926) | (961,340) |
Cash Flows From Investing Activities | ||
Investment in oil and gas properties | (1,122,422) | (562,155) |
Acquisition of property and equipment | (12,000) | (212,898) |
Purchase letter of credit for operator bond | (50,000) | |
Proceeds from sale of oil and gas working interests | 200,000 | 656,596 |
Proceeds from sale of property and equipment | 4,000 | |
Proceeds from sale of leasehold and mineral rights | 170,000 | |
Net cash from investing activities | (934,422) | 5,543 |
Cash Flows From Financing Activities | ||
Proceeds from sale of common stock | 3,230,000 | 1,603,961 |
Proceeds from notes payable, related parties | 25,000 | 225,000 |
Proceeds from note payable | 50,000 | |
Payments on note payable | (50,000) | |
Advances from line of credit | 175,000 | |
Payments on line of credit | (225,000) | |
Payments on notes payable, related parties | (372,500) | (57,500) |
Payments on equipment note | (11,893) | (8,005) |
Payments on note payable on acquisition, related party | (104,167) | (395,833) |
Net cash from financing activities | 2,716,440 | 1,367,623 |
Net change in cash | (232,908) | 411,826 |
Cash - beginning of period | 756,603 | 344,777 |
Cash - end of period | 523,695 | 756,603 |
Non-cash investing and financing activities | ||
Cash paid for interest | 34,993 | 27,834 |
Acquisition of oil and gas properties for shares of common stock | 1,736,429 | |
Acquisition of oil and gas properties for warrants to purchase common stock | 77,961 | |
Due to working interest owners transferred to related party, Note 6 | 25,038 | |
Equipment acquired with note payable | 52,992 | |
Acquisition of common control entity in exchange for related party note and oilfield receivable, related party | 571,745 | |
Deemed capital distribution on acquisition of common control entity | $ 423,648 |
NATURE OF OPERATIONS
NATURE OF OPERATIONS | 12 Months Ended |
Jul. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF OPERATIONS | NOTE 1 – NATURE OF OPERATIONS Amazing Energy Oil and Gas, Co. is incorporated in the State of Nevada. Through its primary subsidiary, Amazing Energy, Inc., also a Nevada corporation, the Company operates its main business of exploration, development, and production of oil and gas in the Permian Basin of West Texas. On October 7, 2014, the Company entered into a change in control agreement with certain shareholders of Amazing Energy, Inc. The change in control agreement was the first step in a reverse merger process whereby the shareholders of Amazing Energy, Inc. would control about 95% of the shares of common stock of Amazing Energy Oil and Gas, Co., and Amazing Energy Oil and Gas, Co. would own 100% of the outstanding shares of common stock of Amazing Energy, Inc. This entire reverse merger process was completed in July of 2015. Amazing Energy, Inc. was formed in 2010 as a Texas corporation and then changed its domicile to Nevada in 2011. The Company owns interests in oil and gas properties located in Texas. The Company is primarily engaged in the acquisition, exploration and development of oil and gas properties and the production and sale of oil and natural gas. Amazing Energy, LLC was formed in December 2008 as a Texas Limited Liability Company. In December of 2010, Amazing Energy, Inc. and Amazing Energy, LLC were combined as commonly controlled entities. On July 31, 2016, the Company acquired Gulf South Securities, Inc. (“GSSI”). GSSI was organized to be active in various aspects of the securities industry and was registered as a broker-dealer with the Financial Industry Regulatory Authority (“FINRA”) and the Securities and Exchange Commission (“SEC”). The Company allowed GSSI’s FINRA registration to lapse as of February 28, 2017. On January 8, 2018, the Company dissolved Gulf South Securities, Inc. On August 31, 2016, the Company acquired 100% of the total outstanding shares of common stock of Jilpetco, Inc., a Texas corporation (“Jilpetco”) which was owned by Jed Miesner, the Chairman of the Company’s board of directors at the time of the transaction, in consideration of $500,000. Jilpetco is engaged in the business of operating and providing oilfield services to oil and gas properties. As a result, Jilpetco became a wholly owned subsidiary corporation of the Company. The parties agreed to allow Jed Miesner to assign certain accounts receivable and to exclude certain personal property from the transaction. In addition, the $500,000 consideration for the acquisition is in the form of a note payable at 6% interest. (See Note 6). Due to the Company and Jilpetco relationship with Jed Meisner, the acquisition was accounted for as common control acquisition. Under this method of accounting, the Company’s Consolidated Financial Statements were recasted to reflect Jilpetco’s historical book basis in its assets and liabilities as if the two companies had always been combined. The difference between the purchase price and historical cost of the net assets acquired was recorded as a deemed capital distribution of $423,648 as of August 1, 2016. |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Jul. 31, 2018 | |
Accounting Policies [Abstract] | |
SIGNIFICANT ACCOUNTING POLICIES | NOTE 2 – SIGNIFICANT ACCOUNTING POLICIES Basis of presentation This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. (U.S. GAAP) The financial statements are presented on a consolidated basis and include all of the accounts of Amazing Energy Oil and Gas, Co. and its wholly owned subsidiaries, Amazing Energy, Inc., Amazing Energy LLC, and Jilpetco, Inc. and Kisa Gold Mining, Inc. All significant intercompany balances and transactions have been eliminated. The consolidated statement of operations for the year ended July 31, 2017 has been revised to eliminate intercompany oilfield service revenue and related production costs between Amazing Energy Oil and Gas, Co. and Jilpetco. The impact of the revisions was to decrease both categories by $160,659. The revision had no impact on the net loss on the consolidated statement of operations, the consolidated balance sheet at July 31, 2017, or the consolidated statement of cash flows for the year ended July 31, 2017. Going Concern These consolidated financial statements have been prepared in accordance with U.S. GAAP as a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. As shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of July 31, 2018, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. At July 31, 2018, the Company has an accumulated deficit of $32,453,703 and a working capital deficit of $786,560. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable oil and gas properties and generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining additional commercial production. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern. Revenue and Cost Recognition The Company uses the sales method of accounting for oil and gas revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company’s individual interest in the property. Periodically, imbalances between production and nomination volumes can occur for various reasons. In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined. Costs associated with production are expensed in the period in which they are incurred. The Company also provided oilfield services to both related party entities and outside oil and gas well owners. Revenue from administration fees to unrelated working interest owners are recognized on an accrual basis in the period services are provided. Receivables Production revenue receivable consist of oil and natural gas revenues due under normal trade terms. Receivables are carried at original amounts on joint interest billings less an estimate for doubtful accounts. Management determines the allowance by regularly evaluating individual working interest owner receivables and considering their financial condition, credit history and current economic conditions. Due to Working Interest Owners The Company provides oilfield services which includes interest owner accounting and subsequent disbursement of the interest owners’ pro-rata share of oil proceeds from a given lease. Generally, the pro-rata share of oil proceeds less any applicable pro-rata share of operating expenses is distributed to the interest owner within two months of sale of oil and natural gas. The due to working interest owners balances comprises those proceeds which have yet to be distributed to interest owners as a result of the time required to process administrative functions and process payment and any revenue suspense. Asset Retirement Obligations The fair value of a liability for an asset’s retirement obligation (“ARO”) is recognized in the period in which a contractual obligation is created and if a reasonable estimate of fair value can be made. A corresponding charge capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment costs incurred are recorded as a reduction of the ARO liability. 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. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and certain assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Management’s estimates include estimates of impairment in carrying value of assets and liabilities, and collectability of recorded oilfield services receivables, stock-based compensation, deferred income taxes, asset retirement obligations, oil and gas property ceiling tests, and depreciation, depletion and amortization. Actual results could differ from these estimates. Risks and Uncertainties The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging oil and gas business, including the potential risk of business failure. Concentration of Risks The Company’s cash is placed with a highly rated financial institution, and the Company periodically reviews the credit worthiness of the financial institutions with which it does business. At times, the Company’s cash balances are in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. The Company’s oil and gas revenue originates from production from its properties in Texas. Each revenue stream is sold to a single purchaser of minerals through month to month contracts. While this creates a purchaser concentration, there are alternate buyers of the production in event the sole customer is unable or unwilling to purchase. The Company sells most of its production to only two purchasers. As a result, during the fiscal years ended July 31,2018 and 2017, these purchasers represented 50% or more of its oil and gas revenue. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a remaining maturity of three months or less when acquired to be cash equivalents. Restricted Cash As of July 31, 2018 and 2017, the Company has a letter of credit in the amount of $50,000 in favor of the Texas Railroad Commission as a bond for reclamation on its oil and gas properties which is included in other assets on the consolidated balance sheet. Income Taxes The Company accounts for income taxes using the liability method. The liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of (i) temporary differences between financial statement carrying amounts of assets and liabilities and their basis for tax purposes and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when management concludes that it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. The Company recognizes a tax benefit from an uncertain position when it is more likely than not that the position will be sustained upon examination, based on the technical merits of the position and will record the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority. The Company classifies any interest and penalties associated with income taxes as income tax expense. Fair value of financial instruments Financial instruments consist of cash and various notes payable. The fair value of these financial instruments approximate the carrying value. Property, plant, and equipment Property, plant, and equipment are stated at cost. Improvements which significantly increase an asset’s value or significantly extend its useful life are capitalized and depreciated over the asset’s remaining useful life. When property, plant or equipment is sold at a price either higher or lower than its carrying amount, or un-depreciated cost at the date of disposal, the difference between the sale proceeds over the carrying amount is recognized as gain, while a loss is recognized when the carrying amount exceeds the sale proceeds. Property, plant, and equipment are depreciated on a straight-line basis over their useful lives, which are typically five to seven years for equipment. Realization of the carrying value of other property and equipment is reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets are determined to be impaired if a forecast of undiscounted estimated future net operating cash flows directly related to the asset, including disposal value, if any, is less than the carrying amount of the asset. If any asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. Repairs and maintenance costs are expensed in the period incurred. Oil and gas properties The Company uses the full cost method of accounting for oil and gas properties. Under this method of accounting, all costs incurred in the acquisition, exploration and development of oil and natural gas properties, including unproductive wells, are capitalized. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and natural gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Oil and natural gas properties include costs that are excluded from costs being depleted or amortized. Excluded costs represent investments in unproved and unevaluated properties and include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. These costs are excluded until the project is evaluated and proved reserves are established or impairment is determined. Excluded costs are reviewed periodically to determine if impairment has occurred. The amount of any evaluated or impaired oil and gas properties is transferred to capitalized costs being amortized. Depletion and amortization The depletion base for oil and natural gas properties includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (“DD&A”), estimated future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization. The depletion base of oil and natural gas properties is amortized on a units-of-production method. Limitation on Capitalized Costs Under the full-cost method of accounting, the Company is required, at the end of each fiscal quarter, to perform a test to determine the limit on the book value of our oil and natural gas properties (the "Ceiling Test"). If the capitalized costs of our oil and gas properties, net of accumulated amortization and related deferred income taxes, exceed the "Ceiling", this excess or impairment is charged to expense and reflected as additional accumulated depreciation, depletion and amortization or as a credit to oil and natural gas properties. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted 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 (with consideration of price changes only to the extent provided by contractual arrangements including hedging arrangements), less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves; plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; and net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. The Ceiling Tests did not result in an impairment of our oil and natural properties during the years ended July 31, 2018 and 2017. The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors, which are difficult to predict, could also affect estimates of proved reserves in the future. Stock-based compensation Compensation cost for equity awards is based on the fair value of the equity instrument on the date of grant. The Company estimates the fair value of options and warrants to purchase common stock using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected life"), the estimated volatility of the Company's common stock price over the expected term ("volatility"), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten-year maximum term and varying vesting periods as determined by the Board of Directors. For options issued with service vesting conditions, compensation cost is recognized over the vesting period. For options issued with performance conditions, compensation cost is recognized if and when the Company concludes that the performance condition will be achieved, net of an estimate of pre-vesting forfeitures. For options issued with market conditions, compensation cost is recognized over the requisite service period and discounted by the probability of the condition thereof being met. Environmental laws and regulations The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations. Fair value measurements When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At July 31, 2018 and July 31, 2017, the Company had no assets or liabilities accounted for at fair value on a recurring basis or nonrecurring basis. Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 Revenue Recognition, replacing guidance currently codified in Subtopic 605-10 Revenue Recognition-Overall with various SEC Staff Accounting Bulletins providing interpretive guidance. The guidance establishes a new five step principle-based framework in an effort to significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. The Company intends to adopt the new standard on August 1, 2018 and expects to use the modified retrospective method. The Company has evaluated the impact of the future adoption of ASU No. 2014-09 on its consolidated financial statements and does not expect significant changes in the timing of revenue recognition compared to the existing methodology. In February 2016 the FASB issued ASU, No. 2016-02, Leases. The ASU requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leased assets. ASU No. 2016-02 will be effective for the Company on August 1, 2019, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU No. 2016-02 will have on the Company’s consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification for cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this update on the consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation, Improvements to Nonemployee Share-Based Payment Accounting. ASU No. 2018-07 expands the scope of to include share-based payment transactions for acquiring goods and services from nonemployees. ASU No. 2018-07 will become effective for the Company on August 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 12 Months Ended |
Jul. 31, 2018 | |
Loss per share: | |
EARNINGS PER SHARE | NOTE 3 – EARNINGS PER SHARE Basic Earnings Per Share (“EPS”) is computed by dividing net income (loss) by the weighted-average number of shares outstanding during the period and includes no dilution. Diluted EPS reflects the potential dilution of securities that could occur from common shares issuable through convertible debt, convertible preferred stock and warrants. The outstanding securities at July 31, 2018 and 2017, that could have a dilutive effect are as follows: July 31,2018 July 31,2017 Convertible preferred stock 6,490,000 6,490,000 Warrants 6,280,633 2,674,576 Stock options 28,085,000 - Total potential dilution 40,855,633 9,164,576 For the years ended July 31, 2018 and 2017, the effect of this potential dilution has not been recognized since it would have been anti-dilutive. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 12 Months Ended |
Jul. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | NOTE 4 – PROPERTY AND EQUIPMENT As of July 31, 2018 and July 31, 2017, the property and equipment asset balance was composed of the following: July 31,2018 July 31,2017 Drilling equipment $ 612,000 $ 600,000 Other equipment 252,204 252,204 864,204 852,204 Less: Accumulated depreciation (429,676 ) (306,392 ) Total property and equipment $ 434,528 $ 545,812 |
OIL AND GAS PROPERTIES
OIL AND GAS PROPERTIES | 12 Months Ended |
Jul. 31, 2018 | |
Extractive Industries [Abstract] | |
OIL AND GAS PROPERTIES | NOTE 5 – OIL AND GAS PROPERTIES The Company is currently participating in oil and gas exploration activities in Texas. The Company’s oil and gas properties are located entirely in the United States. The Company’s mineral lease interests represent leased acreage within the Pecos County 70,000 acre AMI as of July 31, 2018. Through a series of agreements with representatives of mineral owners, the Company has the right to acquire additional acreage for future development encompassing a large percentage of the 70,000 acres not under lease at July 31, 2018. Under those agreements the Company is required to make annual payments into trust accounts to hold the acquisition opportunity. As actual leases are acquired those trust funds are available to pay the lease cost per acre at predetermined amounts. The Company is obligated to pay certain bonus lease payments related to certain of its lease properties. The Company is required to pay $27,000 each year on the JT Walker lease on annually on August 7 th . The Company is also required to pay $200,000 every five years on August 7 th for the JPMorgan lease. The most recent payment on this lease was made in July 2017. The next JPMorgan lease payment is due by August 7, 2022. The Company is current in its lease payments under these leases. At July 31, 2018, the Company has a 100% working interest in twenty-three (25) wells located on these leasehold premises. The Company has drilled 25 wells throughout the property, with twenty-three producing and two shut-in. The oil and gas property balances at July 31, 2018 and July 31, 2017, are set forth in the table below: July 31,2018 July 31,2017 Unproved properties not subject to amortization $ 3,079,492 $ 2,049,593 Property costs subject to amortization 6,627,470 4,920,558 Asset retirement obligation, asset 194,615 128,886 Total cost of oil and gas properties 9,901,577 7,099,037 Less: Accumulated depletion (1,399,096 ) (1,179,955 ) Oil and gas properties, net full cost method $ 8,502,481 $ 5,919,082 During the year ended July 31, 2017, the Company sold an 11% working interest in four wells and a 60% working interest in three wells for a total of $656,596 in cash to Gulf South Energy Partners, a related entity controlled by Robert Bories, who served as Treasurer of the Company at the time. The sale of working interests in seven wells resulted in a reduction in oil and gas properties of $656,596 for the year ended July 31, 2017. No gain or loss was recognized since the sale did not significantly alter the relationship between capitalized costs and proved reserves. Effective March 9, 2018, the Company transferred a 16.125% working interest in four wells and issued common stock purchase warrants to acquire the Company’s common stock valued at $77,961, see Note 14, in exchange for $200,000 in cash. Gain or loss was not recognized on this sale since the sale did not significantly alter the relationship between capitalized costs and proved reserves. During the year ended July 31, 2018, the Company issued 3,617,556 shares of common stock for lease interests with total fair value of $1,736,429. The working interests below were acquired effective June 1, 2018 and resulted in the Company holding 100% of the working interest in the developed wells in Pecos County Section 91. Owner Name Number of Fair Working Revenue Net Revenue Shares Value Interest Interest Interest Related Parties TONY ALFORD, Chairman of the Board 246,668 $ 118,401 10.83 % 8.13 % 75 % PETRO-PRO, LTD. 246,668 $ 118,401 10.83 % 8.13 % 75 % Unrelated Parties 3,124,220 $ 1,499,627 87.38 % 65.59 % 75 % Totals 3,617,556 $ 1,736,429 |
OILFIELD SERVICE MATTERS, RELAT
OILFIELD SERVICE MATTERS, RELATED PARTY | 12 Months Ended |
Jul. 31, 2018 | |
Notes to Financial Statements | |
OILFIELD SERVICE MATTERS, RELATED PARTY | NOTE 6 – OILFIELD SERVICE MATTERS, RELATED PARTY Effective June 1, 2018 the Company ceased to be the record operator of properties in which it owns no working interest. The properties’ principal working interest owner is Petro Pro Ltd. (“Petro Pro”), an entity controlled by Jed Miesner, the Chairman of the Board of Directors at July 31, 2018. In connection with the transfer of operations to US Petro, LLC (an entity is controlled by related parties, Mr. Miesner and Mr. Afford, Chairman) the Company agreed to transfer $25,038 in cash to US Petro which was the amount of suspended revenue attributable to owners in the properties. |
COMMON CONTROL ACQUISITION OF J
COMMON CONTROL ACQUISITION OF JILPETCO, INC. | 12 Months Ended |
Jul. 31, 2018 | |
Business Combinations [Abstract] | |
COMMON CONTROL ACQUISITION OF JILPETCO, INC. | NOTE 7 – COMMON CONTROL ACQUISITION OF JILPETCO, INC. On April 15, 2016, the Company entered into an agreement with Jed Miesner, the Chairman of the Company’s Board of Directors, to acquire all of his interest (100% of the total outstanding shares of common stock) in Jilpetco, Inc., a Texas corporation (“Jilpetco”) in consideration of $500,000. Jilpetco is engaged in the business of operating and providing oilfield services to oil and gas properties, including the Company’s. On August 25, 2016, the foregoing agreement was amended to extend the closing date to August 31, 2016 and exclude certain property therefrom. The parties agreed to allow Jed Miesner to exclude certain oilfield service receivables for $71,745 from the transaction. In addition, the $500,000 in additional consideration for the acquisition was in the form of a note payable at 6% interest calling for monthly payments of principal and interest totaling $511,962 and maturing on December 25, 2017 (Note 8 – Notes Payable, Related Parties). The Note called for five monthly payments of $50,752 commencing on September 25, 2016, and twelve payments of $21,517 commencing on January 25, 2017. The Company completed the acquisition of Jilpetco on August 31, 2016 (Note 1 - Nature of Operations). |
NOTES PAYABLE - RELATED PARTIES
NOTES PAYABLE - RELATED PARTIES | 12 Months Ended |
Jul. 31, 2018 | |
Notes to Financial Statements | |
NOTES PAYABLE - RELATED PARTIES | NOTE 8 – NOTES PAYABLE– RELATED PARTIES Promissory notes, related parties On January 3, 2011, the Company formalized a loan agreement for $1,940,000 with Jed Miesner, the Company’s CEO and Chairman at the time of the agreement and currently a director. The loan is scheduled to mature on December 31, 2030, bear interest at the rate of 8% per annum, and collateralized with a leasehold deed of trust covering certain leasehold interests in Pecos County, Texas. At July 31, 2018 and 2017, the current component of this loan was $172,660 and $248,704, respectively. The long-term amounts at July 31, 2018 and 2017 were $1,767,340 and $1,691,296, respectively. On December 30, 2010, Amazing Energy, LLC, formalized loan agreements with Petro Pro Ltd., an entity controlled by Jed Miesner for $1,100,000. The loan is scheduled to mature on December 31, 2030, bear interest at the rate of 8% per annum and is collateralized with a leasehold deed of trust covering certain leasehold interests in Pecos County, Texas. At July 31, 2018 and 2017, the current component of this loan was $97,900 and $141,018, respectively. The long-term amounts at July 31, 2018 and 2017, were $1,002,100 and $958,982, respectively. On December 30, 2010, Amazing Energy, LLC, (a wholly owned subsidiary of the Company) entered into a $2,000,000 line of credit facility with JLM Strategic Investments LP, an entity controlled by Jed Miesner. Funds advanced on the line of bear interest at the rate of 8% per annum and are collateralized with a leasehold deed of trust covering certain leasehold interests in Pecos County, Texas. At July 31, 2018 and 2017, the current component of this loan was $41,170. Terms of the notes, as amended, provide for adjustment to the interest rate beginning February 1, 2017 from 8% to a rate of 6% through February 1, 2019, and a rate of Prime plus 2% for the remaining years. Principal maturities for the two loan agreements and the credit facility outstanding at July 31, 2018 for the remaining terms are summarized by year as follows: Principal Maturities Year ending July 31, Jed Miesner Petro Pro, Ltd. JLM Strategic Investments, LP Total 2019 $ 172,660 $ 97,900 $ 41,170 $ 311,730 2020 166,840 94,600 - 261,440 2021 161,020 91,300 - 252,320 2022 155,200 88,000 - 243,200 2023 149,380 84,700 - 234,080 Subsequent years 1,134,900 643,500 - 1,778,400 $ 1,940,000 $ 1,100,000 $ 41,170 $ 3,081,170 At July 31, 2018, Mr. Miesner has waived any event of default on the delinquent payments of principal and interest due on the loans and credit facility. As of July 31, 2018 and 2017, the accrued and unpaid interest on this related party convertible debt was $400,805 and $215,935, respectively. See Note 16 regarding payment of accrued interest amounts. Related party interest expense for the year ended July 31, 2018 and 2017, was $198,698 and $215,935, respectively. At July 31, 2018, the balance of the convertible debt and accrued interest was convertible into membership shares of Amazing Energy, LLC, a wholly owned subsidiary of the Company at $.60 per share. Note payable on acquisition, related party As described in Note 7, in August 2016, the Company executed a note with Jed Meisner for $500,000 in consideration for the acquisition of Jilpetco. The note bore interest at 6% and had payments of principal and interest payments through maturity on December 25, 2017. On December 19, 2017, the Company made the final principal payment on the note. Notes payable, related parties On May 27, 2016, Jilpetco entered into several loan agreements totaling $180,000 with Tony Alford, Robert Bories, Robert Manning, Petro Pro Ltd., and Reese Pinney. Messrs. Alford and Manning were directors of the Company at the time of the agreements. Messrs. Bories and Pinney are officers of the Company. During the years ended July 31, 2018 and 2017, additional borrowings and participation fees of $25,000 and $225,000, respectively, were added to these notes payable. The notes and related interest payable were paid in full in December 15, 2017 and January 2, 2018. |
NOTE PAYABLE
NOTE PAYABLE | 12 Months Ended |
Jul. 31, 2018 | |
Debt Disclosure [Abstract] | |
NOTE PAYABLE | NOTE 9 – NOTE PAYABLE On July 21, 2017, the Company entered into a note payable agreement with an unrelated party. The principal amount of the note was $50,000. The note matured on January 21, 2018 and bore interest at a rate of 8% per annum and included a participation fee of $5,000 equal to 10% of the principal amounts of the loan. The loan was paid in full including interest and fees on January 21, 2018. |
EQUIPMENT NOTE PAYABLE
EQUIPMENT NOTE PAYABLE | 12 Months Ended |
Jul. 31, 2018 | |
Notes to Financial Statements | |
EQUIPMENT NOTE PAYABLE | NOTE 10 – EQUIPMENT NOTE PAYABLE On September 13, 2016, the Company entered into a retail installment sale contract and security agreement (the “equipment note”) for the purchase of equipment. The equipment note is collateralized by a tractor loader backhoe. The principal amount of the equipment note was $52,992, and it bears interest at 4.75% per annum. The equipment note requires 60 monthly installment payments of $994 through September 13, 2021. At July 31, 2018 and 2017, the balance of the note was $33,094 and $35,987, respectively. Principal payments for future years ending July 31, 2019, 2020, 2021, and 2022 are $10,247, $10,998, $11,535, and $314, respectively. |
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS | 12 Months Ended |
Jul. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATIONS | NOTE 11 – ASSET RETIREMENT OBLIGATIONS The information below reconciles the value of the asset retirement obligation for years ended July 31, 2018 and 2017 respectively: For the years ended July 31, 2018 2017 Beginning balance $ 183,397 $ 211,218 Asset retirement obligation incurred 65,729 - Accretion expense 9,449 9,396 Revisions in estimates - (37,217 ) Ending balance, July 31,2018 $ 258,575 $ 183,397 During the year ended July 31, 2018, the Company increased its working interest ownership in oil and gas leases for which it already had an interest (See Note 5). As a result, the Company increased its asset retirement obligation by $65,729 to reflect the increased ownership in these working interests. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Jul. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 12 - INCOME TAXES The Company did not recognize a tax provision for the years ended July 31, 2018 and 2017. The following is reconciliation between the federal income tax benefit computed at the statutory federal income tax rate and actual income tax benefit for the years ended July 31, 2018 and July 31, 2017 and deferred taxes as of July 31, 2018 and 2017: For the years ended July 31, 2018 2017 Applicable statutory benefit at 26.5% in 2018 and 34% in 2017 $ (1,766,977 ) $ (736,582 ) Prior year change in estimate 112,187 (260,131 ) Impact on the change in federal tax rate 1,471,136 - Sale of subsidiary - 57,800 Meals and entertainment and other 3,959 3,813 Change in valuation allowance 179,695 935,100 Net tax benefit $ - $ - 2018 2017 Deferred Tax Assets: Net operating loss carryforward $ 2,539,482 $ 3,628,293 Stock based compensation 867,731 - Depletion and depreciation - 65,443 Total deferred tax assets 3,407,213 3,693,736 Deferred Tax Liabilities: Intangible drilling and other costs for oil and gas properties $ (905,799 ) $ (1,466,531 ) Depletion and depreciation (33,824 ) - Other (91,140 ) (30,449 ) Total deferred tax liabilities (1,030,763 ) (1,496,980 ) Net deferred tax assets and liabilities 2,376,450 2,196,756 Less valuation allowance 2,376,450 2,196,756 Net deferred tax assets and liabilities $ - $ - The Company had federal net operating loss carry forwards of approximately $12,100,000 at July 31, 2018. The federal net operating loss carry forwards will begin to expire in fiscal years ending July 31, 2034 through July 31, 2038. Net operating losses incurred prior to the change in control transaction in October 2014 (see Note 1) could be subject to limitation. Realization of the deferred tax asset is dependent, in part, on generating sufficient taxable income prior to expiration of the loss carry forwards. The Company has placed a 100% valuation allowance against the net deferred tax asset because future realization of these assets is not assured. On December 22, 2017, the United States enacted the Tax Cuts and Jobs Act (the "Act") resulting in significant modifications to existing law. The Company did not incur any income tax benefit or provision for the year ended July 31, 2018 as a result of the changes to tax laws and tax rates under the Act. The Company’s net deferred tax asset was reduced by approximately $1.5 million during the year ended July 31, 2018, which consisted primarily of the remeasurement of federal deferred tax assets and liabilities from 34% to 21%. Management has reviewed the Company’s tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. Currently tax years from fiscal 2016 through 2018 remain open for examination by tax authorities. Net operating losses prior to 2015 could be adjusted during an examination of open years. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Jul. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 13 – COMMITMENTS AND CONTINGENCIES The Company is subject to contingencies because of environmental laws and regulations. Present and future environmental laws and regulations applicable to the Company's operations could require substantial capital expenditures or could adversely affect its operations in other ways that cannot be predicted at this time. Legal contingency On September 7, 2017, Amazing Energy LLC and Jilpetco Inc. were served with a lawsuit, being Cause No. P-7600-83-CV in the 83 rd District Court in Pecos County, Texas. The nature of the litigation is that Amazing Energy & Jilpetco were joined as defendants in a case in Pecos County, Texas, between Fredrick Bartlett Wulff, Sr. et al plaintiffs and Benedum & Trees, LLC et al defendants. The suit alleges breach of lease, breach of implied duty to explore and develop, and requests a declaratory judgment that the leases are terminated, and the suit requests an accounting of lease production. The case in the early stages of discovery as to the claims against the Company. Management intends to seek an early resolution but will vigorously defend the case. It is too early in the litigation to evaluate the likely outcome or to evaluate the range of losses, as the lease interests involved are small fractional interests. In the opinion of the Company’s management, none of the pending litigation, disputes or claims against it, if decided adversely, will have a material adverse effect on the Company’s financial condition, cash flows or results of operations. On December 11, 2017, Amazing Energy LLC and Jilpetco Inc. were each served with a summons and complaint in Cause No. P-7813-83-CV in the 83 rd District Court in Pecos County, Texas. Amazing Energy and Jilpetco were named as defendants in a case by Rumson Royalty Company as the plaintiff. The suit alleges Amazing Energy and Jilpetco have suspended certain royalty and/or overriding interest payments owed to the plaintiff, and requests a declaratory judgment seeking the plaintiff’s share of production proceeds and reasonable attorney’s fees. Management will vigorously defend the case. It is too early in the litigation to evaluate the likely outcome or to evaluate the financial impact of the lawsuit, if any. In the opinion of the Company’s Management, none of the pending litigation, disputes or claims against it, if decided adversely, will have a material adverse effect on the Company’s financial condition, cash flows or results of operations. No accrual has been made in the financial statements regarding these two matters. The Company engages Mr. Darrell Carey to perform legal services. Mr. Carey is a director of the Company. Professional fees expensed for his services were $7,995 during the year ended July 31, 2018. Lease commitments The Company’s principal executive offices are in leased office space in Amarillo, Texas. The leased office space consists of approximately 3,700 square feet and is leased through February 28, 2019 at an annual cost of approximately $52,000. Oil and gas lease commitments Royalties: The Company is obligated to pay royalties to holders of oil and natural gas interests in its Texas operations. Working Interest Holders: The Company is obligated to pay working interest holders a pro-rata portion of revenue in oil operations net of shared operating expenses. The amounts are based on monthly oil and gas sales and are charged monthly net of oil and gas revenue and recognized as “Due to working interest owners” on the Company’s consolidated balance sheet. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 12 Months Ended |
Jul. 31, 2018 | |
Equity [Abstract] | |
STOCKHOLDERS' EQUITY | NOTE 14 – STOCKHOLDERS’ EQUITY Common stock The Company is authorized to issue 3,000,000,000 shares of its common stock. All shares of common stock are equal to each other with respect to voting, liquidation, dividend, and other rights. Owners of shares are entitled to one vote for each share owned at any Shareholders’ meeting. The common stock of the Company does not have cumulative voting rights, which means that the holders of more than fifty percent (50%) of the shares voting in an election of directors may elect all of the directors if they choose to do so. Preferred stock The Company is authorized to issue 10,000,000 shares of its preferred stock with a no par value per share. Series A convertible preferred stock: The Company has 9,000 shares of Series A preferred stock outstanding at July 31, 2018. These shares were issued from the designated 10,000,000 shares of preferred stock, no par value, with the following rights and preferences: ● Liquidation preference: Upon a liquidation event, an amount in cash equal to $100 per share, for a total of $900,000 computed as of July 31, 2018, shall be paid prior to liquidation payments to holders of the Company securities junior to the Series A preferred stock. ● Dividends: Holders of the Series A preferred stock are not entitled to receive a dividend. ● Voting: Each share of preferred stock has 10,000 votes and votes with the common shares on all matters submitted to the shareholders for a vote. ● Non-transferrable: The shares of Series A preferred stock are not transferrable except under a plan for wealth transfer and estate planning or upon conversion or redemption as set forth below. ● Conversion: On July 31, 2021, any shares of the Series A preferred stock outstanding will be convertible, at the discretion of the shareholder, for a period of three years, into common stock purchase warrants of the Company with an exercise price of $1.00 per share on the basis of 110 shares of common stock for each one share of Series A preferred stock outstanding. Series B convertible preferred stock: The Company has 50,000 shares of Series B preferred stock outstanding at July 31, 2018. These shares were issued from the designated 10,000,000 shares of preferred stock, no par value, with the following rights and preferences: ● Liquidation preference: Upon a liquidation event, an amount in cash equal to $100 per share, for a total of $5,000,000 computed as of July 31, 2018, shall be paid prior to liquidation payments to holders of Company securities junior to the Series B preferred stock. Holders of the Company’s Series A preferred stock shall be paid in advance of holders of the Series B preferred stock on the occurrence of a liquidation event. ● Dividends: Holders of the Series B preferred stock are not entitled to receive a dividend. ● Voting: The Series B preferred stock has no voting rights other than to be voted when required by the laws of the State of Nevada. ● Non-transferrable: The shares of Series B preferred stock are not transferrable except under a plan for wealth transfer and estate planning or upon conversion or redemption as set forth below. ● Conversion: On July 31, 2021, any shares of the Series B preferred stock outstanding will be convertible, at the discretion of the shareholder, for a period of three years, into common stock purchase warrants of the Company with an exercise price of $1.00 per share on the basis of 110 shares of common stock for each one share of Series B preferred stock outstanding. Redemption of preferred stock In connection with the issuance of the Series A and Series B Preferred Stock as discussed above, for each new oil and gas well drilled by the Company with funds raised or delivered due to the efforts of the former GSSI officers, who for a period of time served as Company officers, the Company was to pay Jed Miesner $10,000 in exchange for 100 shares of Series A Preferred Stock and Robert Bories $10,000 in exchange for 100 shares of Series B Preferred Stock. For the year ended July 31, 2017, there was no redemption or accrual made under this provision. During the year ended July 31, 2018, the Company acquired all of the working interests to which these provisions were attached effectively terminating the Company’s obligation to redeem the preferred shares. Common Stock: During the years ended July 31, 2018 and 2017, the Company issued 12,920,010 and 6,249,959 shares of common stock, respectively, for cash of $3,230,000 and $1,636,212. During the years ended July 31, 2018 and 2017, the Company issued 856,628 and 31,625 shares of common stock with total fair values of $535,200 and $12,375, respectively, as compensation for professional services. During the years ended July 31, 2018 and 2017, the Company issued 3,617,556 and -0- shares of common stock for oil and gas property working interests with total fair values of $1,736,429 and $-0-, respectively. On May 27, 2017, the related party noteholders of notes payable agreed to extend the maturity date of the notes to December 31, 2017. As consideration for the change in terms, the Company issued to the noteholders an aggregate 460,000 shares of the Company’s common stock with a fair value of $105,800 which was recognized as a financing fee associated with debt modification in the year ended July 31, 2017. Warrants: At July 31, 2017, the Company had 2,674,576 warrants outstanding that had an exercise price of $0.60 and an expiration date of July 31, 2019. During the year ended July 31, 2018, the Company issued 3,469,391 warrants to purchase common stock with total fair value of $1,038,587 as compensation for services. In addition, the Company issued 136,666 for oil and gas working interests with total fair value of $77,961. The weighted average fair value of warrants and the key assumptions used in the Black-Scholes valuation model to calculate the fair value, are as follows: Weighted average fair value $0.30 - $0.59 Stock price 0.32 - 0.69 Exercise price 0.37 - 1.00 Expected term (in years) 3 - 5 Risk-free rate 2.33% - 2.85% Volatility 166.4% - 177.65% The Company’s outstanding warrants at July 31, 2018 are as follows: Expiration Date - Year ending July 31, Number of Warrants Exercise Price 2019 2,674,576 $ 0.60 2020 1,200,000 $0.50 2021 1,858,332 $0.40 to $1.00 2022 305,000 $0.40 to $0.60 2023 242,725 $0.34 to $0.74 6,280,633 No warrants exercised during the year ended July 31, 2018. Stock Options: In February 2017, the Board of Directors adopted and approved the 2017 Stock Option Plan (the “2017 Plan”). Pursuant to the 2017 Plan terms, if the 2017 Plan was not approved by a majority of the shareholders of the Company within twelve months of the adoption of the 2017 Plan, the 2017 Plan would become void. The 2017 Plan was never approved by a majority vote of the shareholders of the Company and therefore is now void. No options were ever issued pursuant to the 2017 Plan. The 2017 Plan also has terms and conditions, including without limitations that the exercise price for incentive stock options granted under the Stock Option Plan must equal the stock's fair market value, based on the closing price per share of common stock, at the time the stock option is granted. The fair value of each option award is estimated on the date of grant utilizing the Black-Scholes model and commonly utilized assumptions associated with the Black-Scholes methodology. Options granted under the Plan have a ten-year maximum term and varying vesting periods as determined by the Board. The Company's policy is to issue new shares to satisfy option exercises. To date, the Company has not issued any options pursuant to the 2017 Plan. On August 11, 2017, the Board of Directors authorized the grant of 5,835,000 options to purchase shares of common stock of the Company to certain officers related to their employment agreements (the “Listing Options”). The Listing Options will vest and be immediately exercisable on the date the Company's stock is traded on the American Stock Exchange, the New York Stock Exchange, or any of the NASDAQ trading tiers. The Listing Options shall have an exercise price equal to the closing price on the date such trading commences. As of July 31, 2018, management has determined the probability of such an event is doubtful and, therefore, has not recognized any compensation expense to date regarding the Listing Options. On August 11, 2017, the Board of Directors authorized the grant of 11,750,000 options to purchase shares of common stock of the Company to certain officers. The options have an exercise price of $0.40 and expire five years from the date of grant. 2,937,500 of the options vested immediately on the grant date and the remainder vest 25% annually upon each anniversary of the grant date. For the year ended July 31, 2018, the Company recognized stock based compensation of $1,436,575 for the vested options and the ratable recognition of unvested options as stock-based compensation. Unrecognized compensation related to the option grant is $1,436,575 as of July 31, 2018, to be recognized over the remaining vesting term of the options. On August 11, 2017, the Board of Directors authorized the grant of 10,000,000 options to purchase shares of common stock of the Company to its Chief Executive Officer. The options have an exercise price of $0.40 per share and expire five years from the date of grant. 2,000,000 options vested on the date of grant. The fair value of the grant was $489,047 which was recognized as stock-based compensation at the date of grant. The remaining 8,000,000 options contained market and performance conditions, of which 4,000,000 options are to vest based on market conditions being met and 4,000,000 options will vest upon achievement of certain performance objectives. Management has assessed the likelihood of market conditions and the probability of performance conditions being realized and recognize a fair value of $647,987 for the year ending July 31, 2018. On September 26, 2017, the Board of Directors also authorized the grant of 500,000 options to purchase shares of common stock of the Company to certain directors. The options vested immediately at the date of grant. These options have an exercise price of $0.40 and expire on September 26, 2021. The fair value of the grant was $137,056 which the Company recognized as stock-based compensation for the year ended July 31, 2018. The following is a summary of the Company's options for the year ended July 31, 2018. No options were granted in prior years: Options Exercise Price Weighted Average Remaining Term in Years Outstanding at the beginning of the year - - Issued 28,085,000 $ 0.40 Exercised - - Expired - - Outstanding at the end of the year 28,085,000 $ 0.40 4.01 Outstanding at the end of the year, vested 5,437,500 $ 0.40 3.95 At July 31, 2018, the Company had reserved 34,365,633 common shares for future exercise of warrants and options. At July 31, 2018, the vested options had an intrinsic value of approximately $462,000. Options granted were valued using the Black-Scholes Option Pricing Model. The assumptions used in calculating the fair value of the options were as follows: Weighted average fair value $0.245 - $0.285 Stock price $0.26 - $0.30 Exercise price $0.40 Expected term (in years) 4 - 5 Risk-free rate 1.57% - 1.74% Volatility 175.1 - 200.6% |
2017 GAIN FROM SALES OF LEASEHO
2017 GAIN FROM SALES OF LEASEHOLD AND MINERAL RIGHTS | 12 Months Ended |
Jul. 31, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2017 GAIN FROM SALES OF LEASEHOLD AND MINERAL RIGHTS | NOTE 15 – 2017 GAIN FROM SALES OF LEASEHOLD AND MINERAL RIGHTS Kisa Gold Mining, Inc (an inactive subsidiary of the Company at July 31, 2018) granted Afranex Gold Limited (“Afranex”) an option to purchase all of the outstanding common stock of Kisa or purchase all of Kisa’s right, title and interest in certain mining permits and associated assets of Kisa. The option period was to originally end on December 31, 2016 or such later date which was to be agreed upon by both parties. On January 3, 2017, Afranex paid a $50,000 non-refundable option fee to the Company, as consideration for extending the option period to March 31, 2017. Afranex agreed to pay the Company a total of $120,000 to exercise the option and acquire either the stock or the claims. On March 29, 2017, Afranex exercised the option by paying the Company $120,000 in cash and taking transfer of all of Kisa’s right, title and interest in and to the claims. For the year ended July 31,2017, the Company recognized a gain on sales of mineral rights of $170,000 because the carrying value of the mineral interest was zero. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Jul. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16– SUBSEQUENT EVENTS Modification of Rights of Security Holders Effective September 10, 2018 the sole holder of Series A Preferred Stock of the Company has agreed to material modifications of the rights associated with the Series A Preferred. Jed Miesner is the holder of 9,000 shares of Series A Preferred that possess the right to vote on any matters to which common stock holders of the Company are entitled to vote. The 9,000 shares of Series A Preferred possess the voting power equivalent to 90,000,000 shares of the Company’s common stock. Mr. Miesner has agreed, until January 1, 2019 to not vote the Series A Preferred shares on any matter not related to a change of control of the Company or its assets. As part of this agreement, the Company has agreed to pay accrued interest on promissory notes payable due to Mr. Meisner and related parties associated with him (see Note 8). Payments will be $309,130 on or before December 31, 2018 and $169,168 on or before February 28, 2019. Completion of Acquisition or Disposition of Assets. On October 17, 2018 the Company completed the acquisition of certain oil and gas leases from Wyatt Petroleum, LLC and Wyatt Permian, LLC (together “Wyatt”). Pursuant to the Purchase and Sale Agreement, the Company acquired the leases for a cash payment of $500,000. Additionally, as a result of the acquisition of the leases, the Company obtained the deep rights to 21,000 mostly contiguous acres in the Permian Basin in Pecos County, Texas. |
SUPPLEMENTAL OIL AND GAS DISCLO
SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) | 12 Months Ended |
Jul. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) | NOTE 17 – SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) Costs Incurred 2018 2017 Development costs $ 2,936,812 $ 370,090 Total costs incurred $ 2,936,812 $ 370,090 Capitalized Costs July 31,2018 July 31,2017 Unproved properties not subject to amortization $ 3,079,492 $ 2,049,593 Property costs subject to amortization 6,627,470 4,920,558 Asset retirement obligation, asset 194,615 128,886 Total cost of oil and gas properties 9,901,577 7,099,037 Less: Accumulated depletion (1,399,096 ) (1,179,955 ) Oil and gas properties, net full cost method $ 8,502,481 $ 5,919,082 Proved Oil and Gas Reserve ● Future revenues were based on an un-weighted 12-month average of the first-day-of-the-month price held constant throughout the life of the properties. ● Production and development costs were computed using year-end costs assuming no change in present economic conditions. ● Future net cash flows were discounted at an annual rate of 10%. Reserve estimates are inherently imprecise, and these estimates are expected to change as future information becomes available. Basis of Presentation As of July 31, 2018, we had twenty-three wells drilled with twenty-one producing and two wells shut-in awaiting workovers. The proved reserves as of July 31, 2018 represent the reserves that were estimated to be recovered from twenty-five current wells. There are also seven wells planned for future drilling. All direct offset well locations in this report are proved undeveloped and are based on 10-acre drainage patterns unless current developed completions are estimated to drain an area larger than their volumetric assignment. In this case, the reserves of certain offset locations have been reduced. All locations have a scheduled Queen and/or Grayburg reservoir completion and each of these reservoir completions includes the cost of drilling a single wellbore. All reserves included in this report were estimated using either historical performance or volumetric methods. Estimated Quantities of Net Proved Oil and Natural Gas Reserves 2018 2017 Oil (1) Natural Gas (1) Oil (1) Natural Gas (1) RESERVES: Beginning of year 305,440 1,143,170 436,980 1,849,260 Revisions of previous estimates (12,821 ) (461,404 ) (111,458 ) (638,992 ) Sales of reserves - - (36,556 ) (119,157 ) Acquisition of reserves 2,402 4,982 - - Extensions, discoveries and other additions - - 22,040 89,580 Production (5,761 ) (32,498 ) (5,566 ) (37,521 ) End of year 289,260 654,250 305,440 1,143,170 (1) Oil reserves are stated in barrels; gas reserves are stated in thousand cubic feet. The downward revision of previous gas reserves estimates was primarily due to reassessment of reservoir mapping based on additional log analysis from drilling. Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves – In reviewing the information that follows, we believe that the following factors should be considered: ● future costs and sales prices will probably differ from those required to be used in these calculations; ● actual production rates for future periods may vary significantly from the rates assumed in the calculations; ● a 10% discount rate may not be reasonable relative to risk inherent in realizing future net oil and gas revenues; and ● future net revenues may be subject to different rates of income taxation. Under the standardized measure, future cash inflows were estimated by applying year-end oil and gas prices applicable to our reserves to the estimated future production of year-end proved reserves. Future cash inflows do not reflect the impact of open hedge positions. Future cash inflows were reduced by estimated future development, abandonment and production costs based on year-end costs in order to arrive at net cash flows before tax. Future income tax expense has been computed by applying year-end statutory tax rates to aggregate future pre-tax net cash flows reduced by the tax basis of the properties involved and tax carryforwards. Use of a 10% discount rate and year- end prices and costs are required by ASC 932-235. In general, management does not rely on the following information in making investment and operating decisions. Such decisions are based upon a wide range of factors, including estimates of probable as well as proved reserves and varying price and cost assumptions considered more representative of a range of possible outcomes. Basis of Presentation Standardized Measure of Discounted Future Net Cash Flows – Future cash inflows $ 17,011,660 $ 16,391,090 Future production costs (5,837,010 ) (4,979,820 ) Future development costs (2,397,960 ) (1,688,400 ) Future income tax expense (28,295 ) (3,403,010 ) Future net cash flows 8,748,395 6,319,860 10% annual discount for estimated timing of cash flows (2,115,426 ) (1,853,862 ) Standardized measure of discounted future net cash flows related to proved reserves $ 6,632,969 $ 4,465,998 The following table presents a reconciliation of changes in the standardized measure of discounted future net cash flows: 2018 2017 Standardized Measure, beginning of year $ 4,465,998 $ 4,628,877 Sales of oil produced, net of production costs (41,648 ) 22,999 Net changes in prices, development and production costs 1,906,668 3,802,489 Change in estimated future development costs (960,920 ) 98,145 Extensions, discoveries and improved recovery, less related costs - 616,979 Development costs incurred and changes during the period 552,135 370,090 Revisions of previous quantity estimates (1,917,137 ) (3,752,407 ) Accretion of discount 491,923 792,334 Net changes in production rates and other 1,192,528 (3,216,146 ) Purchase of reserves 69,060 - Sales of reserves - (941,505 ) Net changes in income taxes 874,362 2,044,143 Standardized Measure, end of year $ 6,632,969 $ 4,465,998 |
SIGNIFICANT ACCOUNTING POLICI_2
SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Jul. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation This summary of significant accounting policies is presented to assist in understanding the financial statements. The financial statements and notes are representations of the Company’s management, which is responsible for their integrity and objectivity. These consolidated financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States. (U.S. GAAP) The financial statements are presented on a consolidated basis and include all of the accounts of Amazing Energy Oil and Gas, Co. and its wholly owned subsidiaries, Amazing Energy, Inc., Amazing Energy LLC, and Jilpetco, Inc. and Kisa Gold Mining, Inc. All significant intercompany balances and transactions have been eliminated. The consolidated statement of operations for the year ended July 31, 2017 has been revised to eliminate intercompany oilfield service revenue and related production costs between Amazing Energy Oil and Gas, Co. and Jilpetco. The impact of the revisions was to decrease both categories by $160,659. The revision had no impact on the net loss on the consolidated statement of operations, the consolidated balance sheet at July 31, 2017, or the consolidated statement of cash flows for the year ended July 31, 2017. |
Going Concern | Going Concern These consolidated financial statements have been prepared in accordance with U.S. GAAP as a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for the next twelve months. As shown in the accompanying financial statements, the Company has incurred operating losses since inception. As of July 31, 2018, the Company has limited financial resources with which to achieve the objectives and obtain profitability and positive cash flows. At July 31, 2018, the Company has an accumulated deficit of $32,453,703 and a working capital deficit of $786,560. Achievement of the Company's objectives will be dependent upon the ability to obtain additional financing, to locate profitable oil and gas properties and generate revenue from current and planned business operations, and control costs. The Company plans to fund its future operations by joint venturing, obtaining additional financing from investors, and/or lenders, and attaining additional commercial production. However, there is no assurance that the Company will be able to achieve these objectives, therefore substantial doubt about its ability to continue as a going concern exists. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful. The financial statements do not include adjustments relating to the recoverability of recorded assets nor the implications of associated bankruptcy costs should the Company be unable to continue as a going concern. |
Revenue and Cost Recognition | Revenue and Cost Recognition The Company uses the sales method of accounting for oil and gas revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes the Company may be entitled to, based on the Company’s individual interest in the property. Periodically, imbalances between production and nomination volumes can occur for various reasons. In cases where imbalances have occurred, a production imbalance receivable or liability will be recorded when determined. Costs associated with production are expensed in the period in which they are incurred. The Company also provided oilfield services to both related party entities and outside oil and gas well owners. Revenue from administration fees to unrelated working interest owners are recognized on an accrual basis in the period services are provided. |
Receivables | Receivables Production revenue receivable consist of oil and natural gas revenues due under normal trade terms. Receivables are carried at original amounts on joint interest billings less an estimate for doubtful accounts. Management determines the allowance by regularly evaluating individual working interest owner receivables and considering their financial condition, credit history and current economic conditions. |
Due to Working Interest Owners | Due to Working Interest Owners The Company provides oilfield services which includes interest owner accounting and subsequent disbursement of the interest owners’ pro-rata share of oil proceeds from a given lease. Generally, the pro-rata share of oil proceeds less any applicable pro-rata share of operating expenses is distributed to the interest owner within two months of sale of oil and natural gas. The due to working interest owners balances comprises those proceeds which have yet to be distributed to interest owners as a result of the time required to process administrative functions and process payment and any revenue suspense. |
Asset Retirement Obligations | Asset Retirement Obligations The fair value of a liability for an asset’s retirement obligation (“ARO”) is recognized in the period in which a contractual obligation is created and if a reasonable estimate of fair value can be made. A corresponding charge capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment costs incurred are recorded as a reduction of the ARO liability. 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. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and certain assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Management’s estimates include estimates of impairment in carrying value of assets and liabilities, and collectability of recorded oilfield services receivables, stock-based compensation, deferred income taxes, asset retirement obligations, oil and gas property ceiling tests, and depreciation, depletion and amortization. Actual results could differ from these estimates. |
Risks and Uncertainties | Risks and Uncertainties The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging oil and gas business, including the potential risk of business failure. |
Concentration of Risks | Concentration of Risks The Company’s cash is placed with a highly rated financial institution, and the Company periodically reviews the credit worthiness of the financial institutions with which it does business. At times, the Company’s cash balances are in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. The Company’s oil and gas revenue originates from production from its properties in Texas. Each revenue stream is sold to a single purchaser of minerals through month to month contracts. While this creates a purchaser concentration, there are alternate buyers of the production in event the sole customer is unable or unwilling to purchase. The Company sells most of its production to only two purchasers. As a result, during the fiscal years ended July 31,2018 and 2017, these purchasers represented 50% or more of its oil and gas revenue. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with a remaining maturity of three months or less when acquired to be cash equivalents. |
Restricted Cash | Restricted Cash As of July 31, 2018 and 2017, the Company has a letter of credit in the amount of $50,000 in favor of the Texas Railroad Commission as a bond for reclamation on its oil and gas properties which is included in other assets on the consolidated balance sheet. |
Income Taxes | Income Taxes The Company accounts for income taxes using the liability method. The liability method requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of (i) temporary differences between financial statement carrying amounts of assets and liabilities and their basis for tax purposes and (ii) operating loss and tax credit carry-forwards for tax purposes. Deferred tax assets are reduced by a valuation allowance when management concludes that it is more likely than not that a portion of the deferred tax assets will not be realized in a future period. The Company recognizes a tax benefit from an uncertain position when it is more likely than not that the position will be sustained upon examination, based on the technical merits of the position and will record the largest amount of tax benefit that is greater than 50% likely of being realized upon settlement with a taxing authority. The Company classifies any interest and penalties associated with income taxes as income tax expense. |
Fair value of financial instruments | Fair value of financial instruments Financial instruments consist of cash and various notes payable. The fair value of these financial instruments approximate the carrying value. |
Property, plant, and equipment | Property, plant, and equipment Property, plant, and equipment are stated at cost. Improvements which significantly increase an asset’s value or significantly extend its useful life are capitalized and depreciated over the asset’s remaining useful life. When property, plant or equipment is sold at a price either higher or lower than its carrying amount, or un-depreciated cost at the date of disposal, the difference between the sale proceeds over the carrying amount is recognized as gain, while a loss is recognized when the carrying amount exceeds the sale proceeds. Property, plant, and equipment are depreciated on a straight-line basis over their useful lives, which are typically five to seven years for equipment. Realization of the carrying value of other property and equipment is reviewed for possible impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets are determined to be impaired if a forecast of undiscounted estimated future net operating cash flows directly related to the asset, including disposal value, if any, is less than the carrying amount of the asset. If any asset is determined to be impaired, the loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. Repairs and maintenance costs are expensed in the period incurred. |
Oil and gas properties | Oil and gas properties The Company uses the full cost method of accounting for oil and gas properties. Under this method of accounting, all costs incurred in the acquisition, exploration and development of oil and natural gas properties, including unproductive wells, are capitalized. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and natural gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Oil and natural gas properties include costs that are excluded from costs being depleted or amortized. Excluded costs represent investments in unproved and unevaluated properties and include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. These costs are excluded until the project is evaluated and proved reserves are established or impairment is determined. Excluded costs are reviewed periodically to determine if impairment has occurred. The amount of any evaluated or impaired oil and gas properties is transferred to capitalized costs being amortized. |
Depletion and amortization | Depletion and amortization The depletion base for oil and natural gas properties includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (“DD&A”), estimated future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization. The depletion base of oil and natural gas properties is amortized on a units-of-production method. |
Limitation on Capitalized Costs | Limitation on Capitalized Costs Under the full-cost method of accounting, the Company is required, at the end of each fiscal quarter, to perform a test to determine the limit on the book value of our oil and natural gas properties (the "Ceiling Test"). If the capitalized costs of our oil and gas properties, net of accumulated amortization and related deferred income taxes, exceed the "Ceiling", this excess or impairment is charged to expense and reflected as additional accumulated depreciation, depletion and amortization or as a credit to oil and natural gas properties. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted 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 (with consideration of price changes only to the extent provided by contractual arrangements including hedging arrangements), less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves; plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized; and net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. The Ceiling Tests did not result in an impairment of our oil and natural properties during the years ended July 31, 2018 and 2017. The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors, which are difficult to predict, could also affect estimates of proved reserves in the future. |
Stock-based compensation | Stock-based compensation Compensation cost for equity awards is based on the fair value of the equity instrument on the date of grant. The Company estimates the fair value of options and warrants to purchase common stock using the Black-Scholes model, which requires the input of some subjective assumptions. These assumptions include estimating the length of time employees will retain their vested stock options before exercising them ("expected life"), the estimated volatility of the Company's common stock price over the expected term ("volatility"), employee forfeiture rate, the risk-free interest rate and the dividend yield. Changes in the subjective assumptions can materially affect the estimate of fair value of stock-based compensation. Options granted have a ten-year maximum term and varying vesting periods as determined by the Board of Directors. For options issued with service vesting conditions, compensation cost is recognized over the vesting period. For options issued with performance conditions, compensation cost is recognized if and when the Company concludes that the performance condition will be achieved, net of an estimate of pre-vesting forfeitures. For options issued with market conditions, compensation cost is recognized over the requisite service period and discounted by the probability of the condition thereof being met. |
Environmental laws and regulations | Environmental laws and regulations The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations. |
Fair value measurements | Fair value measurements When required to measure assets or liabilities at fair value, the Company uses a fair value hierarchy based on the level of independent, objective evidence surrounding the inputs used. The Company determines the level within the fair value hierarchy in which the fair value measurements in their entirety fall. The categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Level 1 uses quoted prices in active markets for identical assets or liabilities, Level 2 uses significant other observable inputs, and Level 3 uses significant unobservable inputs. The amount of the total gains or losses for the period are included in earnings that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date. At July 31, 2018 and July 31, 2017, the Company had no assets or liabilities accounted for at fair value on a recurring basis or nonrecurring basis. |
Recent accounting pronouncements | Recent accounting pronouncements In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09 Revenue Recognition, replacing guidance currently codified in Subtopic 605-10 Revenue Recognition-Overall with various SEC Staff Accounting Bulletins providing interpretive guidance. The guidance establishes a new five step principle-based framework in an effort to significantly enhance comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets. The Company intends to adopt the new standard on August 1, 2018 and expects to use the modified retrospective method. The Company has evaluated the impact of the future adoption of ASU No. 2014-09 on its consolidated financial statements and does not expect significant changes in the timing of revenue recognition compared to the existing methodology. In February 2016 the FASB issued ASU, No. 2016-02, Leases. The ASU requires companies to recognize on the balance sheet the assets and liabilities for the rights and obligations created by leased assets. ASU No. 2016-02 will be effective for the Company on August 1, 2019, with early adoption permitted. The Company is currently evaluating the impact that the adoption of ASU No. 2016-02 will have on the Company’s consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU No. 2016-15 Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The update provides guidance on classification for cash receipts and payments related to eight specific issues. The update is effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years, with early adoption permitted. The Company is currently evaluating the impact of this update on the consolidated financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation-Stock Compensation, Improvements to Nonemployee Share-Based Payment Accounting. ASU No. 2018-07 expands the scope of to include share-based payment transactions for acquiring goods and services from nonemployees. ASU No. 2018-07 will become effective for the Company on August 1, 2019 and early adoption is permitted. The Company is currently evaluating the impact of this update on its consolidated financial statements and related disclosures. Other accounting standards that have been issued or proposed by FASB that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption. The Company does not discuss recent pronouncements that are not anticipated to have an impact on or are unrelated to its financial condition, results of operations, cash flows or disclosures. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Loss per share: | |
Schedule of Outstanding Securities that could have a dilutive effect | The outstanding securities at July 31, 2018 and 2017, that could have a dilutive effect are as follows: July 31,2018 July 31,2017 Convertible preferred stock 6,490,000 6,490,000 Warrants 6,280,633 2,674,576 Stock options 28,085,000 - Total potential dilution 40,855,633 9,164,576 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | As of July 31, 2018 and July 31, 2017, the property and equipment asset balance was composed of the following: July 31,2018 July 31,2017 Drilling equipment $ 612,000 $ 600,000 Other equipment 252,204 252,204 864,204 852,204 Less: Accumulated depreciation (429,676 ) (306,392 ) Total property and equipment $ 434,528 $ 545,812 |
OIL AND GAS PROPERTIES (Tables)
OIL AND GAS PROPERTIES (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Extractive Industries [Abstract] | |
Schedule of Oil and Gas Property | The oil and gas property balances at July 31, 2018 and July 31, 2017, are set forth in the table below: July 31,2018 July 31,2017 Unproved properties not subject to amortization $ 3,079,492 $ 2,049,593 Property costs subject to amortization 6,627,470 4,920,558 Asset retirement obligation, asset 194,615 128,886 Total cost of oil and gas properties 9,901,577 7,099,037 Less: Accumulated depletion (1,399,096 ) (1,179,955 ) Oil and gas properties, net full cost method $ 8,502,481 $ 5,919,082 During the year ended July 31, 2018, the Company issued 3,617,556 shares of common stock for lease interests with total fair value of $1,736,429. The working interests below were acquired effective June 1, 2018 and resulted in the Company holding 100% of the working interest in the developed wells in Pecos County Section 91. Owner Name Number of Fair Working Revenue Net Revenue Shares Value Interest Interest Interest Related Parties TONY ALFORD, Chairman of the Board 246,668 $ 118,401 10.83 % 8.13 % 75 % PETRO-PRO, LTD. 246,668 $ 118,401 10.83 % 8.13 % 75 % Unrelated Parties 3,124,220 $ 1,499,627 87.38 % 65.59 % 75 % Totals 3,617,556 $ 1,736,429 |
NOTES PAYABLE - RELATED PARTI_2
NOTES PAYABLE - RELATED PARTIES (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Notes to Financial Statements | |
Schedule of Principal maturities for the two loan agreements and the credit facility outstanding | Principal maturities for the two loan agreements and the credit facility outstanding at July 31, 2018 for the remaining terms are summarized by year as follows: Principal Maturities Year ending July 31, Jed Miesner Petro Pro, Ltd. JLM Strategic Investments, LP Total 2019 $ 172,660 $ 97,900 $ 41,170 $ 311,730 2020 166,840 94,600 - 261,440 2021 161,020 91,300 - 252,320 2022 155,200 88,000 - 243,200 2023 149,380 84,700 - 234,080 Subsequent years 1,134,900 643,500 - 1,778,400 $ 1,940,000 $ 1,100,000 $ 41,170 $ 3,081,170 |
ASSET RETIREMENT OBLIGATIONS (T
ASSET RETIREMENT OBLIGATIONS (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Asset Retirement Obligation | The information below reconciles the value of the asset retirement obligation for years ended July 31, 2018 and 2017 respectively: For the years ended July 31, 2018 2017 Beginning balance $ 183,397 $ 211,218 Asset retirement obligation incurred 65,729 - Accretion expense 9,449 9,396 Revisions in estimates - (37,217 ) Ending balance, July 31,2018 $ 258,575 $ 183,397 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Reconciliation of Income Tax Benefit | The following is reconciliation between the federal income tax benefit computed at the statutory federal income tax rate and actual income tax benefit for the years ended July 31, 2018 and July 31, 2017: For the years ended July 31, 2018 2017 Applicable statutory benefit at 26.5% in 2018 and 34% in 2017 $ (1,766,977 ) $ (736,582 ) Prior year change in estimate 112,187 (260,131 ) Impact on the change in federal tax rate 1,471,136 - Sale of subsidiary - 57,800 Meals and entertainment and other 3,959 3,813 Change in valuation allowance 179,695 935,100 Net tax benefit $ - $ - |
Schedule of Deferred Tax Assets and Liabilities | The following deferred taxes as of July 31, 2018 and 2017: 2018 2017 Deferred Tax Assets: Net operating loss carryforward $ 2,539,482 $ 3,628,293 Stock based compensation 867,731 - Depletion and depreciation - 65,443 Total deferred tax assets 3,407,213 3,693,736 Deferred Tax Liabilities: Intangible drilling and other costs for oil and gas properties $ (905,799 ) $ (1,466,531 ) Depletion and depreciation (33,824 ) - Other (91,140 ) (30,449 ) Total deferred tax liabilities (1,030,763 ) (1,496,980 ) Net deferred tax assets and liabilities 2,376,450 2,196,756 Less valuation allowance 2,376,450 2,196,756 Net deferred tax assets and liabilities $ - $ - |
STOCKHOLDERS' EQUITY (Tables)
STOCKHOLDERS' EQUITY (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Equity [Abstract] | |
Schedule of Warrants Outstanding | The weighted average fair value of warrants and the key assumptions used in the Black-Scholes valuation model to calculate the fair value, are as follows: Weighted average fair value $0.30 - $0.59 Stock price 0.32 - 0.69 Exercise price 0.37 - 1.00 Expected term (in years) 3 - 5 Risk-free rate 2.33% - 2.85% Volatility 166.4% - 177.65% The Company’s outstanding warrants at July 31, 2018 are as follows: Expiration Date - Year ending July 31, Number of Warrants Exercise Price 2019 2,674,576 $ 0.60 2020 1,200,000 $0.50 2021 1,858,332 $0.40 to $1.00 2022 305,000 $0.40 to $0.60 2023 242,725 $0.34 to $0.74 6,280,633 |
Schedule of Stock Option Outstanding | The following is a summary of the Company's options for the year ended July 31, 2018. No options were granted in prior years: Options Exercise Price Weighted Average Remaining Term in Years Outstanding at the beginning of the year - - Issued 28,085,000 $ 0.40 Exercised - - Expired - - Outstanding at the end of the year 28,085,000 $ 0.40 4.01 Outstanding at the end of the year, vested 5,437,500 $ 0.40 3.95 |
Schedule of assumptions used in calculating the fair value of the warrants issued | Options granted were valued using the Black-Scholes Option Pricing Model. The assumptions used in calculating the fair value of the options were as follows: Weighted average fair value $0.245 - $0.285 Stock price $0.26 - $0.30 Exercise price $0.40 Expected term (in years) 4 - 5 Risk-free rate 1.57% - 1.74% Volatility 175.1 - 200.6% |
SUPPLEMENTAL OIL AND GAS DISC_2
SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) (Tables) | 12 Months Ended |
Jul. 31, 2018 | |
Supplemental Oil And Gas Disclosures Unaudited | |
Cost Incurred in Oil and Gas Property Acquisition, Exploration, and Development Activities Disclosure [Table Text Block] | Costs incurred in oil and gas property acquisition, exploration and development activities, whether expensed or capitalized, are reflected in the table below for the years ended July 31, 2018 and 2017. 2018 2017 Development costs $ 2,936,812 $ 370,090 Total costs incurred $ 2,936,812 $ 370,090 |
Schedule of Oil and Gas In Process Activities [Table Text Block] | The aggregate amount of capitalized costs related to oil and gas producing activities and the aggregate amount of the related accumulated depreciation, depletion and amortization (“DD&A”), including any accumulated valuation allowances, are reflected in the table below for the years ended July 31, 2018 and July 31, 2017. July 31,2018 July 31,2017 Unproved properties not subject to amortization $ 3,079,492 $ 2,049,593 Property costs subject to amortization 6,627,470 4,920,558 Asset retirement obligation, asset 194,615 128,886 Total cost of oil and gas properties 9,901,577 7,099,037 Less: Accumulated depletion (1,399,096 ) (1,179,955 ) Oil and gas properties, net full cost method $ 8,502,481 $ 5,919,082 |
Schedule of Proved Oil and Gas Reserve [Table Text Block] | Estimated quantities of net proved oil and natural gas reserves are reflected in the table below for the years ended July 31, 2018 and 2017. 2018 2017 Oil (1) Natural Gas (1) Oil (1) Natural Gas (1) RESERVES: Beginning of year 305,440 1,143,170 436,980 1,849,260 Revisions of previous estimates (12,821 ) (461,404 ) (111,458 ) (638,992 ) Sales of reserves - - (36,556 ) (119,157 ) Acquisition of reserves 2,402 4,982 - - Extensions, discoveries and other additions - - 22,040 89,580 Production (5,761 ) (32,498 ) (5,566 ) (37,521 ) End of year 289,260 654,250 305,440 1,143,170 (1) Oil reserves are stated in barrels; gas reserves are stated in thousand cubic feet. |
Standardized Measure of Discounted Future Cash Flows Relating to Proved Reserves Disclosure [Table Text Block] | The standardized measure of discounted future net cash flows relating to proved oil and gas reserves for years ended July 31, 2018 and 2017 are as follows: Future cash inflows $ 17,011,660 $ 16,391,090 Future production costs (5,837,010 ) (4,979,820 ) Future development costs (2,397,960 ) (1,688,400 ) Future income tax expense (28,295 ) (3,403,010 ) Future net cash flows 8,748,395 6,319,860 10% annual discount for estimated timing of cash flows (2,115,426 ) (1,853,862 ) Standardized measure of discounted future net cash flows related to proved reserves $ 6,632,969 $ 4,465,998 |
Schedule of Changes in Standardized Measure of Discounted Future Net Cash Flows [Table Text Block] | The following table presents a reconciliation of changes in the standardized measure of discounted future net cash flows: 2018 2017 Standardized Measure, beginning of year $ 4,465,998 $ 4,628,877 Sales of oil produced, net of production costs (41,648 ) 22,999 Net changes in prices, development and production costs 1,906,668 3,802,489 Change in estimated future development costs (960,920 ) 98,145 Extensions, discoveries and improved recovery, less related costs - 616,979 Development costs incurred and changes during the period 552,135 370,090 Revisions of previous quantity estimates (1,917,137 ) (3,752,407 ) Accretion of discount 491,923 792,334 Net changes in production rates and other 1,192,528 (3,216,146 ) Purchase of reserves 69,060 - Sales of reserves - (941,505 ) Net changes in income taxes 874,362 2,044,143 Standardized Measure, end of year $ 6,632,969 $ 4,465,998 |
SIGNIFICANT ACCOUNTING POLICI_3
SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Jul. 31, 2018USD ($)Number | Jul. 31, 2017USD ($)Number | |
Accumulated Deficit | $ (32,543,703) | $ (26,028,247) |
Working Captial Deficit | 786,560 | |
Letter of Credit | $ 50,000 | |
Number of customers | Number | 2 | 2 |
Property, Plant and Equipment [Member] | Minimum [Member] | ||
Useful Life of Assets | 5 years | |
Property, Plant and Equipment [Member] | Maximum [Member] | ||
Useful Life of Assets | 7 years | |
Revenue [Member] | ||
Concentration risk percentage | 50.00% | 50.00% |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - shares | Jul. 31, 2018 | Jul. 31, 2017 |
Shares Outstanding with no Dilutive Effect | 40,855,633 | 9,164,576 |
Stock Option [Member] | ||
Shares Outstanding with no Dilutive Effect | 28,085,000 | |
Warrant [Member] | ||
Shares Outstanding with no Dilutive Effect | 6,280,633 | 2,674,576 |
Convertible Preferred Stock [Member] | ||
Shares Outstanding with no Dilutive Effect | 6,490,000 | 6,490,000 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jul. 31, 2018 | Jul. 31, 2017 |
Property and equipment, gross | $ 864,204 | $ 852,204 |
Less: Accumulated depreciation | (429,676) | (306,392) |
Property and equipment, net | 434,528 | 545,812 |
Drilling Equipment [Member] | ||
Property and equipment, gross | 612,000 | 600,000 |
Other Equipment [Member] | ||
Property and equipment, gross | $ 252,204 | $ 252,204 |
OIL AND GAS PROPERTIES (Details
OIL AND GAS PROPERTIES (Details) - USD ($) | Jul. 31, 2018 | Jul. 31, 2017 |
Extractive Industries [Abstract] | ||
Unevaluated costs | $ 3,079,492 | $ 2,049,593 |
Cost of wells and development | 6,627,470 | 4,920,558 |
Asset retirement obligation, asset | 194,615 | 128,886 |
Total cost of oil and gas properties | 9,901,577 | 7,099,037 |
Less: Accumulated depletion | (1,399,096) | (1,179,955) |
Oil and gas properties, net full cost method | $ 8,502,481 | $ 5,919,082 |
OIL AND GAS PROPERTIES (Detai_2
OIL AND GAS PROPERTIES (Details 2) | 12 Months Ended |
Jul. 31, 2018USD ($)shares | |
Common Stock issued for lease interests (in shares) | shares | 3,617,556 |
Common Stock issued for Lease Interest | $ | $ 1,736,429 |
Tony Alford, Chairman of the Board [Member] | |
Common Stock issued for lease interests (in shares) | shares | 246,668 |
Common Stock issued for Lease Interest | $ | $ 118,401 |
Working Interest, Rate | .1083 |
Revenue Interest, Rate | .0813 |
Net Revenue, Rate | .7500 |
Petro Pro, Ltd. [Member] | |
Common Stock issued for lease interests (in shares) | shares | 246,668 |
Common Stock issued for Lease Interest | $ | $ 118,401 |
Working Interest, Rate | .1083 |
Revenue Interest, Rate | .0813 |
Net Revenue, Rate | .7500 |
Unrelated Parties [Member] | |
Common Stock issued for lease interests (in shares) | shares | 3,124,220 |
Common Stock issued for Lease Interest | $ | $ 1,499,627 |
Working Interest, Rate | .8738 |
Revenue Interest, Rate | .6559 |
Net Revenue, Rate | .7500 |
OIL AND GAS PROPERTIES (Detai_3
OIL AND GAS PROPERTIES (Details Narrative) | Mar. 09, 2018shares | Jul. 31, 2018USD ($)Numbershares | Jul. 31, 2017shares |
No. Of Producing Wells | Number | 23 | ||
No. of Non-Producing Wells | Number | 2 | ||
Reduction in Oil and Gas Properties due to Working Interest Sold | $ | $ 656,596 | ||
Common Stock Issued | 83,975,232 | 66,581,040 | |
Common Stock issued for Lease Interest | $ | $ 1,736,429 | ||
Common Stock issued for lease interests (in shares) | 3,617,556 | ||
Four Well [Member] | |||
Working Interest Sold | 0.16125 | ||
Common Stock Issued | 77,961 | ||
Gulf South Energy Partners [Member] | Four Well [Member] | |||
Working Interest Sold | 0.11 | ||
Gulf South Energy Partners [Member] | Three Well [Member] | |||
Working Interest Sold | 0.60 |
OILFIELD SERVICE MATTERS, REL_2
OILFIELD SERVICE MATTERS, RELATED PARTY (Details Narrative) - USD ($) | Jul. 31, 2018 | Jul. 31, 2017 |
Payable - Related Party | $ 25,038 | |
Petro Pro, Ltd. [Member] | ||
Payable - Related Party | $ 25,038 |
COMMON CONTROL ACQUISITION OF_2
COMMON CONTROL ACQUISITION OF JILPETCO, INC. (Details Narrative) - Jilpetco [Member] - Jed Miesner [Member] - USD ($) | Aug. 25, 2016 | Apr. 15, 2016 |
Business Acquisition, Name of Acquired Entity | Jilpetco, Inc. | |
Business Acquisition, Percentage of Voting Interests Acquired (As a percentage) | 100.00% | |
Consideration transferred | $ 500,000 | |
Oilfield service receivables excluded from transaction | $ 71,745 |
NOTES PAYABLE - RELATED PARTI_3
NOTES PAYABLE - RELATED PARTIES (Details) - USD ($) | Jul. 31, 2018 | Jul. 31, 2017 |
2,018 | $ 311,730 | |
2,019 | 261,440 | |
2,020 | 252,320 | |
2,021 | 243,200 | |
2,022 | 234,080 | |
Subsequent years | 1,778,400 | |
Total | 3,081,170 | |
Jed Miesner [Member] | ||
2,018 | 172,660 | $ 248,704 |
2,019 | 166,840 | |
2,020 | 161,020 | |
2,021 | 155,200 | |
2,022 | 149,380 | |
Subsequent years | 1,134,900 | |
Total | 1,940,000 | |
Petro Pro, Ltd. [Member] | ||
2,018 | 97,900 | 141,018 |
2,019 | 94,600 | |
2,020 | 91,300 | |
2,021 | 88,000 | |
2,022 | 84,700 | |
Subsequent years | 643,500 | |
Total | 1,100,000 | |
JLM Strategic Investments, LP [Member] | ||
2,018 | 41,170 | |
2,019 | ||
2,020 | ||
2,021 | ||
2,022 | ||
Subsequent years | ||
Total | $ 41,170 |
NOTES PAYABLE - RELATED PARTI_4
NOTES PAYABLE - RELATED PARTIES (Details Narrative) - USD ($) | Feb. 01, 2019 | Jul. 21, 2017 | Sep. 13, 2016 | Jan. 03, 2011 | Dec. 30, 2010 | Jul. 31, 2018 | Jul. 31, 2017 |
Loan Interest Rate | 8.00% | 4.75% | |||||
Current Loan Component | $ 311,730 | ||||||
Accrued interest payable, related parties | 400,805 | $ 244,009 | |||||
Interest Expenses, Related Parties | $ 207,229 | 264,567 | |||||
Conversion of Convertible Debt and Accrued Interest | At July 31, 2018, the balance of the convertible debt and accrued interest was convertible to 13,371,945 shares of common stock at a conversion price of $0.60 per share. AEI is a wholly owned subsidiary of the Company. Each share of AEI common stock is convertible into 2.3042 shares of the Company's common stock. | ||||||
Jed Miesner [Member] | |||||||
Loan Agreement Value | $ 1,940,000 | $ 1,767,340 | 1,691,296 | ||||
Loan Maturity Date | Dec. 31, 2030 | ||||||
Loan Interest Rate | 8.00% | ||||||
Current Loan Component | 172,660 | 248,704 | |||||
Petro Pro, Ltd. [Member] | |||||||
Loan Agreement Value | $ 1,100,000 | 1,002,100 | 958,982 | ||||
Loan Maturity Date | Dec. 31, 2030 | ||||||
Loan Interest Rate | 8.00% | ||||||
Current Loan Component | 97,900 | 141,018 | |||||
JLM Strategic Investments, LP [Member] | |||||||
Loan Agreement Value | $ 2,000,000 | ||||||
Loan Maturity Date | Dec. 31, 2030 | ||||||
Loan Interest Rate | 8.00% | ||||||
Current Loan Component | $ 41,170 | ||||||
JLM Strategic Investments, LP [Member] | Subsequent Event [Member] | |||||||
Loan Interest Rate | 6.00% |
NOTE PAYABLE (Details Narrative
NOTE PAYABLE (Details Narrative) - USD ($) | Jan. 21, 2018 | Jul. 21, 2017 | Sep. 13, 2016 | Jul. 31, 2018 | Jul. 31, 2017 |
Note Payable | |||||
Note payable | $ 50,000 | $ 50,000 | |||
Note payable Interest Rate (as a percent) | 8.00% | 4.75% | |||
Note payable, participation fee | $ 5,000 |
EQUIPMENT NOTE PAYABLE (Details
EQUIPMENT NOTE PAYABLE (Details Narrative) - USD ($) | Jul. 21, 2017 | Sep. 13, 2016 | Jul. 31, 2018 | Jul. 31, 2017 |
Notes to Financial Statements | ||||
Equipment Note | $ 52,992 | $ 52,992 | ||
Interest Rate | 8.00% | 4.75% | ||
2,019 | 10,247 | |||
2,020 | 10,998 | |||
2,021 | 11,535 | |||
2,022 | $ 314 |
ASSET RETIREMENT OBLIGATIONS (D
ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Asset Retirement Obligation Disclosure [Abstract] | ||
Beginning balance | $ 183,397 | $ 211,218 |
Asset retirement obligation incurred | 65,729 | |
Accretion expense | 9,449 | 9,396 |
Revisions in company working interest | (37,217) | |
Ending balance, July 31,2018 | $ 258,575 | $ 183,397 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Statutory benefit | $ (1,766,977) | $ (736,582) |
Prior year change in estimate | 112,187 | (260,131) |
Impact on the change in federal tax rate | 1,471,136 | |
Sale of subsidiary | ||
Meals and entertainment and other | 3,959 | 3,813 |
Change in valuation allowance | 179,695 | 935,100 |
Net tax benefit |
INCOME TAXES (Details 2)
INCOME TAXES (Details 2) - USD ($) | Jul. 31, 2018 | Jul. 31, 2017 |
Deferred Tax Assets: | ||
Net operating loss carryforward | $ 2,539,482 | $ 3,628,293 |
Stock based compensation | 867,731 | |
Depletion and depreciation | 65,443 | |
Total deferred tax assets | 3,407,213 | 3,693,736 |
Deferred Tax Liabilities: | ||
Intangible drilling and other costs for oil and gas properties | (905,799) | (1,466,531) |
Depletion and depreciation | (33,824) | |
Other | (91,140) | (30,449) |
Total deferred tax liabilities | (1,030,763) | (1,496,980) |
Less valuation allowance | 2,376,450 | 2,196,756 |
Total deferred tax assets and liabilities |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Income Tax Disclosure [Abstract] | ||
Statutory Federal Income tax Rate | 26.50% | 34.00% |
Federal Net Loss Carryforward | $ 12,100,000 | |
Federal Net Operating Loss Expiring Date | Jul. 31, 2037 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) | Aug. 07, 2022USD ($) | Aug. 07, 2018USD ($) | Aug. 07, 2017USD ($) | Jul. 31, 2018USD ($)ft² |
Office Space - Amarillo, Texas [Member] | ||||
Lease Area | ft² | 3,700 | |||
Annual Lease | $ 52,000 | |||
Lease Expiry Date | Feb. 28, 2019 | |||
Oil and Gas - JT Walker [Member] | ||||
Annual Lease | $ 27,000 | |||
Subsequent Event [Member] | Oil and Gas - JT Walker [Member] | ||||
Annual Lease | $ 27,000 | |||
Subsequent Event [Member] | Oil and Gas - JPMorgan [Member] | ||||
Annual Lease | $ 200,000 |
STOCKHOLDERS' EQUITY (Details)
STOCKHOLDERS' EQUITY (Details) | Jul. 31, 2018shares |
Warrant [Member] | |
Total | 6,280,633 |
Exercise Price $0.60 [Member] | |
2,019 | 2,674,576 |
Exercise Price $0.50 [Member] | |
2,020 | 1,200,000 |
Exercise Price $0.40 to $1.00 [Member] | |
2,021 | 1,858,332 |
Exercise Price $0.40 to $0.60 [Member] | |
2,022 | 305,000 |
Exercise Price $0.34 to $0.74 [Member] | |
2,023 | 242,725 |
STOCKHOLDERS' EQUITY (Details 2
STOCKHOLDERS' EQUITY (Details 2) - Stock Option [Member] | 12 Months Ended |
Jul. 31, 2018$ / sharesshares | |
Stock Option Outstanding | shares | 28,085,000 |
Stock Option Outstanding, Vested | shares | 5,437,500 |
Stock Option Excersise price | $ / shares | $ 0.40 |
Stock Option Excersise price, Vested | $ / shares | $ 0.40 |
Stock Option Weighted Average Remaining Term | 4 years 4 days |
Stock Option Weighted Average Remaining Term, Vested | 3 years 11 months 12 days |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - $ / shares | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Common Stock, Shares Authorized | 3,000,000,000 | 3,000,000,000 |
Preferred Stock, Shares Authorized | 10,000,000 | 10,000,000 |
Series A Preferred Stock [Member] | ||
Preferred Stock, Shares Outstanding | 9,000 | 9,000 |
Preferred Stock, Par Value | $ 100 | |
Voting Rights | Each share of preferred stock has 10,000 votes and votes with the common shares on all matters submitted to the shareholders for a vote. | |
Conversion of Preferred Stock | On July 31, 2021, any shares of the Series A preferred stock outstanding will be convertible, at the discretion of the shareholder, for a period of three years, into common stock purchase warrants of the Company with an exercise price of $1.00 per share on the basis of 110 shares of common stock for each one share of Series A preferred stock outstanding. | |
Series A Preferred Stock [Member] | Jed Miesner [Member] | ||
Preferred Stock, Shares Outstanding | 10,000 | |
Preferred Stock, Shares Issued, Related Party | 100 | |
Series B Preferred Stock [Member] | ||
Preferred Stock, Shares Outstanding | 50,000 | 50,000 |
Preferred Stock, Par Value | $ 100 | |
Voting Rights | The Series B preferred stock has no voting rights other than to be voted when required by the laws of the State of Nevada. | |
Conversion of Preferred Stock | On July 31, 2021, any shares of the Series B preferred stock outstanding will be convertible, at the discretion of the shareholder, for a period of three years, into common stock purchase warrants of the Company with an exercise price of $1.00 per share on the basis of 110 shares of common stock for each one share of Series B preferred stock outstanding. | |
Series B Preferred Stock [Member] | Robert Bories [Member] | ||
Preferred Stock, Shares Outstanding | 10,000 | |
Preferred Stock, Shares Issued, Related Party | 100 |
2017 GAIN FROM SALES OF LEASE_2
2017 GAIN FROM SALES OF LEASEHOLD AND MINERAL RIGHTS (Details Narrative) - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Gain From Sales Of Leasehold And Mineral Rights | ||
Gain on sales of Mineral Rights | $ 170,000 |
SUPPLEMENTAL OIL AND GAS DISC_3
SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) (Details) - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Disclosure Supplemental Oil And Gas Disclosures Unaudited Details Abstract | ||
Development costs | $ 2,936,812 | $ 370,090 |
Total costs incurred | $ 2,936,812 | $ 370,090 |
SUPPLEMENTAL OIL AND GAS DISC_4
SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) (Details 2) | 12 Months Ended | |
Jul. 31, 2018bblMcf | Jul. 31, 2017bblMcf | |
Oil [Member] | ||
Beginning of year | bbl | 305,440 | 436,980 |
Revisions of previous estimates | bbl | (12,821) | (111,458) |
Sales of reserves | bbl | (36,556) | |
Acquisition of reserves | bbl | 2,402 | |
Extensions, discoveries and other additions | bbl | 22,040 | |
Production | bbl | (5,761) | (5,566) |
End of year | bbl | 289,260 | 305,440 |
Natural Gas [Member] | ||
Beginning of year | Mcf | 1,143,170 | 1,849,260 |
Revisions of previous estimates | Mcf | (461,404) | (638,992) |
Sales of reserves | Mcf | (119,157) | |
Acquisition of reserves | Mcf | 4,982 | |
Extensions, discoveries and other additions | Mcf | 89,580 | |
Production | Mcf | (32,498) | (37,521) |
End of year | Mcf | 654,250 | 1,143,170 |
SUPPLEMENTAL OIL AND GAS DISC_5
SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) (Details 3) - USD ($) | Jul. 31, 2018 | Jul. 31, 2017 | Jul. 31, 2016 |
Disclosure Supplemental Oil And Gas Disclosures Unaudited Details 4Abstract | |||
Future cash inflows | $ 17,011,660 | $ 16,391,090 | |
Future production costs | (5,837,010) | (4,979,820) | |
Future development costs | (2,397,960) | (1,688,400) | |
Future income tax expense | (28,295) | (3,403,010) | |
Discount at 10% for estimated timing of cash flows | (2,115,426) | (1,853,862) | |
Standardized measure of discounted future net cash flows | $ 6,632,969 | $ 4,465,998 | $ 4,628,877 |
SUPPLEMENTAL OIL AND GAS DISC_6
SUPPLEMENTAL OIL AND GAS DISCLOSURES (UNAUDITED) (Details 4) - USD ($) | 12 Months Ended | |
Jul. 31, 2018 | Jul. 31, 2017 | |
Disclosure Supplemental Oil And Gas Disclosures Unaudited Details 5Abstract | ||
Standardized Measure, beginning of year | $ 4,465,998 | $ 4,628,877 |
Sales of oil produced, net of production costs | (41,648) | 22,999 |
Net changes in prices, development and production costs | 1,906,668 | 3,802,489 |
Change in estimated future development costs | (960,920) | 98,145 |
Extensions, discoveries and improved recovery, less related costs | 616,979 | |
Development costs incurred and changes during the period | 552,135 | 370,090 |
Revisions of previous quantity estimates | (1,917,137) | (3,752,407) |
Accretion of discount | 491,923 | 792,334 |
Net changes in production rates and other | 1,192,528 | (3,216,146) |
Purchase of reserves | 69,060 | |
Sales of reserves | (941,505) | |
Net changes in income taxes | 874,362 | 2,044,143 |
Standardized Measure, end of year | $ 6,632,969 | $ 4,465,998 |