Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Aug. 10, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | TORCHLIGHT ENERGY RESOURCES INC | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Entity Central Index Key | 1,431,959 | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 47,519,173 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 |
CONSOLIDATED CONDENSED BALANCE
CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash | $ 318,011 | $ 1,026,600 |
Accounts Receivable | 662,580 | 741,653 |
Production revenue receivable | 8,817 | 199,317 |
Note receivable | 0 | 613 |
Prepayments - development costs | 150,362 | 0 |
Prepaid expenses | 0 | 38,776 |
Total current assets | 1,139,770 | 2,006,959 |
Investment in oil and gas properties, net | 9,312,719 | 7,057,671 |
Office Equipment | 34,334 | 43,110 |
Debt issuance costs, net | 5,479 | 8,224 |
Other Assets | 43,361 | 72,082 |
TOTAL ASSETS | 10,535,663 | 9,188,046 |
Current liabilities: | ||
Accounts payable | 1,707,289 | 1,114,409 |
Accrued liabilities | 671,364 | 628,876 |
Related party payables | 276,112 | 130,000 |
Convertible promissory notes, (Series B) net of discount of $185,155 at June 30, 2016 | 3,384,345 | 0 |
Note payable within one year - related party | 131,250 | 205,000 |
Notes payable within one year | 105,020 | 129,741 |
Due to working interest owners | 216,476 | 103,364 |
Interest payable | 161,759 | 173,710 |
Total current liabilities | 6,653,615 | 2,485,100 |
Convertible promissory notes, (Series B) net of discount of $277,911 at December 31, 2015 | 0 | 3,291,589 |
Asset retirement obligation | 1,670 | 29,083 |
Commitments and contingencies | 0 | 0 |
Stockholders' equity: | ||
Preferred stock, par value $.001, 10,000,000 shares authorized, 37,000 shares issued and outstanding at June 30, 2016, 134,000 issued and outstanding at December 31, 2015 | 35 | 134 |
Common stock, par value $0.001 per share; 100,000,000 shares authorized; 45,793,587 issued and outstanding at June 30, 2016, 33,166,344 issued and outstanding at December 31, 2015 | 45,800 | 33,168 |
Additional paid-in capital | 63,976,768 | 61,921,450 |
Warrants outstanding | 20,546,667 | 16,330,961 |
Accumulated deficit | (80,688,892) | (74,903,439) |
Total stockholders' equity | 3,880,378 | 3,382,274 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 10,535,663 | $ 9,188,046 |
CONSOLIDATED CONDENSED BALANCE3
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Assets [Abstract] | ||
Discount of Convertible promissory notes current | $ 185,155 | |
Discount on Convertible promissory notes noncurrent | $ 277,911 | |
Preferred Stock, par value | $ .001 | $ 0.001 |
Preferred Stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred Stock, shares issued | 37,000 | 134,000 |
Preferred Stock, shares outstanding | 37,000 | 134,000 |
Common Stock, par or stated value | $ .001 | $ 0.001 |
Common Stock, shares authorized | 100,000,000 | 100,000,000 |
Common Stock, shares issued | 45,793,587 | 33,166,344 |
Common Stock, shares outstanding | 45,793,587 | 33,166,344 |
CONSOLIDATED CONDENSED STATEMEN
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue: | ||||
Oil and gas sales | $ 105,220 | $ 508,265 | $ 303,513 | $ 1,042,827 |
SWD and royalties | 0 | 374 | 0 | 57,070 |
Cost of revenue | (139,116) | (279,646) | (245,300) | (510,544) |
Gross income | (33,896) | 228,993 | 58,213 | 589,353 |
Operating expenses: | ||||
General and administrative expenses | 3,796,418 | 8,207,314 | 4,747,704 | 8,896,025 |
Depreciation, depletion and amortization | 100,082 | 204,330 | 722,054 | 698,805 |
Impairment expense | 57,912 | 22,438,114 | 57,912 | 22,438,114 |
Loss on sale | 146,138 | 0 | 146,138 | 0 |
Total operating expenses | 4,100,550 | 30,849,758 | 5,673,808 | 32,032,944 |
Other income (expense) | ||||
Other income | 0 | 962 | 0 | 962 |
Interest income | 0 | 0 | 0 | 0 |
Interest and accretion expense | (47,481) | (239,667) | (169,858) | (1,631,109) |
Total other income (expense) | (47,481) | (238,705) | (169,858) | (1,630,147) |
Net loss before taxes | (4,181,927) | (30,859,470) | (5,785,453) | (33,073,738) |
Provision for income taxes | 0 | 0 | 0 | 0 |
Net (loss) | $ (4,181,927) | $ (30,859,470) | $ (5,785,453) | $ (33,073,738) |
Loss per share:Basic and Diluted | $ (0.16) | $ (1.44) | $ (0.35) | $ (2.02) |
Weighted average shares outstanding: Basic and Diluted | 26,062,804 | 21,428,769 | 16,506,672 | 16,342,225 |
CONSOLIDATED CONDENSED STATEME5
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW - USD ($) | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash Flows From Operating Activities | ||
Net (loss) | $ (5,785,453) | $ (33,073,738) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Stock based compensation | 3,214,690 | 7,078,791 |
Accretion of convertible note discounts | 95,979 | 1,163,091 |
Loss on sale of assets | 146,138 | 0 |
Impairment expense | 57,912 | 22,438,114 |
Depreciation, depletion and amortization | 722,054 | 698,805 |
Change in: | ||
Accounts receivable | 79,073 | 49,392 |
Note receivable | 613 | 2,627 |
Production revenue receivable | 190,500 | (163,977) |
Prepayment of development costs | (150,362) | 10,602 |
Prepaid expenses | 38,776 | 29,634 |
Debt issuance costs | 2,745 | 0 |
Other assets | 28,720 | (23,938) |
Accounts payable and accrued liabilities | 635,368 | 3,165,044 |
Due to working interest owners | 113,113 | (30,231) |
Asset retirement obligation | (27,413) | 774 |
Interest payable | (15,174) | 447,014 |
Capitalized interest | (157,581) | (395,738) |
Net cash provided by (used in) operating activities | (810,302) | 1,396,266 |
Cash Flows From Investing Activities | ||
Investment in oil and gas properties | (1,700,209) | (4,618,743) |
Proceeds from Sale of Leases | 1,572,000 | 951,918 |
Net cash used in investing activities | (128,209) | (3,666,825) |
Cash Flows From Financing Activities | ||
Proceeds from short term advance | 150,000 | 0 |
Proceeds from sale of common stock | 0 | 1,300,000 |
Proceeds from sale of preferred stock | 0 | 9,800,000 |
Repayment of convertible notes | 0 | (8,859,011) |
Payment of preferred stock dividends | (224,260) | 0 |
Proceeds from warrant exercise | 406,541 | 0 |
Proceeds from promissory notes | 511,270 | 212,000 |
Repayment of promissory notes | (613,629) | (150,000) |
Net cash provided by financing activities | 229,922 | 2,302,989 |
Net increase (decrease) in cash | (708,589) | 32,430 |
Cash - beginning of period | 1,026,600 | 179,787 |
Cash - end of period | 318,011 | 212,217 |
Non cash transactions: | ||
Warrants issued for mineral interests 2016 | 1,409,761 | 0 |
Common stock issued for services | 410,474 | 1,594,871 |
Common stock issued for mineral interests | 1,484,166 | 26,400 |
Warrants issued for services | 2,716,125 | 5,562,919 |
Warrants issued in connection with promissory notes | 80,750 | 0 |
Common stock issued in warrant exercises | 397,471 | 0 |
Cash paid for interest | 266,259 | 931,011 |
Common stock issued in conversion of preferred stock | $ 9,700,000 | $ 0 |
1. NATURE OF BUSINESS
1. NATURE OF BUSINESS | 6 Months Ended |
Jun. 30, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
NATURE OF BUSINESS | Torchlight Energy Resources, Inc. was incorporated in October 2007 under the laws of the State of Nevada as Pole Perfect Studios, Inc. (PPS). From its incorporation to November 2010, the company was primarily engaged in business start-up activities. On November 23, 2010, we entered into and closed a Share Exchange Agreement (the Exchange Agreement) between the major shareholders of PPS and the shareholders of Torchlight Energy, Inc. (TEI). As a result of the transactions effected by the Exchange Agreement, at closing TEI became our wholly-owned subsidiary, and the business of TEI became our sole business. TEI was incorporated under the laws of the State of Nevada in June 2010. We are engaged in the acquisition, exploitation and/or development of oil and natural gas properties in the United States. In addition to TEI, we also operate our business through our wholly-owned subsidiaries Torchlight Energy Operating, LLC, a Texas limited liability company and Hudspeth Oil Corporation, a Texas corporation. On December 10, 2010, we effected a 4-for-1 forward split of our shares of common stock outstanding. All owners of record at the close of business on December 10, 2010 (record date) received three additional shares for every one share they owned. All share amounts reflected throughout this report take into account the 4-for-1 forward split. Effective February 8, 2011, we changed our name to Torchlight Energy Resources, Inc. In connection with the name change, our ticker symbol changed from PPFT to TRCH. The Company is engaged in the acquisition, exploration, development and production of oil and gas properties within the United States. The Companys success will depend in large part on its ability to obtain and develop profitable oil and gas interests. |
2. GOING CONCERN
2. GOING CONCERN | 6 Months Ended |
Jun. 30, 2016 | |
GOING CONCERN | |
GOING CONCERN | These consolidated financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. At June 30, 2016, the Company had not yet achieved profitable operations. We had a net loss of approximately $5.8 million for the six months ended June 30, 2016 and had accumulated losses of $80,688,892 since our inception to June 30, 2016, and expect to incur further losses in the development of our business. Working Capital as of June 30, 2016 was negative $5,513,845. Negative working capital is exacerbated by the inclusion in current liabilities of the $3,384,345 outstanding balance of subordinated convertible notes which have a maturity date of June 30, 2017 and are therefore included in current liabilities as of June 30, 2016. The Companys ability to continue as a going concern is dependent on its ability to generate future profitable operations and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Managements plan to address the Companys ability to continue as a going concern includes: (1) obtaining debt or equity funding from private placement or institutional sources; (2) obtain loans from financial institutions, where possible; (3) participating in joint venture transactions with third parties; or (4) sale of assets. Although management believes that it will be able to obtain the necessary funding to allow the Company to remain a going concern through the methods discussed above, there can be no assurances that such methods will prove successful. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. |
3. SIGNIFICANT ACCOUNTING POLIC
3. SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2016 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | The Company maintains its accounts on the accrual method of accounting in accordance with accounting principles generally accepted in the United States of America. Accounting principles followed and the methods of applying those principles, which materially affect the determination of financial position, results of operations and cash flows are summarized below: Use of estimates Basis of presentation Risks and uncertainties Concentration of risks Fair value of financial instruments For assets and liabilities that require re-measurement to fair value the Company categorizes them in a three-level fair value hierarchy as follows: ·Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. ·Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration. ·Level 3 inputs are unobservable inputs based on managements own assumptions used to measure assets and liabilities at fair value. A financial asset or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Accounts receivable As of December 31, 2015, the Company had a $419,839 account receivable from Husky Ventures for the estimated balance of the sale proceeds from the sale of the Chisholm Trail properties in fourth quarter, 2015. The Chisholm Trail properties were sold to Husky Ventures who then included them with the Husky interests in Chisholm Trail and then entered into a sale agreement with Gastar Exploration Inc. for the combined Torchlight and Husky interests. Receipt of the balance of the sale proceeds was subject to final determination of mineral lease classification and was to occur by February 28, 2016. On June 14, 2016, after the lawsuit that is described in Part II Item 1. Legal Proceedings regarding the Hunton Play, the Company received and subsequently deposited a check from Husky Ventures in the amount of $520,400. Husky Ventures designated that the check was in full satisfaction of its obligations under the transaction in which the Company sold the Chisholm Trail properties as described above. The Company does not believe the check is in full satisfaction of Husky Venturess obligations, including but not limited to that Husky Ventures has provided insufficient information for the Company regarding this transaction. The Company is currently pursuing claims against Husky Ventures, and others, related to this transaction and intends to continue to pursue those claims as described further in Part II Item 1. Legal Proceedings regarding the Hunton Play. Investment in oil and gas properties The Company uses the full cost method of accounting for exploration and development activities as defined by the Securities and Exchange Commission (SEC). Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Oil and gas properties include costs that are excluded from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and include non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. The Company allocates a portion of its acquisition costs to unevaluated properties based on relative value. Costs are transferred to the full cost pool as the properties are evaluated over the life of the reservoir. As of June 30, 2016 the Company performed an assessment of evaluated and unevaluated costs in the cost pool to conform the cumulative value of the Full Cost Pool to the combined amount of Reserve Value of evaluated, producing properties (as determined by independent analysis at December 31, 2015), plus the lesser of cumulative historical cost or estimated realizable value of unevaluated leases and projects expected to commence production in future operating periods. The results of the assessment was an additional charge to Impairment Expense of $57,912. Capitalized interest Depreciation, depletion, and amortization Ceiling test The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors which are difficult to predict could also affect estimates of proved reserves in the future. Gains and losses on the sale of oil and gas properties are not generally reflected in income unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Sales of less than 100% of the Companys interest in the oil and gas property are treated as a reduction of the capital cost of the field, with no gain or loss recognized, as long as doing so does not significantly affect the unit-of-production depletion rate. Costs of retired equipment, net of salvage value, are usually charged to accumulated depreciation. Asset retirement obligations Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. Asset retirement obligation activity is disclosed in Note 10. Share-based compensation Revenue recognition Basic and diluted earnings (loss) per share Environmental laws and regulations Recent accounting pronouncements On August 27, 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of the Companys ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entitys ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. In May 2014, the FASB issued ASU 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements. In April 2014, the FASB issued ASU 2014-08, which includes amendments that change the requirements for reporting discontinued operations and require additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations - that is, a major effect on the organizations operations and financial results should be presented as discontinued operations. Additionally, the ASU requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The new standard is effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption would be permitted for any annual or interim period for which an entitys financial statements have not yet been made available for issuance. The adoption of this guidance is not expected to have an impact on the Companys consolidated financial statements. |
4. RELATED PARTY PAYABLES
4. RELATED PARTY PAYABLES | 6 Months Ended |
Jun. 30, 2016 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY PAYABLES | As of June 30, 2016, related party payables consisted of accrued and unpaid compensation to two of our executive officers totaling $90,000 and a Director Fee payable to one of our Directors, Mr. Edward J. Devereaux of $36,112. Mr. Devereaux elected to receive $50,000 of the Director Fee in cash when funds are available. As of June 30, 2016 $13,888 had been paid to Mr. Devereaux. Additionally, Gregory McCabe, who became a Director in July, 2016, advanced the Company $150,000 as a short term loan in June, 2016. Subsequent to June 30, 2016 these funds were applied as consideration for Series C Convertible Preferred Stock issued to Mr. McCabe. On November 4, 2014, Eunis L. Shockey, a member of the Board of directors, loaned us $500,000 under a 30 day promissory note. The promissory note accrues interest at an annual rate of 10%. The balance of the note at June 30, 2016 was $131,250. The due date of the note is December 31, 2016. |
5. COMMITMENTS AND CONTINGENCIE
5. COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | The Company is subject to contingencies as a result of environmental laws and regulations. Present and future environmental laws and regulations applicable to the Companys operations could require substantial capital expenditures or could adversely affect its operations in other ways that cannot be predicted at this time. As of June 30, 2016, no amounts had been recorded because no specific liability has been identified that is reasonably probable of requiring the Company to fund any future material amounts. |
6. STOCKHOLDERS' EQUITY
6. STOCKHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2016 | |
Stockholders' equity: | |
STOCKHOLDERS' EQUITY | During the three months ended June 30, 2016 the Company issued 489,535 shares of common stock as compensation for consulting services, with total value of $357,301. During the three months ended June 30, 2016 the Company issued 690,000 shares of common stock in connection with oil and gas lease related costs of $512,200. During the three months ended June 30, 2016, the Company issued 8,413,044 shares of common stock in conversion of Preferred Stock valued at $9,675,000. During the three months ended June 30, 2016, the Company issued 794,942 shares of common stock in exercise of warrants at $.50 per share in connection with an offering to warrant holders dated June 16, 2016 to exercise warrants at the reduced exercise price of $.50 per share regardless of the original exercise price of warrants they were holding. The offering was scheduled to close on June 30, 2016, however the Company elected to extend the expiration of the offering to July 15, 2016. Holders exercised an additional 2,069,065 warrants in July. Any warrants not exercised within the offering period retained their original terms including the original exercise price. The exercise price adjustment was considered as a debt agreement modification for accounting purposes. The adjustment arising from the comparison of the fair value of the warrants at their original grant date to the fair value recalculated at the modification date (the re pricing date) was $9,070. During the three months ended June 30, 2016, the Company issued 189,861 shares of common stock for dividends on preferred stock with an aggregate value of $218,340. During the three months ended June 30, 2016, the Company vested 2,487,500 stock options and warrants as compensation for services, with a total value of $2,714,125. During the three months ended June 30, 2016, the Company issued 1,925,000 warrants in connection with oil and gas lease related costs of $1,091,000. During the three months ended June 30, 2016, the Company issued 100,000 warrants in connection with renewal of a loan from a Director valued at $53,000. A summary of stock options and warrants outstanding as of June 30, 2016 by exercise price and year of expiration is presented below: Exercise Expiration Date in Price 2016 2017 2018 2019 2020 2021 Total $0.50 800,000 800,000 $0.70 850,000 850,000 $0.77 100,000 100,000 $1.00 - 150,000 - 161,617 1,500,000 1,811,617 $1.08 37,500 37,500 $1.40 1,682,606 1,682,606 $1.57 5,625,000 5,625,000 $1.73 100,000 100,000 $1.75 102,857 - - - 102,857 $1.79 337,500 337,500 $1.80 1,350,000 1,350,000 $2.00 702,414 126,000 1,437,809 - 2,266,223 $2.03 2,000,000 2,000,000 $2.09 - - 2,800,000 - 2,800,000 $2.23 892,857 892,857 $2.29 120,000 120,000 $2.31 500,000 500,000 $2.50 100,000 - - 35,211 135,211 $2.82 - - 38,174 - 38,174 $3.00 100,000 - - - 100,000 $3.50 15,000 15,000 $4.50 - - - 700,000 700,000 $5.00 8,391 170,000 - - 178,391 $5.05 40,000 40,000 $6.00 - - 565,625 205,585 771,210 $7.00 - - - 700,000 700,000 1,013,662 486,000 8,361,608 1,954,913 10,737,963 1,500,000 24,054,146 At June 30, 2016 the Company had reserved 24,054,146 shares for future exercise of warrants. Warrants issued in relation to the promissory notes issued (see note 9) were valued using the Black Scholes Option Pricing Model. The assumptions used in calculating the fair value of the warrants issued are as follows: Risk-free interest rate 0.78% Expected volatility of common stock 191% - 253% Dividend yield 0.00% Discount due to lack of marketability 20-30% Expected life of warrant 3 years - 5 years |
7. CAPITALIZED COSTS
7. CAPITALIZED COSTS | 6 Months Ended |
Jun. 30, 2016 | |
Extractive Industries [Abstract] | |
7. CAPITALIZED COSTS | The following table presents the capitalized costs of the Company as of June 30, 2016 and December 31, 2015: 2016 2015 Evaluated costs subject to amortization $ 11,371,543 $ 24,177,851 Unevaluated costs 11,174,296 9,677,425 Accumulated impairment expense (10,279,142 ) (22,783,989 ) Total capitalized costs 12,266,697 11,071,287 Less accumulated depreciation, depletion and amortization (2,953,978 ) (4,013,616 ) Net capitalized costs $ 9,312,719 $ 7,057,671 Unevaluated costs as of June 30, 2016 include cumulative costs on developing projects including the Orogrande and Hazel Projects in West Texas and adjusted costs of nonproducing leases in Oklahoma. |
8. INCOME TAXES
8. INCOME TAXES | 6 Months Ended |
Jun. 30, 2016 | |
Income Taxes | |
Income Taxes | Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established to reduce deferred tax assets if it is more likely than not that the related tax benefits will not be realized. The Company has placed a 100% valuation allowance against the net deferred tax asset because future realization of these assets is not assured. Authoritative guidance for uncertainty in income taxes requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an examination. Management has reviewed the Companys tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. The Companys tax returns remain subject to Federal and State tax examinations for the years 2012 through 2015. Generally, the applicable statutes of limitation are three to four years from their respective filings. Estimated interest and penalties related to potential underpayment on any unrecognized tax benefits are classified as a component of tax expense in the statement of operation. The Company has not recorded any interest or penalties associated with unrecognized tax benefits for any periods covered by these financial statements. The Company had a net deferred tax asset related to federal net operating loss carry forwards at June 30, 2016 of $25,142,099 available to offset future taxable income. The federal net operating loss carry forward will begin to expire in 2030. Realization of the deferred tax asset is dependent, in part, on generating sufficient taxable income prior to expiration of the loss carry forwards. The Company has placed a 100% valuation allowance against the net deferred tax asset because future realization of these assets is not assured. |
9. PROMISSORY NOTES
9. PROMISSORY NOTES | 6 Months Ended |
Jun. 30, 2016 | |
PROMISSORY NOTES | |
Promissory Notes | During the quarter ended June 30, 2014, the Company issued $3,197,500 in principal value of 12% Series B Convertible Unsecured Promissory Notes. The 12% Notes are due and payable on June 30, 2017 and provide for conversion into common stock at a price of $4.50 per share and included the issuance of one warrant for each $22.50 of principal amount purchased. The Company issued a total of 142,111 of these five-year warrants to purchase common stock at an exercise price of $6.00 per share. The value of the warrant shares was $405,016 and the amount recorded for the beneficial conversion feature was $195,466. These amounts were recorded as a discount on the 12% Notes. During the quarter ended September 30, 2014, the Company issued an additional $1,372,000 in principal value of 12% Series B Convertible Unsecured Promissory Notes. The 12% Notes are due and payable on June 30, 2017 and provide for conversion into common stock at a price of $4.50 per share and included the issuance of one warrant for each $22.50 of principal amount purchased. The Company issued a total of 60,974 of these five-year warrants to purchase common stock at an exercise price of $6.00 per share. The value of the warrant shares was $157,388 and the amount recorded for the beneficial conversion feature was $-0-. These amounts were recorded as a discount on the 12% Notes. During the fourth quarter of 2015, $1 million in note principal was converted into common stock. The total outstanding balance of Series B Notes at June 30, 2016 was $3,569,500. Notes Payable within one year The Company was obligated on a short term note payable in the amount of $105,020 as of June 30, 2016. The Note was paid in July, 2016. The note payable to a related party of $131,250 is payable with interest to a Director on December 31, 2016. |
10. ASSET RETIREMENT OBLIGATION
10. ASSET RETIREMENT OBLIGATIONS | 6 Months Ended |
Jun. 30, 2016 | |
ASSET RETIREMENT OBLIGATIONS | |
ASSET RETIREMENT OBLIGATIONS | The following is a reconciliation of the asset retirement obligation liability through June 30, 2016: Asset retirement obligation December 31, 2014 $ 35,951 Accretion Expense 1,107 Asset retirement obligation March 31, 2015 $ 37,058 Accretion Expense 819 Removal of ARO for wells sold (1,152 ) Asset retirement obligation June 30, 2015 $ 36,725 Accretion Expense 819 Asset retirement obligation September 30, 2015 $ 37,544 Accretion Expense 747 Removal of ARO for wells sold (9,208 ) Asset retirement obligation December 31, 2015 $ 29,083 Accretion Expense 747 Asset retirement obligation March 31, 2016 $ 29,830 Removal of ARO for wells sold (28,201 ) Accretion Expense 41 Asset retirement obligation June 30, 2016 $ 1,670 |
11. SUBSEQUENT EVENTS
11. SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2016 | |
Subsequent Events [Abstract] | |
11. SUBSEQUENT EVENTS | Divestiture of Assets In August, 2016 the Company entered into an agreement to assign its interest in the Ring Energy project in Kansas to its joint venture partner in exchange for a release from a $1,500,000 drilling commitment, release from future plugging and abandonment liability and cancellation of an account payable of $100,500. Three wells were producing on the property with combined daily production of less than five barrels per day. As of June 30, 2016, $5,355,705 was specifically allocated to the Ring properties from accumulated impairment recorded in prior periods to adjust the book value of Ring to the amount realized from the transaction in August, 2016. No additional impairment was required. Continuance of Offering to Warrant Holders On June 16, 2016 an offering to warrant holders was circulated to allow holders to exercise warrants at the reduced exercise price of $.50 per share regardless of the original exercise price of warrants they were holding. The offering was scheduled to close on June 30, 2016. The Company, however, elected to extend the expiration of the offering to July 15, 2016 at which date the offering was closed. Holders exercised 2,069,065 warrants in July. Any warrants not exercised within the offering period retained their original terms including the original exercise price. Preferred Series C Offering On July 8, 2016, we sold a total of 10,000 shares of Series C Convertible Preferred Stock (the Series C Preferred) to certain investors at a purchase price of $100 per share for total consideration of $1,000,000. We filed the Certificate of Designation for the Series C Preferred with the Secretary of State of Nevada on July 8, 2016. The designations, preferences, limitations, restrictions and relative rights of the Series C Preferred are as follows: (i) a stated value of $100 per share; (ii) mandatory conversion on the earlier of 92 days after the spud date of Hazel Prospect or October 13, 2016, with each holder having the right to convert at its election any time before that; (iii) a conversion price of $1.01 per share of common stock; (iv) each holder has the right to convert its shares into a proportionate heads up working interest in the Hazel Prospect, provided such election is made prior to the mandatory stock conversion date described in (ii) above, which working interest will be determined by dividing the number of shares the holder is converting by 10,000 and multiplying the result by one-third; (v) no rights to dividends; (vi) no voting rights; and (vii) in the event of any voluntary or involuntary liquidation, dissolution or winding up, the holders will be entitled to be paid out of the assets available for distribution to our stockholders, before any payment is to be made to the holders of common stock, but after the payment to the holders of Series B Convertible Preferred Stock. |
3. SIGNIFICANT ACCOUNTING POL17
3. SIGNIFICANT ACCOUNTING POLICIES (POLICIES) | 6 Months Ended |
Jun. 30, 2016 | |
SIGNIFICANT ACCOUNTING POLICIES (POLICIES) | |
Use of estimates | The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and certain assumptions that affect the amounts reported in these consolidated financial statements and accompanying notes. Actual results could differ from these estimates. |
Basis of presentation | The financial statements are presented on a consolidated basis and include all of the accounts of Torchlight Energy Resources Inc. and its wholly owned subsidiaries, Torchlight Energy, Inc., Torchlight Energy Operating, LLC, and Hudspeth Oil Corporation. All significant intercompany balances and transactions have been eliminated. |
Risks and uncertainties | The Companys operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging business, including the potential risk of business failure. |
Concentration of risks | The Companys cash is placed with a highly rated financial institution, and the Company periodically reviews the credit worthiness of the financial institutions with which it does business. At times the Companys cash balances are in excess of amounts guaranteed by the Federal Deposit Insurance Corporation. |
Fair value of financial instruments | Financial instruments consist of cash, accounts receivable, accounts payable, notes payable to related party, and convertible promissory notes. The estimated fair values of cash, accounts receivable, accounts payable, and related party payables approximate the carrying amount due to the relatively short maturity of these instruments. The carrying amounts of the convertible promissory notes approximate their fair value giving affect for the term of the note and the effective interest rates. For assets and liabilities that require re-measurement to fair value the Company categorizes them in a three-level fair value hierarchy as follows: ·Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. ·Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration. ·Level 3 inputs are unobservable inputs based on managements own assumptions used to measure assets and liabilities at fair value. A financial asset or liabilitys classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. |
Accounts receivable | Accounts receivable consist of uncollateralized oil and natural gas revenues due under normal trade terms, as well as amounts due from working interest owners of oil and gas properties for their share of expenses paid on their behalf by the Company. Management reviews receivables periodically and reduces the carrying amount by a valuation allowance that reflects managements best estimate of the amount that may not be collectible. As of June 30, 2016 and December 31, 2015 no valuation allowance was considered necessary. As of December 31, 2015, the Company had a $419,839 account receivable from Husky Ventures for the estimated balance of the sale proceeds from the sale of the Chisholm Trail properties in fourth quarter, 2015. The Chisholm Trail properties were sold to Husky Ventures who then included them with the Husky interests in Chisholm Trail and then entered into a sale agreement with Gastar Exploration Inc. for the combined Torchlight and Husky interests. Receipt of the balance of the sale proceeds was subject to final determination of mineral lease classification and was to occur by February 28, 2016. On June 14, 2016, after the lawsuit that is described in Part II Item 1. Legal Proceedings regarding the Hunton Play, the Company received and subsequently deposited a check from Husky Ventures in the amount of $520,400. Husky Ventures designated that the check was in full satisfaction of its obligations under the transaction in which the Company sold the Chisholm Trail properties as described above. The Company does not believe the check is in full satisfaction of Husky Venturess obligations, including but not limited to that Husky Ventures has provided insufficient information for the Company regarding this transaction. The Company is currently pursuing claims against Husky Ventures, and others, related to this transaction and intends to continue to pursue those claims as described further in Part II Item 1. Legal Proceedings regarding the Hunton Play. |
Investment in oil and gas properties | The Company uses the full cost method of accounting for exploration and development activities as defined by the Securities and Exchange Commission (SEC). Under this method of accounting, the costs of unsuccessful, as well as successful, exploration and development activities are capitalized as properties and equipment. This includes any internal costs that are directly related to property acquisition, exploration and development activities but does not include any costs related to production, general corporate overhead or similar activities. Gain or loss on the sale or other disposition of oil and gas properties is not recognized, unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Oil and gas properties include costs that are excluded from costs being depleted or amortized. Oil and natural gas property costs excluded represent investments in unevaluated properties and include non-producing leasehold, geological, and geophysical costs associated with leasehold or drilling interests and exploration drilling costs. The Company allocates a portion of its acquisition costs to unevaluated properties based on relative value. Costs are transferred to the full cost pool as the properties are evaluated over the life of the reservoir. As of June 30, 2016 the Company performed an assessment of evaluated and unevaluated costs in the cost pool to conform the cumulative value of the Full Cost Pool to the combined amount of Reserve Value of evaluated, producing properties (as determined by independent analysis at December 31, 2015), plus the lesser of cumulative historical cost or estimated realizable value of unevaluated leases and projects expected to commence production in future operating periods. The results of the assessment was an additional charge to Impairment Expense of $57,912. |
Capitalized interest | The Company capitalizes interest on unevaluated properties during the periods in which they are excluded from costs being depleted or amortized. During the periods ended June 30, 2016 and June 30, 2015, the Company capitalized $157,581 and $395,738, respectively, of interest on unevaluated properties. |
Depreciation, depletion and amortization | The depreciable base for oil and natural gas properties includes the sum of all capitalized costs net of accumulated depreciation, depletion, and amortization (DD&A), estimated future development costs and asset retirement costs not included in oil and natural gas properties, less costs excluded from amortization. The depreciable base of oil and natural gas properties is amortized on a unit-of-production method. |
Ceiling test | Future production volumes from oil and gas properties are a significant factor in determining the full cost ceiling limitation of capitalized costs. Under the full cost method of accounting, the Company is required to periodically perform a ceiling test that determines a limit on the book value of oil and gas properties. If the net capitalized cost of proved oil and gas properties, net of related deferred income taxes, plus the cost of unproved oil and gas properties, exceeds the present value of estimated future net cash flows discounted at 10 percent, net of related tax affects, plus the cost of unproved oil and gas properties, the excess is charged to expense and reflected as additional accumulated DD&A. The ceiling test calculation uses a commodity price assumption which is based on the unweighted arithmetic average of the price on the first day of each month for each month within the prior 12 month period and excludes future cash outflows related to estimated abandonment costs. The Company recognized impairment of $22,438,114 on its oil and gas properties during the three months ended June 30, 2015 and an additional impairment at December 31, 2015 of $3,236,009 for a total impairment adjustment for 2015 of $25,674,123. Impairment in the amount of $57,912 was recognized at June 30, 2016 as a result of the Companys assessment. Due to the volatility of commodity prices, should oil and natural gas prices decline in the future, it is possible that a write-down could occur. Proved reserves are estimated quantities of crude oil, natural gas, and natural gas liquids, which geological and engineering data demonstrate with reasonable certainty to be recoverable from known reservoirs under existing economic and operating conditions. The independent engineering estimates include only those amounts considered to be proved reserves and do not include additional amounts which may result from new discoveries in the future, or from application of secondary and tertiary recovery processes where facilities are not in place or for which transportation and/or marketing contracts are not in place. Estimated reserves to be developed through secondary or tertiary recovery processes are classified as unevaluated properties. The determination of oil and gas reserves is a subjective process, and the accuracy of any reserve estimate depends on the quality of available data and the application of engineering and geological interpretation and judgment. Estimates of economically recoverable reserves and future net cash flows depend on a number of variable factors and assumptions that are difficult to predict and may vary considerably from actual results. In particular, reserve estimates for wells with limited or no production history are less reliable than those based on actual production. Subsequent re-evaluation of reserves and cost estimates related to future development of proved oil and gas reserves could result in significant revisions to proved reserves. Other issues, such as changes in regulatory requirements, technological advances, and other factors which are difficult to predict could also affect estimates of proved reserves in the future. Gains and losses on the sale of oil and gas properties are not generally reflected in income unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves. Sales of less than 100% of the Companys interest in the oil and gas property are treated as a reduction of the capital cost of the field, with no gain or loss recognized, as long as doing so does not significantly affect the unit-of-production depletion rate. Costs of retired equipment, net of salvage value, are usually charged to accumulated depreciation. |
Asset retirement obligations | Accounting principles require that the fair value of a liability for an assets retirement obligation (ARO) be recorded in the period in which it is incurred if a reasonable estimate of fair value can be made, and that the corresponding cost be capitalized as part of the carrying amount of the related long-lived asset. The liability is accreted to its then-present value each subsequent period, and the capitalized cost is depleted over the useful life of the related asset. Abandonment cost incurred is recorded as a reduction to the ARO liability. Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental, and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. Asset retirement obligation activity is disclosed in Note 10. |
Share-Based Compensation | Compensation cost for equity awards is based on the fair value of the equity instrument on the date of grant and is recognized over the period during which an employee is required to provide service in exchange for the award. Compensation cost for liability awards is based on the fair value of the vested award at the end of each period. |
Basic and Diluted Earnings (Loss) Per Share | Basic earnings (loss) per common share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per common share is computed in the same way as basic earnings (loss) per common share except that the denominator is increased to include the number of additional common shares that would be outstanding if all potential common shares had been issued and if the additional common shares were dilutive. The Company has not included potentially dilutive securities in the calculation of loss per share for any periods presented as the effects would be anti-dilutive. |
Environmental laws and regulations | The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations. |
Recent accounting pronouncements | On August 27, 2014, the FASB issued ASU 2014-15, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of the Companys ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entitys ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. In May 2014, the FASB issued ASU 2014-09 that introduces a new five-step revenue recognition model in which an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also requires disclosures sufficient to enable users to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers, including qualitative and quantitative disclosures about contracts with customers, significant judgments and changes in judgments, and assets recognized from the costs to obtain or fulfill a contract. This standard is effective for fiscal years beginning after December 15, 2017, including interim periods within that reporting period. The Company is currently evaluating the new guidance to determine the impact it will have on its consolidated financial statements. In April 2014, the FASB issued ASU 2014-08, which includes amendments that change the requirements for reporting discontinued operations and require additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations - that is, a major effect on the organizations operations and financial results should be presented as discontinued operations. Additionally, the ASU requires expanded disclosures about discontinued operations that will provide financial statement users with more information about the assets, liabilities, income, and expenses of discontinued operations. The new standard is effective in the first quarter of 2015 for public organizations with calendar year ends. Early adoption would be permitted for any annual or interim period for which an entitys financial statements have not yet been made available for issuance. The adoption of this guidance is not expected to have an impact on the Companys consolidated financial statements. Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on the Companys financial position or results from operations. |
Subsequent Events | The Company evaluated subsequent events through August 15, 2016, the date of issuance of the financial statements. Subsequent events are disclosed in Note 11. |
6. STOCKHOLDERS' EQUITY (Tables
6. STOCKHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
STOCKHOLDERS' EQUITY (TABLES) | |
Summary of warrant activity | Exercise Expiration Date in Price 2016 2017 2018 2019 2020 2021 Total $ 0.50 800,000 800,000 $ 0.70 850,000 850,000 $ 0.77 100,000 100,000 $ 1.00 - 150,000 - 161,617 1,500,000 1,811,617 $ 1.08 37,500 37,500 $ 1.40 1,682,606 1,682,606 $ 1.57 5,625,000 5,625,000 $ 1.73 100,000 100,000 $ 1.75 102,857 - - - 102,857 $ 1.79 337,500 337,500 $ 1.80 1,350,000 1,350,000 $ 2.00 702,414 126,000 1,437,809 - 2,266,223 $ 2.03 2,000,000 2,000,000 $ 2.09 - - 2,800,000 - 2,800,000 $ 2.23 892,857 892,857 $ 2.29 120,000 120,000 $ 2.31 500,000 500,000 $ 2.50 100,000 - - 35,211 135,211 $ 2.82 - - 38,174 - 38,174 $ 3.00 100,000 - - - 100,000 $ 3.50 15,000 15,000 $ 4.50 - - - 700,000 700,000 $ 5.00 8,391 170,000 - - 178,391 $ 5.05 40,000 40,000 $ 6.00 - - 565,625 205,585 771,210 $ 7.00 - - - 700,000 700,000 1,013,662 486,000 8,361,608 1,954,913 10,737,963 1,500,000 24,054,146 |
Assumptions used in calculating the fair value of the warrants | Risk-free interest rate 0.78% Expected volatility of common stock 191% - 253% Dividend yield 0.00% Discount due to lack of marketability 20-30% Expected life of warrant 3 years - 5 years |
7. CAPITALIZED COSTS (Tables)
7. CAPITALIZED COSTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
Capitalized Costs (Table): | |
Capitalized Costs (Table) | 2016 2015 Evaluated costs subject to amortization $ 11,371,543 $ 24,177,851 Unevaluated costs 11,174,296 9,677,425 Accumulated impairment expense (10,279,142 ) (22,783,989 ) Total capitalized costs 12,266,697 11,071,287 Less accumulated depreciation, depletion and amortization (2,953,978 ) (4,013,616 ) Net capitalized costs $ 9,312,719 $ 7,057,671 |
10. ASSET RETIREMENT OBLIGATI20
10. ASSET RETIREMENT OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
ASSET RETIREMENT OBLIGATIONS (Tables) | |
Asset retirement obligation | Asset retirement obligation December 31, 2014 $ 35,951 Accretion Expense 1,107 Asset retirement obligation March 31, 2015 $ 37,058 Accretion Expense 819 Removal of ARO for wells sold (1,152 ) Asset retirement obligation June 30, 2015 $ 36,725 Accretion Expense 819 Asset retirement obligation September 30, 2015 $ 37,544 Accretion Expense 747 Removal of ARO for wells sold (9,208 ) Asset retirement obligation December 31, 2015 $ 29,083 Accretion Expense 747 Asset retirement obligation March 31, 2016 $ 29,830 Removal of ARO for wells sold (28,201 ) Accretion Expense 41 Asset retirement obligation June 30, 2016 $ 1,670 |
2. Going Concern (Details Narra
2. Going Concern (Details Narrative) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Going Concern Accumulated Losses | ||
Accumulated deficit | $ (80,688,892) | $ (74,903,439) |
6. STOCKHOLDERS' EQUITY (Detail
6. STOCKHOLDERS' EQUITY (Details) | 6 Months Ended |
Jun. 30, 2016 | |
Risk-free interest rate | 0.78% |
Dividend yield | 0.00% |
Minimum | |
Expected volatility of common stock | 191.00% |
Discount due to lack of marketability | 20.00% |
Expected life of warrant in years | 3 years |
Maximum | |
Expected volatility of common stock | 253.00% |
Discount due to lack of marketability | 30.00% |
Expected life of warrant in years | 5 years |
7. CAPITALIZED COSTS (Details)
7. CAPITALIZED COSTS (Details) - USD ($) | Jun. 30, 2016 | Dec. 31, 2015 |
Presents the capitalized costs as follows: | ||
Evaluated costs subject to amortization | $ 11,371,543 | $ 24,177,851 |
Unevaluated costs | 11,174,296 | 9,677,425 |
Impairment expense | (10,279,142) | (22,783,989) |
Total capitalized costs | 12,266,697 | 11,071,287 |
Less accumulated depreciation, depletion and amortization | (2,953,978) | (4,013,616) |
Net capitalized costs | $ 9,312,719 | $ 7,057,671 |
8. INCOME TAXES (Details Narrat
8. INCOME TAXES (Details Narrative) | Jun. 30, 2016USD ($) |
Income Taxes Operating loss carryforwards | |
Net operating loss carryforwards | $ 25,142,099 |
10. ASSET RETIREMENET OBLIGATIO
10. ASSET RETIREMENET OBLIGATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Mar. 31, 2015 | Jun. 30, 2015 | |
Asset Retiremenet Obligation Details | ||||||
Asset retirement obligation | $ 29,830 | $ 29,083 | $ 37,544 | $ 36,725 | $ 37,058 | $ 37,058 |
Estimated liabilities recorded | 0 | |||||
Accretion expense | 41 | 747 | 747 | 819 | 1,107 | 819 |
Removal of ARO for wells sold | (28,201) | (9,208) | (1,152) | |||
Asset retirement obligation | $ 1,670 | $ 29,830 | $ 29,083 | $ 37,544 | $ 37,058 | $ 36,725 |
Uncategorized Items - trch-2016
Label | Element | Value |
Cash and Cash Equivalents, at Carrying Value | us-gaap_CashAndCashEquivalentsAtCarryingValue | $ 12,088 |