Meta Materials (MMATQ) 10-K 31 Mar 17 2016 FY Annual report Financial data

Document and Entity Information

Document and Entity Information - USD ($)	12 Months Ended
	Dec. 31, 2016	Mar. 21, 2017	Jun. 30, 2016
Document and Entity Information
Entity Registrant Name	TORCHLIGHT ENERGY RESOURCES INC
Document Type	10-K
Document Period End Date	Dec. 31, 2016
Amendment Flag	false
Entity Central Index Key	1,431,959
Current Fiscal Year End Date	--12-31
Entity Public Float			$ 19,404,947
Entity Common Stock, Shares Outstanding		57,862,004
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	FY

CONSOLIDATED BALANCE SHEETS

CONSOLIDATED BALANCE SHEETS - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash	$ 1,769,499	$ 1,026,600
Accounts receivable	603,446	741,653
Production revenue receivable	7,325	199,317
Note receivable	0	613
Prepayments - development costs	583,347	0
Prepaid expenses	26,829	38,776
Total current assets	2,990,446	2,006,959
Oil and gas properties, net	9,392,288	7,057,671
Office equipment, net	29,848	43,110
Other Assets	21,066	80,306
TOTAL ASSETS	12,433,648	9,188,046
Current liabilities:
Accounts payable	422,684	1,153,185
Funds received pending settlement	520,400	0
Accrued payroll	565,176	590,100
Related party payables	237,044	130,000
Convertible promissory notes, ((Series B) net of discount of $91,379 at December 31, 2016	3,478,121	0
Note payable within one year - related party	0	205,000
Notes payable within one year	0	129,741
Due to working interest owners	54,320	103,364
Interest payable	6,049	173,710
Total current liabilities	5,283,794	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	7,051	29,083
Total Liabilities	5,290,845	5,805,772
Commitments and contingencies
Stockholders' equity:
Preferred stock, par value .001, 10,000,000 shares authorized; -0- issued and outstanding at December 31, 2016 134,000 issued and outstanding at December 31, 2015	0	134
Common stock, par value 0.001 per share; 100,000,000 shares authorized; 55,096,503 issued and outstanding at December 31, 2016 33,166,344 issued and outstanding at December 31, 2015	55,100	33,168
Additional paid-in capital	89,675,488	78,252,411
Accumulated deficit	(82,587,785)	(74,903,439)
Total stockholders' equity	7,142,803	3,382,274
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 12,433,648	$ 9,188,046

CONSOLIDATED BALANCE SHEETS (Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
ASSETS
Discount of Convertible promissory notes current	$ 91,379
Discount on Convertible promissory notes noncurrent	$ 0	$ 277,911
Preferred Stock, par value	$ 0.001	$ 0.001
Preferred Stock, shares authorized	10,000,000	10,000,000
Preferred Stock, shares issued	0	134,000
Preferred Stock, shares outstanding	0	134,000
Common Stock, par or stated value	$ 0.001	$ 0.001
Common Stock, shares authorized	100,000,000	100,000,000
Common Stock, shares issued	55,096,503	33,166,344
Common Stock, shares outstanding	55,096,503	33,166,344

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Revenue
Oil and gas sales	$ 354,390	$ 1,628,034
SWD and Royalties	0	6,274
Cost of revenue	(328,438)	(814,078)
Gross income	25,952	820,230
Operating expenses:
General and administrative expense	6,447,706	15,550,145
Depreciation, depletion and amortization	636,426	930,934
Impairment expense	70,080	25,674,123
Loss on sale	283,285	24,479
Total operating expenses	7,437,497	42,179,681
Other (income) expense
Interest income	(36)	0
Interest and accretion expense	272,837	1,893,427
Total other (income) expense	272,801	1,893,427
Net loss before taxes	(7,684,346)	(43,252,878)
Provision for income taxes	0	0
Net loss	$ (7,684,346)	$ (43,252,878)
Loss per share:
Basic and Diluted	$ (0.19)	$ (1.58)
Weighted average shares outstanding:
Basic and Diluted	43,122,514	27,897,794

CONSOLIDATED STATEMENT OF STOCK

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($)	Common Stock	Pref. Stock	Additional Paid-in Capital	Accumulated Deficit	Total
Begining balance, shares at Dec. 31, 2014	23,235,441
Begining balance, amount at Dec. 31, 2014	$ 23,237		$ 50,745,072	$ (31,650,561)	$ 19,117,745
Issuance of common stock for cash, shares	4,931,250				4,931,250
Issuance of common stock for cash, amount	$ 4,931		1,295,069		$ 1,300,000
Issuance of preferred stock for cash, shares		135,000			135,000
Issuance of preferred stock for cash, amount		$ 135	13,499,865		$ 13,500,000
Issuance of common stock for services, shares	2,447,696				2,477,696
Issuance of common stock for services, amount	$ 2,448		2,649,056		$ 2,651,504
Issuance of common stock - mineral interests, shares	30,000				30,000
Issuance of common stock - mineral interests, amount	$ 30		26,370		$ 26,400
Issuance of common stock in warrant exercise, shares	65,000				65,000
Issuance of common stock in warrant exercise, amount	$ 65		113,685		$ 113,750
Issuance of common stock for note interest, shares	162,860				162,860
Issuance of common stock for note interest, amount	$ 163		162,697		$ 162,860
Issuance of common stock for preferred dividends, shares	577,140				577,140
Issuance of common stock for preferred dividends, amount	$ 577		(577)		$ 0
Preferred dividends paid in cash			(120,427)		(120,427)
Warrants issued with promissory notes			467,800		$ 467,800
Common stock issued in conversion of notes, shares	1,600,000				1,600,000
Common stock issued in conversion of notes, amount	$ 1,600		1,148,400		$ 1,150,000
Common stock issued in part payment of bonuses, shares	30,000
Common stock issued in part payment of bonuses, amount	$ 30		39,870		39,900
Common stock issued in conversion of preferred stock, shares	86,957
Common stock issued in conversion of preferred stock, amount	87		99,913		100,000
Preferred stock cancelled in conversion, shares		(1,000)
Preferred stock cancelled in conversion, Amount		$ (1)	(99,999)		(100,000)
Warrants issued for services			8,225,619		8,225,619
Net loss				(43,252,878)	(43,252,878)
Ending balance, shares at Dec. 31, 2015	33,166,344	134,000
Ending balance, amount at Dec. 31, 2015	$ 33,168	$ 134	78,252,411	(74,903,439)	$ 3,382,274
Issuance of common stock for cash, shares	3,750,000				3,750,000
Issuance of common stock for cash, amount	$ 3,750		2,996,250		$ 3,000,000
Issuance of preferred stock for cash, amount		10	999,990		$ 1,000,000
Issuance of common stock for services, shares	768,832				768,832
Issuance of common stock for services, amount	$ 769		669,305		$ 670,074
Issuance of common stock - mineral interests, shares	2,824,881				2,824,881
Issuance of common stock - mineral interests, amount	$ 2,825		1,972,221		$ 1,975,046
Issuance of common stock in warrant exercise, shares	3,888,745				3,888,745
Issuance of common stock in warrant exercise, amount	$ 3,891		2,539,855		$ 2,543,746
Issuance of common stock for preferred dividends, shares	440,262				440,262
Issuance of common stock for preferred dividends, amount	$ 440		(440)		$ 0
Preferred dividends paid in cash			(320,724)		(320,724)
Warrants issued with lease interests			1,290,761		1,290,761
Warrants and Options issued for services			2,205,231		2,205,231
Lease interest conveyed in conversion of preferred stock,Amount		(10)	(999,990)		(1,000,000)
Common stock issued in conversion of preferred stock, shares	10,257,439	(134,000)
Common stock issued in conversion of preferred stock, amount	$ 10,257	$ (134)	(10,132)		(9)
Net loss				(7,684,346)	(7,684,346)
Warrants issued in connection with promissory note			80,750		80,750
Ending balance, shares at Dec. 31, 2016	55,096,503	55,100
Ending balance, amount at Dec. 31, 2016	$ 55,100		$ 89,675,488	$ (82,587,785)	$ 7,142,803

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOW - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Cash Flows From Operating Activities
Net loss	$ (7,684,346)	$ (43,252,878)
Adjustments to reconcile net loss to net cash from operations:
Stock based compensation	2,956,044	11,265,926
Accretion of convertible note discounts	186,532	1,395,103
Loss on sale of assets	283,285	24,479
Impairment expense	70,080	25,674,123
Depreciation, depletion and amortization	636,426	930,934
Change in:
Accounts receivable	138,207	(187,305)
Note receivable	613	515,135
Production revenue receivable	191,992	11,118
Prepayment of development costs	(1,583,347)	(290,398)
Prepaid expenses	11,946	(9,142)
Other assets	59,240	(8,860)
Accounts payable and accrued liabilities	(396,456)	1,024,098
Due to working interest owners	(49,044)	29,925
Funds received pending settlement	520,400	0
Interest payable	(167,661)	469,241
Net cash from operating activities	(4,826,089)	(2,408,501)
Cash Flows From Investing Activities
Investment in oil and gas properties	(2,293,497)	(5,224,748)
Acquisition of office equipment	(1,863)	(1,191)
Proceeds from sale of oil and gas properties	2,127,489	2,851,918
Net cash used in investing activities	(167,871)	(2,374,021)
Cash Flows From Financing Activities
Proceeds from short term advance	150,000	0
Repayment of short term advance	(150,000)	0
Proceeds from sale of common stock	3,000,000	1,300,000
Proceeds from sale of preferred stock	1,000,000	13,500,000
Preferred dividends paid in cash	(320,724)	(120,427)
Proceeds from warrant exercise	1,999,310	113,750
Proceeds from promissory notes	708,014	539,916
Repayment of convertible notes	0	(8,859,011)
Repayment of promissory notes	(649,741)	(844,893)
Net cash from financing activities	5,736,859	5,629,335
Net change in cash	742,899	846,813
Cash - beginning of period	1,026,600	179,787
Cash - end of period	1,769,499	1,026,600
Supplemental disclosure of cash flow information: (Non Cash Items
Common stock issued for mineral interests	1,975,046	26,400
Common stock issued in conversion of promissory notes	0	1,150,000
Common stock issued for unpaid compensation	0	39,900
Warrants issued for mineral interests	1,290,761	0
Cash paid for interest	$ 603,157	$ 919,272

1. NATURE OF BUSINESS

1. NATURE OF BUSINESS	12 Months Ended
	Dec. 31, 2016
Organization, Consolidation and Presentation of Financial Statements [Abstract]
NATURE OF BUSINESS	Torchlight Energy Resources, Inc. (“Company”) 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. We operate our business through our subsidiaries Torchlight Energy Inc., Torchlight Energy Operating, LLC, and Hudspeth Oil Corporation.

2. GOING CONCERN

2. GOING CONCERN	12 Months Ended
	Dec. 31, 2016
GOING CONCERN
GOING CONCERN	At December 31, 2016, the Company had not yet achieved profitable operations. We had a net loss of $7,684,346 million for the year ended December 31, 2016 and had accumulated losses of $82,587,785 since our inception. We expect to incur further losses in the development of our business. The Company had a working capital deficit as of December 31, 2016 of $(2,293,348). Negative working capital is exacerbated by the inclusion in current liabilities of the $3,478,121 outstanding balance of subordinated convertible notes which have a maturity date of June 30, 2017.These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company’s 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. Management’s plan to address the Company’s 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, or (3) participating in joint venture transactions with third parties. 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. These consolidated financial statements have been prepared assuming that the Company will continue as a going concern and therefore, the financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amount and classifications of liabilities that may result from the outcome of this uncertainty.

3. SIGNIFICANT ACCOUNTING POLIC

3. SIGNIFICANT ACCOUNTING POLICIES	12 Months Ended
	Dec. 31, 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 management’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement. Accounts receivable Oil and gas properties 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. Unevaluated properties are reviewed for impairment at least quarterly and are determined through an evaluation considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions. 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 Company’s 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. 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. 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. Income taxes - 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 Company’s tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. The Company’s tax returns remain subject to Federal and State tax examinations for all tax years since inception as none of the statutes have expired. 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. Share-based compensation The Company also issues equity awards to non-employees. The fair value of these option awards is estimated when the award recipient completes the contracted professional services. The Company recognizes expense for the estimated total value of the awards during the period from their issuance until performance completion, at which time the estimated expense is adjusted to the final value of the award as measured at performance completion. The Company values warrant and option awards using the Black-Scholes option pricing model. Revenue recognition Basic and diluted earnings (loss) per share – The loss available to common shareholders was determined by subtracting preferred dividends totaling $585,844 for 2016 and $930,169 for 2015 from each year's respective net loss. Environmental laws and regulations Recent accounting pronouncements Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers, In February 2016, the FASB, issued ASU, 2016-02, Leases Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on the Company’s financial position or results from operations. Subsequent events –

4. OIL & GAS PROPERTIES

4. OIL & GAS PROPERTIES	12 Months Ended
	Dec. 31, 2016
Oil Gas Properties
OIL & GAS PROPERTIES	The following table presents the capitalized costs for oil & gas properties of the Company as of December 31, 2016 and 2015: 2016 2015 Evaluated costs subject to amortization $ 1,470,939 $ 24,177,851 Unevaluated costs 13,376,742 9,677,425 Total capitalized costs 14,847,681 33,855,276 Less accumulated depreciation, depletion and amortization (5,455,393 ) (26,797,605 ) Total oil and gas properties $ 9,392,288 $ 7,057,671 The Company recognized impairment expense of $25,674,123 on its oil and gas properties during 2015. An additional impairment of $70,080 was expensed in 2016. 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. During 2016 the Company sold its Cimarron and Marcelina properties. Those sales of the Cimarron and the Marcelina properties in 2016 represented substantial percentages of reserves at the time of each sale and are also presented on the Statement of Operations for 2016. Proceeds from the sale of Cimarron and Marcelina properties were $750,000 and $877,489 respectively. The combined loss on sale for 2016 was $283,285.

5. RELATED PARTY PAYABLES

5. RELATED PARTY PAYABLES	12 Months Ended
	Dec. 31, 2016
RELATED PARTY PAYABLES.
RELATED PARTY PAYABLES	As of December 31, 2016, related party payables consisted of accrued and unpaid compensation to one of our executive officers totaling $45,000 and $192,044 in Director Fees payable to our Directors.

6. COMMITMENTS AND CONTINGENCIE

6. COMMITMENTS AND CONTINGENCIES	12 Months Ended
	Dec. 31, 2016
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES	Leases The Company has a noncancelable lease for its office premises that expires on November 30, 2019 and which requires the payment of base lease amounts and executory costs such as taxes, maintenance and insurance. Rental expense for lease was $81,595 and $87,037 for the year ended December 31, 2016 and 2015, respectively. Approximate future minimum rental commitments under the office premises lease are: For the Year Ending December 31, Amount 2017 $ 79,658 2018 $ 81,248 2019 $ 75,814 $ 236,720 Environmental matters The Company is subject to contingencies as a result of environmental laws and regulations. Present and future environmental laws and regulations applicable to the Company’s operations could require substantial capital expenditures or could adversely affect its operations in other ways that cannot be predicted at this time. As of December 31, 2016 and 2015, 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. Litigation With respect to Oil and Gas properties previously owned by the Company in Central Oklahoma, Torchlight Energy Resources, Inc. and its subsidiary Torchlight Energy, Inc. (“Torchlight”) has pending in the 429th judicial district court in Collin County, Texas a lawsuit against Husky Ventures, Inc., Charles V. Long, Silverstar of Nevada, Inc., Gastar Exploration Inc., J. Russell Porter, Michael A. Gerlich, and Jerry R. Schuyler that was originally filed in May 2016 (previous defendants April Glidewell, Maximus Exploration, LLC, Atwood Acquisitions, LLC and John M. Selser, Sr have been non-suited without prejudice to re-filing the claims). In the lawsuit, Torchlight alleges, among other things, that the defendants acted improperly in connection with multiple transactions, and that the defendants misrepresented and omitted material information to Torchlight with respect to these transactions. The lawsuit seeks damages arising from 15 different causes of action, including without limitation, violations of the Texas Securities Act, fraud, negligent misrepresentation, breach of fiduciary duty, breach of contract, unjust enrichment and tortious interference. The lawsuit also seeks a complete accounting as to how Torchight’s investment funds were used, including all transfers between and among the defendants. Torchlight is seeking the full amount of our damages on $20,000,000 invested. Defendant Gastar has asserted a breach of contract counterclaim against Torchlight related to a release contained in one of the agreements between Torchlight and Husky in which Gastar claims to be a third-party beneficiary. Torchlight is claiming that this agreement should be rescinded, and in any event, that the release is unenforceable. 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 was filed 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 Ventures’s obligations, including but not limited to that Husky Ventures has provided insufficient information for the Company regarding this transaction.

7. STOCKHOLDERS' EQUITY

7. STOCKHOLDERS' EQUITY	12 Months Ended
	Dec. 31, 2016
Stockholders' equity:
STOCKHOLDERS' EQUITY	Common Stock During the years ended December 31, 2016 and 2015, the Company issued 3,750,000 and 4,931,250 shares of common stock, respectively, for cash of $3,000,000 and $1,300,000. During the years ended December 31, 2016 and 2015, the Company issued 768,832 and 2,477,696 shares of common stock with total values of $670,074 and $2,651,504, respectively, as compensation for services. During the year ended December 31, 2016 and 2015 the Company issued 10,257,439 and 86,957 shares of common stock, respectively, in conversions of preferred stock valued at $13,399,992 and $100,000. During the year ended December 31, 2015 the Company issued 1,600,000 shares of common stock, in conversions of notes payable valued $1,150,000 and 162,860 shares of common stock, respectively, for interest on notes payable of $162,860. During the year ended December 31, 2016 and 2015 the Company issued 3,888,745 and 65,000 shares of common stock, respectively, resulting from warrant exercises for consideration totaling $2,543,746 and $113,750. Preferred Stock During the year ended December 31, 2016 the Company issued 10,000 shares of Series C preferred stock for $1,000,000 in cash. The proceeds were deposited as a prepayment with the operator for development cost of the Flying B #2 well in the Hazel Project. The preferred holders exercised their option in fourth quarter of 2016 to convert their preferred shares into an aggregate 33.33% working interest in the Flying “B” #2 whereupon they received credit for the prepayment to their working interest joint interest billing accounts. During the year ended December 31, 2015, the Company issued 135,000 shares of preferred stock for cash of $13,500,000. During the year ended December 31, 2016 and 2015, the Company paid dividends on preferred stock in cash, respectively, of $320,724 and $120,427. In addition during the years 2016 and 2015, 440,262 and 577,140 shares of common stock, respectively, were issued for dividends on preferred stock. Warrants and Options During the years ended December 31, 2016 and 2015, the Company issued/vested 6,437,267 and 7,015,779 warrants and options with total values of $2,205,231 and $7,797,619, respectively, as compensation for services. During the year ended December 31, 2016, and 2015, the Company issued 137,500 and 770,000 warrants, respectively, in connection with financing transactions, with total values of $80,750 and $368,300. During the year ended December 31, 2015 the Company issued 2,615,676 warrants in connection with the issuance of preferred stock. During the year ended December 31, 2016 and 2015, the Company issued 3,412,525 and 750,000 warrants and 2,824,881 and 30,000 shares of common stock, respectively, in connection with the acquisition of lease interests, respectively, with total value of $3,265,807 and $553,900. A summary of warrants outstanding as of December 31, 2016 by exercise price and year of expiration is presented below: Exercise Expiration Date in Price 2017 2018 2019 2020 2021 Total $ 0.50 528,099 528,099 $ 0.70 1,700,000 1,700,000 $ 0.77 100,000 100,000 $ 1.00 150,000 - 54,366 1,500,000 1,704,366 $ 1.03 120,000 120,000 $ 1.08 37,500 37,500 $ 1.40 1,643,475 1,643,475 $ 1.73 100,000 100,000 $ 1.80 500,000 500,000 $ 2.00 126,000 1,906,249 - 2,032,249 $ 2.03 2,000,000 2,000,000 $ 2.09 - 2,800,000 - 2,800,000 $ 2.23 832,512 832,512 $ 2.29 120,000 120,000 $ 2.50 - - 35,211 35,211 $ 2.82 - 38,174 - 38,174 $ 3.50 15,000 15,000 $ 4.50 - - 700,000 700,000 $ 5.00 170,000 - - 170,000 $ 5.05 40,000 40,000 $ 6.00 - 523,123 22,580 545,703 $ 7.00 - - 700,000 700,000 486,000 8,015,645 1,664,657 4,675,987 1,620,000 16,462,289 A summary of stock options outstanding as of December 31, 2016 by exercise price and year of expiration is presented below: Exercise Expiration Date in Price 2017 2018 2019 2020 2021 Total $ 0.97 259,742 259,742 $ 1.57 - - - 5,997,163 - 5,997,163 $ 1.79 - - - 412,500 - 412,500 - - - 6,409,663 259,742 6,669,405 At December 31, 2016 the Company had reserved 23,131,694 shares for future exercise of warrants and options. Warrants and options issued were valued using the Black Scholes Option Pricing Model. The assumptions used in calculating the fair value of the warrants issued were as follows: 2016 Risk-free interest rate 0.78%-1.22% Expected volatility of common stock 101% - 189% Dividend yield 0.00% Discount due to lack of marketability 20-30% Expected life of warrant 3 years - 5 years 2015 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

8. INCOME TAXES

8. INCOME TAXES	12 Months Ended
	Dec. 31, 2016
Income Taxes
INCOME TAXES	The Company recorded no income tax provision for 2016 or 2015 because of losses incurred. The Company has placed a full valuation allowance against net deferred tax assets because future realization of these assets is not assured. The following is a reconciliation between the federal income tax benefit computed at the statutory federal income tax rate of 34% and actual income tax provision for the years ended December 31, 2016 and 2015: Year ended Year ended December 31, 2016 December 31, 2015 Federal income tax benefit at statutory rate $ (2,869,293 ) $ (14,705,979 ) Permanent differences 3,000 4,127 Other 4,096,947 (587,126 ) Change in valuation allowance (1,230,654 ) 15,288,978 Provision for income taxes $ - $ - The tax effects of temporary differences that gave rise to significant portions of deferred tax assets and liabilities at December 31, 2016 and December 31, 2015 are as follows: December 31, 2016 December 31, 2015 Deferred tax assets: Net operating loss carryforward $ 16,269,090 $ 11,443,389 Accruals 15,300 30,600 Reserves 7,156,559 5,883,263 Deferred tax liabilities: Intangible drilling and other costs for oil and gas properties (74,340 ) 7,240,011 Net deferred tax assets and liabilities 23,366,609 24,597,263 Less valuation allowance (23,366,609 ) (24,597,263 ) Total deferred tax assets and liabilities $ - $ - The Company has federal net operating loss carryforwards of $47,850,266 and $39,312,173 at December 31, 2016 and 2015, respectively. The federal net operating loss carryforwards will begin to expire in 2031. Realization of the deferred tax asset is dependent, in part, on generating sufficient taxable income prior to expiration of the loss carryforwards. The Company has placed a full valuation allowance against net deferred tax assets because future realization of these assets is not assured.

9. PROMISSORY NOTES

9. PROMISSORY NOTES	12 Months Ended
	Dec. 31, 2016
PROMISSORY NOTES
PROMISSORY NOTES	During 2014, the Company issued $4,569,500 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 203,085 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 $562,404 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 March 31, 2015, the Company amended a note with a holder of a $1,000,000 Series B Convertible Unsecured Promissory Note to reset the conversion price to $1.00. 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 December 31, 2016 was $3,569,500.

10. ASSET RETIREMENT OBLIGATION

10. ASSET RETIREMENT OBLIGATIONS	12 Months Ended
	Dec. 31, 2016
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS	The following is a reconciliation of the asset retirement obligation liability through December 31, 2016: Asset retirement obligation – December 31, 2014 $ 35,951 Accretion expense 3,492 Removal of ARO for wells sold (10,360 ) Asset retirement obligation – December 31, 2015 $ 29,083 Accretion expense 41 Removal of ARO for wells sold (22,073 ) Asset retirement obligation – December 31, 2016 $ 7,051

11. SUBSEQUENT EVENTS

11. SUBSEQUENT EVENTS	12 Months Ended
	Dec. 31, 2016
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	Acquisition of Additional Interest in the Hazel Project On January 30, 2017, we and our wholly-owned subsidiary, Torchlight Acquisition Corporation, a Texas corporation (“TAC”), entered into and closed an Agreement and Plan of Reorganization and Plan of Merger with Line Drive Energy, LLC, a Texas limited liability company (“Line Drive”), under which agreements TAC merged with and into Line Drive and the separate existence of TAC ceased, with Line Drive being the surviving organization and becoming our wholly-owned subsidiary. Line Drive, which was wholly-owned by Gregory McCabe, our Chairman, owned certain assets and securities, including approximately 40.66% of 12,000 gross acres in the Hazel Project and 521,739 warrants to purchase our common stock (which warrants had been assigned by Mr. McCabe to Line Drive). Under the merger transaction, our shares of common stock of TAC converted into a membership interest of Line Drive, the membership interest in Line Drive held by Mr. McCabe immediately prior to the transaction ceased to exist, and we issued Mr. McCabe 3,301,739 restricted shares of common stock as consideration therefor. Immediately after closing, the 521,739 warrants held by Line Drive were cancelled, which warrants had an exercise price of $1.40 per share and an expiration date of June 9, 2020. A Certificate of Merger for the merger transaction was filed with the Secretary of State of Texas on January 31, 2017. Also on January 30, 2017, our wholly-owned subsidiary, Torchlight Energy, Inc., a Nevada corporation (“TEI”), entered into and closed a Purchase and Sale Agreement with Wolfbone Investments, LLC, a Texas limited liability company (“Wolfbone”) which is wholly-owned by Gregory McCabe. Under the agreement, TEI acquired certain of Wolfbone’s Hazel Project assets, including its interest in the Flying B Ranch #1 well and the 40 acre unit surrounding the well, for consideration of $415,000, and additionally, Wolfbone caused to be cancelled a total of 2,780,000 warrants to purchase our common stock, including 1,500,000 warrants held by McCabe Petroleum Corporation, an entity owned by Mr. McCabe, and 1,280,000 warrants held by Green Hill Minerals, an entity owned by Mr. McCabe’s son, which warrant cancellations were effected through certain Warrant Cancellation Agreements. The 1,500,000 warrants held by McCabe Petroleum Corporation had an exercise price of $1.00 per share and an expiration date of April 4, 2021. The warrants held by Green Hill Minerals included 100,000 warrants with an exercise price of $1.73 and an expiration date of September 30, 2018 and 1,180,000 warrants with an exercise price of $0.70 and an expiration date of February 15, 2020. After the above transactions, our total ownership in the Hazel Project increased to a 74% working interest across all 12,000 gross acres.

3. SIGNIFICANT ACCOUNTING POL18

3. SIGNIFICANT ACCOUNTING POLICIES (Policies)	12 Months Ended
	Dec. 31, 2016
Accounting Policies [Abstract]
Use of estimates	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	Basis of presentation
Risks and uncertainties	Risks and uncertainties – The Company’s operations are subject to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating an emerging business, including the potential risk of business failure.
Concentration of risks	Concentration of risks
Fair value of financial instruments	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 management’s own assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.
Accounts receivable	Accounts receivable
Oil and gas properties	Oil and gas properties 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. Unevaluated properties are reviewed for impairment at least quarterly and are determined through an evaluation considering, among other factors, seismic data, requirements to relinquish acreage, drilling results, remaining time in the commitment period, remaining capital plan, and political, economic, and market conditions. 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 Company’s 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.
Capitalized interest	Capitalized interest –
Depreciation, depletion and amortization	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	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.
Asset retirement obligations	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.
Income taxes	Income taxes - 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 Company’s tax positions and determined there were no uncertain tax positions requiring recognition in the consolidated financial statements. The Company’s tax returns remain subject to Federal and State tax examinations for all tax years since inception as none of the statutes have expired. 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.
Share-based compensation	Share-based compensation The Company also issues equity awards to non-employees. The fair value of these option awards is estimated when the award recipient completes the contracted professional services. The Company recognizes expense for the estimated total value of the awards during the period from their issuance until performance completion, at which time the estimated expense is adjusted to the final value of the award as measured at performance completion. The Company values warrant and option awards using the Black-Scholes option pricing model.
Revenue recognition	Revenue recognition – The Company recognizes oil and gas revenues when production is sold at a fixed or determinable price, persuasive evidence of an arrangement exists, delivery has occurred and title has transferred, and collectability is reasonably assured.
Basic and diluted earnings (loss) per share	Basic and diluted earnings (loss) per share –
Environmental laws and regulations	Environmental laws and regulations – The Company is subject to extensive federal, state, and local environmental laws and regulations. Environmental expenditures are expensed or capitalized depending on their future economic benefit. The Company believes that it is in compliance with existing laws and regulations.
Recent accounting pronouncements	Recent accounting pronouncements Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, In May 2014, the FASB issued ASU 2014-09, Revenue From Contracts With Customers, In February 2016, the FASB, issued ASU, 2016-02, Leases Other recently issued or adopted accounting pronouncements are not expected to have, or did not have, a material impact on the Company’s financial position or results from operations.
Subsequent events	Subsequent events – The Company evaluated subsequent events through March 30, 2017, the date of issuance of the financial statements. Subsequent events are disclosed in Note 11.

4. OIL & GAS PROPERTIES (Tables

4. OIL & GAS PROPERTIES (Tables)	12 Months Ended
	Dec. 31, 2016
Oil Gas Properties Tables
Schedule of Oil and Gas Properties	2016 2015 Evaluated costs subject to amortization $ 1,470,939 $ 24,177,851 Unevaluated costs 13,376,742 9,677,425 Total capitalized costs 14,847,681 33,855,276 Less accumulated depreciation, depletion and amortization (5,455,393 ) (26,797,605 ) Total oil and gas properties $ 9,392,288 $ 7,057,671

6. COMMITMENTS AND CONTINGENC20

6. COMMITMENTS AND CONTINGENCIES (Tables)	12 Months Ended
	Dec. 31, 2016
Commitments And Contingencies Tables
COMMITMENTS AND CONTINGENCIES	For the Year Ending December 31, Amount 2017 $ 79,658 2018 $ 81,248 2019 $ 75,814 $ 236,720

7. STOCKHOLDERS' EQUITY (Tables

7. STOCKHOLDERS' EQUITY (Tables)	12 Months Ended
	Dec. 31, 2016
STOCKHOLDERS' EQUITY (TABLES)
Summary of warrant activity	Exercise Expiration Date in Price 2017 2018 2019 2020 2021 Total $ 0.50 528,099 528,099 $ 0.70 1,700,000 1,700,000 $ 0.77 100,000 100,000 $ 1.00 150,000 - 54,366 1,500,000 1,704,366 $ 1.03 120,000 120,000 $ 1.08 37,500 37,500 $ 1.40 1,643,475 1,643,475 $ 1.73 100,000 100,000 $ 1.80 500,000 500,000 $ 2.00 126,000 1,906,249 - 2,032,249 $ 2.03 2,000,000 2,000,000 $ 2.09 - 2,800,000 - 2,800,000 $ 2.23 832,512 832,512 $ 2.29 120,000 120,000 $ 2.50 - - 35,211 35,211 $ 2.82 - 38,174 - 38,174 $ 3.50 15,000 15,000 $ 4.50 - - 700,000 700,000 $ 5.00 170,000 - - 170,000 $ 5.05 40,000 40,000 $ 6.00 - 523,123 22,580 545,703 $ 7.00 - - 700,000 700,000 486,000 8,015,645 1,664,657 4,675,987 1,620,000 16,462,289
Summary of stock options outstanding	Exercise Expiration Date in Price 2017 2018 2019 2020 2021 Total $ 0.97 259,742 259,742 $ 1.57 - - - 5,997,163 - 5,997,163 $ 1.79 - - - 412,500 - 412,500 - - - 6,409,663 259,742 6,669,405
Assumptions used in calculating the fair value of the warrants	2016 Risk-free interest rate 0.78%-1.22% Expected volatility of common stock 101% - 189% Dividend yield 0.00% Discount due to lack of marketability 20-30% Expected life of warrant 3 years - 5 years 2015 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

8. INCOME TAXES (Tables)

8. INCOME TAXES (Tables)	12 Months Ended
	Dec. 31, 2016
Schedule of Income Taxes:
Schedule of Effective Income Tax Rate Reconciliation	Year ended Year ended December 31, 2016 December 31, 2015 Federal income tax benefit at statutory rate $ (2,869,293 ) $ (14,705,979 ) Permanent differences 3,000 4,127 Other 4,096,947 (587,126 ) Change in valuation allowance (1,230,654 ) 15,288,978 Provision for income taxes $ - $ -
Schedule of Deferred Tax Assets and Liabilities	December 31, 2016 December 31, 2015 Deferred tax assets: Net operating loss carryforward $ 16,269,090 $ 11,443,389 Accruals 15,300 30,600 Reserves 7,156,559 5,883,263 Deferred tax liabilities: Intangible drilling and other costs for oil and gas properties (74,340 ) 7,240,011 Net deferred tax assets and liabilities 23,366,609 24,597,263 Less valuation allowance (23,366,609 ) (24,597,263 ) Total deferred tax assets and liabilities $ - $ -

10. ASSET RETIREMENT OBLIGATI23

10. ASSET RETIREMENT OBLIGATIONS (Tables)	12 Months Ended
	Dec. 31, 2016
ASSET RETIREMENT OBLIGATIONS (Tables)
Schedule of asset retirement obligation liability	Asset retirement obligation – December 31, 2014 $ 35,951 Accretion expense 3,492 Removal of ARO for wells sold (10,360 ) Asset retirement obligation – December 31, 2015 $ 29,083 Accretion expense 41 Removal of ARO for wells sold (22,073 ) Asset retirement obligation – December 31, 2016 $ 7,051

2. GOING CONCERN (Details Narra

2. GOING CONCERN (Details Narrative)	Dec. 31, 2016USD ($)
Going Concern Accumulated Losses
Accumulated deficit	$ (82,587,785)
Accumulated Losses since inception	82,587,785
Working Capital deficit	$ 2,293,348

3. SIGNIFICANT ACCOUNTING POL25

3. SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Significant Accounting Policies {1}
Capitalized interest on unevaluated properties	$ 215,938	$ 705,561
Shares issuable exercise of outstanding warrants and options	23,131,694

4. OIL & GAS PROPERTIES (Detail

4. OIL & GAS PROPERTIES (Details) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Oil Gas Properties Details
Evaluated costs subject to amortization	$ 1,470,939	$ 24,177,851
Unevaluated costs	13,376,742	9,677,425
Total capitalized costs	14,847,681	33,855,276
Less accumulated depreciation, depletion and amortization	(545,539)	(26,797,605)
Total oil and gas properties	$ 9,392,288	$ 7,057,671

4. OIL & GAS PROPERTIES (Deta27

4. OIL & GAS PROPERTIES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Oil Gas Properties Details Narrative
Impairment expense oil and gas properties		$ 25,674,123
Additional impairment	$ 70,080
Proceeds from sale	750,000	$ 877,489
Combined loss on sale	$ 283,285

5. RELATED PARTY PAYABLES (Deta

5. RELATED PARTY PAYABLES (Details Narrative)	3 Months Ended
	Dec. 31, 2016USD ($)
Related Party Transactions payments due to related party
Notes payable within one year	$ 0
Director Fees	$ 192,044

6. COMMITMENTS AND CONTINGENC29

6. COMMITMENTS AND CONTINGENCIES (Details)	Dec. 31, 2016USD ($)
Commitments And Contingencies Details
2,017	$ 79,658
2,018	81,248
2,019	75,814
Total	$ 236,720

6. COMMITMENTS AND CONTINGENC30

6. COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	Dec. 31, 2016	Jun. 14, 2016	Dec. 31, 2015
Commitments And Contingencies Details Narrative
Torchlight invested	$ 20,000,000
Account receivable from Husky Ventures			$ 419,839
Deposited from Husky Ventures		$ 520,400

7. STOCKHOLDERS' EQUITY (Detail

7. STOCKHOLDERS' EQUITY (Details)	Dec. 31, 2016shares
1.79
Outstanding warrants and stock options	528,099
0.70
Outstanding warrants and stock options	1,700,000
0.77
Outstanding warrants and stock options	100,000
1
Outstanding warrants and stock options	1,704,366
1.03
Outstanding warrants and stock options	120,000
1.08
Outstanding warrants and stock options	37,500
1.4
Outstanding warrants and stock options	1,643,475
1.73
Outstanding warrants and stock options	100,000
1.8
Outstanding warrants and stock options	500,000
2
Outstanding warrants and stock options	2,032,249
2.03
Outstanding warrants and stock options	2,000,000
2.09
Outstanding warrants and stock options	2,800,000
2.5
Outstanding warrants and stock options	832,512
2.82
Outstanding warrants and stock options	120,000
3.5
Outstanding warrants and stock options	35,211
4.5
Outstanding warrants and stock options	38,174
0.97
Outstanding warrants and stock options	15,000
5.05
Outstanding warrants and stock options	700,000
6
Outstanding warrants and stock options	170,000
7
Outstanding warrants and stock options	40,000
6
Outstanding warrants and stock options	545,703
1.57
Outstanding warrants and stock options	700,000
Total
Outstanding warrants and stock options	16,462,289
Total | Expiring in the year 2021
Outstanding warrants and stock options	486,000
Total | Expiring in the year 2016
Outstanding warrants and stock options	8,015,645
Total | Expiring in the year 2017
Outstanding warrants and stock options	1,664,657
Total | Expiring in the year 2018
Outstanding warrants and stock options	4,675,987
Total | Expiring in the year 2019
Outstanding warrants and stock options	1,620,000
Total | Expiring in the year 2020
Outstanding warrants and stock options	16,462,289

7. STOCKHOLDERS' EQUITY (Deta32

7. STOCKHOLDERS' EQUITY (Details 1)	Dec. 31, 2016shares
0.97
Stock Options Outstanding	259,742
1.57
Stock Options Outstanding	5,997,163
1.79
Stock Options Outstanding	412,500
Total
Stock Options Outstanding	6,669,405
Total | Expiring in the year 2017
Stock Options Outstanding
Total | Expiring in the year 2018
Stock Options Outstanding
Total | Expiring in the year 2019
Stock Options Outstanding	6,409,663
Total | Expiring in the year 2020
Stock Options Outstanding	259,742
Total | Expiring in the year 2021
Stock Options Outstanding	6,669,405

7. STOCKHOLDERS' EQUITY (Deta33

7. STOCKHOLDERS' EQUITY (Details 2)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Minimum [Member]
Risk-free interest rate	0.78%	0.78%
Expected volatility of common stock	101.00%	191.00%
Dividend yield	0.00%	0.00%
Discount due to lack of marketability	20.00%	20.00%
Expected life of warrant	5 years
Maximum [Member]
Risk-free interest rate	1.22%
Expected volatility of common stock	189.00%	253.00%
Discount due to lack of marketability	30.00%	30.00%
Expected life of warrant		5 years

7. STOCKHOLDERS' EQUITY (Deta34

7. STOCKHOLDERS' EQUITY (Details Narrative)	12 Months Ended
	Dec. 31, 2016USD ($)shares	Dec. 31, 2015USD ($)shares
Assumptions used in calculating the fair value of the warrants issued are as follows:
Issuance of common stock for cash, shares | shares	3,750,000	4,931,250
Issuance of common stock for cash, amount | $	$ 3,000,000	$ 1,300,000
Issuance of preferred stock for cash, shares | shares		135,000
Issuance of preferred stock for cash, amount | $	1,000,000	$ 13,500,000
Preferred dividends paid in cash | $	$ 320,724	$ 120,427
Issuance of common stock for preferred dividends, shares | shares	440,262	577,140
Common stock issued for services | shares	768,832	2,477,696
Issuance of common stock for services, amount | $	$ 670,074	$ 2,651,504
Warrants issued for services, shares | shares	6,437,267	7,015,779
Warrants issued for services, amount | $	$ 2,205,231	$ 7,797,619
warrants issued in connection with financing transactions, shares | shares	137,500	770,000
warrants issued in connection with financing transactions, amount | $	$ 80,750	$ 368,300
Warrants issued in connection with the issuance of preferred stock. | shares		2,615,676
Warrants issued in connection with the acquisition of lease, shares | shares	3,412,525	750,000
Warrants issued in connection with the acquisition of lease, amount | $	$ 1,290,761	$ 527,500
Issuance of common stock - mineral interests, shares | shares	2,824,881	30,000
Issuance of common stock - mineral interests, amount | $	$ 1,975,046	$ 26,400
Common stock issued in conversion of notes, shares | shares		1,600,000
Common stock issued in conversion of notes, amount | $		$ 1,150,000
Issuance of common stock for note interest, shares | shares		162,860
Issuance of common stock for note interest, amount | $		$ 162,860
Issuance of common stock in warrant exercise, shares | shares	3,888,745	65,000
Issuance of common stock in warrant exercise, amount | $	$ 2,543,746	$ 113,750
Preferred Shares Working Interest	0.3333
Reserved Future Exercise of Warrants and options | $	$ 23,131,694
Warrants issued/vested | shares	6,437,267	7,015,779
Warrants issued/vested Total Value | $	$ 2,285,270	$ 7,797,619

8. INCOME TAXES (Details)

8. INCOME TAXES (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Tax Reconciliation and provision for income taxes
Federal income tax benefit at statutory rate	$ (2,869,293)	$ (14,705,979)
Permanent Differences	3,000	4,127
Other	4,096,947	(587,126)
Change in valuation allowance	(1,230,654)	15,288,978
Provision for income taxes

8. INCOME TAXES (Details 1)

8. INCOME TAXES (Details 1) - USD ($)	Dec. 31, 2016	Dec. 31, 2015
Deferred tax assets:
Net operating loss carryforward	$ 16,269,090	$ 11,443,389
Accruals	15,300	30,600
Reserves	7,156,559	5,883,263
Deferred tax liabilities:
Intangible drilling and other costs for oil and gas properties	(74,340)	7,240,011
Net deferred tax assets and liabilities	23,366,609	24,597,263
Less valuation allowance	(23,366,609)	(24,597,263)
Total deferred tax assets and liabilities

8. INCOME TAXES (Details Narrat

8. INCOME TAXES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Income Taxes Operating loss carryforwards
Net deferred tax asset related to federal net operating loss carryforwards of	$ 47,850,266	$ 39,312,173
Statutory Federal Iincome Tax Rate	34.00%	34.00%

9. PROMISSORY NOTES (Details Na

9. PROMISSORY NOTES (Details Narrative) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
Promissory Notes Details Narrative
Converted common stock	$ 3,569,500	$ 1,000,000
Series B convertible unsecured promissory		$ 1,000,000
Conversion price		$ 1

10. ASSET RETIREMENT OBLIGATI39

10. ASSET RETIREMENT OBLIGATIONS (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015
ASSET RETIREMENT OBLIGATIONS RECONCILIATION
Asset Retirement Obligation, Begining	$ 29,083	$ 35,951
Asset retirement obligation	29,083	35,951
Accretion expense	41	3,492
Removal of ARO for wells sold	(22,073)	(10,360)
Asset Retirement Obligation, Ending	$ 7,051	$ 29,083