Osage Exploration & Development (OSGE) 10-Q 14 Aug 14 2014 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Jun. 30, 2014	Aug. 12, 2014
Document And Entity Information	'	'
Entity Registrant Name	'OSAGE EXPLORATION & DEVELOPMENT, INC.	'
Entity Central Index Key	'0001405686	'
Document Type	'10-Q	'
Document Period End Date	30-Jun-14	'
Amendment Flag	'false	'
Current Fiscal Year End Date	'--12-31	'
Entity Filer Category	'Smaller Reporting Company	'
Entity Common Stock, Shares Outstanding	'	58,098,014
Document Fiscal Period Focus	'Q2	'
Document Fiscal Year Focus	'2014	'

Consolidated_Balance_Sheets

Consolidated Balance Sheets (USD $)	Jun. 30, 2014	Dec. 31, 2013
Current assets:	'	'
Cash and equivalents	$10,281,446	$2,782,643
Accounts receivable	1,901,042	2,769,414
Prepaid expenses and other current assets	84,137	596,742
Deferred financing costs	1,390,642	1,829,124
Total current assets	13,657,267	7,977,923
Property and equipment, at cost:	'	'
Oil & gas properties and equipment (successful efforts method)	39,815,424	27,339,460
Other property & equipment	259,025	85,746
Total property & equipment, gross	40,074,449	27,425,206
Less: accumulated depletion, depreciation and amortization	-5,028,695	-2,683,085
Total property & equipment, net	35,045,754	24,742,121
Restricted cash	870,965	908,645
Total assets	49,573,986	33,628,689
Current liabilities:	'	'
Accounts payable	3,883,853	555,784
Joint interest billing	2,629,212	'
Accrued expenses	671,992	117,800
Unrealized losses on oil and gas derivatives	669,047	265,961
Capital lease liability, current portion	42,272	'
Notes payable	25,000,000	20,000,000
Total current liabilities	32,896,376	20,939,545
Unrealized losses on oil and gas derivatives, net of current portion	'	91,606
Capital lease liability, net of current portion	71,141	'
Liability for asset retirement obligations	4,541	3,886
Total liabilities	32,972,058	21,035,037
Commitments and contingencies	'	'
Stockholders' Equity:	'	'
Preferred stock, $0.0001 par value, 10,000,000 authorized, none issued and outstanding as of June 30, 2014 or December 31, 2013	'	'
Common stock, $0.0001 par value, 190,000,000 shares authorized; 58,098,014 and 49,854,675 shares issued and outstanding as of June 30, 2014 and December 31, 2013, respectively	5,809	4,985
Additional paid-in capital	26,243,475	16,903,147
Stock purchase notes receivable	-95,000	-95,000
Accumulated deficit	-9,552,356	-4,219,480
Total stockholders' equity	16,601,928	12,593,652
Total liabilities and stockholders' equity	$49,573,986	$33,628,689

Consolidated_Balance_Sheets_Pa

Consolidated Balance Sheets (Parenthetical) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]	'	'
Preferred stock, par value	$0.00	$0.00
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	'	'
Preferred stock, shares outstanding	'	'
Common stock, shares authorized	$0.00	$0.00
Common stock, shares authorized	190,000,000	190,000,000
Common stock, shares issued	58,098,014	49,854,675
Common stock, shares outstanding	58,098,014	49,854,675

Consolidated_Statements_of_Ope

Consolidated Statements of Operations and Other Comprehensive Income (Loss) (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Operating revenues	'	'	'	'
Oil revenues	$1,895,201	$1,220,811	$4,028,018	$2,308,650
Natural gas revenues	583,495	96,782	1,088,093	220,815
Total operating revenues	2,478,696	1,317,593	5,116,111	2,529,465
Operating costs and expenses	'	'	'	'
Operating costs	390,699	356,489	863,841	538,860
General and administrative expenses	3,643,408	549,133	4,487,360	1,392,843
Depreciation, depletion and accretion	1,346,123	344,527	2,346,022	615,012
Loss on disposal of fixed assets	'	'	'	'
Total operating costs and expenses	5,380,230	1,250,149	7,697,223	2,546,715
Operating income (loss)	-2,901,534	67,444	-2,581,112	-17,250
Other income (expenses):	'	'	'	'
Interest income	4,409	1,023	4,833	1,140
Interest expense	-1,215,579	-1,129,640	-2,426,139	-1,896,146
Loss on oil and gas derivatives	-362,995	-36,690	-478,722	-36,690
Gain on sale of land interests	77,950	'	148,264	'
Loss from continuing operations before income taxes	-4,397,749	-1,097,863	-5,332,876	-1,948,946
Provision for income taxes	'	'	'	'
Loss from continuing operations	-4,397,749	-1,097,863	-5,332,876	-1,948,946
Discontinued operations:	'	'	'	'
Income from discontinued operations net of income taxes	'	1,128,565	'	1,906,223
Net income (loss)	-4,397,749	30,702	-5,332,876	-42,723
Other comprehensive income (loss), net of tax:	'	'	'	'
Foreign currency translation adjustment attributable to discontinued operations	'	-849	'	22,714
Comprehensive income (loss)	($4,397,749)	$29,853	($5,332,876)	($20,009)
Basic and diluted income (loss) per share	'	'	'	'
Continuing operations	($0.08)	($0.02)	($0.10)	($0.04)
Discontinued operations	'	$0.02	'	$0.04
Weighted average number of common share and common share equivalents used to compute basic and diluted income (loss) per share	58,033,570	49,804,453	54,817,975	49,645,119

Consolidated_Statements_of_Cas

Consolidated Statements of Cash Flows (Unaudited) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Cash flows from operating activities:	'	'
Net loss	($5,332,876)	($42,723)
Adjustments to reconcile net loss to net cash provided by operating activities:	'	'
Stock based compensation	3,032,252	405,500
Amortization of deferred financing costs	538,482	641,424
Amortization of debt discount	'	91,415
Gain on sale of land interests	-148,264	'
Write off of expired mineral rights leases	13,373	15,283
Accretion of asset retirement obligation	412	4,731
Provision for depletion, depreciation and amortization	2,345,610	714,899
Unrealized loss on oil and gas derivatives	311,480	36,690
Changes in operating assets and liabilities:	'	'
Decrease (increase) in accounts receivable	868,372	-1,612,442
Decrease in prepaid expenses and other current assets	512,605	18,497
(Decrese) increase in accounts payable	-236,819	132,154
Increase in joint interest billing account	2,629,212	'
Increase (decrease) in accrued expenses	554,192	-907,619
Net cash provided by (used in) operating activities	5,088,031	-502,191
Cash flows from investing activities:	'	'
Investments in oil & gas properties	-9,115,107	-9,957,828
Investments in non-oil & gas properties	-45,844	'
Decrease (increase) in restricted cash	37,680	-114,800
Net proceeds from sale of land interests	339,165	16,846
Proceeds from notes receivable	'	6,000
Net cash used in investing activities	-8,784,106	-10,049,782
Cash flows from financing activities:	'	'
Proceeds from offering of securities	6,744,000	'
Proceeds from secured promissory notes	5,000,000	10,000,000
Proceeds from term loan	'	367,520
Principal payments on term loan	'	-92,147
Principal payments on capital leases	-14,022	'
Payment of Placement fees and expenses	-437,100	'
Payment of deferred financing costs	-100,000	-100,000
Proceeds from exercise of warrants	2,000	3,500
Net cash provided by financing activities	11,194,878	10,178,873
Effect of exchange rate on cash and equivalents	'	131,043
Net increase in cash and equivalents	7,498,803	-242,057
Cash and equivalents - beginning of period	2,782,643	486,205
Cash and equivalents - end of period	10,281,446	244,148
SUPPLEMENTAL CASH FLOW INFORMATION:	'	'
Cash payment for interest	1,887,657	1,179,761
Cash payment for income taxes	'	'
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:	'	'
Increase in asset retirement obligation	243	25
Purchase of furniture and fixtures through capital leases	127,435	'
Oil and gas additions in accounts payable	$3,564,888	$2,716,579

Organization_and_Basis_of_Pres

Organization and Basis of Presentation	6 Months Ended
	Jun. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]	'
Organization and Basis of Presentation	'
	1. ORGANIZATION AND BASIS OF PRESENTATION
	Osage Exploration and Development, Inc. (“Osage” or the “Company”) is an independent energy company engaged primarily in the acquisition, development, production and sale of oil, natural gas and natural gas liquids. The Company’s production activities are located in the State of Oklahoma. The principal executive offices of the Company are at 2445 Fifth Avenue, Suite 310, San Diego, CA 92101.
	Osage prepared the accompanying unaudited consolidated financial statements in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) instructions to Form 10-Q and Item 310(b) of Regulation S-K. These financial statements should be read together with the financial statements and notes in the Company’s 2013 Form 10-K filed with the SEC. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP were condensed or omitted. The accompanying financial statements reflect all adjustments and disclosures, which, in the Company’s opinion, are necessary for fair presentation. All such adjustments are of a normal recurring nature. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the entire year.

Summary_of_Significant_Account

Summary of Significant Accounting Policies	6 Months Ended
	Jun. 30, 2014
Accounting Policies [Abstract]	'
Summary of Significant Accounting Policies	'
	2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
	Going Concern
	As a result of production delays outside of the Company’s control, the Company was not in compliance with certain covenants as of June 30, 2014 and March 31, 2014, including the minimum production covenant under the senior secured note purchase agreement (see Note 5 - Debt).
	On April 27, 2012, we entered into a $10,000,000 senior secured note purchase agreement with Apollo Investment Corporation. On April 5, 2013 we amended this agreement, increasing the facility to $20,000,000 and on April 7, 2014 we further amended this agreement, increasing the facility to $30,000,000, extending the term of the facility by one year, reducing the interest rate from Libor plus 15% to Libor plus 11% and agreeing to modify the covenants to reflect the transition from participant to operator. The Company also drew down an additional $5,000,000. The Company and the lender are still in discussions about modifications to the covenants and the existing covenants, some of which the Company is not in compliance with, remain in place until new covenants are agreed upon.
	In the six months ended June 30, 2014, the Company raised approximately $6.7 million of gross proceeds in a private placement. (See Note 10 - Equity)
	Management of the Company has undertaken steps as part of a plan to improve operations with the goal of sustaining our operations for the next 12 months and beyond. These steps include (a) becoming operators of our own wells, (b) participating in drilling of wells in Logan County, Oklahoma, (c) controlling overhead and expenses, and (d) raising additional equity and/or debt.
	The Company’s operating plans require additional funds which may take the form of debt or equity financings. The Company’s ability to continue as a going concern is dependent upon achieving profitable operations and obtaining additional financing. There is no assurance additional funds will be available on acceptable terms or at all. This raises substantial doubt about the Company’s ability to continue as a going concern.
	These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.
	Basis of Consolidation
	The consolidated financial statements include the accounts of Osage and its wholly owned subsidiaries, Osage Energy Company, LLC and Osage Exploration and Development Operating, LLC. Accordingly, all references herein to Osage or the Company include the consolidated results. All significant inter-company accounts and transactions were eliminated in consolidation. The results, assets and liabilities of the Company’s former wholly owned subsidiary, Cimarrona, LLC, have been presented as discontinued operations in the consolidated financial statements.
	Use of Estimates
	The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Management used significant estimates in determining the carrying value of its oil and gas producing assets and the associated depreciation and depletion expense related to sales volumes. The significant estimates include the use of proved oil and gas reserve estimates and the related present value of estimated future net revenues therefrom.
	Reclassifications
	Certain amounts included in the prior year financial statements have been reclassified to conform to the current year’s presentation. These reclassifications have no affect on the reported results in 2014 or 2013.
	Risk Factors Related to Concentration of Sales and Products
	The Company’s future financial condition and results of operations depend upon prices received for its oil and natural gas and the costs of finding, acquiring, developing and producing reserves. Prices for oil and natural gas are subject to fluctuations in response to changes in supply, market uncertainty and a variety of other factors beyond the Company’s control. These factors include worldwide political instability (especially in the Middle East), the foreign supply of oil and natural gas, the price of foreign imports, the level of consumer product demand and the price and availability of alternative fuels.
	Cash and Equivalents
	Cash and equivalents consist of short-term, highly liquid investments readily convertible into cash with an original maturity of three months or less.
	Concentration of Credit Risk
	Financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable arising from its normal business activities. The Company places its cash in what it believes are credit-worthy financial institutions. However, the Company’s cash balances have exceeded the FDIC insured levels at various times during the three and six months ended June 30, 2014 and 2013. The Company maintains cash accounts only at large, high quality financial institutions and believes the credit risk associated with cash held in banks exceeding the FDIC insured levels is remote. The Company generated substantially all of its revenues from six customers in the three and six months ended June 30, 2014 and four customers in prior year comparable quarter.
	Deferred Financing Costs
	The Company incurred deferred financing costs in connection with the Note Purchase Agreement (see Note 5), which represented the fair value of warrants, placement fees and legal fees. Deferred financing costs of $3,959,448 are being amortized over the term of the Note Purchase Agreement on a straight-line basis, which approximates the effective interest method.
	Deferred financing costs net of accumulated amortization at June 30, 2014 were $1,390,642. Amortization of deferred financing costs was $190,499 and $538,482 for the three and six months ended June 30, 2014, respectively and $326,962 and $641,424 for the three and six months ended June 30, 2013, respectively.
	Restricted Cash
	In connection with the Apollo Note Purchase Agreement, as amended (see Note 5), the Company has classified $812,500 and $850,000, representing three months interest, as restricted cash as of June 30, 2014 and December 31, 2013, respectively. The Company has also pledged $58,465 for certain bonds and sureties at June 30, 2014. Restricted cash at June 30, 2014 was $870,965, compared to $908,645 at December 31, 2013.
	Risk Management Activities
	The Company has entered into certain derivative financial instruments to manage the inherent uncertainty of future revenues. The Company does not intend to hold or issue derivative financial instruments for speculative purposes and has elected not to designate any of its derivative instruments for hedge accounting treatment. These derivative financial instruments are marked to market at each reporting period.
	Net Income/Loss Per Share
	In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260 “Earnings Per Share,” the Company’s basic net income/loss per share of common stock is calculated by dividing net income/loss by the weighted-average number of shares of common stock outstanding for the period. The diluted net income/loss per share of common stock is computed by dividing the net income/loss using the weighted-average number of common shares including potential dilutive common shares outstanding during the period. Potential common shares are excluded from the computation of diluted net loss per share if anti-dilutive.
	The following table shows the computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2014 and 2013:
			Three Months Ended June 30,						Six Months Ended June 30,
			2014			2013			2014			2013
	Net loss allocable to continuing operations		$	(4,397,749	)	$	(1,097,863	)	$	(5,332,876	)	$	(1,948,946	)
	Net income allocable to discontinued operations		$	-		$	1,128,565		$	-		$	1,906,223
	Basic and diluted net income (loss) per share
	Continuing operations		$	(0.08	)	$	(0.02	)	$	(0.10	)	$	(0.04	)
	Discontinued operations		$	-		$	0.02		$	-		$	0.04
	Basic and diluted weighted average shares outstanding			58,033,570			49,804,453			54,817,975			49,645,119
	Potential common shares consisted of 7,287,559 and 1,696,843 warrants and options to purchase common stock at June 30, 2014 and 2013, respectively. All of these warrants and options were excluded from the computations for the three and six months June 30, 2014 and 2013, as their effect would have been anti-dilutive.
	Fair Value of Financial Instruments
	As of June 30, 2014 and December 31, 2013, the fair value of cash and equivalents, accounts receivable, notes payable, accounts payable and accrued expenses approximate carrying values because of the short-term maturity of these instruments.
	FASB ACS Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.
	The three levels of valuation hierarchy are defined as follows:
		●	Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.
		●	Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
		●	Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement.
	The Company analyzes all financial instruments with features of both liabilities and equity under ASC Topic 480, “Distinguishing Liabilities from Equity,” and ASC Topic 815, “Derivatives and Hedging.”
	As of June 30, 2014 the Company identified certain derivative financial instruments which required disclosure at fair value on the balance sheet.
	The following table presents information for those assets and liabilities requiring disclosure at fair value as of 2014:
						Total			Fair Value Measurements Using:
			Carrying			Fair			Level 1			Level 2			Level 3
			Amount			Value			Inputs			Inputs			Inputs
	June 30, 2014 assets (liabilities):
	Commodity derivative liability			(669,047	)		(669,047	)		-			(669,047	)		-
	The following methods and assumptions were used to estimate the fair values in the tables above.
	Level 2 Fair Value Measurements
	Commodity derivatives — The fair values of commodity derivatives are estimated using internal option pricing models based upon forward curves and data obtained from independent third parties for contracts with similar terms or data obtained from counterparties to the agreements.
	Recent Accounting Pronouncements
	The Company does not expect the adoption of any recently issued accounting pronouncements to have a material effect on the consolidated financial statements.

Oil_and_Gas_Properties

Oil and Gas Properties	6 Months Ended
	Jun. 30, 2014
Oil and Gas Property [Abstract]	'
Oil and Gas Properties	'
	3. OIL AND GAS PROPERTIES
	Oil and gas properties consisted of the following:
		June 30, 2014			December 31, 2013
	Properties subject to amortization	$	38,207,374		$	25,551,336
	Properties not subject to amortization		1,604,149			1,784,465
	Capitalized asset retirement costs		3,901			3,659
	Accumulated depreciation and depletion		(4,933,502	)		(2,606,243	)
	Oil & gas properties, net	$	34,881,922		$	24,733,217
	Depreciation and depletion expense for oil and gas properties totaled $1,334,307 and $2,327,259 in the three and six months ended June 30, 2014 and 2013, respectively and $213,128 and $478,733 in the three and six months ended June 30, 2013, respectively.
	On December 12, 2013, Osage and Slawson entered into an agreement (the “Partition Agreement”) which amended the Participation Agreement related to certain lands located within the Nemaha Ridge in Logan County, Oklahoma, and for the exploration and development of those leases by the parties.
	Under the Partition Agreement and effective as of September 1, 2013, Slawson agreed to assign all of its rights, title and interest in and to the oil and gas leases and force-pooled acreage which are part of the Nemaha Ridge Project within certain sections to Osage and Osage agreed to assign all of its rights, title and interest in and to the oil and gas leases and force-pooled acreage which are part of the Nemaha Ridge Project within certain sections to Slawson, such that the net acreage controlled by the parties would remain substantially unchanged, but that the acreage controlled by each of the parties in undeveloped sections would be located in sections where the other party did not control acreage. The parties also agreed that the Participation Agreement would terminate as to all lands within the Nemaha Ridge Project except for lands within sections already developed by the parties which shall continue to be controlled by the Participation Agreement.
	As a result of the Partition Agreement, Osage has become the project operator on much of its acreage in the Nemaha Ridge Project. As of June 30, 2014, Osage operated or has the right to operate approximately 4,183 net acres (6,301 gross), and remains joint-venture or potential joint-venture partners with others in approximately 5,185 net acres (30,088 gross).
	In 2011, the Company began to acquire leases in Pawnee County, Oklahoma, targeting the Mississippian formation. In July 2011, we purchased from B&W Exploration, Inc. (“B&W”) the Pawnee County prospect targeting the Mississippian, for $8,500. In addition, B&W is also entitled to an overriding royalty interest on the leases acquired and a 12.5% carry on the first $200,000 of lease bonus paid in the form of an assignment of 12.5% of the leases acquired. Subsequently, B&W shall have an option to purchase a 12.5% share of leasehold acquired on a heads-up basis. As of June 30, 2014, the Company had 4,190 net acres (5,085 gross) leased in Pawnee County. As of June 30, 2014, none of these leases have been assigned to B&W.
	In 2011, we also began to acquire leases in Coal County, Oklahoma, targeting the Oily Woodford Shale formation. The Oily Woodford Shale formation is located mainly in southeastern Oklahoma in the Arkoma Basin. The Oily Woodford shale lies directly under the Mississippian and started as a vertical play, but horizontal drilling techniques and multi-stage fracturing technology have been used in the Woodford in recent years with much success. At June 30, 2014, we had 4,246 net (9,509 gross) acres leased in Coal County.
	At June 30, 2014 we have leased 17,804 net (50,983 gross) acres across three counties in Oklahoma as follows:
		Gross			Osage Net
	Logan (non operated)		30,088			5,185
	Logan - Osage		6,301			4,183
	Coal		9,509			4,246
	Pawnee		5,085			4,190
			50,983			17,804

Segment_and_Geographical_Infor

Segment and Geographical Information	6 Months Ended
	Jun. 30, 2014
Segments, Geographical Areas [Abstract]	'
Segment and Geographical Information	'
	4. SEGMENT AND GEOGRAPHICAL INFORMATION
	At June 30, 2014, the Company’s continuing operations comprised one segment in one geographic region.

Debt

Debt	6 Months Ended
	Jun. 30, 2014
Debt Disclosure [Abstract]	'
Debt	'
	5. DEBT
	Apollo - Note Purchase Agreement
	On April 27, 2012, we entered into a $10,000,000 senior secured note purchase agreement (“Note Purchase Agreement” or “Notes”) with Apollo Investment Corporation (“Apollo”). The Notes, which mature on April 27, 2015, are secured by substantially all of the assets of the Company, including a mortgage on all our Oklahoma leases. The Notes bear interest of Libor plus 15.0% with a Libor floor of 2.0%, with interest payable monthly. In addition, Apollo received a warrant to purchase 1,496,843 shares of common stock, exercisable at $0.01 per share, with a Black-Scholes value of $2,483,952 and an expiration date of April 27, 2017. Variables used in the valuation include (1) discount rate of 0.82%, (2) expected life of 5 years, (3) expected volatility of 245.0% and (4) zero expected dividends. The minimum draw amount on the Note Purchase Agreement is $1,000,000. At closing, we did not draw down any funds.
	At closing of the Note Purchase Agreement, we paid $100,000 of a minimum placement fee to CC Natural Resource Partners, LLC (“CCNRP”) and issued a warrant to purchase 250,000 shares of common stock, exercisable at $0.01 per share, with a Black-Scholes value of $413,690 and an expiration date of April 27, 2014. Variables used in the valuation include (1) discount rate of 0.26%, (2) expected life of 2 years, (3) expected volatility of 242.0% and (4) zero expected dividends. In addition, we paid $170,692 in legal fees, of which $100,000 were paid to Apollo. In December 2012, we paid an additional $380,000 in placement fees. We also issued a warrant to purchase 100,000 shares of common stock, exercisable at $0.01 per share, with a Black-Scholes value of $89,952 and a term of five years, to the placement agent for the Note Purchase Agreement and amended the term of the warrant granted on April 27, 2012 from two to five years, with a Black-Scholes value of $1,161. Variables used in the valuation include (1) discount rate of 0.72%, (2) expected life of five years, (3) expected volatility of 242.0% and (4) zero expected dividends. In December 2013 we paid an additional $100,000 in placement fees and in April 2014 we paid $100,000 in additional placement fees.
	On April 5, 2013 the Company and Apollo amended the Note Purchase Agreement, increasing the amount of the facility to $20,000,000 and modifying certain covenants for the remainder of the Note Purchase Agreement term. The Company paid an amendment fee of $100,000 which is being amortized over the remaining term of the Note Purchase Agreement.
	On August 12, 2013, the Company and Apollo amended the Note Purchase Agreement. The amendment required that the Company, within 75 days of the effective date as defined in the amendment, complete either (1) a sale of certain assets, or (2) the issuance of capital stock in a transaction that resulted in aggregate net proceeds as defined in the amendment. In the event that the Company did not complete either one of the aforementioned transactions, the Company would have been required under the terms of the amendment to issue to Apollo additional warrants equivalent to three percent of the Company’s common stock, on a fully-diluted basis. On October 7, 2013, the Company completed the sale of its membership interests in Cimarrona LLC as more fully discussed in Note 11. This sale satisfied the requirements of the amendment and the Company is thus not obligated to issue additional Warrants to Apollo.
	During the quarter ended June 30, 2014, we drew down $5,000,000 in additional funds and, as of June 30, 2014, the amount outstanding under the Note Purchase Agreement was $25,000,000. On April 3, 2014, the Company and Apollo amended the Note Purchase Agreement, increasing the amount of the total facility to $30,000,000, extending the term by one year and reducing the interest rate from Libor plus 15% to Libor plus 11%. The parties also agreed to modify future covenants to reflect the Company’s transition from participant to operator.
	The Company has recorded deferred financing costs in the aggregate amount of $3,959,448 in connection with the Note Purchase Agreement, which represented the fair value of warrants issued to Apollo and CCNRP, placement fees, amendment fees and legal fees, which are amortized on a straight-line basis over the term of the Notes, which approximates the effective interest method, as the Company did not draw funds at issuance.
	On each anniversary of the closing date, the Company is obligated to pay an administrative fee of $50,000. The Company is subject to certain precedents in connection with each draw, an upfront fee equal to 2.0% of the principal amount of each draw, and is required to maintain a deposit account equal to three months of interest payments.
	The Company is subject to various affirmative, negative and financial covenants under the Note Purchase Agreement as amended along with other restrictions and requirements, all as defined in the Note Purchase Agreement. Affirmative covenants include by October 31st of each year beginning in 2012, a reserve report prepared as of the immediately preceding September 30, concerning the Company’s domestic oil and gas properties prepared by approved petroleum engineers, and thereafter as of September 30th of each year.
	The Company and Apollo are negotiating new covenants to the Note Purchase Agreement. Until these negotiations are complete existing covenants, some of which the Company is not in compliance with, remain in place. Accordingly, the Company has classified borrowings under the Note Purchase Agreement as short term in the accompanying consolidated balance sheets.
	Use of proceeds is limited to those purposes specified in the Note Purchase Agreement. The Notes are subject to mandatory prepayment in the event of certain asset sales, insurance or condemnation proceeds, issuance of indebtedness, extraordinary receipts and tax refunds. All terms are as defined in the Note Purchase Agreement.
	Boothbay - Secured Promissory Note
	On April 17, 2012, we issued a secured promissory note (“Secured Promissory Note”) to Boothbay Royalty Co., (“Boothbay”) for gross proceeds of $2,500,000. The Secured Promissory Note had a maturity date of April 17, 2014 and bore interest of 18%, payable monthly. In addition, Boothbay received 400,000 shares of common stock for which the relative fair value of $386,545 was recorded as debt discount, a 1.5% overriding royalty on our leases in section 29, township 17 North, range 3 and a 1.7143% overriding royalty on our leases in section 36, township 19 North, range 4 West in Logan County, Oklahoma. The closing price of the Company’s common stock on April 17, 2012 was $1.14. The Secured Promissory Note was secured by a first mortgage (with power of sale), security agreement and financing statement covering a 5% overriding royalty interest, proportionately reduced, in all of the Company’s leases in Logan County, Oklahoma. The Company repaid the Secured Promissory Note in full in December 2013.
	In connection with the Note Purchase Agreement, the Company recognized $1,215,360 of interest expense, of which $190,499 was non-cash interest expense and $1,024,861 was cash interest expense, for the three months ended June 30, 2014. For the six months ended June 30, 2014, the Company recognized $2,425,920 of interest expense related to this facility, of which $538,482 was non-cash interest expense and $1,887,438 was cash interest expense. In connection with the Note Purchase Agreement and the Secured Promissory Note, the Company recognized $1,129,640 of interest expense, of which $375,112 was non-cash interest expense and $754,528 was cash interest expense, for the three months ended June 30, 2013. For the six months ended June 30, 2013, the Company recognized $1,896,116 of interest expense related to these facilities, of which $732,839 was non-cash interest expense and $1,163,306 was cash interest expense.

Derivative_Financial_Instrumen

Derivative Financial Instruments	6 Months Ended
	Jun. 30, 2014
Derivative Instruments and Hedging Activities Disclosure [Abstract]	'
Derivative Financial Instruments	'
	6. DERIVATIVE FINANCIAL INSTRUMENTS
	The Company entered into certain derivative financial instruments with respect to a portion of its oil and gas production in the third quarter of 2013. Prior thereto, the Company had not entered into any derivative financial instruments. These instruments are used to manage the inherent uncertainty of future revenues due to commodity price volatility and currently include only costless price collars. The Company does not intend to hold or issue derivative financial instruments for speculative trading purposes and has elected not to designate any of its derivative instruments for hedge accounting treatment.
	As of June, 2014, the Company had the following open oil derivative positions. These oil derivatives settle against the average of the daily settlement prices for the WTI first traded contract month on the New York Mercantile Exchange (“NYMEX”) for each successive day of the calculation period.
			Price Collars
			Monthly			Weighted Average		Weighted Average
			Volume			Floor Price		Ceiling Price
	Period			(BBLs/m)			($/BBL)		($/BBL)
	Q3 - Q4, 2014			6,000		$	85	$	95
	Q1 - Q2, 2015			6,000		$	80	$	93.5
	As of June 30, 2014, the Company had the following open natural gas derivative positions. These natural gas derivatives settle against the NYMEX Penultimate for the calculation period.
			Price Collars
			Monthly			Weighted Average		Weighted Average
			Volume			Floor Price		Ceiling Price
	Period		(Btu/m)			($/Btu)		($/Btu)
	Q3 - Q4, 2014			10,000		$	3.75	$	4.4
	Q1 - Q2, 2015			10,000		$	3.75	$	4.4
	Cash settlements and unrealized gains and losses on fair value changes associated with the Company’s commodity derivatives are presented in the “Oil and gas derivatives’ caption in the accompanying consolidated statements of earnings.
	The following table sets forth the cash settlements and unrealized gains and losses on fair value changes for commodity derivatives for the three and six months ended June 30, 2014 and 2013.
		Three Months Ended			Six Months Ended
		30-Jun-14			30-Jun-14
	Cash settlements to (by) Company	$	(119,572	)	$	(167,242	)
	Unrealized gains (losses) on commodity derivatives		(243,423	)		(311,480	)
	Loss on oil and gas derivatives	$	(362,995	)	$	(478,722	)
		Three Months Ended			Six Months Ended
		30-Jun-13			30-Jun-13
	Cash settlements to (by) Company	$	-		$	-
	Unrealized gains (losses) on commodity derivatives		(36,690	)		(36,690	)
	Loss on oil and gas derivatives	$	(36,690	)	$	(36,690	)
	On October 15, 2013, the Company entered into an Intercreditor Agreement with Apollo and BP Energy Company to provide collateral for its oil and gas derivative financial instruments. BP Energy Corporation North America simultaneously provided a Guarantee for $25 million as collateral for its obligations to the Company.

Commitments_and_Contingencies

Commitments and Contingencies	6 Months Ended
	Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Commitments and Contingencies	'
	7. COMMITMENTS AND CONTINGENCIES
	Environment
	Osage, as owner and operator of oil and gas properties, is subject to various Federal, State, and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the owner of real property and the lessee under oil and gas leases for the cost of pollution clean-up resulting from operations, subject the owner/lessee to liability for pollution damages and impose restrictions on the injection of liquids into subsurface strata. Although Company environmental policies and practices are designed to ensure compliance with these laws and regulations, future developments and increasing stringent regulations could require the Company to make additional unforeseen environmental expenditures. The Company maintains insurance coverage it believes is customary in the industry, although it is not fully insured against all environmental risks. The Company is not aware of any environmental claims existing as of June 30, 2014, that would have a material impact on its consolidated financial position or results of operations. There can be no assurance, however, that current regulatory requirements will not change, or past non-compliance with environmental laws will not be discovered on the Company’s property.
	Operating Leases
	In February 2011, the Company entered into a 36 month lease for its corporate offices in San Diego. In February 2014, the Company amended this lease to extend the term for an additional three years through February 2017. In February 2012, the Company entered into a 24 month lease for a vehicle to be utilized by its operations in Oklahoma and entered into a 36 month lease for a vehicle at the termination of the original auto lease. In December 2013, the Company entered into a three year lease for office space in Oklahoma City the term for which commenced in February 2014.
	Rental expense totaled $44,028 and $14,595 in the three months ended June 30, 2014 and 2013, respectively and $74,967 and $28,958 for the six months ended June 30, 2014 and 2013, respectively.
	Future minimum commitments under operating leases are as follows as of June 30, 2014:
	Year	Amount
	2014 (July - December)	$	91,883
	2015		184,810
	2016		186,098
	2017		29,862
		$	492,653
	Capital leases
	The Company entered into a lease for certain office furniture and equipment in the first quarter of 2014. The term of the lease is three years and as the lease essentially transfer the risks of ownership it is being accounted for as a capital lease.
	Leased property under capital leases at June 30, 2014 includes:
		30-Jun-14
	Furniture and equipment	$	127,436
	less: accumulated depreciation		(8,496	)
		$	118,940
	Total depreciation expense under capital leases was $6,372 and $8,496 for the three and six months ended June 30, 2014 and as of that date the future minimum lease payments under capital leases were as follows:
	Year	Amount
	2014 (July - December)	$	21,478
	2015		42,956
	2016		42,956
	2017		7,158
			114,548
	Less amount representing interest		(1,135	)
	Present value of minimum lease payments	$	113,413
	Current maturities	$	42,272
	Non-current maturities		71,141
		$	113,413
	Legal Proceedings
	The Company is not a party to any litigation that has arisen in the normal course of its business or that of its subsidiaries.
	Division de Impuestos y Actuanas Nacionales (“DIAN”), the Colombian tax authorities, levies a tax based on the equity value of Cimarrona. In 2010, the Company was notified by DIAN that it owed $883,742 in equity taxes relating to the 2001 and 2003 equity tax years. To compute the value the equity tax is assessed upon, Cimarrona subtracted the cost of its non-producing wells in 2001 and 2003. However, DIAN’s position is that as long as the field is productive, Cimarrona should not have subtracted the cost of the non-producing wells. In May 2011, we settled in full the 2001 equity liability with DIAN. In January 2012, we were informed by DIAN that we had lost our appeal on the 2003 tax issue and we increased the amount attributable to the 2003 tax year by $322,288 as of December 31, 2011 to correspond to the amount DIAN indicated we owed for the 2003 tax year. In January 2013, we successfully concluded negotiations with DIAN with respect to the ultimate liability for the 2003 tax year. DIAN waived certain interest and penalties. We paid the agreed final liability to DIAN in January 2013, and financed the payment with an unsecured Colombian term loan facility in the amount of $367,521. We recognized in discontinued operations the $531,644 benefit of the amnesty in the quarter ended June 30, 2013, upon receipt of official confirmation that the liability is fully settled. We repaid the unsecured Colombian term loan facility in October 2013 in conjunction with the sale of Cimarrona.
	SALE OF CIMARRONA LLC
	On October 7, 2013, the Company completed the sale of 100% of the membership interests in Cimarrona LLC to Raven Pipeline Company, LLC (“Raven”), pursuant to a Membership Interest Purchase Agreement dated September 30, 2013 (the “Agreement”) by and between the Company and Raven. The Cimarrona property is subject to an Ecopetrol Association Contract (the “Association Contract”) whereby Ecopetrol S.A. (“Ecopetrol”) receives royalties of 20% of the oil produced. The pipeline is not subject to the Association Contract. In addition to the royalty, according to the Association Contract, Ecopetrol may, for no consideration, become a 50% partner, once an audit of revenues and expenses indicate that the partners in the Association Contract have received a 200% reimbursement of all historical costs to develop and operate the Guaduas field. If such an audit determines that the specified reimbursement of historical costs occurred prior to September 30, 2013, the Company is required to reimburse Raven for any amounts due to Ecopetrol from Cimarrona LLC which relate to the period prior to that date. The Company believes its maximum exposure is 50% of Cimarrona LLC’s oil revenues for the nine months ended September 30, 2013, or $729,308. The Company has not recorded any provision for this matter, as it is not possible to estimate the potential liability, if any.

Major_Customers

Major Customers	6 Months Ended
	Jun. 30, 2014
Major Customers	'
Major Customers	'
	8. MAJOR CUSTOMERS
	During the three and six months ended June 30, 2014 and 2013, the Company had the following customers who accounted for all of its sales:
		Three Months ended					Three Months ended
		30-Jun-14					30-Jun-13
		Amount		% of Total			Amount		% of Total
	Slawson	$	1,638,250		66.1	%	$	966,213		73.3	%
	Devon		492,857		19.9	%		102,516		7.8	%
	Stephens		161,627		6.5	%		235,251		17.9	%
	CMO Energy Partners		153,698		6.2	%		-		-
	Phillips 66		16,690		0.7	%		-		-
	Sundance		15,574		0.6	%		13,613		1	%
	Total	$	2,478,696		100	%	$	1,317,593		100	%
		Six Months ended					Six Months ended
		30-Jun-14					30-Jun-13
		Amount		% of Total			Amount		% of Total
	Slawson	$	3,555,914		69.5	%	$	1,918,284		75.8	%
	Devon		1,036,326		20.3	%		280,438		11.1	%
	Stephens		333,391		6.5	%		317,130		12.6	%
	CMO Energy Partners		153,698		3	%		-		-
	Phillips 66		16,690		0.3	%		-		-
	Sundance		20,092		0.4	%		13,613		0.5	%
	Total	$	5,116,111		100	%	$	2,529,465		100	%

Liability_for_Asset_Retirement

Liability for Asset Retirement Obligations	6 Months Ended
	Jun. 30, 2014
Asset Retirement Obligation [Abstract]	'
Liability for Asset Retirement Obligations	'
	9. LIABILITY FOR ASSET RETIREMENT OBLIGATIONS
	The Company recognizes a liability at discounted fair value for the future retirement of tangible long-lived assets and associated assets retirement cost associated with the petroleum and natural gas properties. The fair value of the liability is capitalized as part of the cost of the related asset and amortized to expense over its useful life. The liability accretes until the date of expected settlement of the retirement obligations. The related accretion expense is recognized in the statements of operations. The provision will be revised for the effect of any changes to timing related to cash flow or undiscounted abandonment costs. Actual expenditures incurred for the purpose of site reclamation are charged to the asset retirement obligations (“AROs”) to the extent that the liability exists on the balance sheet. Differences between the actual costs incurred and the fair value of the liability recorded are recognized in income in the period the actual costs are incurred. There are no legally restricted assets for the settlement of AROs. No income tax is applicable to the ARO as of June 30, 2014 and December 31, 2013, because the Company records a valuation allowance on deductible temporary differences due to the uncertainty of its realization.
	A reconciliation of the Company’s asset retirement obligations for the six months ended June 30, 2014 is as follows:
		Six Months Ended
		30-Jun-14
	Beginning balance	$	3,886
	Incurred during the period		-
	Reversed during the period		-
	Additions for new wells		243
	Accretion expense		412
	Ending balance	$	4,541

Equity

Equity	6 Months Ended
	Jun. 30, 2014
Equity [Abstract]	'
Equity	'
	10. EQUITY
	Common Stock
	In February 2014, the Company initiated a private placement, pursuant to Securities Purchase Agreements between Osage and certain purchasers, with aggregate gross proceeds of approximately $6.7 million. The purchase price of each unit, representing one share of common stock and a warrant to purchase 0.4 shares of common stock at $1.80 per share, was $0.90. The warrants have a term of five years. The placement agent received placement fees of 8%, in cash or warrants or a combination thereof at their election. As of June 30, 2014 units representing $6,744,000 had been sold, representing 7,493,333 shares of common stock and warrants to purchase 2,997,333 shares of common stock. The placement agent fees related to these units as of June 30, 2014 were cash fees of $427,100 and warrants to purchase 196,620 shares of common stock at $0.01 per share. In addition, the Company incurred legal fees of $10,000 with respect to the private placement.
	On January 2, 2014 we issued a total of 550,000 shares to three individuals in connection with amended employment and consulting agreements. Stock based compensation had already been expensed for 150,000 shares as discussed below. The remaining 400,000 shares vest on January 1, 2015, were valued at $436,000 based on closing prices of $1.00 for 200,000 shares and $1.18 for 200,000 shares and are being expensed over one year.
	On June 5, 2014 we issued a total of 600,000 non-qualified stock options to two employees and a consultant, exercisable at $0.8925 per share, with a Black-Scholes value of $629,714 and an expiration date of June 4, 2024. Variables used in the valuation include (1) discount rate of 0.85%, (2) expected life of 10 years, (3) expected volatility of 220.0% and 219.0% for employees and consultant, respectively, and (4) zero expected dividends. These options were fully vested as of the grant date.
	During the three months ended March 31, 2013 we issued 400,000 shares which vested immediately to two employees with a fair value of $364,000, or $0.91 per share. On August 1, 2012, in connection with a three-year employment agreement, we agreed to issue 150,000 shares of common stock at future dates as specified in the agreement. The 150,000 shares were valued at $177,000, or $1.18 per share, and were being expensed over the three years of the employment agreement. We recognized $14,750 of expense related to these shares in the three months ended March 31, 2013. On January 2, 2014, we amended the employment agreement and the vesting of these shares accelerated, and we recognized the unamortized portion of the stock based compensation expense in the fourth quarter of 2013.
	Warrants
	During the three months ended March 31, 2014, 200,000 warrants were exercised by a consultant who had previously received the warrants in exchange for services.
	On April 10, 2014 we issued a warrant to purchase 2,000,000 shares of common stock to a consultant, exercisable at $1.04 per share, with a Black-Scholes value of $2,184,538 and an expiration date of April 9, 2017. Variables used in the valuation include (1) discount rate of 0.81%, (2) expected life of 3 years, (3) expected volatility of 223.0% and (4) zero expected dividends. This warrant was fully vested as of the grant date.
	Total stock-based compensation expense was $2,923,252 and $26,750 for the three months ended June 30, 2014 and 2013, respectively, and $3,032,252 and $405,500 for the six months ended June 30, 2014 and 2013, respectively. All stock-based compensation expense is included in general and administrative expenses in the accompanying unaudited financial statements.

Discontinued_Operations

Discontinued Operations	6 Months Ended
	Jun. 30, 2014
Discontinued Operations and Disposal Groups [Abstract]	'
Discontinued Operations	'
	11. DISCONTINUED OPERATIONS
	On October 7, 2013, the Company completed the sale of 100% of the membership interests in Cimarrona LLC to Raven, pursuant to the Agreement dated September 30, 2013 by and between the Company and Raven. Cimarrona LLC is the owner of a 9.4% interest in certain oil and gas assets including a pipeline in the Guaduas field, located in the Dindal and Rio Seco Blocks that covers 30,665 acres in the Middle Magdalena Valley in Colombia.
	The sales price consisted of cash of $6,800,000, less settlement of debt of Cimarrona LLC of approximately $250,000. Of the net sales price, $250,000 will be held in escrow for 12 months to secure any post-Closing purchase price adjustments and any indemnity obligations of the Company pursuant to the Agreement. In addition, so long as the per barrel transportation rate charged with respect to the pipeline is not adjusted prior to March 31, 2014, then Raven is obligated to pay the Company an additional $1,000,000 in cash. Pursuant to the Agreement, the Company also recognized a receivable for a working capital adjustment of $422,955 in other current assets as of December 31, 2013 and recognized a gain on disposal of discontinued operations of $4,873,660 in the year ended December 31, 2013. Raven has reimbursed the Company for the working capital adjustment. The Company and Raven are in discussions about the status of the per barrel transportation rate with respect to the pipeline, and the Company does not presently have sufficient information to estimate the outcome of these discussions.
	The following table sets forth the results of operations for the discontinued operations for the three and six months ended June 30, 2013:
		Three Months			Six Months
		ended			ended
		30-Jun-13			30-Jun-13
	Revenues
	Oil revenues	$	460,749		$	1,076,436
	Pipeline revenues		611,919			1,211,111
	Total revenues		1,072,668			2,287,547
	Operating costs and expenses
	Operating expenses		362,590			679,128
	Depreciation, depletion and accretion		45,866			104,618
	Equity tax		(499,922	)		(466,958	)
	General and administrative		26,374			48,164
	Total operating costs and expenses		(65,092	)		364,952
	Operating income		1,137,760			1,922,595
	Other income (expenses):
	Interest income		13			84
	Interest expense		(9,208	)		(16,456	)
	Income before income taxes		1,128,565			1,906,223
	Provision for income taxes		-			-
	Net income	$	1,128,565		$	1,906,223

Summary_of_Significiant_Accoun

Summary of Significiant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2014

Accounting Policies [Abstract]

'

Going Concern

'

Going Concern

As a result of production delays outside of the Company’s control, the Company was not in compliance with certain covenants as of June 30, 2014 and March 31, 2014, including the minimum production covenant under the senior secured note purchase agreement (see Note 5 - Debt).

On April 27, 2012, we entered into a $10,000,000 senior secured note purchase agreement with Apollo Investment Corporation. On April 5, 2013 we amended this agreement, increasing the facility to $20,000,000 and on April 7, 2014 we further amended this agreement, increasing the facility to $30,000,000, extending the term of the facility by one year, reducing the interest rate from Libor plus 15% to Libor plus 11% and agreeing to modify the covenants to reflect the transition from participant to operator. The Company also drew down an additional $5,000,000. The Company and the lender are still in discussions about modifications to the covenants and the existing covenants, some of which the Company is not in compliance with, remain in place until new covenants are agreed upon.

In the six months ended June 30, 2014, the Company raised approximately $6.7 million of gross proceeds in a private placement. (See Note 10 - Equity)

Management of the Company has undertaken steps as part of a plan to improve operations with the goal of sustaining our operations for the next 12 months and beyond. These steps include (a) becoming operators of our own wells, (b) participating in drilling of wells in Logan County, Oklahoma, (c) controlling overhead and expenses, and (d) raising additional equity and/or debt.

The Company’s operating plans require additional funds which may take the form of debt or equity financings. The Company’s ability to continue as a going concern is dependent upon achieving profitable operations and obtaining additional financing. There is no assurance additional funds will be available on acceptable terms or at all. This raises substantial doubt about the Company’s ability to continue as a going concern.

These consolidated financial statements do not give effect to any adjustments which would be necessary should the Company be unable to continue as a going concern and therefore be required to realize its assets and discharge its liabilities in other than the normal course of business and at amounts different from those reflected in the accompanying consolidated financial statements.

Basis of Consolidation

'

Basis of Consolidation

The consolidated financial statements include the accounts of Osage and its wholly owned subsidiaries, Osage Energy Company, LLC and Osage Exploration and Development Operating, LLC. Accordingly, all references herein to Osage or the Company include the consolidated results. All significant inter-company accounts and transactions were eliminated in consolidation. The results, assets and liabilities of the Company’s former wholly owned subsidiary, Cimarrona, LLC, have been presented as discontinued operations in the consolidated financial statements.

Use of Estimates

'

Use of Estimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from those estimates. Management used significant estimates in determining the carrying value of its oil and gas producing assets and the associated depreciation and depletion expense related to sales volumes. The significant estimates include the use of proved oil and gas reserve estimates and the related present value of estimated future net revenues therefrom.

Reclassifications

'

Reclassifications

Certain amounts included in the prior year financial statements have been reclassified to conform to the current year’s presentation. These reclassifications have no affect on the reported results in 2014 or 2013.

Risk Factors Related to Concentration of Sales and Products

'

Risk Factors Related to Concentration of Sales and Products

The Company’s future financial condition and results of operations depend upon prices received for its oil and natural gas and the costs of finding, acquiring, developing and producing reserves. Prices for oil and natural gas are subject to fluctuations in response to changes in supply, market uncertainty and a variety of other factors beyond the Company’s control. These factors include worldwide political instability (especially in the Middle East), the foreign supply of oil and natural gas, the price of foreign imports, the level of consumer product demand and the price and availability of alternative fuels.

Cash and Equivalents

'

Cash and Equivalents

Cash and equivalents consist of short-term, highly liquid investments readily convertible into cash with an original maturity of three months or less.

Concentration of Credit Risk

'

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk are cash and accounts receivable arising from its normal business activities. The Company places its cash in what it believes are credit-worthy financial institutions. However, the Company’s cash balances have exceeded the FDIC insured levels at various times during the three and six months ended June 30, 2014 and 2013. The Company maintains cash accounts only at large, high quality financial institutions and believes the credit risk associated with cash held in banks exceeding the FDIC insured levels is remote. The Company generated substantially all of its revenues from six customers in the three and six months ended June 30, 2014 and four customers in prior year comparable quarter.

Deferred Financing Costs

'

Deferred Financing Costs

The Company incurred deferred financing costs in connection with the Note Purchase Agreement (see Note 5), which represented the fair value of warrants, placement fees and legal fees. Deferred financing costs of $3,959,448 are being amortized over the term of the Note Purchase Agreement on a straight-line basis, which approximates the effective interest method.

Deferred financing costs net of accumulated amortization at June 30, 2014 were $1,390,642. Amortization of deferred financing costs was $190,499 and $538,482 for the three and six months ended June 30, 2014, respectively and $326,962 and $641,424 for the three and six months ended June 30, 2013, respectively.

Restricted Cash

'

Restricted Cash

In connection with the Apollo Note Purchase Agreement, as amended (see Note 5), the Company has classified $812,500 and $850,000, representing three months interest, as restricted cash as of June 30, 2014 and December 31, 2013, respectively. The Company has also pledged $58,465 for certain bonds and sureties at June 30, 2014. Restricted cash at June 30, 2014 was $870,965, compared to $908,645 at December 31, 2013.

Risk Management Activities

'

Risk Management Activities

The Company has entered into certain derivative financial instruments to manage the inherent uncertainty of future revenues. The Company does not intend to hold or issue derivative financial instruments for speculative purposes and has elected not to designate any of its derivative instruments for hedge accounting treatment. These derivative financial instruments are marked to market at each reporting period.

Net Income/Loss Per Share

'

Net Income/Loss Per Share

In accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 260 “Earnings Per Share,” the Company’s basic net income/loss per share of common stock is calculated by dividing net income/loss by the weighted-average number of shares of common stock outstanding for the period. The diluted net income/loss per share of common stock is computed by dividing the net income/loss using the weighted-average number of common shares including potential dilutive common shares outstanding during the period. Potential common shares are excluded from the computation of diluted net loss per share if anti-dilutive.

The following table shows the computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2014 and 2013:

Three Months Ended June 30,

Six Months Ended June 30,

2014

2013

2014

2013

Net loss allocable to continuing operations

$

(4,397,749

)

$

(1,097,863

)

$

(5,332,876

)

$

(1,948,946

)

Net income allocable to discontinued operations

$

-

$

1,128,565

$

-

$

1,906,223

Basic and diluted net income (loss) per share

Continuing operations

$

(0.08

)

$

(0.02

)

$

(0.10

)

$

(0.04

)

Discontinued operations

$

-

$

0.02

$

-

$

0.04

Basic and diluted weighted average shares outstanding

58,033,570

49,804,453

54,817,975

49,645,119

Potential common shares consisted of 7,287,559 and 1,696,843 warrants and options to purchase common stock at June 30, 2014 and 2013, respectively. All of these warrants and options were excluded from the computations for the three and six months June 30, 2014 and 2013, as their effect would have been anti-dilutive.

Fair Value of Financial Instruments

'

Fair Value of Financial Instruments

As of June 30, 2014 and December 31, 2013, the fair value of cash and equivalents, accounts receivable, notes payable, accounts payable and accrued expenses approximate carrying values because of the short-term maturity of these instruments.

FASB ACS Topic 820, “Fair Value Measurements and Disclosures,” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 825, “Financial Instruments,” defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measures. The carrying amounts reported in the consolidated balance sheets for receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of their fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest.

The three levels of valuation hierarchy are defined as follows:

●

Level 1 inputs to the valuation methodology are quoted prices for identical assets or liabilities in active markets.

●

Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets in inactive markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.

●

Level 3 inputs to the valuation methodology use one or more unobservable inputs which are significant to the fair value measurement.

The Company analyzes all financial instruments with features of both liabilities and equity under ASC Topic 480, “Distinguishing Liabilities from Equity,” and ASC Topic 815, “Derivatives and Hedging.”

As of June 30, 2014 the Company identified certain derivative financial instruments which required disclosure at fair value on the balance sheet.

The following table presents information for those assets and liabilities requiring disclosure at fair value as of 2014:

Total

Fair Value Measurements Using:

Carrying

Fair

Level 1

Level 2

Level 3

Amount

Value

Inputs

Inputs

Inputs

June 30, 2014 assets (liabilities):

Commodity derivative liability

(669,047

)

(669,047

)

-

(669,047

)

-

The following methods and assumptions were used to estimate the fair values in the tables above.

Level 2 Fair Value Measurements

Commodity derivatives — The fair values of commodity derivatives are estimated using internal option pricing models based upon forward curves and data obtained from independent third parties for contracts with similar terms or data obtained from counterparties to the agreements.

Recent Accounting Pronouncements

'

Recent Accounting Pronouncements

The Company does not expect the adoption of any recently issued accounting pronouncements to have a material effect on the consolidated financial statements.

Summary_of_Significant_Account1

Summary of Significant Accounting Policies (Tables)	6 Months Ended
	Jun. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]	'
Schedule of Computation of Basic and Diluted Net Income (Loss) Per Share	'
	The following table shows the computation of basic and diluted net income (loss) per share for the three and six months ended June 30, 2014 and 2013:
		Three Months Ended June 30,						Six Months Ended June 30,
		2014			2013			2014			2013
	Net loss allocable to continuing operations	$	(4,397,749	)	$	(1,097,863	)	$	(5,332,876	)	$	(1,948,946	)
	Net income allocable to discontinued operations	$	-		$	1,128,565		$	-		$	1,906,223
	Basic and diluted net income (loss) per share
	Continuing operations	$	(0.08	)	$	(0.02	)	$	(0.10	)	$	(0.04	)
	Discontinued operations	$	-		$	0.02		$	-		$	0.04
	Basic and diluted weighted average shares outstanding		58,033,570			49,804,453			54,817,975			49,645,119
Schedule of Fair Value Measurements Assets and Liability	'
	The following table presents information for those assets and liabilities requiring disclosure at fair value as of 2014:
					Total			Fair Value Measurements Using:
		Carrying			Fair			Level 1			Level 2			Level 3
		Amount			Value			Inputs			Inputs			Inputs
	June 30, 2014 assets (liabilities):
	Commodity derivative liability		(669,047	)		(669,047	)		-			(669,047	)		-

Oil_and_Gas_Properties_Tables

Oil and Gas Properties (Tables)	6 Months Ended
	Jun. 30, 2014
Oil and Gas Property [Abstract]	'
Schedule of Oil and Gas Properties	'
	Oil and gas properties consisted of the following:
		June 30, 2014			December 31, 2013
	Properties subject to amortization	$	38,207,374		$	25,551,336
	Properties not subject to amortization		1,604,149			1,784,465
	Capitalized asset retirement costs		3,901			3,659
	Accumulated depreciation and depletion		(4,933,502	)		(2,606,243	)
	Oil & gas properties, net	$	34,881,922		$	24,733,217
Schedule of Area of Land Leased	'
	At June 30, 2014 we have leased 17,804 net (50,983 gross) acres across three counties in Oklahoma as follows:
		Gross			Osage Net
	Logan (non operated)		30,088			5,185
	Logan - Osage		6,301			4,183
	Coal		9,509			4,246
	Pawnee		5,085			4,190
			50,983			17,804

Derivative_Financial_Instrumen1

Derivative Financial Instruments (Tables)	6 Months Ended
	Jun. 30, 2014
Schedule of Cash Settlements and Unrealized Gains (Losses) on Fair Value Changes for Commodity Derivatives	'
	The following table sets forth the cash settlements and unrealized gains and losses on fair value changes for commodity derivatives for the three and six months ended June 30, 2014 and 2013.
		Three Months Ended			Six Months Ended
		30-Jun-14			30-Jun-14
	Cash settlements to (by) Company	$	(119,572	)	$	(167,242	)
	Unrealized gains (losses) on commodity derivatives		(243,423	)		(311,480	)
	Loss on oil and gas derivatives	$	(362,995	)	$	(478,722	)
		Three Months Ended			Six Months Ended
		30-Jun-13			30-Jun-13
	Cash settlements to (by) Company	$	-		$	-
	Unrealized gains (losses) on commodity derivatives		(36,690	)		(36,690	)
	Loss on oil and gas derivatives	$	(36,690	)	$	(36,690	)
Oil [Member]	'
Schedule of Oil and Natural Gas Open Derivative Positions	'
	As of June, 2014, the Company had the following open oil derivative positions. These oil derivatives settle against the average of the daily settlement prices for the WTI first traded contract month on the New York Mercantile Exchange (“NYMEX”) for each successive day of the calculation period.
			Price Collars
			Monthly			Weighted Average		Weighted Average
			Volume			Floor Price		Ceiling Price
	Period			(BBLs/m)			($/BBL)		($/BBL)
	Q3 - Q4, 2014			6,000		$	85	$	95
	Q1 - Q2, 2015			6,000		$	80	$	93.5
Natural Gas Member]	'
Schedule of Oil and Natural Gas Open Derivative Positions	'
	As of June 30, 2014, the Company had the following open natural gas derivative positions. These natural gas derivatives settle against the NYMEX Penultimate for the calculation period.
			Price Collars
			Monthly			Weighted Average		Weighted Average
			Volume			Floor Price		Ceiling Price
	Period		(Btu/m)			($/Btu)		($/Btu)
	Q3 - Q4, 2014			10,000		$	3.75	$	4.4
	Q1 - Q2, 2015			10,000		$	3.75	$	4.4

Commitments_and_Contingencies_

Commitments and Contingencies (Tables)	6 Months Ended
	Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Schedule of Future Minimum Commitments Under Operating Leases	'
	Future minimum commitments under operating leases are as follows as of June 30, 2014:
	Year	Amount
	2014 (July - December)	$	91,883
	2015		184,810
	2016		186,098
	2017		29,862
		$	492,653
Schedule of Leased Property Under Capital Leases	'
	Leased property under capital leases at June 30, 2014 includes:
		30-Jun-14
	Furniture and equipment	$	127,436
	less: accumulated depreciation		(8,496	)
		$	118,940
Schedule of Future Minimum Lease Payments Under Capital Leases	'
	Total depreciation expense under capital leases was $6,372 and $8,496 for the three and six months ended June 30, 2014 and as of that date the future minimum lease payments under capital leases were as follows:
	Year	Amount
	2014 (July - December)	$	21,478
	2015		42,956
	2016		42,956
	2017		7,158
			114,548
	Less amount representing interest		(1,135	)
	Present value of minimum lease payments	$	113,413
	Current maturities	$	42,272
	Non-current maturities		71,141
		$	113,413

Major_Customers_Tables

Major Customers (Tables)	6 Months Ended
	Jun. 30, 2014
Major Customers	'
Schedule of Major Customers Accounting for All of Its Sale	'
	During the three and six months ended June 30, 2014 and 2013, the Company had the following customers who accounted for all of its sales:
		Three Months ended					Three Months ended
		30-Jun-14					30-Jun-13
		Amount		% of Total			Amount		% of Total
	Slawson	$	1,638,250		66.1	%	$	966,213		73.3	%
	Devon		492,857		19.9	%		102,516		7.8	%
	Stephens		161,627		6.5	%		235,251		17.9	%
	CMO Energy Partners		153,698		6.2	%		-		-
	Phillips 66		16,690		0.7	%		-		-
	Sundance		15,574		0.6	%		13,613		1	%
	Total	$	2,478,696		100	%	$	1,317,593		100	%
		Six Months ended					Six Months ended
		30-Jun-14					30-Jun-13
		Amount		% of Total			Amount		% of Total
	Slawson	$	3,555,914		69.5	%	$	1,918,284		75.8	%
	Devon		1,036,326		20.3	%		280,438		11.1	%
	Stephens		333,391		6.5	%		317,130		12.6	%
	CMO Energy Partners		153,698		3	%		-		-
	Phillips 66		16,690		0.3	%		-		-
	Sundance		20,092		0.4	%		13,613		0.5	%
	Total	$	5,116,111		100	%	$	2,529,465		100	%

Liability_for_Asset_Retirement1

Liability for Asset Retirement Obligations (Tables)	6 Months Ended
	Jun. 30, 2014
Asset Retirement Obligation [Abstract]	'
Schedule of Reconciliation of Asset Retirement Obligations	'
	A reconciliation of the Company’s asset retirement obligations for the six months ended June 30, 2014 is as follows:
		Six Months Ended
		30-Jun-14
	Beginning balance	$	3,886
	Incurred during the period		-
	Reversed during the period		-
	Additions for new wells		243
	Accretion expense		412
	Ending balance	$	4,541

Discontinued_Operations_Tables

Discontinued Operations (Tables)	6 Months Ended
	Jun. 30, 2014
Discontinued Operations and Disposal Groups [Abstract]	'
Summary of Discontinued Operations	'
	The following table sets forth the results of operations for the discontinued operations for the three and six months ended June 30, 2013:
		Three Months			Six Months
		ended			ended
		30-Jun-13			30-Jun-13
	Revenues
	Oil revenues	$	460,749		$	1,076,436
	Pipeline revenues		611,919			1,211,111
	Total revenues		1,072,668			2,287,547
	Operating costs and expenses
	Operating expenses		362,590			679,128
	Depreciation, depletion and accretion		45,866			104,618
	Equity tax		(499,922	)		(466,958	)
	General and administrative		26,374			48,164
	Total operating costs and expenses		(65,092	)		364,952
	Operating income		1,137,760			1,922,595
	Other income (expenses):
	Interest income		13			84
	Interest expense		(9,208	)		(16,456	)
	Income before income taxes		1,128,565			1,906,223
	Provision for income taxes		-			-
	Net income	$	1,128,565		$	1,906,223

Summary_of_Significant_Account2

Summary of Significant Accounting Policies (Details Narrative) (USD $)

3 Months Ended

6 Months Ended

6 Months Ended

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Apr. 03, 2014

Apr. 05, 2013

Apr. 27, 2012

Jun. 30, 2014

Apr. 07, 2014

Dec. 31, 2013

Apollo Investment Corporation [Member]

Apollo Investment Corporation [Member]

Apollo Investment Corporation [Member]

Apollo Investment Corporation [Member]

Apollo Note Purchase Agreement [Member]

Apollo Note Purchase Agreement [Member]

Apollo Note Purchase Agreement [Member]

Senior secured notes

'

'

'

'

'

'

$30,000,000

$20,000,000

$10,000,000

'

$30,000,000

'

Drew down an additional amount

5,000,000

'

5,000,000

'

'

'

'

'

'

'

'

'

Term of facility

'

'

'

'

'

'1 year

'

'

'

'

'

'

Line of credit facility, interest rate description

'

'

'

'

'

'

'

'

'

'

'

'

reducing the interest rate from Libor plus 15% to Libor plus 11%

Proceeds from private placement

'

'

6,700,000

'

'

'

'

'

'

'

'

'

Deferred financing costs

3,959,448

'

3,959,448

'

'

'

'

'

'

'

'

'

Deferred financing costs, net of accumulated amortization

1,390,642

'

1,390,642

'

'

'

'

'

'

'

'

'

Amortization of deferred finance costs

190,499

326,962

538,482

641,424

'

'

'

'

'

'

'

'

Restricted cash

870,965

'

870,965

'

908,645

'

'

'

'

812,500

'

850,000

Pledged for bonds and sureties

$58,465

'

$58,465

'

'

'

'

'

'

'

'

'

Number of warrants consisted in potential common shares to purchase common stock

7,287,559

'

7,287,559

'

1,696,843

'

'

'

'

'

'

'

Summary_of_Significant_Account3

Summary of Significant Accounting Policies - Schedule of Computation of Basic and Diluted Net Income (Loss) Per Share (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Accounting Policies [Abstract]	'	'	'	'
Net loss allocable to continuing operations	($4,397,749)	($1,097,863)	($5,332,876)	($1,948,946)
Net income allocable to discontinued operations	'	$1,128,565	'	$1,906,223
Basic and diluted net income (loss) per share, Continuing operations	($0.08)	($0.02)	($0.10)	($0.04)
Basic and diluted net income (loss) per share, Discontinued operations	'	$0.02	'	$0.04
Basic and diluted weighted average shares outstanding	58,033,570	49,804,453	54,817,975	49,645,119

Summary_of_Significant_Account4

Summary of Significant Accounting Policies - Schedule of Fair Value Measurements Assets and Liability (Details) (USD $)	Jun. 30, 2014
Commodity derivative liability	($669,047)
Carrying Amount [Member]	'
Commodity derivative liability	-669,047
Level 1 Inputs [Member]	'
Commodity derivative liability	'
Level 2 Inputs [Member]	'
Commodity derivative liability	-669,047
Level 3 Inputs [Member]	'
Commodity derivative liability	'

Oil_and_Gas_Properties_Details

Oil and Gas Properties (Details Narrative) (USD $)	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 31, 2011	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
		acre		acre
Depreciation and depletion expense	'	$1,346,123	$344,527	$2,346,022	$615,012
Net acres of leased land	'	17,804	'	17,804	'
Gross acres of leased land	'	50,983	'	50,983	'
Purchase of oil prospects	8,500	'	'	'	'
Percentage of leases acquired	12.50%	'	'	'	'
Lease bonus paid	200,000	'	'	'	'
Others [Member]	'	'	'	'	'
Net acres of leased land	'	5,185	'	5,185	'
Gross acres of leased land	'	30,088	'	30,088	'
Parent Company [Member]	'	'	'	'	'
Net acres of leased land	'	4,183	'	4,183	'
Gross acres of leased land	'	6,301	'	6,301	'
Pawnee County [Member]	'	'	'	'	'
Net acres of leased land	'	4,190	'	4,190	'
Gross acres of leased land	'	5,085	'	5,085	'
Coal County [Member]	'	'	'	'	'
Net acres of leased land	'	4,246	'	4,246	'
Gross acres of leased land	'	9,509	'	9,509	'
Oklahoma County [Member]	'	'	'	'	'
Net acres of leased land	'	17,804	'	17,804	'
Gross acres of leased land	'	50,983	'	50,983	'
Oil and Gas Properties [Member]	'	'	'	'	'
Depreciation and depletion expense	'	$1,334,307	$213,128	$2,327,259	$478,733

Oil_and_Gas_Properties_Schedul

Oil and Gas Properties - Schedule of Oil and Gas Properties (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Oil and Gas Property [Abstract]	'	'
Properties subject to amortization	$38,207,374	$25,551,336
Properties not subject to amortization	1,604,149	1,784,465
Capitalized asset retirement costs	3,901	3,659
Accumulated depreciation and depletion	-4,933,502	-2,606,243
Oil & gas properties, net	$34,881,922	$24,733,217

Oil_and_Gas_Properties_Schedul1

Oil and Gas Properties - Schedule of Area of Land Leased (Details)	Jun. 30, 2014
	acre
Gross acres of leased land	50,983
Net acres of leased land	17,804
Logan Non Operated County [Member]	'
Gross acres of leased land	30,088
Net acres of leased land	5,185
Logan Operated County [Member]	'
Gross acres of leased land	6,301
Net acres of leased land	4,183
Coal County [Member]	'
Gross acres of leased land	9,509
Net acres of leased land	4,246
Pawnee County [Member]	'
Gross acres of leased land	5,085
Net acres of leased land	4,190

Segment_and_Geographical_Infor1

Segment and Geographical Information (Details Narrative)	6 Months Ended
	Jun. 30, 2014
	Region
	Segment
Segments, Geographical Areas [Abstract]	'
Number of segment	1
Number of geographic region	1

Debt_Details_Narrative

Debt (Details Narrative) (USD $)

0 Months Ended

1 Months Ended

3 Months Ended

6 Months Ended

0 Months Ended

1 Months Ended

0 Months Ended

6 Months Ended

0 Months Ended

6 Months Ended

0 Months Ended

3 Months Ended

6 Months Ended

3 Months Ended

6 Months Ended

Jun. 05, 2014

Apr. 30, 2014

Dec. 31, 2013

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Apr. 27, 2012

Apr. 17, 2012

Apr. 17, 2012

Apr. 03, 2014

Apr. 03, 2014

Apr. 10, 2014

Apr. 27, 2012

Dec. 31, 2012

Apr. 27, 2012

Jun. 30, 2014

Apr. 03, 2014

Apr. 05, 2013

Apr. 27, 2012

Jun. 30, 2014

Jun. 30, 2014

Apr. 17, 2012

Jun. 30, 2014

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2013

Logan County Range Three [Member]

Logan County Range Four [Member]

Minimum [Member]

Maximum [Member]

Warrant [Member]

Warrant [Member]

Warrant [Member]

Apollo Investment Corporation [Member]

Apollo Investment Corporation [Member]

Apollo Investment Corporation [Member]

Apollo Investment Corporation [Member]

CC Natural Resource Partners, LLC [Member]

CC Natural Resource Partners, LLC [Member]

Apollo Investment Corporation And CC Natural Resource Partners LLC [Member[Member

Boothbay Royalty Co [Member]

Boothbay Royalty Co [Member]

Boothbay Royalty Co [Member]

Boothbay Royalty Co [Member]

Boothbay Royalty Co [Member]

Warrant [Member]

Note Purchase Agreement [Member]

Note Purchase Agreement [Member]

Note Purchase Agreement and Secured Promissory Note [Member]

Note Purchase Agreement and Secured Promissory Note [Member]

Senior secured notes

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$10,000,000

'

$30,000,000

$20,000,000

'

'

'

'

'

'

'

'

Notes maturity date

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

27-Apr-15

'

'

'

'

'

'

17-Apr-14

'

'

'

'

Percentage of LIBOR plus interest rate

'

'

'

'

'

'

'

'

'

'

15.00%

11.00%

'

'

'

15.00%

'

'

'

'

'

'

'

'

'

'

'

Percentage of LIBOR floor interest rate

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

2.00%

'

'

'

'

'

'

'

'

'

'

'

Note purchase agreement minimum placement fee

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

100,000

'

'

'

'

'

'

'

Warrants issued to purchase of common stock

'

'

'

'

'

'

'

'

'

'

'

'

'

'

100,000

1,496,843

'

'

'

250,000

'

'

'

'

'

'

'

Warrants exercise price

'

'

'

'

'

'

'

'

'

'

'

'

'

'

0.001

0.01

'

'

'

0.01

'

'

'

'

'

'

'

Warrants value using Black-Scholes

'

'

'

'

'

'

'

'

'

'

'

'

2,184,538

1,161

89,952

2,483,952

'

'

'

413,690

'

'

'

'

'

'

'

Warrants maturity date

'

'

'

'

'

'

'

'

'

'

'

'

9-Apr-17

'

'

27-Apr-17

'

'

'

27-Apr-14

'

'

'

'

'

'

'

Discount rate

0.85%

'

'

'

'

'

'

'

'

'

'

'

0.81%

0.82%

0.72%

'

'

'

'

'

0.26%

'

'

'

'

'

'

Expected life in years

'10 years

'

'

'

'

'

'

'

'

'

'

'

'3 years

'5 years

'5 years

'

'

'

'

'

'2 years

'

'

'

'

'

'

Expected volatility rate

'

'

'

'

'

'

'

'

'

'

'

'

'

245.00%

242.00%

'

'

'

'

'

242.00%

'

'

'

'

'

'

Expected dividends rate

0.00%

'

'

'

'

'

'

'

'

'

'

'

0.00%

0.00%

0.00%

'

'

'

'

'

0.00%

'

'

'

'

'

'

Minimum amount draw through purchase of notes

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

1,000,000

'

'

'

'

'

'

'

'

'

'

Legal fees on notes

'

'

'

'

'

'

'

170,692

'

'

'

'

'

'

'

'

100,000

'

'

'

'

'

'

'

'

'

'

Additional placement fees

'

100,000

100,000

'

'

'

'

'

'

'

'

'

'

'

380,000

'

'

'

'

100,000

'

'

'

'

'

'

'

Warrants expiration term

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'5 years

'

'

'

'

'

'

'

'

'

'

'

'

Payment made for agreement fee

'

'

'

'

'

100,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Percentage of common stock equivalent to additional warrants

'

'

'

'

'

3.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Amount of drew down in additional funds

'

'

'

5,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Note purchase agreemnt outstanding amount

'

'

'

25,000,000

'

25,000,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Line of credit facility, interest rate description

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

reducing the interest rate from Libor plus 15% to Libor plus 11%

Deferred financing costs

'

'

'

1,390,642

'

1,390,642

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

3,959,448

'

'

'

'

'

Liability to pay administrative fees

'

'

'

50,000

'

50,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Percentage of upfront fee

'

'

'

2.00%

'

2.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Secured promissory note

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

2,500,000

'

'

'

'

Secured promissory note, interest rate

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

18.00%

'

'

'

'

Shares issued for secured promissory note

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

400,000

'

'

'

'

Debt discount

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

386,545

'

'

'

'

Percentage of overriding royalty

'

'

'

'

'

'

'

'

1.50%

1.71%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Common stock closing price

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$1.14

'

'

'

'

Percentage of overriding royalty interest

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

5.00%

'

'

'

'

Interest expense

'

'

'

1,215,579

1,129,640

2,426,139

1,896,146

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

1,215,360

2,425,920

1,129,640

1,896,116

Non-cash interest expense

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

190,499

538,482

375,112

732,839

Cash interest expense on secured promissory note

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$1,024,861

$1,887,438

$754,528

$1,163,306

Derivative_Financial_Instrumen2

Derivative Financial Instruments (Details Narrative) (USD $)	Oct. 15, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]	'
Collateral amount	$25,000,000

Derivative_Financial_Instrumen3

Derivative Financial Instruments - Schedule of Oil Open Derivative Positions (Details) (Oil [Member])	6 Months Ended
	Jun. 30, 2014
	bbl
Q3 - Q4, 2014 [Member]	'
Monthly Volume (BBLs/m)	6,000
Weighted Average Floor Price ($/BBL)	85
Weighted Average Ceiling Price ($/BBL)	95
Q1 - Q2, 2015 [Member]	'
Monthly Volume (BBLs/m)	6,000
Weighted Average Floor Price ($/BBL)	80
Weighted Average Ceiling Price ($/BBL)	93.5

Derivative_Financial_Instrumen4

Derivative Financial Instruments - Schedule of Natural Gas Open Derivative Positions (Details) (Natural Gas Member])	6 Months Ended
	Jun. 30, 2014
	Btu
Q3 - Q4, 2014 [Member]	'
Monthly Volume (Btu/m)	10,000
Weighted Average Floor Price ($/Btu)	3.75
Weighted Average Ceiling Price ($/BBL)	4.4
Q1 - Q2, 2015 [Member]	'
Monthly Volume (Btu/m)	10,000
Weighted Average Floor Price ($/Btu)	3.75
Weighted Average Ceiling Price ($/BBL)	4.4

Derivative_Financial_Instrumen5

Derivative Financial Instruments - Schedule of Cash Settlements and Unrealized Gains (Losses) on Fair Value Changes for Commodity Derivatives (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Derivative Instruments and Hedging Activities Disclosure [Abstract]	'	'	'	'
Cash settlements to (by) Company	($119,572)	'	($167,242)	'
Unrealized gains (losses) on commodity derivatives	-243,423	-36,690	-311,480	-36,690
Loss on oil and gas derivatives	($362,995)	($36,690)	($478,722)	($36,690)

Commitments_and_Contingencies_1

Commitments and Contingencies (Details Narrative) (USD $)

0 Months Ended

1 Months Ended

3 Months Ended

6 Months Ended

12 Months Ended

9 Months Ended

1 Months Ended

Oct. 07, 2013

Jan. 31, 2013

Feb. 29, 2012

Jan. 31, 2012

Feb. 28, 2011

Jun. 30, 2014

Jun. 30, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2010

Sep. 30, 2013

Oct. 07, 2013

Feb. 29, 2012

Cimarrona LLC [Member]

Cimarrona LLC [Member]

Termination of Original Auto Lease [Member]

Lease periods in months

'

'

'24 months

'

'36 months

'

'

'

'

'

'

'

'36 months

Capital lease terms

'

'

'

'

'

'

'

'3 years

'

'

'

'

'

Rental expense

'

'

'

'

'

$44,028

$14,595

$74,967

$28,958

'

'

'

'

Depreciation expense

'

'

'

'

'

6,372

'

8,496

'

'

'

'

'

Value of equity taxes levied

'

'

'

'

'

'

'

'

'

883,742

'

'

'

Increase in amount of tax

'

'

'

322,288

'

'

'

'

'

'

'

'

'

Payment of tax liability

'

367,521

'

'

'

'

'

'

'

'

'

'

'

Recognized in discontinued operations

'

'

'

'

'

'

531,644

'

'

'

'

'

'

Percentage of sale membership interest

'

'

'

'

'

'

'

'

'

'

9.40%

100.00%

'

Percentage of royalty received for oil produced

20.00%

'

'

'

'

'

'

'

'

'

'

'

'

Percentage of additional royalty received

50.00%

'

'

'

'

'

'

'

'

'

'

'

'

Percentage of received reimbursement of all historical costs

200.00%

'

'

'

'

'

'

'

'

'

'

'

'

Oil revenues

'

'

'

'

'

$1,895,201

$1,220,811

$4,028,018

$2,308,650

'

$729,308

'

'

Commitments_and_Contingencies_2

Commitments and Contingencies - Schedule of Future Minimum Commitments Under Operating Leases (Details) (USD $)	Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]	'
2014 (July - December)	$91,883
2015	184,810
2016	186,098
2017	29,862
Total	$492,653

Commitments_and_Contingencies_3

Commitments and Contingencies - Schedule of Leased Property Under Capital Leases (Details) (USD $)	Jun. 30, 2014
Commitments and Contingencies Disclosure [Abstract]	'
Furniture and equipment	$127,436
less: accumulated depreciation	-8,496
Leased property under capital leases, total	$118,940

Commitments_and_Contingencies_4

Commitments and Contingencies - Schedule of Future Minimum Lease Payments Under Capital Leases (Details) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Commitments and Contingencies Disclosure [Abstract]	'	'
2014 (July - December)	$21,478	'
2015	42,956	'
2016	42,956	'
2017	7,158	'
Future minimum payments due	114,548	'
Less amount representing interest	-1,135	'
Present value of minimum lease payments	113,413	'
Current maturities	42,272	'
Non-current maturities	71,141	'
Capital lease	$113,413	'

Major_Customers_Schedule_of_Ma

Major Customers - Schedule of Major Customers Accounting for All of its Sale (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Revenue from major customers	$2,478,696	$1,317,593	$5,116,111	$2,529,465
Percentage of revenue from major customers	100.00%	100.00%	100.00%	100.00%
Slawson Exploration Company [Member]	'	'	'	'
Revenue from major customers	1,638,250	966,213	3,555,914	1,918,284
Percentage of revenue from major customers	66.10%	73.30%	69.50%	75.80%
Devon [Member]	'	'	'	'
Revenue from major customers	492,857	102,516	1,036,326	280,438
Percentage of revenue from major customers	19.90%	7.80%	20.30%	11.10%
Stephens [Member]	'	'	'	'
Revenue from major customers	161,627	235,251	333,391	317,130
Percentage of revenue from major customers	6.50%	17.90%	6.50%	12.60%
CMO Energy Partners [Member]	'	'	'	'
Revenue from major customers	153,698	'	153,698	'
Percentage of revenue from major customers	6.20%	'	3.00%	'
Phillips 66 [Member]	'	'	'	'
Revenue from major customers	16,690	'	16,690	'
Percentage of revenue from major customers	0.70%	'	0.30%	'
Sundance [Member]	'	'	'	'
Revenue from major customers	$15,574	$13,613	$20,092	$13,613
Percentage of revenue from major customers	0.60%	1.00%	0.40%	0.50%

Liability_for_Asset_Retirement2

Liability for Asset Retirement Obligations (Details Narrative) (USD $)	Jun. 30, 2014	Dec. 31, 2013
Asset Retirement Obligation [Abstract]	'	'
Legally restricted assets for settlement of AROs	$0	'
Asset retirement obligation, income tax	$0	$0

Liability_for_Asset_Retirement3

Liability for Asset Retirement Obligations - Schedule of Reconciliation of Asset Retirement Obligations (Details) (USD $)	6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013
Asset Retirement Obligation Disclosure [Abstract]	'	'
Beginning balance	$3,886	'
Incurred during the period	'	'
Reversed during the period	'	'
Additions for new wells	243	'
Accretion expense	412	4,731
Ending balance	$4,541	'

Equity_Details_Narrative

Equity (Details Narrative) (USD $)

0 Months Ended

1 Months Ended

3 Months Ended

6 Months Ended

6 Months Ended

0 Months Ended

6 Months Ended

0 Months Ended

1 Months Ended

Jun. 05, 2014

Jan. 02, 2014

Aug. 01, 2012

Feb. 28, 2014

Jun. 30, 2014

Mar. 31, 2014

Jun. 30, 2013

Mar. 31, 2013

Jun. 30, 2014

Jun. 30, 2013

Dec. 31, 2013

Jun. 30, 2014

Jan. 02, 2014

Jan. 02, 2014

Jun. 30, 2014

Apr. 10, 2014

Apr. 27, 2012

Dec. 31, 2012

Placement Agent Fees [Member]

Share Valuation Condition One [Member]

Share Valuation Condition Two [Member]

Common Stock [Member]

Warrant [Member]

Warrant [Member]

Warrant [Member]

Proceeds from issuance of private placement

'

'

'

'

'

'

'

'

$6,700,000

'

'

'

'

'

'

'

'

'

Number of common stock warrants purchase

'

'

'

0.4

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Common stock price per share

'

'

$1.18

$1.80

'

'

'

$0.91

'

'

'

$0.01

'

'

'

'

'

'

Warrants price per share

'

'

'

$0.90

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Warrant, expiration term

'

'

'

'5 years

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Percentage of placement fee in cash or warrants

'

'

'

8.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Units sold

'

'

'

'

6,744,000

'

'

'

6,744,000

'

'

'

'

'

'

'

'

'

Common stock, shares

'

'

'

'

58,098,014

'

'

'

58,098,014

'

49,854,675

'

'

'

7,493,333

'

'

'

Warrants issued to purchase of common stock

'

'

'

'

'

'

'

'

'

'

'

196,620

'

'

2,997,333

'

'

100,000

Placement agent fees paid in cash

'

'

'

'

'

'

'

'

'

'

'

427,100

'

'

'

'

'

'

Legal fees

'

'

'

'

'

'

'

'

10,000

'

'

'

'

'

'

'

'

'

Shares issued under employment agreement

'

550,000

150,000

'

'

'

'

400,000

'

'

'

'

'

'

'

'

'

'

Stock based compensation, shares

'

150,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Shares issued during period remaining shares vested

'

400,000

'

'

'

'

'

'

'

'

'

'

200,000

200,000

'

'

'

'

Shares issued during period remaining shares vested, value

'

436,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Shares, closing prices, per share

'

'

'

'

'

'

'

'

'

'

'

'

$1

$1.18

'

'

'

'

Stock options to two employees

600,000

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Consultant exercisable price per share

$0.89

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Value of non qualified stock option issued

629,714

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Stock option expiration date

'2024-06-04

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Discount rate

0.85%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

0.81%

0.82%

0.72%

Expected life in years

'10 years

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'3 years

'5 years

'5 years

Employees expected volatility rate

220.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Consultant expected volatility rate

219.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Expected dividends rate

0.00%

'

'

'

'

'

'

'

'

'

'

'

'

'

'

0.00%

0.00%

0.00%

Stock based compensation, expensed period

'

'1 year

'3 years

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

Shares issued under employment agreement, value

'

'

177,000

'

'

'

'

364,000

'

'

'

'

'

'

'

'

'

'

Employment agreement, term

'

'

'

'

'

'

'

'3 years

'

'

'

'

'

'

'

'

'

'

Stock based compensation, expenses recognized

'

'

'

'

'

'

'

14,750

'

'

'

'

'

'

'

'

'

'

Warrants, exercised

'

'

'

'

'

200,000

'

'

'

'

'

'

'

'

'

'

'

'

Warrants issued to purchase common stock, shares

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

2,000,000

'

'

Exercisable price per share

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

$1.04

'

'

Warrants value using Black-Scholes

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

2,184,538

1,161

89,952

Warrants maturity date

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

9-Apr-17

'

'

Warrants, expected volatility rate

'

'

'

'

'

'

'

'

'

'

'

'

'

'

'

223.00%

'

'

Stock-based compensation expense

'

'

'

'

$2,923,252

'

$26,750

'

$3,032,252

$405,500

'

'

'

'

'

'

'

'

Discontinued_Operations_Detail

Discontinued Operations (Details Narrative) (USD $)	12 Months Ended	6 Months Ended
	Dec. 31, 2013	Jun. 30, 2014	Oct. 07, 2013	Sep. 30, 2013
		Cimarrona LLC [Member]	Cimarrona LLC [Member]	Cimarrona LLC [Member]
				acre
Percentage of sale membership interest	'	'	100.00%	9.40%
Area of land of oil and gas assets	'	'	'	30,665
Cash	$422,955	$6,800,000	'	'
Liability payable to disposal group	'	250,000	'	'
Payment of sales price held in escrow	'	250,000	'	'
Payment of disposal of transportation cost	1,000,000	'	'	'
Recognized benefit of discontinued operation	$4,873,660	'	'	'

Discontinued_Operations_Summar

Discontinued Operations - Summary of Discontinued Operations (Details) (USD $)	3 Months Ended		6 Months Ended
	Jun. 30, 2014	Jun. 30, 2013	Jun. 30, 2014	Jun. 30, 2013
Discontinued Operations and Disposal Groups [Abstract]	'	'	'	'
Oil revenues	'	$460,749	'	$1,076,436
Pipeline revenues	'	611,919	'	1,211,111
Total revenues	'	1,072,668	'	2,287,547
Operating expenses	'	362,590	'	679,128
Depreciation, depletion and accretion	'	45,866	'	104,618
Equity tax	'	-499,922	'	-466,958
General and administrative	'	26,374	'	48,164
Total operating costs and expenses	'	-65,092	'	364,952
Operating income	'	1,137,760	'	1,922,595
Interest income	'	13	'	84
Interest expense	'	-9,208	'	-16,456
Income before income taxes	'	1,128,565	'	1,906,223
Provision for income taxes	'	'	'	'
Net income	'	$1,128,565	'	$1,906,223