Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
31-May-14 | Jul. 10, 2014 | |
Document And Entity Information [Abstract] | ' | ' |
Document Type | '10-Q | ' |
Amendment Flag | 'false | ' |
Document Period End Date | 31-May-14 | ' |
Entity Registrant Name | 'SARA CREEK GOLD CORP. | ' |
Entity Central Index Key | '0001415286 | ' |
Current Fiscal Year End Date | '--08-31 | ' |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q3 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 41,174,703 |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | 31-May-14 | Aug. 31, 2013 |
Current assets | ' | ' |
Cash | $258,164 | $8,298 |
Accounts receivable | 23,919 | 18,755 |
Inventory | 10,312 | 7,064 |
Prepaid expenses | 8,570 | 2,658 |
Secured subordinated loan receivable, short term | 303,129 | ' |
Total current assets | 604,094 | 36,775 |
Fixed assets: | ' | ' |
Machinery and equipment, net of accumulated depreciation of $18,395 and $15,179, respectively | 15,479 | 13,156 |
Other assets: | ' | ' |
Capitalized oil and gas properties, net of accumulated depletion of $79,324 and $59,878, respectively | 736,915 | 297,590 |
Deposits | 5,000 | ' |
Total assets | 1,361,488 | 347,521 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 478,745 | 31,018 |
Net profits interest payable, current portion | 19,571 | 12,109 |
Loans payable to related parties, short term | 180,000 | ' |
Convertible note payable, short term | 300,378 | ' |
Total current liabilities | 978,694 | 43,127 |
Long term liabilities: | ' | ' |
Loans payable to related parties, long term | ' | 89,833 |
Asset retirement obligations | 164,818 | 103,299 |
Net profits interest payable, long term portion | 154,054 | 112,488 |
Total long term liabilities | 318,872 | 305,620 |
Total liabilities | 1,297,566 | 348,747 |
Stockholders' equity: | ' | ' |
Common stock; $0.001 par value; 750,000,000 shares authorized, 39,686,703 shares issued and outstanding | 39,687 | ' |
Common stock payable | 5,000 | ' |
Additional paid in capital | 1,023,512 | 350,000 |
Accumulated deficit | -1,004,277 | -351,226 |
Total stockholders' equity (deficit) | 63,922 | -1,226 |
Total liabilities and stockholders' equity | $1,361,488 | $347,521 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | 31-May-14 | Aug. 31, 2013 |
CONDENSED CONSOLIDATED BALANCE SHEETS [Abstract] | ' | ' |
Accumulated depreciation of machinery and equipment | $18,395 | $15,179 |
Capitalized oil and gas properties accumulated depletion | $79,324 | $59,878 |
Common stock, par value per share | $0.00 | $0.00 |
Common stock, shares authorized | 750,000,000 | 750,000,000 |
Common stock, shares issued | 39,686,703 | 0 |
Common stock, shares outstanding | 39,686,703 | 0 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
31-May-14 | 31-May-13 | 31-May-14 | 31-May-13 | |
Revenue: | ' | ' | ' | ' |
Oil revenues | $35,755 | $33,942 | $79,867 | $57,367 |
Expenses: | ' | ' | ' | ' |
Direct operating costs | 19,224 | 25,277 | 40,216 | 52,151 |
Depletion, depreciation and amortization | 12,249 | 7,271 | 28,206 | 18,740 |
Professional fees | 320,019 | 1,000 | 513,062 | 2,747 |
General and administrative expenses | 66,251 | 1,862 | 126,147 | 3,651 |
Equity compensation expense | 14,999 | ' | 14,999 | ' |
Total expenses | 432,742 | 35,410 | 722,630 | 77,289 |
Net operating (loss) | -396,987 | -1,468 | -642,763 | -19,922 |
Other expense: | ' | ' | ' | ' |
Interest (income) | -827 | ' | -827 | ' |
Interest expense | 4,367 | 3,183 | 11,115 | 9,752 |
Total other expense | 3,540 | 3,183 | 10,288 | 9,752 |
Loss before income taxes | -400,527 | -4,651 | -653,051 | -29,674 |
Provision for income taxes | ' | ' | ' | ' |
Net loss | ($400,527) | ($4,651) | ($653,051) | ($29,674) |
Net loss per common share - basic and diluted | ($0.01) | ' | ($0.02) | ($0.01) |
Weighted average common shares outstanding - basic and diluted | 37,874,868 | 5,544,561 | 28,967,059 | 5,453,303 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
31-May-14 | 31-May-13 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($653,051) | ($29,674) |
Depletion, depreciation and amortization | 20,650 | 12,671 |
Accretion of asset retirement obligation | 7,556 | 6,069 |
Accretion of net profits interest liability | 9,883 | 9,752 |
Stock compensation expense | 14,999 | ' |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Accounts receivable | -3,611 | -7,342 |
Inventory | 3,033 | 3,825 |
Prepaid expenses | 10,713 | 1,401 |
Accounts payable and accrued expenses | 329,583 | -1,829 |
Net cash provided by (used in) operating activities | -260,245 | -5,127 |
Cash flows from investing activities: | ' | ' |
Cash acquired in Sara Creek acquisition | 6,004 | ' |
Cash acquired in Hawker acquisition | 1,214 | ' |
Acquisition of an additional working interest in DEEP Lease | -325,000 | ' |
Secured subordinated loan receivable | -302,306 | ' |
Net cash provided by (used in) investing activities | -620,088 | ' |
Cash flows from financing activities: | ' | ' |
Loan from related party | 180,000 | 17,500 |
Net proceeds from unit offering | 669,901 | ' |
Payments on net profits interest agreement | -19,702 | -17,953 |
Proceeds from convertible notes | 300,000 | ' |
Net cash provided by (used in) financing activities | 1,130,199 | -453 |
Net change in cash | 249,866 | -5,580 |
Cash, beginning | 8,298 | 7,822 |
Cash, end | 258,164 | 2,242 |
Supplemental disclosure of cash flow information: | ' | ' |
Interest paid | 9,883 | 9,752 |
Units issued to settle loans from related parties | 135,312 | ' |
Units issued to settle accounts payable | $31,560 | ' |
CONDENSED_STATEMENT_OF_STOCKHO
CONDENSED STATEMENT OF STOCKHOLDERS' EQUITY (USD $) | Total | Common Stock [Member] | Common Stock Payable [Member] | Additional Paid-in Capital [Member] | Accumulated Equity [Member] |
Balance at Aug. 31, 2012 | $40,765 | ' | ' | $350,000 | ($309,235) |
Balance, shares at Aug. 31, 2012 | ' | ' | ' | ' | ' |
Net loss | -41,991 | ' | ' | ' | -41,991 |
Balance at Aug. 31, 2013 | -1,226 | ' | ' | 350,000 | -351,226 |
Balance, shares at Aug. 31, 2013 | 0 | ' | ' | ' | ' |
Recapitalization on completion of acquisition of SCNRG | 1,626 | 25,962 | 2,000 | -26,336 | ' |
Recapitalization on completion of acquisition of SCNRG, shares | ' | 25,961,983 | 2,000,000 | ' | ' |
Issued to acquire Hawker | -135,199 | 3,000 | ' | -138,199 | ' |
Issued to acquire Hawker, shares | ' | 3,000,000 | ' | ' | ' |
Issuance of common stock payable | ' | 2,000 | -2,000 | ' | ' |
Issuance of common stock payable, shares | ' | 2,000,000 | -2,000,000 | ' | ' |
Net proceeds from unit offering | 831,773 | 8,725 | ' | 823,048 | ' |
Net proceeds from unit offering, shares | ' | 8,724,720 | ' | ' | ' |
Proceeds received for common stock payable | 5,000 | ' | 5,000 | ' | ' |
Proceeds received for common stock payable, shares | ' | ' | 50,000 | ' | ' |
Stock compensation | 14,999 | ' | ' | 14,999 | ' |
Net loss | -653,051 | ' | ' | ' | -653,051 |
Balance at May. 31, 2014 | $63,922 | $39,687 | $5,000 | $1,023,512 | ($1,004,277) |
Balance, shares at May. 31, 2014 | 39,686,703 | 39,686,703 | 50,000 | ' | ' |
DESCRIPTION_OF_BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended | |
31-May-14 | ||
DESCRIPTION OF BUSINESS [Abstract] | ' | |
DESCRIPTION OF BUSINESS | ' | |
1. | DESCRIPTION OF BUSINESS | |
Sara Creek Gold Corp. ("we", "our", "us", "SCGC", Sara Creek or "the Company") was incorporated under the laws of the State of Nevada on June 12, 2006, under the name of Uventus Technologies Corp. On September 23, 2009, we merged with our wholly owned subsidiary and changed our name to Sara Creek Gold Corp. | ||
On October 25, 2013, we closed on the Agreement and Plan of Reorganization with SCNRG, LLC ("SCNRG"), a California limited liability company, whereby we acquired 100% of the membership interest in SCNRG, resulting in SCNRG becoming a wholly-owned subsidiary of SCGC, in exchange for 14.0 million shares of our common stock issued to the members of SCNRG (see Note 3). For accounting purposes, the acquisition of SCNRG by SCGC has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of SCGC. Accordingly, SCNRG is considered the acquirer for accounting purposes and, therefore, the historical financial statements of SCNRG are presented and consolidated with SCGC's beginning October 25, 2013. As a result of this transaction, SCGC changed its business direction and is now in the oil and gas industry. Our goal is to acquire and develop mature leases, interests and other rights to oil and gas producing properties with proven undeveloped potential. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | |
31-May-14 | ||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Presentation | ||
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial information. | ||
The unaudited interim financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended August 31, 2013, as amended, which contains the audited financial statements and notes thereto for SCGC. Additionally, the Company's Amendment No. 1 to Current Report on Form 8-K/A filed with the SEC on December 24, 2013, contains the audited financial statements and notes thereto for the years ended August 31, 2013 and 2012 for SCNRG. | ||
Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the nine months ended May 31, 2014, are not necessarily indicative of results for the full fiscal year. | ||
Principles of Consolidation | ||
The acquisition of SCNRG by SCGC on October 25, 2013, has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of SCGC. Therefore, our condensed consolidated financial statements include the historic accounts of SCNRG, and consolidated with SCGC's beginning October 25, 2013. | ||
On January 1, 2014, we acquired all of the membership interests of Hawker Energy, LLC ("Hawker"), and its wholly-owned subsidiary Punta Gorda Resources, LLC (see Note 4). Our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014. | ||
All significant intercompany balances and transactions have been eliminated. | ||
Use of Estimates | ||
The preparation of financial statements in conformity with 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. Significant estimates included in the financial statements are: (1) depreciation and depletion; (2) accrued assets and liabilities; (3) asset retirement obligations; and (4) net profits interest payable. Although management believes these estimates are reasonable, changes in facts and circumstances or discovery of new information may result in revised estimates. Actual results could differ from those estimates. | ||
Financial Instruments | ||
Financial instruments consist of cash, accounts receivable, loan receivable, accounts payable, loan payable and notes payable. Recorded values of cash, receivables, accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments. Recorded values for loan and notes payable approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations. | ||
Oil Properties | ||
We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition, and exploration and development activities. We do not capitalize any costs related to production, general corporate overhead or similar activities. Surface equipment on a property is also part of the amounts capitalized. | ||
Under the full-cost method, capitalized costs are depleted (amortized) on a composite unit-of-production method based on proved oil reserves. If we maintain the same level of production year over year, the depletion expense may be significantly different if our estimate of remaining reserves changes significantly. Proceeds from the sale of properties are accounted for as reductions of capitalized costs unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. The costs of unproved properties are excluded from amortization until the properties are evaluated. We review all of our unevaluated properties quarterly to determine whether or not and to what extent proved reserves have been assigned to the properties, and if impairment has occurred. Unevaluated properties are assessed individually when individual costs are significant. | ||
We review the carrying value of our oil properties under the full-cost accounting rules of the SEC on a quarterly basis. This quarterly review is referred to as a ceiling test. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. In calculating future net revenues, current SEC regulations require us to utilize prices at the end of the appropriate quarterly period. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including the effects of derivatives qualifying as cash flow hedges. Two primary factors impacting this test are reserve levels and current prices, and their associated impact on the present value of estimated future net revenues. Revisions to estimates of oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Any excess of the net book value, less deferred income taxes, is generally written off as an expense. Under SEC regulations, the excess above the ceiling is not expensed (or is reduced) if, subsequent to the end of the period, but prior to the release of the financial statements, oil prices increase sufficiently such that an excess above the ceiling would have been eliminated (or reduced) if the increased prices were used in the calculations. | ||
The estimates of proved crude oil reserves utilized in the preparation of the financial statements are estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board ("FASB"), which require that reserve estimates be prepared under existing economic and operating conditions using a 12-month average price with no provision for price and cost escalations in future years except by contractual arrangements. Actual results could differ materially from these estimates. | ||
Long-Lived Assets | ||
Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value. The carrying value of the assets is then reduced to their estimated fair value that is usually measured based on an estimate of future discounted cash flows. | ||
Asset Retirement Obligations | ||
Asset retirement obligations relate to the plug and abandonment costs when our wells are no longer useful, and for the cost of removing related surface facilities. We determine the value of the liability by reviewing operator estimates and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future, however, on a quarterly basis we monitor the costs of the abandoned wells and adjust this liability if necessary. | ||
Revenue Recognition | ||
Oil revenues are recognized net of royalties when production is sold to a purchaser at a fixed or determinable price, when title has transferred, and if collection of the revenue is probable. | ||
Equity Compensation Expense | ||
We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards. | ||
Net Profits Interest | ||
A Net Profits Interest ("NPI") on the DEEP property calls for 40% of the net cash flow, as defined in the Assignment of Net Profit Interest (see Note 10), to be paid each month to the owner of the NPI. If net cash flow is negative, such losses carry forward to be deducted against future positive net cash flow. Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when our working interest increased to 87.18% on February 1, 2014, and again on May 15, 2014, when our working interest increased to 100.0% (see Note 5). The discount rate used in all cases was 10.0% per annum (see Note 10). | ||
Income Taxes | ||
Until October 25, 2013, SCNRG (the accounting acquirer of SCGC) was not a taxable entity for U.S. federal or California income tax purposes. Taxes on its net income were borne by its members through the allocation of taxable income. Until July 31, 2013, we were treated as a partnership for tax purposes. On August 1, 2013, we elected to be treated as an S-Corp. Upon completion of the reverse acquisition of SCGC, SCNRG became part of a consolidated taxable entity. Due to a history of losses, we have a full valuation allowance for all net deferred tax assets, including our net operating loss. | ||
Loss per share | ||
Dilutive securities, including warrants to acquire common stock, shares issuable on conversion of notes payable and stock options, are excluded from the diluted weighted average shares of common stock outstanding computation in periods where they have an anti-dilutive effect, such as when we report a loss. Anti-dilutive securities omitted from the calculation for the three and nine months ended May 31, 2014 are 3,240,638 and 1,350,060, respectively, and none for the comparable 2013 periods. | ||
Concentrations | ||
Pursuant to a January 13, 2010, Crude Oil Purchase Contract between the DEEP operator and Plains Marketing L.P. ("PMLP"), all production from the DEEP property is sold to PMLP. The initial term of the agreement was for one year, expiring on December 31, 2010, and was automatically renewed for an additional one-year term that expired on December 31, 2011. Since January 1, 2012, the agreement has continued on a month-to-month basis and is cancellable upon thirty day's written notice by either party. | ||
New Accounting Pronouncements | ||
There are no recent accounting pronouncements that are expected to have a material effect on the Company's financial statements. |
ACQUISITION_OF_SCNRG
ACQUISITION OF SCNRG | 9 Months Ended | ||||
31-May-14 | |||||
ACQUISITION OF SCNRG [Abstract] | ' | ||||
ACQUISITION OF SCNRG | ' | ||||
3. | ACQUISITION OF SCNRG | ||||
As described in Note 1, on October 25, 2013, we acquired 100% of the membership interest in SCNRG, resulting in SCNRG becoming a wholly-owned subsidiary of SCGC, in exchange for 14.0 million shares of our common stock issued to the members of SCNRG. For accounting purposes, the acquisition of SCNRG by SCGC has been accounted for as a reverse acquisition effectuating a recapitalization of SCNRG. Accordingly, SCNRG is considered the acquirer for accounting purposes and, therefore, the historical financial statements of SCNRG are brought forward and consolidated with SCGC's beginning October 25, 2013. | |||||
The 14.0 million common shares issued in the transaction had an estimated fair value of $14,000. The following is a summary of the fair value of consideration transferred in exchange for the estimated fair value of net assets acquired on October 25, 2013: | |||||
Fair value of consideration transferred: | |||||
14,000,000 shares of SCGC restricted common stock | $ | 14,000 | |||
Fair value of net assets acquired: | |||||
Cash | $ | 6,004 | |||
Accounts receivable | 1,553 | ||||
Oil properties | 26,500 | ||||
Deposit | 5,000 | ||||
Accounts payable and accrued liabilities | (37,431 | ) | |||
Net assets acquired | $ | 1,626 | |||
The difference between the estimated fair value of the common shares issued and the net assets acquired was recorded to additional paid-in capital. |
ACQUISITION_OF_HAWKER_ENERGY_L
ACQUISITION OF HAWKER ENERGY, LLC | 9 Months Ended | ||||
31-May-14 | |||||
ACQUISITION OF HAWKER ENERGY, LLC [Abstract] | ' | ||||
ACQUISITION OF HAWKER ENERGY, LLC | ' | ||||
4. | ACQUISITION OF HAWKER ENERGY, LLC | ||||
On January 1, 2014, we exercised our option to acquire all of the membership interests in Hawker from Darren Katic (who was also a seller in our transaction with SCNRG) and Charles Moore (collectively the "Hawker Sellers"). We issued 3,000,000 shares of our common stock to the Hawker Sellers as consideration for the acquisition and, as described below, may be required to issue up to an additional 33,000,000 shares of our common stock to the Hawker Sellers upon us or Hawker consummating certain follow-on transactions described below ("Potential Follow-On Transactions"). In addition, we assumed $135,199 in net liabilities of Hawker. | |||||
Hawker, through its wholly-owned subsidiary Punta Gorda Resources, LLC ("Punta Gorda"), claims oil production and development rights of coastal lease PRC 145.1 just offshore Ventura County in the Rincon Field and ownership rights to an associated on-shore drilling and production site, which rights are being challenged in court by the lease's operator of record (see Part II, Item 1, "Legal Proceedings"). Hawker has also engaged in preliminary discussions with various third parties concerning the Potential Follow-On Transactions, none of which were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of Hawker) due to the preliminary status of those discussions and lack of certainty around Hawker's or Sara Creek's ability to finance one or more of these Potential Follow-On Transactions. Other than its contested interest in PRC 145.1 and its preliminary discussions concerning the Potential Follow-On Transactions, Hawker had no assets or operations as of January 1, 2014. PRC 145.1 and the Potential Follow-On Transactions are discussed in greater detail below. | |||||
PRC 145.1 is subject to 24.5% in overriding royalties, primarily to the State of California. A single active well on PRC 145.1 has historically produced between 5 and 15 barrels of oil per day (gross production before royalties). This lease has ten other non-active wells, one or more of which may be recompleted or re-drilled. Although initial technical work has been done on PRC 145.1 to develop a preliminary understanding of the resource and opportunity, no reserve reports done to SEC standards have been completed to date. | |||||
All rights claimed by Hawker to PRC 145.1 are being challenged in court by the lease's operator of record -- Case No. 56-2013-00440672-CU-BC-VTA pending in Ventura County Superior Court (see Part II, Item 1, "Legal Proceedings"). Hawker is currently not receiving any net proceeds from production on this lease pending resolution of this matter in our favor. | |||||
After we exercise our option to acquire Hawker, the agreement also provides that the Hawker Sellers may be entitled to additional shares of our common stock upon the consummation of Potential Follow-On Transactions as follows: | |||||
(a) 2,000,000 shares of our common stock shall be issued upon our or Hawker's acquisition of California Oil Independents or its oil and gas interests being the "Doud" leases, comprised of approximately 340 acres, 20 wells and two tank batteries, located in the Monroe Swell Field, near Greenfield, California; | |||||
(b) 2,000,000 shares of our common stock shall be issued upon our or Hawker's acquisition of a participation in South Coast Oil - Huntington Beach CA oil and gas interests comprised of approximately 340 acres, and 20 wells (of which 9 are active) and 4 tank batteries, and known as the "Town Lot"; | |||||
(c) 5,000,000 shares of our common stock shall be issued upon our or Hawker's acquisition of all of the oil and gas leases held by Christian Hall (or affiliates) in the Midway-Sunset field located between the towns of Taft and McKittrick in Kern County, CA; | |||||
(d) 10,000,000 shares of our common stock shall be issued upon our or Hawker's acquisition of TEG Oil & Gas, Inc. (or certain oil and gas interests held by it, being all leases located in the Tapia Field, Los Angeles County, California); | |||||
(e) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or Hawker of certain assets and rights regarding PRC 145.1 Lease held by Rincon Island Limited Partnership or settlement in lieu of such conveyance (see Part II, Item 1, "Legal Proceedings"); and | |||||
(f) 7,000,000 shares of our common stock shall be issued upon the conveyance to us or Hawker of certain mineral rights regarding PRC 427 Lease held by ExxonMobil, a lease that is adjacent to PRC 145.1 Lease above. | |||||
The Potential Follow-On Transactions described above are dependent on a number of variables that are not within our control and, as a result, (i) we cannot state with a reasonable degree of certainty that any of the transactions will occur and (ii) as described above, none of the transactions were deemed by us to be reasonably possible as of January 1, 2014 (the date of our acquisition of Hawker). Each of the Potential Follow-On Transactions described above, if consummated, would constitute a transaction separate and independent from our acquisition of Hawker pursuant to the option. Any shares of our common stock that may be issued upon the consummation of any of the Potential Follow-On Transactions will constitute expensed costs incurred concurrently with consummation of the applicable follow-on transaction (as opposed to incremental consideration for our acquisition of Hawker). | |||||
The assets and liabilities of Hawker at the date of acquisition were recorded at their fair values of: | |||||
Cash | $ | 1,214 | |||
Prepaid expenses | 16,625 | ||||
Less: | |||||
Accounts payable | (123,413 | ) | |||
Loan payable to related party, short term | (29,625 | ) | |||
Net liabilities assumed | $ | 135,199 | |||
The $138,199 difference between the par value of the common stock issued, $3,000, and the net liabilities assumed, $135,199, was recorded to paid in capital as there is no objective evidence of the value of Hawker's assets, which consist of the disputed claim to coastal lease PRC 145.1, and inability to determine a probability of success of the litigation. As a result and in an effort to fairly represent and not overstate the consolidated assets of SCGC, a decrease in capital was deemed appropriate. | |||||
With respect to the contingent common stock potentially issuable pursuant to (d) above, see Note 16 Subsequent Events for the status of the potential acquisition of an interest in the assets of TEG Oil & Gas, Inc. |
ACQUISITION_OF_AN_ADDITIONAL_3
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE | 9 Months Ended | |
31-May-14 | ||
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE [Abstract] | ' | |
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE | ' | |
5. | ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE | |
As a result of two transactions (described below) through our wholly-owned subsidiary SCNRG, we acquired the remaining 33.33% working interest in the DEEP Lease. | ||
On February 4, 2014, SCNRG completed the acquisition of additional 20.5108% working interest in the DEEP Lease for $200,000 in cash plus assumed asset retirement obligations and net profits interest liabilities aggregating to an estimated fair value of $69,729, for total consideration of $269,729. SCNRG's working interest increased from 66.67% to 87.18% as a result of the purchase, effective February 1, 2014. Our condensed consolidated financial statements include the increased working interest beginning February 1, 2014. The purchase price was allocated $3,529 to machinery and equipment, and $266,200 to oil properties based on estimated fair values. | ||
On May 15, 2014, SCNRG completed the acquisition of the remaining 12.8192% working interest in the DEEP Lease for $125,000 in cash plus assumed asset retirement obligations and net profits interest liabilities aggregating to an estimated fair value of $43,081, for total consideration of $168,081. SCNRG's working interest increased from 87.18% to 100.0% as a result of the purchase, effective May 15, 2014. Our condensed consolidated financial statements include the increased working interest beginning May 15, 2014. The purchase price was allocated $2,010 to machinery and equipment, and $166,071 to oil properties based on estimated fair values. | ||
The operator, Caleco, LLC, will continue to operate the DEEP Lease on SCNRG's behalf during a transitional period until SCNRG qualifies with the regulatory agency as an operator. |
SECURED_SUBORDINATED_LOAN_RECE
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM | 9 Months Ended | ||||||||
31-May-14 | |||||||||
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM [Abstract] | ' | ||||||||
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM | ' | ||||||||
6. | SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM | ||||||||
On April 18, 2014, our newly-formed wholly-owned subsidiary Tapia Holdings, LLC ("Tapia Holdings") entered into a Secured Subordinated Note agreement and a Security Agreement with TEG Oil & Gas USA, Inc. ("TEG"). A second Secured Subordinated Note agreement and a First Amendment to Security Agreement were entered into on May 1, 2014. | |||||||||
Under the terms of the note agreements, TEG promised to pay Tapia Holdings the principal sum of $400,000, or such lesser amount as may be outstanding from time to time, with interest on the unpaid principal amount at the rate of 3.0% per annum. As of May 31, 2014, the amount of outstanding advances was $302,306, plus accrued interest of $823. Further advances are subject to the sole and absolute discretion of Tapia Holdings. The notes originally matured on July 18, 2014, at which time all outstanding principal and accrued interest would have been due and payable in full. As described below and in Note 16, Subsequent Events, the notes were subsequently amended. The personal property assets of TEG secure the notes. These assets consist of all personal property assets located in the Tapia and Eureka Fields, Los Angeles and Ventura Counties, California. The notes and our security interest in the personal property assets of TEG are subordinate to senior indebtedness of TEG. | |||||||||
The following shows the changes in secured subordinated loan receivable, short term, for the nine months ended May 31, 2014, and twelve months ended August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Secured subordinated loan receivable, short term, | $ | - | $ | - | |||||
beginning | |||||||||
Loan made during the period | 302,306 | - | |||||||
Current period interest | 823 | - | |||||||
Secured subordinated loan receivable, short term, | $ | 303,129 | $ | - | |||||
ending | |||||||||
As described in Note 16, Subsequent Events, these agreements were further amended first on June 2, 2014, when Tapia Holdings entered into (i) a Subordination and Intercreditor Agreement ("Intercreditor Agreement"), by and among Tapia Holdings, TEG, TEG's parent company Sefton Resources, Inc. ("Sefton"), TEG's affiliate TEG MidContinent, Inc., and Sefton's senior lender Bank of the West ("BOTW"); (ii) an Amended and Restated Security Agreement, by and among Tapia Holdings and TEG; and (iii) a Secured Subordinated Note Due July 31, 2014, issued by TEG in favor of Tapia Holdings. On June 27, 2014 certain of these agreements were further amended when Tapia Holdings (i) entered into a Second Amended and Restated Security Agreement ("Security Agreement"), by and among Tapia and TEG; and (ii) agreed to a Secured Subordinated Note Due December 29, 2014 ("Note"), issued by TEG in favor of Tapia Holdings, which replaces the July 31, 2014 note above. The Intercreditor Agreement, Security Agreement and Note are all entered into in connection with a proposal by Tapia Holdings to acquire a majority interest in the assets of TEG as described in Note 16. |
LOANS_PAYABLE_RELATED_PARTIES
LOANS PAYABLE, RELATED PARTIES | 9 Months Ended | ||||||||
31-May-14 | |||||||||
LOANS PAYABLE, RELATED PARTIES [Abstract] | ' | ||||||||
LOANS PAYABLE, RELATED PARTIES | ' | ||||||||
7. | LOANS PAYABLE TO RELATED PARTIES | ||||||||
Loan payable to related party, short term | |||||||||
During the quarter ended May 31, 2014, Darren Katic, an officer, director and significant shareholder, advanced a total of $180,000 to us. This loan is unsecured, bears interest at 10% per annum and is due on demand. Accordingly, it has been treated as a short-term loan. | |||||||||
In addition, as part of the acquisition of Hawker on January 1, 2014, we assumed $29,625 loan payable to Mr. Katic (for both cash advanced to Hawker and expenses incurred on its behalf). This loan was unsecured and non-interest bearing with no formal maturity date. On April 9, 2014, the Mr. Katic agreed to convert this amount into common stock and warrants on the same terms as the unit offering described in Note 13. In addition, as part of the acquisition of Sara Creek on October 25, 2013, we assumed an amount owing to Kristian Andresen, a director, officer and significant shareholder, of $15,000, which amount was converted similarly to common stock and warrants on January 31, 2014. | |||||||||
Loan payable to related parties, long term | |||||||||
SCNRG received various loans from its former members from its inception totaling $0 as of May 31, 2014, and $89,833 as of August 31, 2013. Each loan was originally unsecured, non-interest bearing and due on demand. On September 18, 2013, each loan was formalized through the issuance of an amended and restated promissory note to each former member. The amended and restated promissory notes are unsecured, bear interest at a rate of 1.66% per annum and mature no later than September 18, 2018. The unpaid principal and interest were payable upon the earlier of their maturity or upon the issuance of new debt or equity securities in a transaction or series of transactions resulting in aggregate gross proceeds to Sara Creek of a minimum of $5 million. Sara Creek assumed these loans payable upon its acquisition of SCNRG on October 25, 2013. | |||||||||
On April 9, 2014, the related parties agreed to convert the long-term loans payable, including accrued interest, into common stock and warrants on the same terms as the unit offering described in Note 13. | |||||||||
Loans payable to related parties, long term, consist of the following at May 31, 2014, and August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Darren Katic | $ | - | $ | 38,500 | |||||
Manhattan Holdings, LLC | - | 38,500 | |||||||
Gerald Tywoniuk | - | 12,833 | |||||||
Total long-term loans | - | 89,833 | |||||||
Accrued interest payable | - | - | |||||||
Less current portion | - | - | |||||||
Loans payable to related parties, long term | $ | - | $ | 89,833 |
CONVERTIBLE_NOTES_PAYABLE_SHOR
CONVERTIBLE NOTES PAYABLE, SHORT TERM | 9 Months Ended | ||||||||
31-May-14 | |||||||||
CONVERTIBLE NOTES PAYABLE, SHORT TERM [Abstract] | ' | ||||||||
CONVERTIBLE NOTES PAYABLE, SHORT TERM | ' | ||||||||
8. | CONVERTIBLE NOTES PAYABLE, SHORT TERM | ||||||||
Convertible note payable issued May 13, 2014 | |||||||||
On May 13, 2014, we issued a Convertible Promissory Note to an investor (the "Convertible Note") in the aggregate principal amount of $50,000, which equals the amount of cash investment we received. The Convertible Note bears simple interest on the unpaid principal balance at the rate of 12% per annum. Some or all of the Convertible Note and accrued interest is convertible at any time at the option of the investor into our common stock in an amount computed by dividing the amount converted by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). The note matures on the earlier of: ten days after the date TEG repays Tapia Holdings (which repayment terms are described in Notes 6 and 16); and May 13, 2016. Interest is due on the maturity date of the Convertible Note. | |||||||||
Secured convertible note payable issued May 30, 2014 | |||||||||
On May 30, 2014, we issued a Secured Convertible Promissory Note to Oceanside Strategies (the "Secured Convertible Note"), in the aggregate principal amount of $250,000, which equals the amount of cash investment we received. The Secured Convertible Note bears simple interest on the unpaid principal balance at the rate of 12% per annum. The Secured Convertible Note is convertible at any time at the option of Oceanside Strategies into "Conversion Units." Each Conversion Unit consists of one share of common stock of Sara Creek and one warrant to purchase one-half share of common stock of Sara Creek at an exercise price of $0.25 per share. The number of Conversion Units into which the Secured Convertible Note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the Secured Convertible Note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events). To secure our obligations under the Secured Convertible Note, Sara Creek granted a security interest to Oceanside Strategies in all of its assets. The proceeds from the Secured Convertible Note were to be used solely for the purpose of allowing Tapia Holdings to make advances to TEG under the terms of the notes described in Note 6. The maturity date is November 30, 2014. Any repayment of such advances by TEG to Tapia Holdings must be used by us to immediately repay Oceanside Strategies; such repayment terms are described in Notes 6 and 16. Interest is due on the maturity date of the Secured Convertible Note Payable. On June 23, 2014, an Amended and Restated Secured Convertible Promissory Note was issued to clarify the term of the warrant to be five years. | |||||||||
Summary of changes in convertible notes payable | |||||||||
The following shows the changes in convertibles note payable, short term, for the nine months ended May 31, 2014, and twelve months ended August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Convertible notes payable, short term, beginning | $ | - | $ | - | |||||
Proceeds during the period | 300,000 | - | |||||||
Current period interest | 378 | - | |||||||
Convertible notes payable, short term, ending | $ | 300,378 | $ | - | |||||
We issued an additional secured convertible note payable in the amount of $350,000 on June 25, 2014, as described in Note 16. | |||||||||
ASSET_RETIREMENT_OBLIGATION
ASSET RETIREMENT OBLIGATION | 9 Months Ended | ||||||||
31-May-14 | |||||||||
ASSET RETIREMENT OBLIGATION [Abstract] | ' | ||||||||
ASSET RETIREMENT OBLIGATION | ' | ||||||||
9. | ASSET RETIREMENT OBLIGATION | ||||||||
Our asset retirement obligations relate to the abandonment of oil wells and related surface facilities. The amounts recognized are based on numerous estimates and assumptions, including future retirement costs, inflation rates and credit adjusted risk-free interest rates. | |||||||||
The following shows the changes in asset retirement obligations for the nine months ended May 31, 2014, and twelve months ended August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Asset retirement obligations, beginning | $ | 103,299 | $ | 95,206 | |||||
Liabilities acquired during the period | 53,963 | - | |||||||
Liabilities settled during the period | - | - | |||||||
Current period accretion | 7,556 | 8,093 | |||||||
Asset retirement obligations, ending | $ | 164,818 | $ | 103,299 | |||||
NET_PROFITS_INTEREST_NPI_PAYAB
NET PROFITS INTEREST ("NPI") PAYABLE | 9 Months Ended | ||||||||
31-May-14 | |||||||||
NET PROFITS INTEREST ("NPI") PAYABLE [Abstract] | ' | ||||||||
NET PROFITS INTEREST ("NPI") PAYABLE | ' | ||||||||
10. | NET PROFITS INTEREST ("NPI") PAYABLE | ||||||||
In connection with SCNRG's December 1, 2009 Purchase and Sale Agreement for DEEP, and as part of the purchase price consideration, SCNRG entered into an Assignment of Net Profit Interest with Christian Hall Petroleum. Pursuant to the agreement, SCNRG is required to make monthly payments to the holder in an amount equal to 40% of SCNRG's share of net profit (as defined in the agreement) from production. | |||||||||
Until February 1, 2014, SCNRG's working interest in the DEEP property was 66.67%, and the NPI agreement called for a minimum monthly payment of $1,985 (SCNRG's 66.67% share). Beginning February 1, 2014, SCNRG's working interest in the DEEP property increased to 87.18%, and its share of the minimum monthly payment became $2,596. Beginning May 15, 2014, SCNRG's working interest in the DEEP property increased to 100.0%, and its share of the minimum monthly payment became $2,978. Payments are required until SCNRG and other working interest owners have made NPI payments in aggregate between $347,000 and $357,410 on or before December 31, 2022 (the actual maximum amount within this range is dependent on when SCNRG and other working interest owners satisfy their aggregate NPI payment obligations). As of May 31, 2014, SCNRG and other working interest owners have made NPI payments totaling $116,267. SCNRG has paid its 66.67% working interest share of this amount through February 1, 2014, its subsequent 87.18% share through May 15, 2014, and its subsequent 100.0% share through May 31, 2014. | |||||||||
Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when its working interest increased to 87.18% on February 1, 2014, and again on May 14, 2014 when its working interest increased to 100.0%. The discount rate used in all cases was 10.0% per annum. | |||||||||
Changes in SCNRG's share of the NPI liability are as follows for the nine months ended May 31, 2014, and the twelve months ended August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
NPI liability, beginning of period | $ | 124,597 | $ | 135,640 | |||||
Liabilities assumed in connection with | 58,847 | - | |||||||
acquisition of additional DEEP lease | |||||||||
working interests | |||||||||
Current period accretion | 9,883 | 12,865 | |||||||
Payments made | (19,702 | ) | (23,908 | ) | |||||
NPI liability, end of period | 173,625 | 124,597 | |||||||
Less: current portion | 19,571 | 12,109 | |||||||
NPI liability, long-term portion | $ | 154,054 | $ | 112,488 | |||||
FAIR_VALUE_MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended | ||||||||||||
31-May-14 | |||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | ' | ||||||||||||
FAIR VALUE MEASUREMENTS | ' | ||||||||||||
11. | FAIR VALUE MEASUREMENTS | ||||||||||||
We hold certain financial assets, which are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, "Fair Value Measurements" ("ASC Topic 820-10"). ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability. | |||||||||||||
The three levels of the fair value hierarchy under ASC Topic 820-10 are described below: | |||||||||||||
§ | Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. We believe receivables, payables and our loans approximate fair value at May 31, 2014 and August 31, 2013. | ||||||||||||
§ | Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. | ||||||||||||
§ | Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider depleting assets, asset retirement obligations and net profit interest liability to be Level 3. We determine the fair value of Level 3 assets and liabilities utilizing various inputs, including oil price quotations and contract terms. | ||||||||||||
Fair Value Measurement | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||
31-May-14 | |||||||||||||
Assets: | |||||||||||||
Capitalized oil and gas properties, net | $ | - | $ | - | $ | 736,915 | |||||||
Liabilities: | |||||||||||||
Net profit interest liability | - | - | (173,625 | ) | |||||||||
Asset retirement obligation | (164,818 | ) | |||||||||||
Total | $ | - | $ | - | $ | 398,472 | |||||||
31-Aug-13 | |||||||||||||
Assets: | |||||||||||||
Capitalized oil and gas properties, net | $ | - | $ | - | $ | 297,500 | |||||||
Liabilities: | |||||||||||||
Net profit interest liability | - | - | (124,597 | ) | |||||||||
Asset retirement obligation | - | - | (103,299 | ) | |||||||||
Total | $ | - | $ | - | $ | 69,604 |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended | |
31-May-14 | ||
COMMITMENTS AND CONTINGENCIES [Abstract] | ' | |
COMMITMENTS AND CONTINGENCIES | ' | |
12. | COMMITMENTS AND CONTINGENCIES | |
Commitments | ||
Oil production from the DEEP property is subject to a 1% overriding royalty. Additionally, production is also subject to an aggregate additional 19.92% royalty for total royalties of 20.92%. | ||
Further, on December 1, 2009, SCNRG entered into an Operating Agreement with Caleco, LLC ("Caleco") for a term equal to the life of the DEEP property wells. As the operator, Caleco incurs production and other costs, which are subsequently billed to SCNRG for its share through a joint interest billing process; and the operator distributes to SCNRG its share of revenue received from production, less royalties and NPI obligations. All expenses and revenue presented by the operator represent the pro rata share of the revenue earned and expenses incurred. In accordance with the terms of the agreement, the operator is entitled to a fee for services but has instead elected to bill SCNRG based on actual time and materials. As described in Note 5, SCNRG has increased its working interest in the DEEP property to 100.0%; Caleco will continue to operate the DEEP Lease on SCNRG's behalf during a transitional period until SCNRG qualifies with the regulatory agency as an operator. | ||
Contingencies | ||
We are 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 owners for the cost of pollution cleanup resulting from operations and subject the owners to liability for pollution damages. In some instances, the operator may be directed to suspend or cease operations in the affected area. As of May 31, 2014, and August 31, 2013, we have no reserve for environmental remediation and are not aware of any environmental claims. | ||
STOCKHOLDERS_EQUITY
STOCKHOLDERS' EQUITY | 9 Months Ended | ||
31-May-14 | |||
STOCKHOLDERS' EQUITY [Abstract] | ' | ||
STOCKHOLDERS' EQUITY | ' | ||
13. | STOCKHOLDERS' EQUITY | ||
Common stock | |||
The following common stock transactions occurred during the nine months ended May 31, 2014: | |||
(a) On October 25, 2013, we issued 14,000,000 shares of our common stock to the members of SCNRG for 100% of the membership interests in SCNRG. As described in Notes 1 and 3, the acquisition of SCNRG by SCGC has been accounted for as a recapitalization of SCGC for accounting purposes; | |||
(b) On January 1, 2014, we issued 3,000,000 shares of our common stock to acquire Hawker as described in Note 4; | |||
(c) On January 8, 2014, we issued 2,000,000 shares of our common stock to Ryan Bateman to satisfy an obligation pursuant to a July 2013 purchase agreement for the Sawtelle well interest; | |||
(d) On January 10 and January 31, 2014, we closed private placements for an aggregate of 4,775,000 units for gross proceeds of $477,500. On April 9, 2014, and May 8, 2014, we closed private placements for an aggregate of 3,949,720 units for gross proceeds of $394,972. These amounts include $135,312 to settle certain loans payable to related parties and $31,560 to settle certain accounts payable. Units purchased by related parties are set forth in Note 14. No commissions were paid or are payable. The price of each unit in all cases was $0.10. Each unit is comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share. The warrants expire five years from the closing date. Net proceeds after offering costs were $831,773. Included in this amount is $135,312 for units issued to settle loans from related parties and $31,560 for units issued to settle accounts payable. Together with $5,000 received for a future closing of units, we received the balance of $669,901 in cash. No separate accounting was given to the warrants as the value is indeterminable, and any such allocation would be recorded to paid-in capital regardless, just as the excess over par value for the common stock was recorded. | |||
Additional units were sold after May 31, 2014, as described in Note 16. | |||
Shares of common stock potentially issuable pursuant to warrants, convertible notes payable, options and contingent shares | |||
Pursuant to the private placements through May 31, 2014, described above, up to 4,362,360 shares of our common stock would be issuable upon payment to us of $0.20 per share. The warrants expire five years from the date of each private placement. | |||
Up to 4,316,000 shares of common stock could be issued pursuant to the convertible notes payable described in Note 8, as follows: | |||
· | Up to 3,000,000 shares of common stock would be issuable if each of the two investors so elect to convert all or some of the $300,000 aggregate principal amount on or prior to maturity, with the number of shares issuable on conversion computed at a rate of $0.10 per share; | ||
· | Up to an additional 1,250,000 shares of common stock would be issuable if one investor so elects to convert some or all of a $250,000 convertible note payable to that investor (which note is included in the preceding paragraph) and pays us $0.25 per share on or prior to maturity; and | ||
· | An additional amount of up to approximately 66,000 shares of common stock would be issuable determined based on the amount of any accrued interest payable at maturity each of the two investors elect to convert into common stock, based on a conversion rate of $0.10 per share. | ||
On May 14, 2014, 5,950,000 common stock options were issued to our officers and other key consultants. | |||
· | Each option has a life of 10 years and a strike price of $0.10 per share. One million stock options vest on December 15, 2014, with the balance of 4,950,000 stock options vesting one-third on each of May 13, 2015, 2016 and 2017. There are no other options outstanding, and no options have vested to date. | ||
· | These options were granted pursuant to the 2014 Stock Plan approved by written consent of a majority of our stockholders on March 18, 2014, which authorized 15% of our outstanding shares of common stock to be available for grant in the form of options or stock purchase rights. At May 31, 2014, 15% of our outstanding common stock is 5,953,005, of which we granted 5,950,000 stock options as stated above. | ||
· | The fair value of each stock option award was estimated on the date of grant using the Black-Scholes option pricing method. Compensation costs related to the options granted are recognized on a straight-line basis over the vesting period. The expected life assumption was 10 years, the same as the contract life, as we do not have historical data upon which to base an expected term assumption. No forfeitures were assumed, as we have no historical data. Expected volatility was based on historical volatility of our common stock. The risk-free interest rate was derived from the U.S. Treasury yields in effect at the time of grant and the dividend yield was zero, based on historical experience and expected future changes. | ||
· | Equity compensation expense was $14,999 for the period from the date of grant on May 14, 2014, to May 31, 2014. The total compensation cost relating to unvested stock option grants not yet recognized at May 31, 2014, was $557,000, and the weighted average period over which this cost is expected to be recognized, as of May 31, 2014, is approximately 2.6 years. | ||
Up to 33,000,000 shares of common stock could be issued to the Hawker Sellers upon the consummation of Potential Follow-On Transactions, all as described in Note 4. |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended | ||
31-May-14 | |||
Related Party Transactions [Abstract] | ' | ||
RELATED PARTY TRANSACTIONS | ' | ||
14. | RELATED PARTY TRANSACTIONS | ||
Hawker | |||
On January 1, 2014, we exercised our option to acquire all of the membership interests in Hawker Energy, LLC, a California limited liability company ("Hawker"), from Darren Katic and Charles Moore (collectively the "Sellers"). We issued 3,000,000 shares of our common to the Sellers as consideration for the acquisition, 1,500,000 shares to each Seller. We also assumed net liabilities of $135,199, including $29,625 owing to Mr. Katic. We may be required to issue up to an additional 33,000,000 shares to Sellers upon SCGC or Hawker consummating certain follow-on transactions. (See Note 4). Mr. Katic is a director and our Chief Executive Officer and Chief Financial Officer. He was a member of SCNRG, LLC, which we acquired on October 25, 2013, and at which point Mr. Katic became a director, officer and a significant shareholder of SCGC. | |||
The Hawker option was originally entered into with Sara Creek on October 15, 2013 and amended on November 20, 2013 to (a) extend the term of the option, (b) revise the option consideration payable upon consummation of certain transactions described in the Agreement and (c) provide for additional option consideration in the event of the consummation of certain transactions not previously contemplated by the parties. | |||
Loan from related party, short term | |||
During the quarter ended May 31, 2014, Mr. Katic, an officer, director and significant shareholder, advanced a total of $180,000 to us. This loan is unsecured, bears interest at 10% and is due on demand. | |||
Unit sales | |||
The following unit sale transactions involved related parties: | |||
· | On January 10, 2014, Mr. Katic, one of the sellers of SCNRG and a director, officer and significant shareholder of SCGC, purchased 380,000 units of SCGC for $38,000, Manhattan Holdings, LLC, one of the sellers of SCNRG and a significant shareholder of SCGC, acquired 900,000 units of SCGC for $90,000, and Gerald Tywoniuk, also one of the sellers of SCNRG and a significant shareholder of SCGC, purchased 500,000 units of SCGC for $50,000. | ||
· | On January 31, 2014, Mr. Andresen agreed to settle $15,000 owing to him in exchange for 150,000 units. | ||
· | On April 9, 2014, Mr. Katic, Manhattan Holdings, LLC and Mr. Tywoniuk agreed to settle amounts owing to them (see Note 7) totaling $120,312, in exchange for 1,203,120 units. | ||
· | All of these amounts are a portion of the monies we raised described in Note 13. Each unit is comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock at $0.20 per share. The warrants expire five years from the closing date. The price of each unit was $0.10 per unit. | ||
Stock option grant | |||
See Note 13 for a description of the stock option grant that occurred on May 14, 2014. Of the options granted, 600,000 options vesting over three years were granted to Mr. Katic, 1,000,000 options vesting December 15, 2014 were granted to Mr. Andresen, both officers, directors and significant shareholders. In addition, of the options granted, 1,600,000 options vesting over three years were granted to Mr. Tywoniuk, a significant shareholder and a consultant to SCGC. |
PRO_FORMA_FINANCIAL_INFORMATIO
PRO FORMA FINANCIAL INFORMATION | 9 Months Ended | ||||||||
31-May-14 | |||||||||
PRO FORMA FINANCIAL INFORMATION [Abstract] | ' | ||||||||
PRO FORMA FINANCIAL INFORMATION | ' | ||||||||
15. | PRO FORMA FINANCIAL INFORMATION | ||||||||
The following table presents unaudited pro forma consolidated information, adjusted for the reverse acquisition of SCGC (Note 3) and the acquisition of an additional 33.33% interest in DEEP Lease (Note 5), as if the acquisitions had occurred on September 1, 2012: | |||||||||
Nine Months Ended | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Revenue | $ | 105,082 | $ | 86,048 | |||||
Net loss | $ | (669,543 | ) | $ | (116,544 | ) | |||
Loss per share | $ | (0.02 | ) | $ | - | ||||
These amounts have been calculated after applying our accounting policies and adjusting the results to reflect the recapitalization of SCGC. The unaudited pro forma adjustments are based on available information and certain assumptions we believe are reasonable. It was determined that Hawker was not a business and therefore there is no pro forma adjustment for the acquisition of Hawker (Note 4). |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended | |
31-May-14 | ||
SUBSEQUENT EVENTS [Abstract] | ' | |
SUBSEQUENT EVENTS | ' | |
16. | SUBSEQUENT EVENTS | |
Secured subordinated loan receivable from TEG | ||
Amending the terms of the secured subordinated loan receivable set forth in Note 6, on June 2, 2014, Tapia Holdings entered into (i) the Intercreditor Agreement; (ii) a security agreement; and (iii) a promissory note receivable. On June 27, 2014, Tapia Holdings further amended certain of these agreements when it (i) entered into a Second Amended and Restated Security Agreement ("Security Agreement"), by and among Tapia Holdings and TEG; and (ii) agreed to a Secured Subordinated Note Due December 29, 2014 ("Note"), issued by TEG in favor of Tapia Holdings. The Intercreditor Agreement, Security Agreement and Note are all entered into in connection with a proposal by Tapia Holdings to acquire a majority interest in the assets of TEG (the "Acquisition Proposal"), which is described further below, and which, among other things, is subject to the affirmative vote of the shareholders of Sefton. | ||
Under the terms of the Note, TEG promises to pay Tapia Holdings the principal sum of $1,500,000 (as opposed to $1,000,000 under the June 2, 2014 amendment and $400,000 previously), or such lesser amount as may be outstanding from time to time, with interest on the unpaid principal amount at the rate of 3.0% per annum. As of July 10, 2014, the amount of outstanding advances was $969,306 (increased from $302,306 at May 31, 2014). Further advances are subject to the sole and absolute discretion of Tapia Holdings. The Note matures on December 29, 2014 (as opposed to July 31, 2014, under the June 2, 2014, amendment and July 18, 2014 previously), at which time all outstanding principal and accrued interest will be due and payable in full. Pursuant to the Security Agreement, the Note is secured by all personal property held by TEG located in the Tapia and Eureka Fields, Los Angeles and Ventura Counties, California | ||
The Security Agreement also provides that if the transactions contemplated by the Proposed TEG Acquisition (defined below) are consummated (such transactions, the "Acquisition"), Tapia Holdings may apply any or all of the outstanding principal and accrued interest on the Note towards the consideration for the Acquisition. Further, under the terms of the Security Agreement, Tapia Holdings has the option, exercisable at any time prior to June 27, 2015 (as opposed to June 2, 2015 under the June 2, 2014, amendment), to cause TEG to contribute its assets to Tapia, LLC ("Tapia, LLC"), a newly organized California limited liability company and wholly-owned subsidiary of TEG, and to sell, to Tapia Holdings, TEG's membership interests in Tapia, LLC at the rate of $68,750 (as opposed to $59,171.60 under the June 2, 2014, amendment) for each 1.0% of membership interest in Tapia, LLC for cash or for such other consideration as set forth in the Security Agreement, including but not limited to, cancellation of outstanding amounts payable under the Note. TEG further covenants and agrees to cease and terminate any solicitation or encouragement of a third party acquisition proposal; provided, that, if TEG receives an unsolicited, bona fide acquisition proposal that is found to be superior to the Acquisition Proposal, to the extent Tapia Holdings declines to renegotiate the Acquisition Proposal or to otherwise match the terms of the third party acquisition proposal, TEG may pursue such third party acquisition proposal. The Security Agreement also contains other representations, warranties and covenants of both parties that are customary for an agreement of this type. | ||
TEG nonbinding letter of intent | ||
The disclosure in this section, and in the section titled "Crest nonbinding letter of intent" below, concerns certain nonbinding letters of intent that we have entered into in connection with the Proposed TEG Acquisition. The Proposed TEG Acquisition (including, but not limited to, the transactions contemplated by the nonbinding letters of intent) are subject to a number of conditions and contingencies outside of our control, all of which create a level of uncertainly concerning our ability to ultimately consummate the Proposed TEG Acquisition. Even if the Proposed TEG Acquisition is ultimately consummated, it may be on terms materially different than the terms described below. | ||
On June 18, 2014, we entered into a nonbinding letter of intent with Sefton (the "Sefton LOI") concerning the principal terms upon which the Proposed TEG Acquisition might be consummated. The principal terms of the nonbinding Sefton LOI are as follows: (i) TEG would transfer all of the TEG Assets and all of TEG's known liabilities to TEG's wholly owned subsidiary Tapia, LLC, (ii) Tapia Holdings would acquire 80% of the common membership interests of Tapia, LLC for payment to TEG of $2.5 million in cash (with amounts advanced under the Note credited toward the cash payment) and our issuance to TEG of a $3.0 million promissory note which would accrue 6% interest per annum and amortize quarterly on a straight line basis over the 12 quarters following closing, and (iii) TEG would retain the balance of the ownership interest in Tapia, LLC comprising the remaining 20% common membership interests of Tapia, LLC. Tapia Holdings' cash or note payment to TEG may be subject to adjustment based on the working capital of Tapia, LLC at closing. The transactions contemplated by the Sefton LOI are subject to a number of conditions, contingencies and uncertainties inherent to any nonbinding preliminary terms, including, but not limited to, completion of definitive documentation, amending or refinancing the BOTW debt that encumbers the TEG Assets, our ability to finance the transaction, our satisfactory completion of due diligence concerning the TEG Assets, consummation of a definitive agreement and closing pursuant to deal terms outlined in the Crest LOI (defined and discussed below), and affirmative shareholder vote in favor of the proposed transaction by Sefton shareholders. | ||
The TEG Assets that would be contributed by TEG to Tapia, LLC under the terms of the Proposed TEG Acquisition comprise four oil and gas leases encompassing the Tapia Canyon field and one lease west of the Tapia Canyon field, and the accompanying production equipment. | ||
Crest nonbinding letter of intent | ||
On June 25, 2014, we entered into a nonbinding letter of intent (the "Crest LOI") with Crest Petroleum Corp ("Crest") concerning a proposed transaction whereby Tapia Holdings would issue Crest membership interests representing a 27.3% ownership interest in Tapia Holdings for a cash purchase price of $1.5 million and reimbursement to Sara Creek of $100,000 in fees. The $1.5 million would be used by Tapia Holdings toward the Proposed TEG Acquisition. The transactions contemplated by the Crest LOI are subject to a number of conditions, contingencies and uncertainties inherent to any nonbinding preliminary terms, including, but not limited to, Crest obtaining approval from the TSX Venture Exchange, Crest's completion of a private placement for gross proceeds of not less than $1.8 million, completion of the Proposed TEG Acquisition, refinancing or replacement of the BOTW debt and Crest's satisfactory completion of due diligence concerning the TEG Assets. | ||
Second Secured Convertible Note Issued June 25, 2014 | ||
On June 25, 2014, we issued an Amended and Restated Secured Convertible Promissory Note to Oceanside Strategies (the "Second Secured Convertible Note"), in the aggregate principal amount of $350,000. The Second Secured Convertible Note bears simple interest on the unpaid principal balance of the Second Secured Convertible Note at the rate of 12% per annum. The Second Secured Convertible Note is convertible at any time at the option of Oceanside Strategies into "Conversion Units." Each Conversion Unit consists of one share of common stock of Sara Creek and one warrant to purchase one-half share of common stock Sara Creek at an exercise price of $0.25 per share with a term of five years. The number of Conversion Units in to which the Second Secured Convertible Note is convertible is computed by dividing all of the then outstanding principal and accrued interest under the Second Secured Convertible Note by $0.10 (as appropriately adjusted for any stock splits, stock combinations or similar events) (the "Conversion Rate"). However, if Sara Creek subsequently issues or sells its common stock at a price per share lower than the Conversion Rate, then the Conversion Rate then in effect will be automatically reduced to such lower price. Sara Creek will at all times reserve and keep available out of its authorized but unissued shares a sufficient number of shares of common stock to give effect to the conversion of the Second Secured Convertible Note. To secure Sara Creek's obligations under the Second Secured Convertible Note, Sara Creek granted a security interest to Oceanside Strategies in all assets of Sara Creek. Sara Creek received gross proceeds in cash of $350,000 in connection with the issuance of the Second Secured Convertible Note. The proceeds from the Second Secured Convertible Note are to be used and were used solely for the purpose of allowing Tapia Holdings to make further advances to TEG under the terms of the Note (as described above), issued by TEG in favor of Tapia Holdings. The maturity date is November 30, 2014. Any repayment of such advances by TEG to Tapia Holdings under the terms of the Note must be used by Sara Creek to immediately make repayment to Oceanside Strategies under the terms of the Second Secured Convertible Note. The Second Secured Convertible Note also contains other terms and covenants of Sara Creek that are customary for an agreement of this type. | ||
Additional Unit Sales | ||
On June 24, 2014, and July 1, 2014, Sara Creek issued an aggregate of 1,488,000 Units to two investors in consideration of an aggregate of $125,000 in debt owing by Sara Creek or its subsidiaries and $23,800 in cash. No commissions were paid or payable. The price of each Unit (including the value used to determine the cancellation of the debt) was $0.10. Each Unit was comprised of one share of our common stock, together with a warrant to acquire an additional one-half share of our common stock on payment of $0.20 per share. The warrants expire five years from the closing date. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT1
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
31-May-14 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract] | ' |
Basis of Presentation | ' |
Basis of Presentation | |
The accompanying unaudited interim financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and the rules and regulations of the United States Securities and Exchange Commission ("SEC") for interim financial information. | |
The unaudited interim financial statements should be read in conjunction with the Company's Annual Report on Form 10-K for the year ended August 31, 2013, as amended, which contains the audited financial statements and notes thereto for SCGC. Additionally, the Company's Amendment No. 1 to Current Report on Form 8-K/A filed with the SEC on December 24, 2013, contains the audited financial statements and notes thereto for the years ended August 31, 2013 and 2012 for SCNRG. | |
Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been omitted, pursuant to the rules and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a comprehensive presentation of financial position, results of operations, or cash flows. It is management's opinion, however, that all material adjustments (consisting of normal recurring adjustments) have been made which are necessary for a fair financial statement presentation. The interim results for the nine months ended May 31, 2014, are not necessarily indicative of results for the full fiscal year. | |
Principles of Consolidation | ' |
Principles of Consolidation | |
The acquisition of SCNRG by SCGC on October 25, 2013, has been accounted for as a reverse acquisition whereby SCNRG is the accounting acquirer effectuating a recapitalization of SCGC. Therefore, our condensed consolidated financial statements include the historic accounts of SCNRG, and consolidated with SCGC's beginning October 25, 2013. | |
On January 1, 2014, we acquired all of the membership interests of Hawker Energy, LLC ("Hawker"), and its wholly-owned subsidiary Punta Gorda Resources, LLC (see Note 4). Our condensed consolidated financial statements include the accounts of these entities beginning January 1, 2014. | |
All significant intercompany balances and transactions have been eliminated. | |
Use of Estimates | ' |
Use of Estimates | |
The preparation of financial statements in conformity with 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. Significant estimates included in the financial statements are: (1) depreciation and depletion; (2) accrued assets and liabilities; (3) asset retirement obligations; and (4) net profits interest payable. Although management believes these estimates are reasonable, changes in facts and circumstances or discovery of new information may result in revised estimates. Actual results could differ from those estimates. | |
Financial Instruments | ' |
Financial Instruments | |
Financial instruments consist of cash, accounts receivable, loan receivable, accounts payable, loan payable and notes payable. Recorded values of cash, receivables, accounts payable and accrued liabilities approximate fair values due to the short maturities of such instruments. Recorded values for loan and notes payable approximate fair values, since their stated or imputed interest rates are commensurate with prevailing market rates for similar obligations. | |
Oil Properties | ' |
Oil Properties | |
We follow the full-cost method of accounting under which all costs associated with property acquisition, exploration and development activities are capitalized. We also capitalize internal costs that can be directly identified with our acquisition, and exploration and development activities. We do not capitalize any costs related to production, general corporate overhead or similar activities. Surface equipment on a property is also part of the amounts capitalized. | |
Under the full-cost method, capitalized costs are depleted (amortized) on a composite unit-of-production method based on proved oil reserves. If we maintain the same level of production year over year, the depletion expense may be significantly different if our estimate of remaining reserves changes significantly. Proceeds from the sale of properties are accounted for as reductions of capitalized costs unless such sales involve a significant change in the relationship between costs and the value of proved reserves or the underlying value of unproved properties, in which case a gain or loss is recognized. The costs of unproved properties are excluded from amortization until the properties are evaluated. We review all of our unevaluated properties quarterly to determine whether or not and to what extent proved reserves have been assigned to the properties, and if impairment has occurred. Unevaluated properties are assessed individually when individual costs are significant. | |
We review the carrying value of our oil properties under the full-cost accounting rules of the SEC on a quarterly basis. This quarterly review is referred to as a ceiling test. Under the ceiling test, capitalized costs, less accumulated amortization and related deferred income taxes, may not exceed an amount equal to the sum of the present value of estimated future net revenues (adjusted for cash flow hedges) less estimated future expenditures to be incurred in developing and producing the proved reserves, less any related income tax effects. In calculating future net revenues, current SEC regulations require us to utilize prices at the end of the appropriate quarterly period. Such prices are utilized except where different prices are fixed and determinable from applicable contracts for the remaining term of those contracts, including the effects of derivatives qualifying as cash flow hedges. Two primary factors impacting this test are reserve levels and current prices, and their associated impact on the present value of estimated future net revenues. Revisions to estimates of oil reserves and/or an increase or decrease in prices can have a material impact on the present value of estimated future net revenues. Any excess of the net book value, less deferred income taxes, is generally written off as an expense. Under SEC regulations, the excess above the ceiling is not expensed (or is reduced) if, subsequent to the end of the period, but prior to the release of the financial statements, oil prices increase sufficiently such that an excess above the ceiling would have been eliminated (or reduced) if the increased prices were used in the calculations. | |
The estimates of proved crude oil reserves utilized in the preparation of the financial statements are estimated in accordance with guidelines established by the SEC and the Financial Accounting Standards Board ("FASB"), which require that reserve estimates be prepared under existing economic and operating conditions using a 12-month average price with no provision for price and cost escalations in future years except by contractual arrangements. Actual results could differ materially from these estimates. | |
Long-Lived Assets | ' |
Long-Lived Assets | |
Impairment of long-lived assets is recorded when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying value. The carrying value of the assets is then reduced to their estimated fair value that is usually measured based on an estimate of future discounted cash flows. | |
Asset Retirement Obligations | ' |
Asset Retirement Obligations | |
Asset retirement obligations relate to the plug and abandonment costs when our wells are no longer useful, and for the cost of removing related surface facilities. We determine the value of the liability by reviewing operator estimates and estimate the increase we will face in the future. We then discount the future value based on an intrinsic interest rate that is appropriate for us. If costs rise more than what we have expected there could be additional charges in the future, however, on a quarterly basis we monitor the costs of the abandoned wells and adjust this liability if necessary. | |
Revenue Recognition | ' |
Revenue Recognition | |
Oil revenues are recognized net of royalties when production is sold to a purchaser at a fixed or determinable price, when title has transferred, and if collection of the revenue is probable. | |
Equity Compensation Expense | ' |
Equity Compensation Expense | |
We record equity compensation expense for stock option grants based on the estimated grant-date fair value over the period the officers or consultants are required to provide services to earn the awards. | |
Net Profits Interest | ' |
Net Profits Interest | |
A Net Profits Interest ("NPI") on the DEEP property calls for 40% of the net cash flow, as defined in the Assignment of Net Profit Interest (see Note 10), to be paid each month to the owner of the NPI. If net cash flow is negative, such losses carry forward to be deducted against future positive net cash flow. Given its terminating nature, the discounted present value of the minimum monthly NPI payments was recorded as a liability at SCNRG's December 1, 2009, acquisition date of a 66.67% working interest in the DEEP property, and this liability was increased pro rata when our working interest increased to 87.18% on February 1, 2014, and again on May 15, 2014, when our working interest increased to 100.0% (see Note 5). The discount rate used in all cases was 10.0% per annum (see Note 10). | |
Income Taxes | ' |
Income Taxes | |
Until October 25, 2013, SCNRG (the accounting acquirer of SCGC) was not a taxable entity for U.S. federal or California income tax purposes. Taxes on its net income were borne by its members through the allocation of taxable income. Until July 31, 2013, we were treated as a partnership for tax purposes. On August 1, 2013, we elected to be treated as an S-Corp. Upon completion of the reverse acquisition of SCGC, SCNRG became part of a consolidated taxable entity. Due to a history of losses, we have a full valuation allowance for all net deferred tax assets, including our net operating loss. | |
Loss per share | ' |
Loss per share | |
Dilutive securities, including warrants to acquire common stock, shares issuable on conversion of notes payable and stock options, are excluded from the diluted weighted average shares of common stock outstanding computation in periods where they have an anti-dilutive effect, such as when we report a loss. Anti-dilutive securities omitted from the calculation for the three and nine months ended May 31, 2014 are 3,240,638 and 1,350,060, respectively, and none for the comparable 2013 periods. | |
Concentrations | ' |
Concentrations | |
Pursuant to a January 13, 2010, Crude Oil Purchase Contract between the DEEP operator and Plains Marketing L.P. ("PMLP"), all production from the DEEP property is sold to PMLP. The initial term of the agreement was for one year, expiring on December 31, 2010, and was automatically renewed for an additional one-year term that expired on December 31, 2011. Since January 1, 2012, the agreement has continued on a month-to-month basis and is cancellable upon thirty day's written notice by either party. | |
New Accounting Pronouncements | ' |
New Accounting Pronouncements | |
There are no recent accounting pronouncements that are expected to have a material effect on the Company's financial statements. |
ACQUISITION_OF_SCNRG_Tables
ACQUISITION OF SCNRG (Tables) (SCNRG [Member]) | 9 Months Ended | ||||
31-May-14 | |||||
SCNRG [Member] | ' | ||||
Business Acquisition [Line Items] | ' | ||||
Schedule of Net Assets Acquired | ' | ||||
The following is a summary of the fair value of consideration transferred in exchange for the estimated fair value of net assets acquired on October 25, 2013: | |||||
Fair value of consideration transferred: | |||||
14,000,000 shares of SCGC restricted common stock | $ | 14,000 | |||
Fair value of net assets acquired: | |||||
Cash | $ | 6,004 | |||
Accounts receivable | 1,553 | ||||
Oil properties | 26,500 | ||||
Deposit | 5,000 | ||||
Accounts payable and accrued liabilities | (37,431 | ) | |||
Net assets acquired | $ | 1,626 |
ACQUISITION_OF_HAWKER_ENERGY_L1
ACQUISITION OF HAWKER ENERGY, LLC (Tables) (HAWKER ENERGY, LLC [Member]) | 9 Months Ended | ||||
31-May-14 | |||||
HAWKER ENERGY, LLC [Member] | ' | ||||
Business Acquisition [Line Items] | ' | ||||
Schedule of Fair Value of the Assets Acquired and Liabilities Assumed | ' | ||||
The assets and liabilities of Hawker at the date of acquisition were recorded at their fair values of: | |||||
Cash | $ | 1,214 | |||
Prepaid expenses | 16,625 | ||||
Less: | |||||
Accounts payable | (123,413 | ) | |||
Loan payable to related party, short term | (29,625 | ) | |||
Net liabilities assumed | $ | 135,199 | |||
SECURED_SUBORDINATED_LOAN_RECE1
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Tables) | 9 Months Ended | ||||||||
31-May-14 | |||||||||
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM [Abstract] | ' | ||||||||
Schedule of Secured Subordinated Loan Receivable, Short Term | ' | ||||||||
The following shows the changes in secured subordinated loan receivable, short term, for the nine months ended May 31, 2014, and twelve months ended August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Secured subordinated loan receivable, short term, | $ | - | $ | - | |||||
beginning | |||||||||
Loan made during the period | 302,306 | - | |||||||
Current period interest | 823 | - | |||||||
Secured subordinated loan receivable, short term, | $ | 303,129 | $ | - | |||||
ending | |||||||||
LOANS_PAYABLE_RELATED_PARTIES_
LOANS PAYABLE, RELATED PARTIES (Tables) | 9 Months Ended | ||||||||
31-May-14 | |||||||||
LOANS PAYABLE, RELATED PARTIES [Abstract] | ' | ||||||||
Schedule of Loans from Related Parties | ' | ||||||||
Loans payable to related parties, long term, consist of the following at May 31, 2014, and August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Darren Katic | $ | - | $ | 38,500 | |||||
Manhattan Holdings, LLC | - | 38,500 | |||||||
Gerald Tywoniuk | - | 12,833 | |||||||
Total long-term loans | - | 89,833 | |||||||
Accrued interest payable | - | - | |||||||
Less current portion | - | - | |||||||
Loans payable to related parties, long term | $ | - | $ | 89,833 |
CONVERTIBLE_NOTES_PAYABLE_SHOR1
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Tables) | 9 Months Ended | ||||||||
31-May-14 | |||||||||
CONVERTIBLE NOTES PAYABLE, SHORT TERM [Abstract] | ' | ||||||||
Summary of Changes in Convertibles Note Payable | ' | ||||||||
The following shows the changes in convertibles note payable, short term, for the nine months ended May 31, 2014, and twelve months ended August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Convertible notes payable, short term, beginning | $ | - | $ | - | |||||
Proceeds during the period | 300,000 | - | |||||||
Current period interest | 378 | - | |||||||
Convertible notes payable, short term, ending | $ | 300,378 | $ | - |
ASSET_RETIREMENT_OBLIGATION_Ta
ASSET RETIREMENT OBLIGATION (Tables) | 9 Months Ended | ||||||||
31-May-14 | |||||||||
ASSET RETIREMENT OBLIGATION [Abstract] | ' | ||||||||
Schedule of Changes in Asset Retirement Obligation | ' | ||||||||
The following shows the changes in asset retirement obligations for the nine months ended May 31, 2014, and twelve months ended August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
Asset retirement obligations, beginning | $ | 103,299 | $ | 95,206 | |||||
Liabilities acquired during the period | 53,963 | - | |||||||
Liabilities settled during the period | - | - | |||||||
Current period accretion | 7,556 | 8,093 | |||||||
Asset retirement obligations, ending | $ | 164,818 | $ | 103,299 | |||||
NET_PROFITS_INTEREST_NPI_PAYAB1
NET PROFITS INTEREST ("NPI") PAYABLE (Tables) | 9 Months Ended | ||||||||
31-May-14 | |||||||||
NET PROFITS INTEREST ("NPI") PAYABLE [Abstract] | ' | ||||||||
Schedule of Changes in NPI Liability | ' | ||||||||
Changes in SCNRG's share of the NPI liability are as follows for the nine months ended May 31, 2014, and the twelve months ended August 31, 2013: | |||||||||
May 31, | August 31, | ||||||||
2014 | 2013 | ||||||||
NPI liability, beginning of period | $ | 124,597 | $ | 135,640 | |||||
Liabilities assumed in connection with | 58,847 | - | |||||||
acquisition of additional DEEP lease | |||||||||
working interests | |||||||||
Current period accretion | 9,883 | 12,865 | |||||||
Payments made | (19,702 | ) | (23,908 | ) | |||||
NPI liability, end of period | 173,625 | 124,597 | |||||||
Less: current portion | 19,571 | 12,109 | |||||||
NPI liability, long-term portion | $ | 154,054 | $ | 112,488 | |||||
FAIR_VALUE_MEASUREMENTS_Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended | ||||||||||||
31-May-14 | |||||||||||||
FAIR VALUE MEASUREMENTS [Abstract] | ' | ||||||||||||
Schedule of Assets and Liabilities Measured at Fair Value on a Recurring Basis | ' | ||||||||||||
Fair Value Measurement | |||||||||||||
Level 1 | Level 2 | Level 3 | |||||||||||
31-May-14 | |||||||||||||
Assets: | |||||||||||||
Capitalized oil and gas properties, net | $ | - | $ | - | $ | 736,915 | |||||||
Liabilities: | |||||||||||||
Net profit interest liability | - | - | (173,625 | ) | |||||||||
Asset retirement obligation | (164,818 | ) | |||||||||||
Total | $ | - | $ | - | $ | 398,472 | |||||||
31-Aug-13 | |||||||||||||
Assets: | |||||||||||||
Capitalized oil and gas properties, net | $ | - | $ | - | $ | 297,500 | |||||||
Liabilities: | |||||||||||||
Net profit interest liability | - | - | (124,597 | ) | |||||||||
Asset retirement obligation | - | - | (103,299 | ) | |||||||||
Total | $ | - | $ | - | $ | 69,604 |
PRO_FORMA_FINANCIAL_INFORMATIO1
PRO FORMA FINANCIAL INFORMATION (Tables) | 9 Months Ended | ||||||||
31-May-14 | |||||||||
PRO FORMA FINANCIAL INFORMATION [Abstract] | ' | ||||||||
Schedule of Unaudited Pro Forma Consolidated Information | ' | ||||||||
The following table presents unaudited pro forma consolidated information, adjusted for the reverse acquisition of SCGC (Note 3) and the acquisition of an additional 33.33% interest in DEEP Lease (Note 5), as if the acquisitions had occurred on September 1, 2012: | |||||||||
Nine Months Ended | |||||||||
May 31, | |||||||||
2014 | 2013 | ||||||||
Revenue | $ | 105,082 | $ | 86,048 | |||||
Net loss | $ | (669,543 | ) | $ | (116,544 | ) | |||
Loss per share | $ | (0.02 | ) | $ | - |
DESCRIPTION_OF_BUSINESS_Detail
DESCRIPTION OF BUSINESS (Details) (SCNRG [Member]) | 1 Months Ended |
Oct. 25, 2013 | |
SCNRG [Member] | ' |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' |
Acquisition of share interest | 100.00% |
Number of shares issued for acquisition | 14,000,000 |
SUMMARY_OF_SIGNIFICANT_ACCOUNT2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) | 3 Months Ended | 9 Months Ended | |
31-May-14 | 31-May-14 | Oct. 25, 2013 | |
SCNRG [Member] | |||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' | ' |
Percentage of monthly payments equal to net profit | ' | 40.00% | ' |
Interest rate utilizing a discount rate | 10.00% | 10.00% | ' |
Acquisition of share interest | ' | ' | 100.00% |
Shares with anti-dilutive effect excluded from the computation of Diluted EPS | 3,240,638 | 1,350,060 | ' |
ACQUISITION_OF_SCNRG_Narrative
ACQUISITION OF SCNRG (Narrative) (Details) (USD $) | 9 Months Ended | 1 Months Ended |
31-May-14 | Oct. 25, 2013 | |
SCNRG [Member] | ||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' |
Number of shares issued for acquisition | ' | 14,000,000 |
Stock issued during period for acquisition | $1,626 | $14,000 |
Acquisition of share interest | ' | 100.00% |
ACQUISITION_OF_SCNRG_Schedule_
ACQUISITION OF SCNRG (Schedule of Net Assets Acquired) (Details) (USD $) | Oct. 25, 2013 |
ACQUISITION OF SCNRG [Abstract] | ' |
Cash | $6,004 |
Accounts receivable | 1,553 |
Oil properties | 26,500 |
Deposit | 5,000 |
Accounts payable and accrued liabilities | -37,431 |
Net assets acquired | $1,626 |
ACQUISITION_OF_HAWKER_ENERGY_L2
ACQUISITION OF HAWKER ENERGY, LLC (Narrative) (Details) (USD $) | 0 Months Ended | 9 Months Ended |
Jan. 01, 2014 | 31-May-14 | |
Business Acquisition [Line Items] | ' | ' |
Overriding royalty percentage | ' | 1.00% |
HAWKER ENERGY, LLC [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | 3,000,000 | ' |
Overriding royalty percentage | ' | 24.50% |
Par value | ' | $138,199 |
Additional paid-in capital | ' | $3,000 |
California Oil Independents [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | ' | 2,000,000 |
South Coast Oil [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | ' | 2,000,000 |
Midway Sunset Lease Oil And Gas [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | ' | 5,000,000 |
TEG Oil & Gas, Inc. [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | ' | 10,000,000 |
Rincon Island Limited Partnership [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | ' | 7,000,000 |
ExxonMobil [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | ' | 7,000,000 |
Darren Katic [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | 1,500,000 | ' |
Sellers [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | 3,000,000 | ' |
Possible additional shares required to issue | 33,000,000 | ' |
Charles Moore [Member] | ' | ' |
Business Acquisition [Line Items] | ' | ' |
Number of shares issued for acquisition | 1,500,000 | ' |
ACQUISITION_OF_HAWKER_ENERGY_L3
ACQUISITION OF HAWKER ENERGY, LLC (Schedule of Assets and Liabilities Acquired) (Details) (USD $) | Oct. 25, 2013 | Jan. 01, 2014 |
HAWKER ENERGY, LLC [Member] | ||
Business Acquisition [Line Items] | ' | ' |
Cash | $6,004 | $1,214 |
Prepaid expenses | ' | 16,625 |
Accounts payable and accrued liabilities | -37,431 | -123,413 |
Loan payable to related party, short term | ' | -29,625 |
Net liabilities assumed | ' | ($135,199) |
ACQUISITION_OF_AN_ADDITIONAL_31
ACQUISITION OF AN ADDITIONAL 33.33% WORKING INTEREST IN DEEP LEASE (Details) (USD $) | 0 Months Ended | |||
15-May-14 | Feb. 04, 2014 | 31-May-14 | Oct. 25, 2013 | |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Oil properties | ' | ' | ' | 26,500 |
SCNRG [Member] | ' | ' | ' | ' |
Business Acquisition [Line Items] | ' | ' | ' | ' |
Cash paid for business acquisition | 125,000 | 200,000 | ' | ' |
Machinery and equipment | 2,010 | 3,529 | ' | ' |
Oil properties | 166,071 | 266,200 | ' | ' |
Purchase price of entity | 168,081 | 269,729 | ' | ' |
Contingent consideration liabilities | $43,081 | $69,729 | ' | ' |
Acquisition of additional working interest in DEEP lease | 12.82% | 20.51% | 33.33% | ' |
Acquisition of share interest | ' | ' | ' | 100.00% |
SECURED_SUBORDINATED_LOAN_RECE2
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Narrative) (Details) (USD $) | 0 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | |||
Jul. 10, 2014 | Jun. 27, 2014 | Jun. 02, 2014 | 31-May-14 | 31-May-14 | Aug. 31, 2013 | 31-May-14 | |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | |
Subsequent Event [Member] | |||||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Outstanding advances | $969,306 | ' | ' | ' | $302,306 | ' | ' |
Current period interest | ' | ' | ' | ' | 823 | ' | ' |
Promissory note receivable | ' | $1,500,000 | $1,000,000 | $400,000 | ' | ' | ' |
Interest rate | ' | ' | ' | ' | ' | ' | 3.00% |
SECURED_SUBORDINATED_LOAN_RECE3
SECURED SUBORDINATED LOAN RECEIVABLE, SHORT TERM (Schedule of Secured Subordinated Loan Receivable, Short Term) (Details) (Secured Subordinated Loan Receivable, Short Term [Member], USD $) | 9 Months Ended | 12 Months Ended |
31-May-14 | Aug. 31, 2013 | |
Secured Subordinated Loan Receivable, Short Term [Member] | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Secured subordinated loan receivable, short term, beginning | ' | ' |
Loan made during the period | 302,306 | ' |
Current period interest | 823 | ' |
Secured subordinated loan receivable, short term, ending | $303,129 | ' |
LOANS_PAYABLE_RELATED_PARTIES_1
LOANS PAYABLE, RELATED PARTIES (Narrative) (Details) (USD $) | 1 Months Ended | 0 Months Ended | |||||
Sep. 18, 2013 | 31-May-14 | Aug. 31, 2013 | 31-May-14 | Jan. 01, 2014 | Aug. 31, 2013 | Jan. 31, 2014 | |
Darren Katic [Member] | Darren Katic [Member] | Darren Katic [Member] | Kristian Andresen [Member] | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' | ' | ' | ' | ' | ' |
Loans payable | ' | ' | $89,833 | ' | ' | $38,500 | ' |
Interest rate | 1.66% | ' | ' | 10.00% | ' | ' | ' |
Gross proceeds received to trigger repayment of loans to related party | 5,000,000 | ' | ' | ' | ' | ' | ' |
Due to related party | ' | ' | ' | -180,000 | -29,625 | ' | ' |
Conversion of debt | ' | ' | ' | ' | ' | ' | $15,000 |
LOANS_PAYABLE_RELATED_PARTIES_2
LOANS PAYABLE, RELATED PARTIES (Schedule of Loans from Related Parties) (Details) (USD $) | 31-May-14 | Aug. 31, 2013 |
Related Party Transaction [Line Items] | ' | ' |
Total long-term term loans | ' | $89,833 |
Accrued interest payable | ' | ' |
Less - current maturities | ' | ' |
Long-term loans from related parties | ' | 89,833 |
Darren Katic [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Total long-term term loans | ' | 38,500 |
Manhattan Holdings, LLC [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Total long-term term loans | ' | 38,500 |
Gerald Tywoniuk [Member] | ' | ' |
Related Party Transaction [Line Items] | ' | ' |
Total long-term term loans | ' | $12,833 |
CONVERTIBLE_NOTES_PAYABLE_SHOR2
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Narrative) (Details) (USD $) | 31-May-14 | Sep. 18, 2013 | 13-May-14 | 30-May-14 | 31-May-14 |
Convertible Note [Member] | Secured Convertible Note [Member] | Secured Convertible Note [Member] | |||
Subsequent Event [Member] | |||||
Debt Instrument [Line Items] | ' | ' | ' | ' | ' |
Convertible debt | $300,000 | ' | $50,000 | $250,000 | $350,000 |
Conversion price | $0.10 | ' | $0.10 | $0.10 | ' |
Interest rate | ' | 1.66% | 12.00% | 12.00% | ' |
Maturity date | ' | ' | 13-May-16 | 30-Nov-14 | ' |
Warrant exercise price | $0.20 | ' | ' | $0.25 | ' |
CONVERTIBLE_NOTES_PAYABLE_SHOR3
CONVERTIBLE NOTES PAYABLE, SHORT TERM (Summary of Changes in Convertible Notes Payable) (Details) (USD $) | 9 Months Ended | 12 Months Ended |
31-May-14 | Aug. 31, 2013 | |
Debt Instrument [Line Items] | ' | ' |
Convertible notes payable, short term, ending | $300,378 | ' |
Convertible Notes Payable Member | ' | ' |
Debt Instrument [Line Items] | ' | ' |
Convertible notes payable, short term, beginning | ' | ' |
Proceeds during the period | 300,000 | ' |
Current period interest | 378 | ' |
Convertible notes payable, short term, ending | $300,378 | ' |
ASSET_RETIREMENT_OBLIGATION_De
ASSET RETIREMENT OBLIGATION (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
31-May-14 | 31-May-13 | Aug. 31, 2013 | |
ASSET RETIREMENT OBLIGATION [Abstract] | ' | ' | ' |
Asset retirement obligations, beginning | $103,299 | $95,206 | $95,206 |
Liabilities acquired during the period | 53,963 | ' | ' |
Liabilities settled during the period | ' | ' | ' |
Current period accretion | 7,556 | 6,069 | 8,093 |
Asset retirement obligations, ending | $164,818 | ' | $103,299 |
NET_PROFITS_INTEREST_NPI_PAYAB2
NET PROFITS INTEREST ("NPI") PAYABLE (Narrative) (Details) (USD $) | 0 Months Ended | 9 Months Ended | |
Dec. 01, 2009 | 31-May-14 | Oct. 25, 2013 | |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' | ' |
Percentage of monthly payments equal to net profit | ' | 40.00% | ' |
Stated minimum monthly payment | ' | $2,978 | ' |
Maturity date | ' | 31-Dec-22 | ' |
Interest rate utilizing a discount rate | ' | 10.00% | ' |
NPI payments | ' | 116,267 | ' |
Minimum NPI payment requirement | ' | 347,000 | ' |
Maximum NPI payment requirement | ' | 357,410 | ' |
SCNRG [Member] | ' | ' | ' |
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' | ' |
Stated minimum monthly payment | $1,985 | $2,596 | ' |
Acquisition of share interest | ' | ' | 100.00% |
NET_PROFITS_INTEREST_NPI_PAYAB3
NET PROFITS INTEREST ("NPI") PAYABLE (Schedule of Changes in NPI Liability) (Details) (USD $) | 9 Months Ended | 12 Months Ended | |
31-May-14 | 31-May-13 | Aug. 31, 2013 | |
NET PROFITS INTEREST ("NPI") PAYABLE [Abstract] | ' | ' | ' |
NPI liability, beginning of period | $124,597 | $135,640 | $135,640 |
Liabilities assumed in connection with acquisition of additional DEEP lease working interests | 58,847 | ' | ' |
Current period accretion | 9,883 | 9,752 | 12,865 |
Payments made | -19,702 | -17,953 | -23,908 |
NPI liability, end of period | 173,625 | ' | 124,597 |
Less: current portion | 19,571 | ' | 12,109 |
NPI liability: long-term portion | $154,054 | ' | $112,488 |
FAIR_VALUE_MEASUREMENTS_Detail
FAIR VALUE MEASUREMENTS (Details) (USD $) | 31-May-14 | Aug. 31, 2013 |
Level 1 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Capitalized oil and gas properties | ' | ' |
Net profit interest liability | ' | ' |
Asset retirement obligation | ' | ' |
Total | ' | ' |
Level 2 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Capitalized oil and gas properties | ' | ' |
Net profit interest liability | ' | ' |
Asset retirement obligation | ' | ' |
Total | ' | ' |
Level 3 [Member] | ' | ' |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ' | ' |
Capitalized oil and gas properties | 736,915 | 297,500 |
Net profit interest liability | -173,625 | -124,597 |
Asset retirement obligation | -164,818 | -103,299 |
Total | $398,472 | $69,604 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details) | 9 Months Ended |
31-May-14 | |
Long-term Purchase Commitment [Line Items] | ' |
Overriding royalty percentage | 1.00% |
Aggregate additional royalty percentage subject to production | 19.92% |
Total royalties | 20.92% |
DEEP Property [Member] | ' |
Long-term Purchase Commitment [Line Items] | ' |
Working interest | 100.00% |
STOCKHOLDERS_EQUITY_Details
STOCKHOLDERS' EQUITY (Details) (USD $) | 0 Months Ended | 9 Months Ended | 0 Months Ended | 9 Months Ended | 0 Months Ended | 1 Months Ended | |||||||
14-May-14 | 31-May-14 | 31-May-13 | 31-May-14 | 13-May-14 | 30-May-14 | 8-May-14 | Jan. 31, 2014 | 31-May-14 | 31-May-14 | Jan. 01, 2014 | Jan. 08, 2014 | Oct. 25, 2013 | |
Convertible Note [Member] | Convertible Note [Member] | Secured Convertible Note [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock [Member] | Common Stock Payable [Member] | HAWKER ENERGY, LLC [Member] | Ryan Bateman [Member] | SCNRG [Member] | ||||
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares issued for acquisition | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000,000 | 2,000,000 | 14,000,000 |
Warrant exercise price | ' | $0.20 | ' | ' | ' | $0.25 | ' | ' | ' | ' | ' | ' | ' |
Price per unit | ' | $0.10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Gross proceeds from issuance of unit offering | ' | ' | ' | ' | ' | ' | $394,972 | $477,500 | ' | ' | ' | ' | ' |
Net proceeds from unit offering, shares | ' | ' | ' | ' | ' | ' | 3,949,720 | 4,775,000 | 8,724,720 | ' | ' | ' | ' |
Proceeds received for common stock payable | ' | 5,000 | ' | ' | ' | ' | 31,560 | ' | ' | 5,000 | ' | ' | ' |
Proceeds received for common stock payable, shares | ' | ' | ' | ' | ' | ' | ' | ' | ' | 50,000 | ' | ' | ' |
Units issued to settle accounts payable | ' | 31,560 | ' | ' | ' | ' | 135,312 | ' | ' | ' | ' | ' | ' |
Common stock issuable | ' | 4,362,360 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock compensation | ' | 14,999 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Unrecognized balance of compensation expenses | ' | 557,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected life of options | '10 years | '2 years 7 months 6 days | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Shares of stock issued for the conversion of debt | ' | 3,000,000 | ' | 4,316,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Potential additional warrants issuable | ' | ' | ' | ' | ' | 1,250,000 | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from unit offering | ' | 831,773 | ' | ' | ' | ' | ' | ' | 8,725 | ' | ' | ' | ' |
Convertible debt | ' | 300,000 | ' | ' | 50,000 | 250,000 | ' | ' | ' | ' | ' | ' | ' |
Conversion price | ' | $0.10 | ' | ' | $0.10 | $0.10 | ' | ' | ' | ' | ' | ' | ' |
Options granted | 5,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Options outstanding | ' | 5,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock options vesting first | ' | 1,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Expected to vest | ' | 5,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Stock options vesting in subsequent transactions | ' | 4,950,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from unit offering | ' | $669,901 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition of share interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100.00% |
Potential additional shares issuable | ' | 66,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
RELATED_PARTY_TRANSACTIONS_Det
RELATED PARTY TRANSACTIONS (Details) (USD $) | 31-May-14 | Sep. 18, 2013 | Jan. 01, 2014 | 14-May-14 | Jan. 10, 2014 | Jan. 01, 2014 | 31-May-14 | Jan. 10, 2014 | Jan. 01, 2014 | 14-May-14 | Jan. 10, 2014 | Jan. 01, 2014 | 14-May-14 | Jan. 31, 2014 | Apr. 09, 2014 |
HAWKER ENERGY, LLC [Member] | Darren Katic [Member] | Darren Katic [Member] | Darren Katic [Member] | Darren Katic [Member] | Manhattan Holdings, LLC [Member] | Sellers [Member] | Gerald Tywoniuk [Member] | Gerald Tywoniuk [Member] | Charles Moore [Member] | Kristian Andresen [Member] | Kristian Andresen [Member] | Manhattan Holdings, LLC and Mr.Tywoniuk [Member] | |||
Related Party Transaction [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Number of shares issued for acquisition | ' | ' | 3,000,000 | ' | ' | 1,500,000 | ' | ' | 3,000,000 | ' | ' | 1,500,000 | ' | ' | ' |
Warrant exercise price | $0.20 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Price per unit | $0.10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Possible additional shares required to issue | ' | ' | ' | ' | ' | ' | ' | ' | 33,000,000 | ' | ' | ' | ' | ' | ' |
Value of purchased units | ' | ' | ' | ' | $38,000 | ' | ' | $90,000 | ' | ' | $50,000 | ' | ' | $15,000 | $120,312 |
Purchased units | ' | ' | ' | ' | 380,000 | ' | ' | 900,000 | ' | ' | 500,000 | ' | ' | 150,000 | 1,203,120 |
Liabilities assumed | ' | ' | -135,199 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Due to related party | ' | ' | ' | ' | ' | ($29,625) | ($180,000) | ' | ' | ' | ' | ' | ' | ' | ' |
Options granted | ' | ' | ' | 600,000 | ' | ' | ' | ' | ' | 1,600,000 | ' | ' | 1,000,000 | ' | ' |
Vesting period | ' | ' | ' | '3 years | ' | ' | ' | ' | ' | '3 years | ' | ' | '3 years | ' | ' |
Interest rate | ' | 1.66% | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' | ' |
PRO_FORMA_FINANCIAL_INFORMATIO2
PRO FORMA FINANCIAL INFORMATION (Schedule of Unaudited Pro Forma Consolidated Information) (Details) (USD $) | 9 Months Ended | |
31-May-14 | 31-May-13 | |
PRO FORMA FINANCIAL INFORMATION [Abstract] | ' | ' |
Revenue | $105,082 | $86,048 |
Net loss | ($669,543) | ($116,544) |
Loss per share | ($0.02) | ' |
SUBSEQUENT_EVENTS_Details
SUBSEQUENT EVENTS (Details) (USD $) | 9 Months Ended | 0 Months Ended | 1 Months Ended | 9 Months Ended | 1 Months Ended | 9 Months Ended | 12 Months Ended | 9 Months Ended | 0 Months Ended | ||||||
31-May-14 | Sep. 18, 2013 | Jul. 10, 2014 | Jul. 01, 2014 | Jun. 02, 2014 | Jun. 18, 2014 | Jun. 24, 2014 | 31-May-14 | Jun. 27, 2014 | Jun. 25, 2014 | 31-May-14 | Aug. 31, 2013 | 31-May-14 | 30-May-14 | 31-May-14 | |
Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Subsequent Event [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | Secured Subordinated Loan Receivable, Short Term [Member] | Secured Convertible Note [Member] | Secured Convertible Note [Member] | |||
Crest Petroleum Corp [Member] | Subsequent Event [Member] | Subsequent Event [Member] | |||||||||||||
Subsequent Event [Line Items] | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Maturity date | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 30-Nov-14 | ' |
Interest rate | ' | 1.66% | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 12.00% | ' |
Interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3.00% | ' | ' |
Rate of membership interests | ' | ' | ' | ' | $68,750 | ' | ' | $59,171.60 | ' | ' | ' | ' | ' | ' | ' |
Convertible debt | 300,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 250,000 | 350,000 |
Conversion price | $0.10 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.10 | ' |
Warrant exercise price | $0.20 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.25 | ' |
Ownership interest | ' | ' | ' | ' | ' | ' | ' | ' | ' | 27.30% | ' | ' | ' | ' | ' |
Potential acquisition of membership interest | ' | ' | ' | ' | ' | 80.00% | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Acquisition purchase price | ' | ' | ' | ' | ' | 2,500,000 | ' | ' | ' | 1,500,000 | ' | ' | ' | ' | ' |
Fees | ' | ' | ' | ' | ' | ' | ' | ' | ' | 100,000 | ' | ' | ' | ' | ' |
Net proceeds from unit offering, shares | ' | ' | ' | ' | ' | ' | 1,488,000 | ' | ' | ' | ' | ' | ' | ' | ' |
Net proceeds from unit offering | 831,773 | ' | ' | 125,000 | ' | ' | 23,800 | ' | ' | ' | ' | ' | ' | ' | ' |
Potential minimum gross proceeds of private placement | ' | ' | ' | ' | ' | ' | ' | ' | ' | 1,800,000 | ' | ' | ' | ' | ' |
Promissory note receivable | ' | ' | ' | ' | 1,000,000 | ' | ' | 400,000 | 1,500,000 | ' | ' | ' | ' | ' | ' |
Promissory note | ' | ' | ' | ' | ' | 3,000,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Outstanding advances | ' | ' | $969,306 | ' | ' | ' | ' | ' | ' | ' | $302,306 | ' | ' | ' | ' |