Document And Entity Information
Document And Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 08, 2016 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2016 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | RING ENERGY, INC. | |
Entity Central Index Key | 1,384,195 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Trading Symbol | REI | |
Entity Common Stock, Shares Outstanding | 41,917,061 |
CONDENSED BALANCE SHEETS
CONDENSED BALANCE SHEETS - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current Assets | ||
Cash | $ 2,249,007 | $ 4,431,350 |
Accounts receivable | 2,965,320 | 2,507,858 |
Joint interest billing receivable | 611,236 | 1,629,165 |
Prepaid expenses and retainers | 330,600 | 146,118 |
Total Current Assets | 6,156,163 | 8,714,491 |
Properties and Equipment | ||
Oil and natural gas properties subject to amortization | 235,671,313 | 269,590,374 |
Office equipment and automobiles | 1,549,311 | 1,539,991 |
Total Properties and Equipment | 237,220,624 | 271,130,365 |
Accumulated depreciation, depletion and amortization | (38,405,819) | (29,863,838) |
Net Properties and Equipment | 198,814,805 | 241,266,527 |
Deferred Income Taxes | 21,888,849 | 64,323 |
Deferred Financing Costs | 473,696 | 820,904 |
Total Assets | 227,333,513 | 250,866,245 |
Current Liabilities | ||
Accounts payable | 7,435,554 | 11,023,269 |
Other accrued liabilities | 0 | 309,898 |
Total Current Liabilities | 7,435,554 | 11,333,167 |
Long term debt | 0 | 45,900,000 |
Asset retirement obligations | 8,002,787 | 7,401,950 |
Total Liabilities | 15,438,341 | 64,635,117 |
Stockholders' Equity | ||
Preferred stock - $0.001 par value; 50,000,000 shares authorized; no shares issued or outstanding | 0 | 0 |
Common stock - $0.001 par value; 150,000,000 shares authorized; 41,917,061 shares and 30,391,942 shares outstanding, respectively | 41,917 | 30,392 |
Additional paid-in capital | 256,082,234 | 193,269,034 |
Retained Loss | (44,228,979) | (7,068,298) |
Total Stockholders' Equity | 211,895,172 | 186,231,128 |
Total Liabilities and Stockholders' Equity | $ 227,333,513 | $ 250,866,245 |
CONDENSED BALANCE SHEETS (Paren
CONDENSED BALANCE SHEETS (Parenthetical) - $ / shares | Sep. 30, 2016 | Dec. 31, 2015 |
Preferred Stock, par value | $ 0.001 | $ 0.001 |
Preferred Stock, Shares Authorized | 50,000,000 | 50,000,000 |
Preferred Stock, Shares Issued | 0 | 0 |
Preferred Stock, Shares Outstanding | 0 | 0 |
Common Stock, par value | $ 0.001 | $ 0.001 |
Common Stock, Shares Authorized | 150,000,000 | 150,000,000 |
Common Stock, Shares, Outstanding | 41,917,061 | 30,391,942 |
CONDENSED STATEMENTS OF OPERATI
CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Oil and Gas Revenues | $ 7,822,543 | $ 8,629,007 | $ 21,019,540 | $ 23,651,498 |
Costs and Operating Expenses | ||||
Oil and gas production costs | 2,329,228 | 2,917,296 | 7,019,771 | 6,991,148 |
Oil and gas production taxes | 389,029 | 410,347 | 1,032,335 | 1,110,262 |
Depreciation, depletion and amortization | 2,568,153 | 4,668,353 | 8,541,981 | 11,527,684 |
Ceiling test impairment | 9,648,942 | 0 | 56,513,016 | 0 |
Accretion expense | 125,813 | 103,887 | 360,167 | 250,266 |
General and administrative expense | 1,882,579 | 2,002,638 | 6,023,038 | 5,775,355 |
Total Costs and Operating Expenses | 16,943,744 | 10,102,521 | 79,490,308 | 25,654,715 |
Loss from Operations | (9,121,201) | (1,473,514) | (58,470,768) | (2,003,217) |
Other Income (Expense) | ||||
Interest expense | (95,864) | (350,737) | (597,910) | (429,742) |
Interest income | 6,417 | 1,831 | 83,470 | 2,613 |
Net Other Expense | (89,447) | (348,906) | (514,440) | (427,129) |
Loss before tax provision | (9,210,648) | (1,822,420) | (58,985,208) | (2,430,346) |
Benefit From Income Taxes | 3,266,511 | 684,152 | 21,824,527 | 850,621 |
Net Loss | $ (5,944,137) | $ (1,138,268) | $ (37,160,681) | $ (1,579,725) |
Basic Earnings (Loss) per Share | $ (0.14) | $ (0.04) | $ (1) | $ (0.06) |
Diluted Earnings (Loss) per Share | $ (0.14) | $ (0.04) | $ (1) | $ (0.06) |
CONDENSED STATEMENTS OF CASH FL
CONDENSED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash Flows From Operating Activities | ||
Net loss | $ (37,160,681) | $ (1,579,725) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, depletion and amortization | 8,541,981 | 11,527,684 |
Ceiling test impairment | 56,513,016 | 0 |
Accretion expense | 360,167 | 250,266 |
Share-based compensation | 1,647,554 | 1,962,142 |
Deferred income tax benefit | (21,824,526) | (850,621) |
Changes in assets and liabilities: | ||
Accounts receivable | 560,467 | 916,843 |
Prepaid expenses | 162,726 | (904,052) |
Accounts payable | (3,897,613) | (8,737,901) |
Net Cash Used in Operating Activities | 4,903,091 | 2,584,636 |
Cash Flows From Investing Activities | ||
Payments to purchase oil and natural gas properties | (6,154,997) | (77,191,925) |
Payments to develop oil and natural gas properties | (16,190,471) | (21,449,757) |
Purchase of equipment, vehicles and leasehold improvements | (9,320) | (330,182) |
Plugging and abandonment cost incurred | (7,817) | (186,626) |
Net Cash Used in Investing Activities | (22,362,605) | (99,158,490) |
Cash Flows From Financing Activities | ||
Proceeds from issuance of common stock | 61,064,671 | 50,039,853 |
Proceeds from issuance of notes payable | 5,000,000 | 40,900,000 |
Principal payments on revolving line of credit | (50,900,000) | 0 |
Proceeds from option exercise | 112,500 | 130,000 |
Net Cash Provided by Financing Activities | 15,277,171 | 91,069,853 |
Net Decrease in Cash | (2,182,343) | (5,504,001) |
Cash at Beginning of Period | 4,431,350 | 8,622,235 |
Cash at End of Period | 2,249,007 | 3,118,234 |
Supplemental Cash Flow Information | ||
Cash paid for interest | 564,640 | 17,410 |
Noncash Investing and Financing Activities | ||
Asset retirement obligation acquired | 0 | 2,177,110 |
Asset retirement obligation incurred during development | $ 248,487 | $ 124,375 |
BASIS OF PRESENTATION AND SIGNI
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation and Significant Accounting Policies [Text Block] | NOTE 1 BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES The accompanying condensed financial statements prepared by Ring Energy, Inc. (the “Company” or “Ring”) have not been audited by an independent registered public accounting firm. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all adjustments necessary for fair presentation of the results of operations for the periods presented, which adjustments were of a normal recurring nature, except as disclosed herein. The results of operations for the three and nine months ended September 30, 2016, are not necessarily indicative of the results to be expected for the full year ending December 31, 2016. Certain notes and other disclosures have been omitted from these interim financial statements. Therefore, these financial statements should be read in conjunction with the Company’s 2015 Annual Report on Form 10-K. The Company is a Nevada corporation that owns interests in oil and natural gas properties located in Texas and Kansas. The Company’s oil and natural gas sales, profitability and future growth are dependent upon prevailing and future prices for oil and natural gas and the successful acquisition, exploration and development of oil and natural gas properties. Oil and natural gas prices have historically been volatile and may be subject to wide fluctuations in the future. A substantial decline in oil and natural gas prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows and quantities of oil and natural gas reserves that may be economically produced. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Changes in the future estimated oil and natural gas reserves or the estimated future cash flows attributable to the reserves that are utilized for impairment analysis could have a significant impact on the Company’s future results of operations. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Financial Accounting Standards Board (FASB) has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability. The carrying amounts reported for the revolving line of credit approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The carrying amounts of receivables and accounts payable and other current assets and liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. 48 43 43 43 Approximately 83 The Company uses the full cost method of accounting for oil and gas properties. Under this method, all costs associated with the acquisition, leasing, exploration, and development of oil and gas reserves are capitalized. Costs capitalized include acquisition costs, estimated future costs of abandonment and site restoration, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs. Capitalized costs are generally categorized either as being subject to amortization or not subject to amortization. All of our costs are subject to amortization. All capitalized costs of oil and gas properties, plus estimated future costs to develop proved reserves, are amortized on the unit-of-production method using estimates of proved reserves as determined by independent engineers. The Company evaluates oil and gas properties for impairment at least annually. Amortization expense for the three and nine months ended September 30, 2016, was $ 2,568,153 8,541,981 11.72 4,668,353 11,527,684 21.33 71,666 229,422 79,797 208,440 Write-down of Oil and Gas Properties Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is performed quarterly utilizing the average of prices in effect on the first day of the month for the preceding twelve month period in accordance with SEC Release No. 33-8995. The ceiling limits such pooled costs to the aggregate of the present value of future net revenues attributable to proved crude oil and natural gas reserves discounted at 10 During the three and nine months ended September 30, 2016, the Company recorded non-cash write-downs of the carrying value of the Company’s proved oil and gas properties as a result of ceiling test limitations of $ 9,648,942 56,513,016 Office equipment is valued at historical cost adjusted for impairment loss less accumulated depreciation. Historical costs include all direct costs associated with the acquisition of office equipment and placing such equipment in service. Depreciation is calculated using the straight-line method based upon an estimated useful life of 5 7 The Company records a liability in the period in which an asset retirement obligation (“ARO”) is incurred, in an amount equal to the discounted estimated fair value of the obligation that is capitalized. Thereafter, this liability is accreted up to the final estimated retirement cost. An ARO is a future expenditure related to the disposal or other retirement of certain assets. The Company’s ARO relates to future plugging and abandonment expenses of its oil and natural gas properties and related facilities disposal. The Company predominantly derives its revenues from the sale of produced oil and natural gas. Revenue is recorded in the month the product is delivered to the purchasers. At the end of each month, the Company recognizes oil and natural gas sales based on estimates of the amount of production delivered to purchasers and the price to be received. Variances between the Company’s estimated oil and natural gas sales and actual receipts are recorded in the month the payments are received. The Company has outstanding stock option grants to directors, officers and employees, which are described more fully in Note 6. The Company recognizes the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the related compensation expense over the period during which an employee is required to provide service in exchange for the award, which is generally the vesting period. The Company accounts for share-based compensation issued to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for these issuances is the earlier of (i) the date at which a commitment for performance by the recipient to earn the equity instruments is reached or (ii) the date at which the recipient’s performance is complete. Recent Accounting Pronouncements In March 2016, the FASB issued guidance for improvements to employee share-based payment accounting to simplify the accounting for share-based compensation. The new standard requires all excess tax benefits and reductions from differences between the deduction for tax purposes and the compensation cost recorded for financial reporting purposes be recognized as income tax expense or benefit in the Statement of Operations and not recognized as additional paid-in capital. The new standard also requires all excess tax benefits and deficiencies to be classified as operating activity included with income tax cash flows. For public business entities, the amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. We are evaluating the impact of this guidance on our financial statements. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 841). For lessees, the amendments in this update require that for all leases not considered to be short term, a company recognize both a lease liability and right-of-use asset on its balance sheet, representing the obligation to make payments and the right to use or control the use of a specified asset for the lease term. The amendments in this update are effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Management is currently evaluating the impact that this amendment will have on its financial statements. In January 2016, the FASB issued guidance regarding several broad topics related to the recognition and measurement of financial assets and liabilities. The guidance is effective for interim and annual periods beginning after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements. In August 2014, the FASB issued guidance regarding disclosures of uncertainties about an entity's ability to continue as a going concern. The guidance applies prospectively to all entities, requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern and disclose certain information when substantial doubt exists. We will adopt this guidance for the annual period ending December 31, 2016. In May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. In April and May 2016, the FASB issued additional guidance, addressed implementation issues and provided technical corrections. The guidance may be applied retrospectively or using a modified retrospective approach to adjust retained earnings (deficit). The guidance is effective for interim and annual periods beginning on or after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements. Basic and Diluted Earnings (Loss) per Share |
EARNINGS (LOSS) PER SHARE INFOR
EARNINGS (LOSS) PER SHARE INFORMATION | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Earnings Per Share [Text Block] | NOTE 2 EARNINGS (LOSS) PER SHARE INFORMATION For The Three Months For The Nine Months Ended September 30, Ended September 30, 2016 2015 2016 2015 Net Loss $ (5,944,137) $ (1,138,268) $ (37,160,681) $ (1,579,725) Basic Weighted-Average Shares Outstanding 41,917,061 30,372,701 36,996,932 27,430,624 Effect of dilutive securities: Stock options - - - - Diluted Weighted-Average Shares Outstanding 41,917,061 30,372,701 36,996,932 27,430,624 Basic Loss per Share $ (0.14) $ (0.04) $ (1.00) $ (0.06) Diluted Loss per Share $ (0.14) $ (0.04) $ (1.00) $ (0.06) Stock options to purchase 2,780,600 2,623,250 |
REVOLVING LINE OF CREDIT
REVOLVING LINE OF CREDIT | 9 Months Ended |
Sep. 30, 2016 | |
Debt Disclosure [Abstract] | |
Debt Disclosure [Text Block] | NOTE 3 REVOLVING LINE OF CREDIT On July 1, 2014, the Company entered into a Credit Agreement with SunTrust Bank, as lender, issuing bank and administrative agent for several banks and other financial institutions and lenders (“Administrative Agent”), which was amended on May 18, 2016, June 26, 2015 and July 24, 2014 (as amended, the “Credit Facility”). The Credit Facility provides for a senior secured revolving credit facility with a maximum borrowing amount of $ 500 June 26, 2020 In May 2016, the borrowing base (the “Borrowing Base”) was reduced from the initial $ 100 60 The Credit Facility allows for Eurodollar Loans and Base Rate Loans (each as defined in the Credit Facility). The interest rate on each Eurodollar Loan will be the adjusted LIBOR for the applicable interest period plus a margin between 1.75 2.75 1.00 2.75 3.75 The Credit Facility contains certain covenants, which, among other things, require the maintenance of (i) a total leverage ratio of not more than 4.0 to 1.0 1.0 to 1.0 |
ASSET RETIREMENT OBLIGATION
ASSET RETIREMENT OBLIGATION | 9 Months Ended |
Sep. 30, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Asset Retirement Obligation Disclosure [Text Block] | NOTE 4 ASSET RETIREMENT OBLIGATION The Company provides for the obligation to plug and abandon oil and gas wells at the dates properties are either acquired or the wells are drilled. The asset retirement obligation is adjusted each quarter for any liabilities incurred or settled during the period, accretion expense and any revisions made to the estimated cash flows. Balance, December 31, 2015 $ 7,401,950 Liabilities incurred 248,487 Liabilities settled (7,817) Accretion expense 360,167 Balance, September 30, 2016 $ 8,002,787 |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended |
Sep. 30, 2016 | |
Stockholders' Equity Note [Abstract] | |
Stockholders' Equity Note Disclosure [Text Block] | NOTE 5 STOCKHOLDERS’ EQUITY On April 26, 2016, the Company closed an underwritten public offering of 11,500,000 1,500,000 5.60 64,400,000 61,063,497 3,336,503 3,200,000 10 50.9 approximately $215,000 10 Common Stock Issued in Option Exercise During the nine months ended September 30, 2015, the Company issued 40,000 20,000 4.50 90,000 20,000 2.00 40,000 150,000 Also during the nine months ended September 30, 2015, the Company issued 16,875 10,000 2.00 10,000 4.50 5,000 5.50 8,125 92,500 11.38 During the nine months ended September 30, 2016, the Company issued 25,000 4.50 112,500 Also during the nine months ended September 30, 2016, the Company issued 119 150 2.00 31 300 9.72 |
EMPLOYEE STOCK OPTIONS
EMPLOYEE STOCK OPTIONS | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Disclosure of Compensation Related Costs, Share-based Payments [Text Block] | NOTE 6 EMPLOYEE STOCK OPTIONS Compensation expense charged against income for share-based awards during the three and nine months ended September 30, 2016, was $ 555,587 1,647,554 650,968 1,962,142 In 2011, the Board of Directors and stockholders approved and adopted a long-term incentive plan which allowed for the issuance of up to 2,500,000 5,000,000 1,949,650 On January 13, 2016, upon the recommendation of the Compensation Committee, Ring rescinded the option awards granted to its employees and directors on December 9, 2015 (other than Messrs. McCabe and Rochford, who are the members of the Compensation Committee) as the result of a significant decline in the stock price and re-issued the option awards as of that date to meet the goals and objectives of the Company’s equity based compensation program. The fair value of each option award is estimated on the date of grant using the Black-Scholes option pricing model and using certain assumptions. The expected volatility is based on the historical price volatility of the Company’s common stock. The Company uses the simplified method for estimating the expected term for options granted. Under the simplified method, the expected term is equal to the midpoint between the vesting period and the contractual term of the stock option. The risk-free interest rate represents the U.S. Treasury bill rate for the expected life of the related stock options. The dividend yield represents the Company’s anticipated cash dividend over the expected life of the stock options. 2016 2015 Weighted-average volatility 100 - 99 % 103 % Expected dividends 0 0 Expected term (in years) 6.5 6.5 Risk-free interest rate 1.51 - 1.25 % 1.32 % Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding, December 31, 2015 2,881,150 $ 5.07 Granted 15,000 6.42 Exercised (25,150) 4.49 Forfeited (90,400) 9.71 Outstanding, September 30, 2016 2,780,600 $ 4.67 6.5 Years $ 17,532,933 Exercisable, September 30, 2016 1,487,850 $ 3.95 6.0 Years The intrinsic value was calculated using the closing price on September 30, 2016 of $ 10.95 2,473,232 2.2 58,058 |
CONTINGENCIES AND COMMITMENTS
CONTINGENCIES AND COMMITMENTS | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | NOTE 7 CONTINGENCIES AND COMMITMENTS Standby Letters of Credit 280,000 |
BASIS OF PRESENTATION AND SIG13
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Accounting, Policy [Policy Text Block] | Condensed Financial Statements The accompanying condensed financial statements prepared by Ring Energy, Inc. (the “Company” or “Ring”) have not been audited by an independent registered public accounting firm. In the opinion of the Company’s management, the accompanying unaudited financial statements contain all adjustments necessary for fair presentation of the results of operations for the periods presented, which adjustments were of a normal recurring nature, except as disclosed herein. The results of operations for the three and nine months ended September 30, 2016, are not necessarily indicative of the results to be expected for the full year ending December 31, 2016. Certain notes and other disclosures have been omitted from these interim financial statements. Therefore, these financial statements should be read in conjunction with the Company’s 2015 Annual Report on Form 10-K. |
Organization And Nature Of Operations [Policy Text Block] | Organization and Nature of Operations The Company is a Nevada corporation that owns interests in oil and natural gas properties located in Texas and Kansas. The Company’s oil and natural gas sales, profitability and future growth are dependent upon prevailing and future prices for oil and natural gas and the successful acquisition, exploration and development of oil and natural gas properties. Oil and natural gas prices have historically been volatile and may be subject to wide fluctuations in the future. A substantial decline in oil and natural gas prices could have a material adverse effect on the Company’s financial position, results of operations, cash flows and quantities of oil and natural gas reserves that may be economically produced. |
Use of Estimates, Policy [Policy Text Block] | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Changes in the future estimated oil and natural gas reserves or the estimated future cash flows attributable to the reserves that are utilized for impairment analysis could have a significant impact on the Company’s future results of operations. |
Fair Value Measurement, Policy [Policy Text Block] | Fair Measurements Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). The Financial Accounting Standards Board (FASB) has established a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. This hierarchy consists of three broad levels. Level 1 inputs are the highest priority and consist of unadjusted quoted prices in active markets for identical assets and liabilities. Level 2 are inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. Level 3 are unobservable inputs for an asset or liability. |
Fair Value of Financial Instruments, Policy [Policy Text Block] | Fair Values of Financial Instruments The carrying amounts reported for the revolving line of credit approximates fair value because the underlying instruments are at interest rates which approximate current market rates. The carrying amounts of receivables and accounts payable and other current assets and liabilities approximate fair value because of the short-term maturities and/or liquid nature of these assets and liabilities. |
Concentration Risk, Credit Risk, Policy [Policy Text Block] | Concentration of Credit Risk and Major Customer 48 43 43 43 Approximately 83 |
Oil and Gas Properties Policy [Policy Text Block] | Oil and Gas Properties The Company uses the full cost method of accounting for oil and gas properties. Under this method, all costs associated with the acquisition, leasing, exploration, and development of oil and gas reserves are capitalized. Costs capitalized include acquisition costs, estimated future costs of abandonment and site restoration, geological and geophysical expenditures, lease rentals on undeveloped properties and costs of drilling and equipping productive and non-productive wells. Drilling costs include directly related overhead costs. Capitalized costs are generally categorized either as being subject to amortization or not subject to amortization. All of our costs are subject to amortization. All capitalized costs of oil and gas properties, plus estimated future costs to develop proved reserves, are amortized on the unit-of-production method using estimates of proved reserves as determined by independent engineers. The Company evaluates oil and gas properties for impairment at least annually. Amortization expense for the three and nine months ended September 30, 2016, was $ 2,568,153 8,541,981 11.72 4,668,353 11,527,684 21.33 71,666 229,422 79,797 208,440 Write-down of Oil and Gas Properties Companies that use the full cost method of accounting for oil and natural gas exploration and development activities are required to perform a ceiling test calculation each quarter. The full cost ceiling test is an impairment test prescribed by SEC Regulation S-X Rule 4-10. The ceiling test is performed quarterly utilizing the average of prices in effect on the first day of the month for the preceding twelve month period in accordance with SEC Release No. 33-8995. The ceiling limits such pooled costs to the aggregate of the present value of future net revenues attributable to proved crude oil and natural gas reserves discounted at 10 During the three and nine months ended September 30, 2016, the Company recorded non-cash write-downs of the carrying value of the Company’s proved oil and gas properties as a result of ceiling test limitations of $ 9,648,942 56,513,016 |
Property, Plant and Equipment, Policy [Policy Text Block] | Office Equipment Office equipment is valued at historical cost adjusted for impairment loss less accumulated depreciation. Historical costs include all direct costs associated with the acquisition of office equipment and placing such equipment in service. Depreciation is calculated using the straight-line method based upon an estimated useful life of 5 7 |
Asset Retirement Obligations, Policy [Policy Text Block] | Asset Retirement Obligation The Company records a liability in the period in which an asset retirement obligation (“ARO”) is incurred, in an amount equal to the discounted estimated fair value of the obligation that is capitalized. Thereafter, this liability is accreted up to the final estimated retirement cost. An ARO is a future expenditure related to the disposal or other retirement of certain assets. The Company’s ARO relates to future plugging and abandonment expenses of its oil and natural gas properties and related facilities disposal. |
Revenue Recognition, Policy [Policy Text Block] | Revenue Recognition The Company predominantly derives its revenues from the sale of produced oil and natural gas. Revenue is recorded in the month the product is delivered to the purchasers. At the end of each month, the Company recognizes oil and natural gas sales based on estimates of the amount of production delivered to purchasers and the price to be received. Variances between the Company’s estimated oil and natural gas sales and actual receipts are recorded in the month the payments are received. |
Share-based Compensation, Option and Incentive Plans Policy [Policy Text Block] | Share-Based Employee Compensation The Company has outstanding stock option grants to directors, officers and employees, which are described more fully in Note 6. The Company recognizes the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the related compensation expense over the period during which an employee is required to provide service in exchange for the award, which is generally the vesting period. |
Share-based Compensation, Option and Incentive Plans, Director Policy [Policy Text Block] | Share-Based Compensation to Non-Employees The Company accounts for share-based compensation issued to non-employees as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable. The measurement date for these issuances is the earlier of (i) the date at which a commitment for performance by the recipient to earn the equity instruments is reached or (ii) the date at which the recipient’s performance is complete. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Pronouncements In March 2016, the FASB issued guidance for improvements to employee share-based payment accounting to simplify the accounting for share-based compensation. The new standard requires all excess tax benefits and reductions from differences between the deduction for tax purposes and the compensation cost recorded for financial reporting purposes be recognized as income tax expense or benefit in the Statement of Operations and not recognized as additional paid-in capital. The new standard also requires all excess tax benefits and deficiencies to be classified as operating activity included with income tax cash flows. For public business entities, the amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2016. Early adoption is permitted in any interim or annual period, with any adjustments reflected as of the beginning of the fiscal year of adoption. We are evaluating the impact of this guidance on our financial statements. In February 2016, FASB issued ASU No. 2016-02, Leases (Topic 841). For lessees, the amendments in this update require that for all leases not considered to be short term, a company recognize both a lease liability and right-of-use asset on its balance sheet, representing the obligation to make payments and the right to use or control the use of a specified asset for the lease term. The amendments in this update are effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods. Management is currently evaluating the impact that this amendment will have on its financial statements. In January 2016, the FASB issued guidance regarding several broad topics related to the recognition and measurement of financial assets and liabilities. The guidance is effective for interim and annual periods beginning after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements. In August 2014, the FASB issued guidance regarding disclosures of uncertainties about an entity's ability to continue as a going concern. The guidance applies prospectively to all entities, requiring management to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity's ability to continue as a going concern and disclose certain information when substantial doubt exists. We will adopt this guidance for the annual period ending December 31, 2016. In May 2014, the FASB issued guidance regarding the accounting for revenue from contracts with customers. In April and May 2016, the FASB issued additional guidance, addressed implementation issues and provided technical corrections. The guidance may be applied retrospectively or using a modified retrospective approach to adjust retained earnings (deficit). The guidance is effective for interim and annual periods beginning on or after December 15, 2017. We are currently evaluating the impact of this guidance on our financial statements. |
Earnings Per Share, Policy [Policy Text Block] | Basic and Diluted Earnings (Loss) per Share |
EARNINGS (LOSS) PER SHARE INF14
EARNINGS (LOSS) PER SHARE INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Earnings Per Share [Abstract] | |
Schedule Of Earnings Per Share Basic And Diluted [Table Text Block] | For The Three Months For The Nine Months Ended September 30, Ended September 30, 2016 2015 2016 2015 Net Loss $ (5,944,137) $ (1,138,268) $ (37,160,681) $ (1,579,725) Basic Weighted-Average Shares Outstanding 41,917,061 30,372,701 36,996,932 27,430,624 Effect of dilutive securities: Stock options - - - - Diluted Weighted-Average Shares Outstanding 41,917,061 30,372,701 36,996,932 27,430,624 Basic Loss per Share $ (0.14) $ (0.04) $ (1.00) $ (0.06) Diluted Loss per Share $ (0.14) $ (0.04) $ (1.00) $ (0.06) |
ASSET RETIREMENT OBLIGATION (Ta
ASSET RETIREMENT OBLIGATION (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of Asset Retirement Obligations [Table Text Block] | The asset retirement obligation incurred at the time of drilling was computed using the annual credit-adjusted risk-free discount rate at the applicable dates. Changes in the asset retirement obligation were as follows: Balance, December 31, 2015 $ 7,401,950 Liabilities incurred 248,487 Liabilities settled (7,817) Accretion expense 360,167 Balance, September 30, 2016 $ 8,002,787 |
EMPLOYEE STOCK OPTIONS (Tables)
EMPLOYEE STOCK OPTIONS (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Schedule of Share-based Payment Award, Employee Stock Purchase Plan, Valuation Assumptions [Table Text Block] | The following are the assumptions used to determine the fair value of options granted during the nine months ended September 30, 2016 and 2015: 2016 2015 Weighted-average volatility 100 - 99 % 103 % Expected dividends 0 0 Expected term (in years) 6.5 6.5 Risk-free interest rate 1.51 - 1.25 % 1.32 % |
Schedule of Share-based Compensation, Stock Options, Activity [Table Text Block] | Weighted- Weighted- Average Average Remaining Aggregate Exercise Contractual Intrinsic Shares Price Term Value Outstanding, December 31, 2015 2,881,150 $ 5.07 Granted 15,000 6.42 Exercised (25,150) 4.49 Forfeited (90,400) 9.71 Outstanding, September 30, 2016 2,780,600 $ 4.67 6.5 Years $ 17,532,933 Exercisable, September 30, 2016 1,487,850 $ 3.95 6.0 Years |
BASIS OF PRESENTATION AND SIG17
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Textual) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016USD ($)$ / Barrel | Sep. 30, 2015USD ($)$ / Barrel | Sep. 30, 2016USD ($)$ / Barrel | Sep. 30, 2015USD ($)$ / Barrel | |
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||
Depreciation | $ 71,666 | $ 79,797 | $ 229,422 | $ 208,440 |
Amortization expense | $ 2,568,153 | $ 4,668,353 | $ 8,541,981 | $ 11,527,684 |
Depletion At The Rate Per Barrel | $ / Barrel | 11.72 | 21.33 | 11.72 | 21.33 |
Estimated Present Value Of Future Net Revenues From Proved Reserves Discounted At An Interest Rate | 10.00% | |||
Percentage Of Accounts Receivables | 83.00% | 83.00% | ||
Impairment of Oil and Gas Properties | $ 9,648,942 | $ 56,513,016 | ||
Maximum [Member] | Office Equipment [Member] | ||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 7 years | |||
Minimum [Member] | Office Equipment [Member] | ||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||
Property, Plant and Equipment, Useful Life | 5 years | |||
Sales Revenue, Net [Member] | Customer One [Member] | ||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration Risk, Percentage | 48.00% | |||
Sales Revenue, Net [Member] | Customer Two [Member] | ||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration Risk, Percentage | 43.00% | |||
Accounts Receivable [Member] | Customer One [Member] | ||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration Risk, Percentage | 43.00% | |||
Accounts Receivable [Member] | Customer Two [Member] | ||||
Organization And Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration Risk, Percentage | 43.00% |
EARNINGS (LOSS) PER SHARE INF18
EARNINGS (LOSS) PER SHARE INFORMATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Net Loss | $ (5,944,137) | $ (1,138,268) | $ (37,160,681) | $ (1,579,725) |
Basic Weighted-Average Shares Outstanding | 41,917,061 | 30,372,701 | 36,996,932 | 27,430,624 |
Effect of dilutive securities: | ||||
Stock options | 0 | 0 | 0 | 0 |
Diluted Weighted-Average Shares Outstanding | 41,917,061 | 30,372,701 | 36,996,932 | 27,430,624 |
Basic Loss per Share | $ (0.14) | $ (0.04) | $ (1) | $ (0.06) |
Diluted Loss per Share | $ (0.14) | $ (0.04) | $ (1) | $ (0.06) |
EARNINGS (LOSS) PER SHARE INF19
EARNINGS (LOSS) PER SHARE INFORMATION (Details Textual) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Common Stock [Member] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||||
Antidilutive Securities Excluded from Computation of Earnings Per Share, Amount | 2,780,600 | 2,623,250 | 2,780,600 | 2,623,250 |
REVOLVING LINE OF CREDIT (Detai
REVOLVING LINE OF CREDIT (Details Textual) - USD ($) $ in Millions | 1 Months Ended | 9 Months Ended | |
Jul. 31, 2014 | Sep. 30, 2016 | May 01, 2016 | |
Line of Credit Facility [Line Items] | |||
Leverage Ratio, Total | 4.0 to 1.0 | ||
Minimum Leverage Ratio Current | 1.0 to 1.0 | ||
Debt Instrument, Redemption, Description | The Borrowing Base will be redetermined semi-annually on each May 1 and November 1, beginning November 1, 2015. | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 500 | ||
LIBOR [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Interest Rate During Period | 1.00% | ||
Revolving Credit Facility [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Maturity Date | Jun. 26, 2020 | ||
Line of Credit Facility, Interest Rate Description | 0.5% | ||
Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 2.75% | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 100 | ||
Debt Instrument, Interest Rate, Effective Percentage | 3.75% | ||
Minimum [Member] | |||
Line of Credit Facility [Line Items] | |||
Debt Instrument, Basis Spread on Variable Rate | 1.75% | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 60 | ||
Debt Instrument, Interest Rate, Effective Percentage | 2.75% |
ASSET RETIREMENT OBLIGATION (De
ASSET RETIREMENT OBLIGATION (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Asset Retirement Obligation [Line Items] | ||||
Balance | $ 7,401,950 | |||
Liabilities incurred | 248,487 | |||
Liabilities settled | (7,817) | |||
Accretion expense | $ 125,813 | $ 103,887 | 360,167 | $ 250,266 |
Balance | $ 8,002,787 | $ 8,002,787 |
STOCKHOLDERS' EQUITY (Details T
STOCKHOLDERS' EQUITY (Details Textual) - USD ($) | 1 Months Ended | 9 Months Ended | |
Apr. 26, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Class of Stock [Line Items] | |||
Proceeds from issuance of common stock | $ 61,064,671 | $ 50,039,853 | |
Noncontrolling Interest, Ownership Percentage by Noncontrolling Owners | 10.00% | ||
Repayments of Lines of Credit | $ 50,900,000 | $ 50,900,000 | $ 0 |
Line of Credit Facility, Periodic Payment, Interest | 10,000,000 | ||
Repayments Of Lines Of Credit Related Interest | $ 215,000 | ||
Stock Option One [Member] | |||
Class of Stock [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 150 | 40,000 | |
Stock Issued During Period, Value, Stock Options Exercised | $ 150,000 | ||
Stock Option Two [Member] | |||
Class of Stock [Line Items] | |||
Stock Options Exercise Per Share | $ 9.72 | $ 11.38 | |
Stock Options Exercise Shares Held Shares | 31 | 8,125 | |
Stock Options Exercise Shares Held Value | $ 300 | $ 92,500 | |
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 16,875 | ||
Exercise Price 2.00 [Member] | Stock Option One [Member] | |||
Class of Stock [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 20,000 | ||
Stock Issued During Period, Value, Stock Options Exercised | $ 40,000 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 2 | ||
Exercise Price 2.00 [Member] | Stock Option Two [Member] | |||
Class of Stock [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 119 | 10,000 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 2 | $ 2 | |
Exercise Price 4.50 [Member] | Stock Option One [Member] | |||
Class of Stock [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 25,000 | 20,000 | |
Stock Issued During Period, Value, Stock Options Exercised | $ 112,500 | $ 90,000 | |
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 4.50 | $ 4.50 | |
Exercise Price 4.50 [Member] | Stock Option Two [Member] | |||
Class of Stock [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 10,000 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 4.50 | ||
Exercise Price 5.50 [Member] | Stock Option Two [Member] | |||
Class of Stock [Line Items] | |||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period | 5,000 | ||
Share-based Compensation Arrangements by Share-based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 5.50 | ||
Underwritten Public Offering [Member] | |||
Class of Stock [Line Items] | |||
Stock Issued During Period, Shares, New Issues | 11,500,000 | ||
Stock Issued During Period, Value, New Issues | $ 64,400,000 | ||
Share Price | $ 5.60 | ||
Proceeds from issuance of common stock | $ 61,063,497 | ||
Payments of Stock Issuance Costs | 3,336,503 | ||
Payments for Underwriting Discounts | $ 3,200,000 | ||
Over-Allotment Option [Member] | |||
Class of Stock [Line Items] | |||
Stock Issued During Period, Shares, New Issues | 1,500,000 |
EMPLOYEE STOCK OPTIONS (Details
EMPLOYEE STOCK OPTIONS (Details) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted-average volatility | 103.00% | |
Expected dividends | 0.00% | 0.00% |
Expected term (in years) | 6 years 6 months | 6 years 6 months |
Risk-free interest rate | 1.32% | |
Maximum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted-average volatility | 100.00% | |
Risk-free interest rate | 1.51% | |
Minimum [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Weighted-average volatility | 99.00% | |
Risk-free interest rate | 1.25% |
EMPLOYEE STOCK OPTIONS (Detai24
EMPLOYEE STOCK OPTIONS (Details 1) - Employee Stock Option [Member] | 9 Months Ended |
Sep. 30, 2016USD ($)$ / sharesshares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares, Outstanding, December 31, 2015 | shares | 2,881,150 |
Shares, Granted | shares | 15,000 |
Shares, Exercised | shares | (25,150) |
Shares, Forfeited | shares | (90,400) |
Shares, Outstanding, September 30, 2016 | shares | 2,780,600 |
Shares, Exercisable, September 30, 2016 | shares | 1,487,850 |
Weighted-Average Exercise Price, Outstanding, December 31, 2015 | $ / shares | $ 5.07 |
Weighted Average Exercise Price, Granted | $ / shares | 6.42 |
Weighted-Average Exercise Price, Exercised | $ / shares | 4.49 |
Weighted-Average Exercise Price, Forfeited | $ / shares | 9.71 |
Weighted-Average Exercise Price, Outstanding, September 30, 2016 | $ / shares | 4.67 |
Weighted-Average Exercise Price, Exercisable, September 30, 2016 | $ / shares | $ 3.95 |
Weighted Average Remaining Contractual Term, Outstanding, September 30, 2016 | 6 years 6 months |
Weighted Average Remaining Contractual Term, Exercisable, September 30, 2016 | 6 years |
Aggregate Intrinsic Value, Outstanding | $ | $ 17,532,933 |
EMPLOYEE STOCK OPTIONS (Detai25
EMPLOYEE STOCK OPTIONS (Details Textual) - USD ($) | 3 Months Ended | 9 Months Ended | 12 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2013 | Dec. 31, 2011 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Available for Grant | 1,949,650 | 1,949,650 | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Not yet Recognized, Stock Options | $ 2,473,232 | $ 2,473,232 | ||||
Employee Service Share-based Compensation, Nonvested Awards, Compensation Cost Not yet Recognized, Period for Recognition | 2 years 2 months 12 days | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Per Share Weighted Average Price of Shares Purchased | $ 10.95 | $ 10.95 | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Options, Exercises in Period, Intrinsic Value | $ 58,058 | |||||
Compensation Expenses Charged Against Income For Share Based Awards Included In General And Administrative Expenses | $ 555,587 | $ 650,968 | $ 1,647,554 | $ 1,962,142 | ||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized | 2,500,000 | |||||
Share-based Compensation Arrangement by Share-based Payment Award, Number of Additional Shares Authorized | 5,000,000 |
CONTINGENCIES AND COMMITMENTS (
CONTINGENCIES AND COMMITMENTS (Details Textual) - USD ($) | Sep. 30, 2016 | Jul. 31, 2014 |
Loss Contingencies [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 500,000,000 | |
Standby Letters of Credit [Member] | ||
Loss Contingencies [Line Items] | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 280,000 |