Eflo Energy (EFLO) 10-Q 14 Apr 15 2015 Q2 Quarterly report Financial data

Document_and_Entity_Informatio

Document and Entity Information	6 Months Ended
	Feb. 28, 2015	Apr. 14, 2015
DocumentAndEntityInformationAbstract
Entity Registrant Name	EFLO ENERGY, INC.
Entity Central Index Key	1448806
Document Type	10-Q
Document Period End Date	28-Feb-15
Amendment Flag	FALSE
Current Fiscal Year End Date	-23
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		32,204,299
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2015

CONSOLIDATED_BALANCE_SHEETS_Un

CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $)	Feb. 28, 2015	Aug. 31, 2014
ASSETS
Cash	$158,905	$650,599
Accounts receivable; joint interest owners and other	1,292,291	1,589,898
Prepaids	111,507	47,864
Other	15,922	30,182
Total current assets	1,578,625	2,318,543
OIL AND GAS PROPERTIES, full cost method, unproven	50,534,546	50,305,989
OTHER ASSETS-Goodwill	1,194,365	1,194,365
Total assets	53,307,536	53,818,897
CURRENT LIABILITIES
Accounts payable and accrued liabilities	2,866,371	4,250,625
Convertible notes, net of $56,029 and $233,964 of unamortized discount at February 28, 2015 and August 31, 2014, respectively	2,223,971	3,396,036
Asset retirement obligation-current	80,000	80,000
Total current liabilities	5,170,342	7,726,661
NONCURRECT LIABILITIES
Asset retirement obligations	18,109,557	17,759,023
Deferred income taxes	3,297,434	3,297,434
Total liabilities	26,577,333	28,783,118
STOCKHOLDERS' EQUITY
Capital Stock Authorized: 10,000,000 preferred shares, par value $0.001 per share 150,000,000 common shares, par value $0.001 per share Issued and outstanding: 32,204,299 common shares at February 28, 2015 (August 31, 2014 – 19,897,714 common shares)	32,205	19,898
Additional paid-in capital	32,094,837	30,493,045
Accumulated other comprehensive loss	-141,033	-90,423
Accumulated deficit	-5,255,806	-5,386,741
Total stockholders' equity	26,730,203	25,035,779
Total liabilities and stockholders' equity	$53,307,536	$53,818,897

CONSOLIDATED_BALANCE_SHEETS_Pa

CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $)	Feb. 28, 2015	Aug. 31, 2014
Statement of Financial Position [Abstract]
Unamortized Discount	$56,029	$233,964
Stockholders Equity
Preferred Stock Shares Par value	$0.00	$0.00
Preferred Stock Shares Authorized	10,000,000	10,000,000
Common Stock Shares Par value	$0.00	$0.00
Common Stock Shares Authorized	150,000,000	150,000,000
Common Stock Shares Issued	32,204,299	19,897,714
Common Stock Shares Outstanding	32,204,299	19,897,714

CONDENSED_CONSOLIDATED_STATEME

CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS) (Unaudited) (USD $)	3 Months Ended		6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014	Feb. 28, 2015	Feb. 28, 2014
EXPENSES
Management and director's fees	$102,884	$218,676	$244,725	$432,568
Stock-based compensation expense	14,136	106,440	33,624	222,419
Consulting fees	58,536	86,737	128,345	244,535
Professional fees	93,989	112,752	230,599	245,905
Financing fees	0	0	0	176,400
Office, travel and general	70,285	145,474	134,211	237,353
Accretion of asset retirement obligations	175,307	172,374	350,534	343,042
Total Expenses	515,137	842,453	1,122,038	1,902,222
OPERATING LOSS	-515,137	-842,453	-1,122,038	-1,902,222
OTHER INCOME (EXPENSE)
Interest expense and other financing costs	-181,229	-101,794	-396,423	-136,920
Gain on settlement of accounts payable and accrued liabilities	3,798	0	1,649,396	0
NET INCOME (LOSS) before taxes	-692,568	-944,247	130,935	-2,039,142
Provision for income tax	0	0	0	0
NET INCOME (LOSS)	-692,568	-944,247	130,935	-2,039,142
Foreign currency translation	-35,917	-39,185	-50,610	-33,084
COMPREHENSIVE INCOME (LOSS)	($728,485)	($983,432)	$80,325	($2,072,226)
BASIC AND DILUTED INCOME (LOSS) PER SHARE	($0.03)	($0.05)	$0.01	($0.10)
WEIGHTED AVERAGE SHARES OUTSTANDING	26,926,956	19,539,191	23,398,431	19,513,604

CONDENSED_CONSOLIDATED_STATEME1

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $)	6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$130,935	($2,039,142)
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Stock-based compensation and fee payments	33,624	236,494
Amortization of convertible note discount	177,935	59,790
Unrealized foreign exchange losses	0	-33,084
Gain on settlement of accounts payable and accrued liabilities	-1,649,396	0
Accretion of asset retirement obligations	350,534	343,042
Changes in working capital items-
Accounts receivable	272,302	-360,173
Prepaids and other	-49,383	-38,871
Accounts payable and accrued liabilities	554,667	550,710
Net cash used in operating activities	-178,782	-1,281,234
CASH FLOWS FROM INVESTING ACTIVITIES
Expenditures on oil and gas properties, net	-312,912	-522,323
Net cash used in investing activities	-312,912	-522,323
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from notes payable	0	2,255,000
Net cash provided by financing activities	0	2,255,000
(DECREASE) INCREASE IN CASH	-491,694	451,443
CASH, BEGINNING OF PERIOD	650,599	476,522
CASH, END OF PERIOD	158,905	927,965
SUPPLEMENTAL DISCLOSURE
Cash paid for interest	0	0
Cash paid for income taxes	0	0
NON-CASH INVESTING ACTIVITIES:
Accrued expenditures on oil and gas properties	930,321	102,000
NON-CASH FINANCING ACTIVITIES
Common stock issued for settlement of accounts payable and accrued liabilities	230,475	105,000
Common stock issued as settlement of convertible notes	$1,350,000	$0

1_BASIS_OF_PRESENTATION

1. BASIS OF PRESENTATION	6 Months Ended
	Feb. 28, 2015
Accounting Policies [Abstract]
1. BASIS OF PRESENTATION	Unaudited Interim Condensed Consolidated Financial Statements
	The unaudited interim condensed consolidated financial statements of EFLO Energy, Inc. (the “Company”), have been prepared in accordance with United States generally accepted accounting principles (“GAAP”) for interim financial information and the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). They do not include all information and footnotes required by GAAP for complete financial statements. However, except as disclosed herein, there have been no material changes in the information disclosed in the notes to the consolidated financial statements for the year ended August 31, 2014 included in the Company’s Annual Report on Form 10-K filed with the SEC. The unaudited interim condensed consolidated financial statements should be read in conjunction with those consolidated financial statements included in the Form 10-K. In the opinion of management, all adjustments considered necessary for fair presentation have been made. Operating results for the six months ended February 28, 2015 are not necessarily indicative of the results that may be expected for the year ending August 31, 2015.
	Recent Accounting Pronouncements
	In June 2014, the FASB issued Accounting Standards Update 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation (ASU 2014-10), which eliminates the concept of a development stage entity (DSE) from U.S. GAAP. This change rescinds certain financial reporting requirements that have historically applied to DSEs and is intended to result in cost-savings for affected entities.  ASU 2014-10 is effective for public entities for annual reporting periods beginning after December 15, 2014 and interim periods therein.
	The Company adopted ASU 2014-10 on September 1, 2014 and has applied its guidance in the preparation of these unaudited interim condensed consolidated financial statements.  The application of ASU 2014-10 resulted in the removal of 1) inception-to-date information in the statements of operations and cash flows, 2) labels on the financial statements indicating the Company’s exploration stage status, 3) certain historic disclosures describing exploration stage activities in which the Company has been engaged. The Company does not believe, however, that the removal of this information has a material effect on its unaudited interim condensed consolidated financial statements or the related footnote disclosures thereto.
	In August 2014, the FASB issued Accounting Standard Update No. 2014-15, Disclosure of Uncertainties About an Entity's Ability to Continue as a Going Concern. The amendments require management to perform interim and annual assessments of an entity's ability to continue as a going concern and provides guidance on determining when and how to disclose going concern uncertainties in the financial statements. The standard applies to all entities and is effective for annual and interim reporting periods ending after December 15, 2016, with early adoption permitted. The Company is currently evaluating the impact that this new guidance will have on its financial statements.

2_OIL_AND_GAS_PROPERTIES

2. OIL AND GAS PROPERTIES	6 Months Ended
	Feb. 28, 2015
Extractive Industries [Abstract]
2. OIL AND GAS PROPERTIES	Oil and Gas Acquisition – Kotaneelee Gas Project (the “KGP”)
	As a result of two working interest acquisitions, the Company generally owns a 53.65% working interest in the KGP, including a 100% working interest in one shut in gas well.
	The KGP covers 30,188 gross acres in the Yukon Territory in Canada, and includes: a gas dehydration plant (capacity: 70 MMcf/d), one shut in gas well, one water disposal well (capacity: 6,000 bbl/d), and two suspended gas wells.  The KGP has a fully developed gas gathering, sales and delivery infrastructure, airstrip, roads, flarestack, storage tanks, barge dock and a 24 person permanent camp facility.  The KGP gas dehydration plant has a processing capacity of 70 MMcf/d, outlet gas compression of 1,200 psig and is tied-in through a 24-inch gas sales line to a gas processing plant in Fort Nelson, British Columbia.
	On July 18, 2012, the Company completed an acquisition of Devon Canada’s (“Devon”) entire right and interest (generally a working interest of 22.989%, with a working interest of 69.337% in one shut in gas well) in the KGP. As consideration for Devon’s working interest in the KGP, (the “Devon Assets”), the Company paid approximately $23,298,000. The consideration was comprised of $290,000 in cash, 7,250,000 shares of the Company’s restricted common stock valued at $15,950,000, and the absorption of approximately $7,058,000 in asset retirement obligations.
	On October 17, 2012, the Company completed a Share Purchase Agreement with Nahanni Energy Inc., 1700665 Alberta Ltd., Apex Energy (2000), Inc. and Canada Southern Petroleum #1 L.P. (jointly “Nahanni”) for the acquisition of its entire right and interest (generally a working interest of 30.664%) in the KGP (the “Nahanni Assets”) which, in addition to the 69.337% working interest acquired from Devon on July 18, 2012, provided the Company with a 100% interest in one shut in gas well in the KGP.
	As consideration for the Nahanni Assets, the Company paid Nahanni approximately $13,761,000. The consideration was comprised of approximately $133,000 in cash ($398,550 offset by $265,950 paid in connection with the acquisition of the Devon Assets in settlement of certain Nahanni indebtedness), 1,614,767 shares of one of the Company’s subsidiaries, which are exchangeable for 1,614,767 shares of the Company’s restricted common stock valued at approximately $4,191,000, and the absorption of approximately $9,437,000 in asset retirement obligations. The number of shares issued by the Company’s subsidiary was calculated by dividing the fair value of the exchangeable shares by the volume weighted average trading price of the Company’s stock for the ten (10) trading days prior to closing the purchase agreement.  The fair value of the exchangeable shares has been recorded as additional paid in capital in the Company’s equity. The exchangeable shares enjoy no voting or revenue participation rights in the subsidiary.
	The Company records assets acquired and liabilities assumed at their estimated acquisition date fair values, while transaction and integration costs associated with the acquisitions are expensed as incurred.  The Company uses relevant market assumptions to determine fair value and allocate purchase price, such as future commodity pricing for purchased hydrocarbons, market multiples for similar transactions and replacement value for certain equipment.  Many of the assumptions are unobservable. The Company’s preliminary assessment of the fair value of the Nahanni Assets resulted in a valuation of $25,526,554. As a result of incorporating this information into the purchase price allocation, a gain on bargain purchase of $11,766,787 was recognized in the accompanying consolidated statement of operations. The gain on bargain purchase was primarily attributable to the strategic nature of the divestiture by the motivated seller, coupled with a confluence of certain favorable economic trends in the industry and the geographic region in which the Nahanni Assets are located.
	The Company allocated the consideration paid for the Nahanni Assets and Devon assets based upon its assessment of their fair value at the dates of purchase, as follows:
	Fair Value of Assets Acquired
	Asset Description	Nahanni Assets		Devon Assets		Total
		$		$		$
	Unproved leasehold costs		14,548,787		13,827,001		28,375,788
	Plant and equipment		8,594,362		6,484,001		15,078,363
	Gathering systems		2,383,405		1,788,001		4,171,406
	Vehicles		-		4,527		4,527
	Unproven Properties		25,526,554		22,103,530		47,630,084
	Goodwill		-		1,194,365		1,194,365
	Total Assets Acquired - KGP		25,526,554		23,297,895		48,824,449
	Development costs incurred to obtain access and provide facilities for extracting, gathering, treating and storing oil and gas related to unproved oil and gas properties that are being evaluated for economic viability are capitalized to the full cost pool until proved reserves are established, or determination is made that the unproved properties are impaired.  During the six months ended February 28, 2015, the full cost pool was increased by $228,557 (2014 - $548,495) as a result of these costs.

3_ASSET_RETIRMENT_OBLIGATIONS

3. ASSET RETIRMENT OBLIGATIONS	6 Months Ended
	Feb. 28, 2015
Notes to Financial Statements
3. ASSET RETIRMENT OBLIGATIONS	In connection with its acquisition of the Nahanni Assets and the Devon Assets, the Company acquired $9,436,526 and $7,057,716 in asset retirement obligations, respectively, relating to its portion of the abandonment, reclamation and environmental liabilities associated with the KGP.
	On March 31, 2011, the Company initiated oil and gas operations by entry into a Farmout and Participation Agreement which provided for its acquisition of a net working interest ranging from 21.25% to 42.5%, in a 2,629 acre oil and gas lease, insofar as that lease covers from the surface to the base of the San Miguel formation (the “San Miguel Lease”). The San Miguel Lease, which is located in Zavala County, Texas, is unproven and has no current production. The Company recorded $80,000 in asset retirement obligations related to the future plugging and abandonment of a test well on the San Miguel Lease. At May 31, 2014, the Company’s interest in the San Miguel lease was impaired and expensed to the extent of its carrying value, which included the full amount of the associated asset retirement obligation. The entire asset retirement obligation relating to the San Miguel Lease has been classified as a current liability.
	The Company has no assets that are legally restricted for purposes of settling asset retirement obligations. As part of the Company’s acquisition of the Devon Assets, it provided Devon a corporate guarantee (the “Guarantee”) in the amount of CAD$10,000,000 ($9,225,000) and delivered a letter of credit in the amount of CAD$4,380,000 ($4,041,000) to Devon (the “Devon LOC”). The Company also delivered a letter of credit in the amount of CAD$625,000 ($577,000) to the government of the Yukon Territory (the “Yukon LOC”). The amounts of the Devon LOC and Yukon LOC reduce the amount of the Guarantee on a dollar-for-dollar basis. The Company is primarily responsible for payment of all asset retirement obligations. The Guarantee, Devon LOC and Yukon LOC are only available to Devon in the event the Company defaults upon its asset retirement obligations relating to the Devon Assets.
	The following table summarizes changes to the Company’s asset retirement obligations during the six months ended February 28, 2015 and the year ended August 31, 2014:
		$
	Balance, August 31, 2013		17,146,750
	Liabilities incurred (acquired)		-
	Accretion expense		692,273
	Balance, August 31, 2014		17,839,023
	Liabilities incurred (acquired)		-
	Accretion expense		350,534
	Total Balance, February 28, 2015		18,189,557
	Total Balance, February 28, 2015 – Current		80,000
	Total Balance, February 28, 2015 – Long Term		18,109,557

4_CONVERTIBLE_NOTES_PAYABLE

4. CONVERTIBLE NOTES PAYABLE	6 Months Ended
	Feb. 28, 2015
Notes to Financial Statements
4. CONVERTIBLE NOTES PAYABLE
	The following table summarizes changes to the Company’s convertible notes payable during the six months ended February 28, 2015 and the year ended August 31, 2014:
			2013 Convertible Notes			2014 Convertible Notes
			$			$
	Balance, August 31, 2013			-			-
	Principal received			2,255,000			1,400,000
	Transaction costs			(533,803	)		-
	Amortization of transaction costs			299,839			-
	Conversion into common stock			(25,000	)		-
	Balance, August 31, 2014			1,996,036			1,400,000
	Amortization of transaction costs			177,935			-
	Settlement of principal and interest in common stock			-			(1,350,000	)
	Balance, February 28, 2015			2,173,971			50,000
	2013 Convertible Note Offering
	On October 30, 2013 the Company sold convertible notes having an aggregate principal amount of $2,255,000 (the “2013 Convertible Notes”), to 22 accredited investors, under the following general terms:
	●	the maturity date is April 30, 2015;
	●	the principal amount is convertible into shares of the Company’s common stock at a price of $1.00 per share;
	●	interest is at 15% per annum payable, at the Company’s election, in cash or shares of its common stock at a rate of $1.25 per share; and,
	●	the Company also issued stock purchase warrants in connection with the 2013 Convertible Note providing for the purchase of up to 1,127,500 shares of its common stock (1 full share for each $2.00 invested in the 2013 Convertible Notes”) at an exercise price of $1.25 per share for a period of three years (the "Stock Purchase Warrants”).
	During the year ended August 31, 2014, the Company paid $176,400 in finders’ fees which were recognized as financing fees in the statement of loss.  The fair value of the Stock Purchase Warrants ($533,803) is being amortized to the statement of loss over the life of the 2013 Convertible Notes.
	During the six months ended February 28, 2015, the Company recognized $167,250 (2014 - $75,773) in interest expense relating to the 2013 Convertible Notes and $177,935 (2014 - $61,147) as amortization of transaction costs.
	On June 2, 2014, $25,000 in principal payable on the 2013 Convertible Notes was converted into 25,000 shares of the Company’s common stock at a conversion price of $1.00 per share.
	2014 Convertible Note Offering
	During June 2014, the Company sold convertible notes having an aggregate principal amount of $1,400,000 (the “2014 Convertible Notes”), to two accredited investors, and one non-accredited investor, under the following general terms:
	●	the maturity date is December 31, 2014.  On December 30, 2014, the maturity date was extended to January 31, 2015;
	●	at the option of the note holder, the principal amount is convertible into shares of the Company’s common stock at a price per share to be determined in connection with the Company’s planned offering of shares upon migration to a senior stock exchange, less a 10% discount (the “2014 Conversion Right”);
	●	a 6% financing fee on the principal sum of the 2014 Convertible Notes, is payable at the option of the note holder, in shares of the Company’s common stock (the number of which is to be calculated using the closing market price of the Company’s shares at the notes’ maturity date), or in cash of $84,000.
	●	the 2014 Convertible Notes are non-interest bearing so long as they are paid or converted prior to their maturity date. In the event of default, or if a 2014 Convertible Note is not paid, or converted on or within ten (10) days following its maturity date:
	a)		the note will bear interest at 10% per annum, payable monthly; and,
	b)	an additional 4% financing fee (the “Default Financing Fee”) on the then outstanding principal balance of the 2014 Convertible Note(s) shall become due and payable. The Company is obligated to pay the Default Financing Fee in common shares at a conversion price equal to the closing market price of the common shares on the date of an event of default, or at the maturity date, whichever is earliest.
	Entities controlled, in part or in whole, by the Company’s Chairman and former President acquired $1,000,000 and $350,000 of 2014 Convertible Notes under these terms.
	During the six months ended February 28, 2015, the Company recognized $46,817 (2014 - $nil) of financing expense relating to the 6% financing fee.
	On January 12, 2015, the Company entered into a settlement agreement with two of the three 2014 Convertible Notes holders whereby $1,350,000 of principal and $81,000 of the 6% financing fee were settled by the issuance of 11,007,692 shares of the Company’s common stock calculated using a price of $0.13 per share.
	During the six months ended February 28, 2015, the Company recognized $2,000 of Default Financing Fee and $417 of interest expense (2014 - $nil).

5_CAPITAL_STOCK_AND_STOCK_BASE

5. CAPITAL STOCK AND STOCK BASED COMPENSATION	6 Months Ended
	Feb. 28, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
5. CAPITAL STOCK AND STOCK BASED COMPENSATION		a)	Issuance of Common Stock:
	During the six months ended February 28, 2015, the Company completed the follow stock transactions:
	i)	During December 2014, in connection with cost cutting efforts, Holloman Corporation and Niconsult GmbH voluntarily terminated their service agreements with the Company (Note 6). The effective date of those terminations was June 1, 2014.  As a result, the Company adjusted fees totaling $22,500 related to the three months ended August 31, 2014, which had been paid using 23,991 shares of its restricted common stock, at a weighted average price of $0.938 per share. This adjustment resulted in the recognition of a gain on forgiveness of accounts payable of $22,500 during the six months ended February 28, 2015.
		ii)	On January 12, 2015, the Company issued 11,007,692 shares of the Company’s common stock as settlement of $1,350,000 of 2014 Convertible Notes principal and $81,000 of 6% financing fee (Notes 4 and 7).
		iii)	On January 12, 2015, the Company issued 1,322,884 shares of the Company’s common stock at the fair value of $171,975 as settlement of $1,798,871 of accounts payable and accrued liabilities and accordingly, the Company recorded a gain on settlement of accounts payable and accrued liabilities of $1,626,896 (Note 7).
		b)	Convertible notes:
	The Company has outstanding 2013 Convertible Notes and 2014 Convertible Notes (Note 4) which are convertible into shares of the Company’s common stock.
		c)	Stock purchase warrants:
	The Company has 1,127,500 Stock Purchase Warrants outstanding which are exercisable at $1.25 per share up to October 30, 2016.
		d)	Options:
	On August 27, 2012, the Company established a Non-Qualified Stock Option Plan and a Stock Bonus Plan (the “Plans”). The Non-Qualified Stock Option Plan (the “Option Plan”) authorizes the issuance of up to 2,000,000 shares of the Company’s common stock. The Stock Bonus Plan provides for the issuance of up to 350,000 common shares (“Bonus Shares”). Under the Plans, shares may only be issued to employees, directors, officers, consultants and advisors, provided qualifying services are rendered.
	The Company’s stock options outstanding as at February 28, 2015 and August 31, 2014 and the changes for the periods then ended are as follows:
			Number Outstanding			Weighted Average Exercise Price
			#			$
	Balance, August 31, 2013			1,600,000			2.46
	Expired			(600,000	)		2.23
	Balance, August 31, 2014			1,000,000			2.6
	Expired			(100,000	)		2.3
	Balance, February 28, 2015			900,000			2.63
	Summary of stock options outstanding at February 28, 2015:
	Security		Number Outstanding			Exercise Price		Expiry Date
			#			$
	Stock options			100,000			2.5	15-Jan-16
	Stock options			100,000			2.75	15-Jan-17
	Stock options			100,000			3	15-Jul-17
	Stock options			300,000			2.5	27-Aug-17
	Stock options			300,000			2.65	27-Aug-17
	As of February 28, 2015, $13,174 of total unrecognized compensation cost remains under the Option Plan. All of this amount is expected to be recognized during the remainder of fiscal 2015.
	During the six months ended February 28, 2015, the Company had stock-based compensation expense of $33,624 (2014 - $222,419).

6_RELATED_PARTY_TRANSACTIONS

6. RELATED PARTY TRANSACTIONS	6 Months Ended
	Feb. 28, 2015
Related Party Transactions [Abstract]
6. RELATED PARTY TRANSACTIONS	Effective January 20, 2011, a company controlled by the Company’s former Chief Executive Officer, its former Chief Financial Officer, and an unrelated consultant (the “Finders”) entered into an agreement with the Company providing for the payment of finder’s compensation ranging from 5% (on transaction values greater than $1,000,000) to 10% (on transactions valued up to $300,000) on transactions introduced to the Company by or through the Finders for a period of two years (the “Finder’s Fee Agreement”). Under the Finder’s Fee Agreement, compensation is divided between the Finders and the Finders may elect whether the finder’s compensation is payable in cash, or shares of the Company’s restricted common stock. The Finder’s Fee Agreement specifically recognizes that the KGP has been presented to the Company by the Finders. On January 12, 2015, two of the Finders settled the fees payable under the Finders’ Fee Agreement at no cost to the Company (see Note 7).
	Effective September 1, 2013, the Company executed an administrative services agreement with Holloman Corporation. Under this agreement, fees of $5,000 per month are payable to Holloman Corporation covering; office and meeting space, supplies, utilities, office equipment, network access and other administrative facilities costs. These fees are payable quarterly in shares of the Company’s restricted common stock at the closing price of the stock on the last trading-day of the applicable monthly billing period. During December 2014, in connection with cost cutting efforts, Holloman Corporation voluntarily terminated its administrative services agreement with the Company. The effective date of that termination was June 1, 2014.
	The chairman of the Company’s board of directors is also a director of Pacific World Energy Corporation (“Pacific World”).  Pacific World held $1,000,000 of 2014 Convertible Notes principal until settlement for shares of the Company’s common stock on January 12, 2015 (Note 4).

7_GAIN_ON_SETTLEMENT_OF_ACCOUN

7. GAIN ON SETTLEMENT OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	6 Months Ended
	Feb. 28, 2015
Notes to Financial Statements
7. GAIN ON SETTLEMENT OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	On January 12, 2015, the Company (together with its officers and directors), two of the 2014 Convertible Notes holders, and other interest parties entered into a settlement agreement (the “Settlement Agreement”).
	Under the terms of the Settlement Agreement, two of the 2014 Convertible Notes holders agreed to accept payment of principal and 6% financing fees aggregating $1,431,000 into 11,007,692 shares of the Company’s common stock calculated using a price of $0.13 per share (Note 4).
	The Settlement Agreement also provided for the following liability settlements which were settled with 1,322,884 shares of the Company’s common stock calculated using a price of $0.13 per share:
	Description of liability	Accounts payable and accrued liabilities		Agreed settlement amount		Gain on settlement of accounts payable and accrued liabilities		Number of shares of the Company’s common stock
		$		$		$		#
	Finders’ fees		1,079,802		-		1,079,802		-
	Directors’ fees		451,750		55,900		395,850		430,000
	Management fees		233,891		116,075		117,816		892,884
	Consulting fees		33,428		-		33,428		-
			1,798,871		171,975		1,626,896		1,322,884

8_SUBSEQUENT_EVENTS

8. SUBSEQUENT EVENTS	6 Months Ended
	Feb. 28, 2015
Subsequent Events [Abstract]
8. SUBSEQUENT EVENTS	On March 4, 2015, the Company entered into a Loan Agreement (the “Loan Agreement”) with Fundacion Inversiones Barroco (“FIB”), a Panamanian corporation, whereby the Company borrowed CAD$600,000 from FIB (the “Loan”).  The Loan bears interest at a rate of 10% per annum, is unsecured and due on or before February 1, 2016.  On April 7, 2015, the Company repaid the CAD$600,000 loan.
	The Loan Agreement is a related party transaction as a director of the Company is related to FIB.

2_OIL_AND_GAS_PROPERTIES_Table

2. OIL AND GAS PROPERTIES (Tables)	6 Months Ended
	Feb. 28, 2015
Oil And Gas Properties Tables
Schedule of Oil and Gas Acquisition	Fair Value of Assets Acquired
	Asset Description	Nahanni Assets		Devon Assets		Total
		$		$		$
	Unproved leasehold costs		14,548,787		13,827,001		28,375,788
	Plant and equipment		8,594,362		6,484,001		15,078,363
	Gathering systems		2,383,405		1,788,001		4,171,406
	Vehicles		-		4,527		4,527
	Unproven Properties		25,526,554		22,103,530		47,630,084
	Goodwill		-		1,194,365		1,194,365
	Total Assets Acquired - KGP		25,526,554		23,297,895		48,824,449

3_ASSET_RETIREMENT_OBLIGATIONS

3. ASSET RETIREMENT OBLIGATIONS (Tables)	6 Months Ended
	Feb. 28, 2015
BalanceEnding1
Schedule of Asset Retirement Obligation		$
	Balance, August 31, 2013		17,146,750
	Liabilities incurred (acquired)		-
	Accretion expense		692,273
	Balance, August 31, 2014		17,839,023
	Liabilities incurred (acquired)		-
	Accretion expense		350,534
	Total Balance, February 28, 2015		18,189,557
	Total Balance, February 28, 2015 – Current		80,000
	Total Balance, February 28, 2015 – Long Term		18,109,557

4_CONVERTIBLE_NOTES_PAYABLE_Ta

4. CONVERTIBLE NOTES PAYABLE (Tables)	6 Months Ended
	Feb. 28, 2015
Convertible Notes Payable Tables
Schedule convertible notes payable		2013 Convertible Notes			2014 Convertible Notes
		$			$
	Balance, August 31, 2013		-			-
	Principal received		2,255,000			1,400,000
	Transaction costs		(533,803	)		-
	Amortization of transaction costs		299,839			-
	Conversion into common stock		(25,000	)		-
	Balance, August 31, 2014		1,996,036			1,400,000
	Amortization of transaction costs		177,935			-
	Settlement of principal and interest in common stock		-			(1,350,000	)
	Balance, February 28, 2015		2,173,971			50,000

5_CAPITAL_STOCK_AND_STOCKBASED

5. CAPITAL STOCK AND STOCK-BASED COMPENSATION (Tables)	6 Months Ended
	Feb. 28, 2015
Capital Stock And Stock-based Compensation Tables
Option activity	The Company’s stock options outstanding as at February 28, 2015 and August 31, 2014 and the changes for the periods then ended are as follows:
		Number Outstanding			Weighted Average Exercise Price
		#			$
	Balance, August 31, 2013		1,600,000			2.46
	Expired		(600,000	)		2.23
	Balance, August 31, 2014		1,000,000			2.6
	Expired		(100,000	)		2.3
	Balance, February 28, 2015		900,000			2.63
	Summary of stock options outstanding at February 28, 2015:
	Security	Number Outstanding			Exercise Price		Expiry Date
		#			$
	Stock options		100,000			2.5	15-Jan-16
	Stock options		100,000			2.75	15-Jan-17
	Stock options		100,000			3	15-Jul-17
	Stock options		300,000			2.5	27-Aug-17
	Stock options		300,000			2.65	27-Aug-17

7_GAIN_ON_SETTLEMENT_OF_ACCOUN1

7. GAIN ON SETTLEMENT OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)	6 Months Ended
	Feb. 28, 2015
Notes to Financial Statements
GAIN ON SETTLEMENT OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	Description of liability	Accounts payable and accrued liabilities		Agreed settlement amount		Gain on settlement of accounts payable and accrued liabilities		Number of shares of the Company’s common stock
		$		$		$		#
	Finders’ fees		1,079,802		-		1,079,802		-
	Directors’ fees		451,750		55,900		395,850		430,000
	Management fees		233,891		116,075		117,816		892,884
	Consulting fees		33,428		-		33,428		-
			1,798,871		171,975		1,626,896		1,322,884

2_OIL_AND_GAS_PROPERTIES_Detai

2. OIL AND GAS PROPERTIES (Details) (USD $)	Feb. 28, 2015
Unproven Properties
Unproved Leasehold costs	$28,375,788
Plant and equipment	15,078,363
Gathering systems	4,171,406
Vehicles	4,527
Subtotal	47,630,084
Goodwill	1,194,365
Total Assets Acquired - KGP	48,824,449
Nahanni Assets
Unproven Properties
Unproved Leasehold costs	14,548,787
Plant and equipment	8,594,362
Gathering systems	2,383,405
Vehicles	0
Subtotal	25,526,554
Goodwill	0
Total Assets Acquired - KGP	25,526,554
Devon Assets
Unproven Properties
Unproved Leasehold costs	13,827,001
Plant and equipment	6,484,001
Gathering systems	1,788,001
Vehicles	4,527
Subtotal	22,103,530
Goodwill	1,194,365
Total Assets Acquired - KGP	$23,297,895

3_ASSET_RETIREMENT_OBLIGATIONS1

3. ASSET RETIREMENT OBLIGATIONS (Details) (USD $)	6 Months Ended	12 Months Ended
	Feb. 28, 2015	Aug. 31, 2014
Asset Retirement Obligations
Asset Retirement Obligation, Beginning	$17,839,023	$17,146,750
Liabilities incurred (acquired)	0	0
Accretion expense	350,534	692,273
Asset Retirement Obligation, Ending	18,189,557	17,839,023
Total Balance, February 28, 2015 - Current	80,000	80,000
Total Balance, February 28, 2015 - Long Term	$18,109,557	$17,759,023

4_CONVERTIBLE_NOTES_PAYABLE_De

4. CONVERTIBLE NOTES PAYABLE (Details) (USD $)	6 Months Ended	12 Months Ended
	Feb. 28, 2015	Aug. 31, 2014
2013 Convertible Notes
Beginning balance	$1,996,036	$0
Principal received		2,255,000
Transaction costs		-533,803
Amortization of transaction costs	177,935	299,839
Conversion into common stock		-25,000
Ending balance	2,173,971	1,996,036
2014 Convertible Notes
Beginning balance	1,400,000	0
Principal received		1,400,000
Transaction costs		0
Amortization of transaction costs	0	0
Conversion into common stock		0
Settlement of principal and interest in common stock	-1,350,000
Ending balance	$50,000	$1,400,000

5_CAPITAL_STOCK_AND_STOCKBASED1

5. CAPITAL STOCK AND STOCK-BASED COMPENSATION (Details) (USD $)	6 Months Ended	12 Months Ended
	Feb. 28, 2015	Aug. 31, 2014
Capital Stock And Stock-based Compensation Details
Options outstanding, beginning	1,000,000	1,600,000
Expired	-100,000	-600,000
Options outstanding, ending	900,000	1,000,000
Weighted Average Exercise Price, beginning	$2.60	$2.46
Weighted Average Exercise Price, expired	$2.30	$2.23
Weighted Average Exercise Price, ending	$2.63	$2.60

5_CAPITAL_STOCK_AND_STOCKBASED2

5. CAPITAL STOCK AND STOCK-BASED COMPENSATION (Details 1) (USD $)	6 Months Ended
	Feb. 28, 2015	Aug. 31, 2014	Aug. 31, 2013
Options outstanding, ending	900,000	1,000,000	1,600,000
Weighted Average Exercise Price, ending	$2.63	$2.60	$2.46
Option group 1
Options outstanding, ending	100,000
Weighted Average Exercise Price, ending	$2.50
Expiry date	15-Jan-16
Option group 2
Options outstanding, ending	100,000
Weighted Average Exercise Price, ending	$2.75
Expiry date	15-Jan-17
Option group 3
Options outstanding, ending	100,000
Weighted Average Exercise Price, ending	$3
Expiry date	15-Jul-17
Option group 4
Options outstanding, ending	300,000
Weighted Average Exercise Price, ending	$2.50
Expiry date	17-Aug-17
Option group 5
Options outstanding, ending	300,000
Weighted Average Exercise Price, ending	$2.65
Expiry date	17-Aug-17

7_GAIN_ON_SETTLEMENT_OF_ACCOUN2

7. GAIN ON SETTLEMENT OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES - GAIN ON SETTLEMENT OF ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) (USD $)	6 Months Ended
	Feb. 28, 2015	Feb. 28, 2014
Accounts payable and accrued liabilities	$1,798,871
Agreed settlement amount	171,975
Gain on settlement of accounts payable and accrued liabilities	1,649,396	0
Number of shares of the Companybs common stock	1,322,884
FindersB fees
Accounts payable and accrued liabilities	1,079,802
Agreed settlement amount	0
Gain on settlement of accounts payable and accrued liabilities	1,079,802
Number of shares of the Companybs common stock	0
DirectorsB fees
Accounts payable and accrued liabilities	451,750
Agreed settlement amount	55,900
Gain on settlement of accounts payable and accrued liabilities	395,850
Number of shares of the Companybs common stock	430,000
Management fees
Accounts payable and accrued liabilities	233,891
Agreed settlement amount	116,075
Gain on settlement of accounts payable and accrued liabilities	117,816
Number of shares of the Companybs common stock	892,884
Consulting fees
Accounts payable and accrued liabilities	33,428
Agreed settlement amount	0
Gain on settlement of accounts payable and accrued liabilities	$33,428
Number of shares of the Companybs common stock	0