Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Sep. 30, 2013 | Oct. 31, 2013 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'Petron Energy II, Inc. | ' |
Entity Central Index Key | '0001467434 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-13 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
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 | ' | 222,382,437 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2013 | ' |
Consolidated_Balance_Sheets_Un
Consolidated Balance Sheets (Unaudited) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Current Assets | ' | ' |
Cash | $8,600 | $17,089 |
Accounts Receivable | 48,915 | 18,332 |
Total Current Assets | 57,515 | 35,421 |
Pipeline, net of accumulated depreciation of $330,195 and $245,156, respectively | 778,428 | 742,844 |
Producing Oil & Gas Properties, net of accumulated depletion of $836,195 and $731,795, respectively | 1,773,278 | 1,424,729 |
Other Depreciable Equipment, net of accumulated depreciation of $88,693 and $45,361, respectively | 638,599 | 71,915 |
Other Assets | 31,531 | 34,790 |
TOTAL ASSETS | 3,279,351 | 2,309,699 |
Current Liabilities | ' | ' |
Bank Overdraft | 61,737 | ' |
Accounts Payable--Trade | 1,382,699 | 716,140 |
Accounts Payable--Related Party | 214,239 | 18,082 |
Accrued Liabilities | 544,690 | 375,284 |
Derivative Liability | 85,926 | ' |
Notes Payable-- short-term | 484,679 | 170,500 |
Total Current Liabilities | 2,773,970 | 1,280,006 |
Asset Retirement Obligation | 222,000 | 40,278 |
Common Stock Issuance Liability | 1,525,829 | 5,904,090 |
Notes Payable--long-term | 275,000 | 250,000 |
TOTAL LIABILITIES | 4,796,799 | 7,474,374 |
STOCKHOLDERS' EQUITY | ' | ' |
Series A, $0.001 par value, 1,000 shares designated, issued and outstanding | 1 | 1 |
Series B, $0.001 par value, 5,910,000 shares designated, 1,389,218 and 5,910,000 shares issued and outstanding, respectively | 1,389 | 5,910 |
Common Stock, $0.001 par value, 1,000,000,000 shares authorized, 164,190,038 and 11,976,942 issued and outstanding, respectively | 164,190 | 11,977 |
Additional Paid-In Capital | 20,313,750 | 14,638,660 |
Accumulated Deficit | -21,996,778 | -19,821,223 |
Total Stockholders' Equity | -1,517,448 | -5,164,675 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $3,279,351 | $2,309,699 |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Sep. 30, 2013 | Dec. 31, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Accumulated depreciation of Pipeline | $330,572 | $245,156 |
Accumulated depletion of Producing Oil and Gas Properties | 836,195 | 731,795 |
Other Depreciable Equipment, net of accumulated depreciation | $88,693 | $45,361 |
Series B Preferred stock, par value | $0.00 | $0.00 |
Series B Preferred stock, authorized | 5,910,000 | 5,910,000 |
Series B Preferred stock, issued | 1,389,218 | 5,910,000 |
Series B Preferred stock, outstanding | 1,389,218 | 5,910,000 |
Series A Preferred stock, par value | $0.00 | $0.00 |
Series A Preferred stock, authorized | 1,000 | 1,000 |
Series A Preferred stock, issued | 1,000 | 1,000 |
Series A Preferred stock, outstanding | 1,000 | 1,000 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized | 1,000,000,000 | 1,000,000,000 |
Common stock, issued | 164,190,038 | 11,976,942 |
Common stock, outstanding | 164,190,038 | 11,976,942 |
Consolidated_Statements_of_Ope
Consolidated Statements of Operations (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | |
Revenues | ' | ' | ' | ' |
Oil & Gas Sales | $76,403 | $78,808 | $204,037 | $274,384 |
Costs and Expenses | ' | ' | ' | ' |
Cost of Revenue | 133,753 | 42,287 | 475,750 | 189,266 |
Depletion and Depreciation | 108,904 | 50,725 | 233,149 | 143,174 |
Impairment Charge | ' | ' | ' | 5,903,000 |
Derivative Expense | 42,052 | ' | 283,352 | ' |
General and Administrative | 138,497 | 310,221 | 1,120,675 | 1,388,514 |
Interest Expense | 122,118 | 5,798 | 266,666 | 5,798 |
Total Expenses | 545,324 | 409,031 | 2,379,592 | 7,629,752 |
Loss from Operations Before Income Taxes | -468,921 | -330,223 | -2,175,555 | -7,355,368 |
Income Taxes | ' | ' | ' | ' |
Net Loss | ($468,921) | ($330,223) | ($2,175,555) | ($7,355,368) |
Loss per share--basic and diluted | $0 | ($0.03) | ($0.04) | ($0.65) |
Weighted average number of shares--basic and diluted | 108,475,130 | 11,339,587 | 60,440,132 | 11,347,341 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
OPERATING ACTIVITIES | ' | ' |
Net Loss | ($2,175,555) | ($7,355,368) |
Adjustments to reconcile net loss to cash used by operating activitites: | ' | ' |
Depletion and depreciation | 233,148 | 143,174 |
Amortization of debt discount | 155,760 | ' |
Derivative expense | 283,352 | ' |
Impairment charge | ' | 5,903,000 |
Penalty interest | 45,250 | ' |
Common stock issued for services | 95,198 | 149,483 |
Imputed interest on shareholders notes payable | 22,891 | ' |
Common stock issued for lawsuit settlement | 138,000 | ' |
Note payable issued for services | 25,000 | ' |
Change in other asset and liabilities: | ' | ' |
Decrease (Increase) in oil & gas receivables | -30,583 | 29,704 |
Decrease in other assets | 3,259 | ' |
Increase in accounts payable | 243,715 | 284,266 |
Increase in accrued liabilities | 173,626 | 43,612 |
Decrease in asset retirement obligation | -3,900 | ' |
Cash used in operating activities | -790,839 | -802,129 |
INVESTING ACTIVITIES | ' | ' |
Investment in oil & gas properties | -267,326 | -215,923 |
Pipeline investment | -121,000 | ' |
Accounts payable specifically for fixed asset purchases | 619,000 | ' |
Purchase of other equipment | -610,016 | -7,810 |
Cash used in investing activities | -379,342 | -223,733 |
FINANCING ACTIVITIES | ' | ' |
Bank overdraft | 61,737 | 66,433 |
Proceeds from sales of common stock | 505,150 | 813,000 |
Proceeds from notes payable | 674,630 | 63,000 |
Loan fees | -79,825 | ' |
Cash from financing activities | 1,161,692 | 942,433 |
Decrease in cash | -8,489 | -83,429 |
Cash at beginning of period | 17,089 | 106,850 |
Cash at end of period | 8,600 | 23,421 |
Non-Cash Investing and Financing Activities: | ' | ' |
Oil & gas properties | -185,622 | -5,910,000 |
Notes Payable | -221,336 | ' |
Common Stock | 107,436 | ' |
Preferred Stock | -4,521 | 5,910 |
Additional Paid-in Capital | 4,996,628 | ' |
Derivative liability | -197,426 | ' |
Common stock issuance liability | -4,416,261 | 5,904,090 |
Accrued Interest | -4,220 | ' |
Asset Retirement Obligation | 185,622 | ' |
Loan fees | ($260,300) | ' |
Incorporation_and_Nature_of_Op
Incorporation and Nature of Operations | 3 Months Ended |
Sep. 30, 2013 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
Incorporation and Nature of Operations | ' |
1. INCORPORATION AND NATURE OF OPERATIONS | |
Petron Energy II, Inc. (“Petron” or the “Company”) was formerly known as Petron Energy Special Corp. and was incorporated in September 2007 under the laws of the State of Texas; and, on April 2011, was reincorporated in the state of Nevada. Pursuant to a Plan of Merger, the parent company, Petron Energy Special Corp. was merged into its wholly owned subsidiary, Petron Energy II, Inc. The surviving entity was Petron Energy II, Inc. The effective date of the Plan of Merger was January 3, 2012. | |
The Company is engaged primarily in the acquisition, development, production, exploration for and the sale of oil, gas and gas liquids in the United States. As of September 30, 2013 the Company is operating in the states of Texas and Oklahoma. In addition, the Company operates two gas gathering systems located in Tulsa, Wagoner, Rogers and Mayes counties of Oklahoma. The pipeline consists of approximately 132 miles of steel and poly pipe, a gas processing plant and other ancillary equipment. The Company sells its oil and gas products primarily to a domestic pipeline and to another oil company. |
Summary_of_Significant_Account
Summary of Significant Accounting Policies | 3 Months Ended | |
Sep. 30, 2013 | ||
Accounting Policies [Abstract] | ' | |
Summary of Significant Accounting Policies | ' | |
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Basis of presentation | ||
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: | ||
Subsidiary Name | Organization Date | |
Petron Energy II Pipeline, Inc. | 1-Apr-08 | |
Petron Energy II Well Service, Inc. | 1-Jul-08 | |
The interim consolidated financial statements as of September 30, 2013 and 2012 have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2012. In the opinion of management, the interim unaudited consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. | ||
The consolidated statements of operations reflect the results of operations of the Company for the three month and nine month periods ended September 30, 2013 and 2012. Operating results for the nine month period ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. | ||
Going concern uncertainty | ||
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred a net loss of $2,175,555 for the nine month period ended September 30, 2013 (2012 - $7,355,368) and at September 30, 2013 had an accumulated deficit of $21,996,778 (2012 – $18,850,528). While the Company has recognized revenues from operations, the revenues generated are not sufficient to sustain operations. The Company does not have sufficient funds to acquire new business assets or maintain its existing operations at this time. Management’s plan is to raise equity and/or debt financing as required but there is no certainty that such financing will be available or that it will be available at acceptable terms. The outcome of these matters cannot be predicted at this time. | ||
These financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty. | ||
Subsequent events | ||
Subsequent to September 30, 2013 the Company entered into 2 convertible notes payable in the total amount of $145,000 with a financial institution. The notes bear interest at 8% and the conversion terms are a 50% discount of the stock market price based on the average of the three lowest closing prices for the ten trading days before conversion. The Company also entered into 3 convertible notes payable in the total amount of $149,000 with another financial institution. These notes bear interest at 9% and the conversion terms are a 50% discount from the lowest closing bid price during the ten trading days before conversion. |
Summary_of_Significant_Account1
Summary of Significant Accounting Policies (Policies) | 3 Months Ended | |
Sep. 30, 2013 | ||
Accounting Policies [Abstract] | ' | |
Basis of presentation | ' | |
Basis of presentation | ||
The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries: | ||
Subsidiary Name | Organization Date | |
Petron Energy II Pipeline, Inc. | 1-Apr-08 | |
Petron Energy II Well Service, Inc. | 1-Jul-08 | |
The interim consolidated financial statements as of September 30, 2013 and 2012 have been prepared in accordance with generally accepted accounting principles for interim financial information. Accordingly, these consolidated financial statements do not include all of the disclosures required by generally accepted accounting principles for complete financial statements. These interim unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements for the year ended December 31, 2012. In the opinion of management, the interim unaudited consolidated financial statements furnished herein include all adjustments, all of which are of a normal recurring nature, necessary for a fair statement of the results for the interim periods presented. | ||
The consolidated statements of operations reflect the results of operations of the Company for the three month and nine month periods ended September 30, 2013 and 2012. Operating results for the nine month period ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013. | ||
Going concern uncertainty | ' | |
Going concern uncertainty | ||
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States applicable to a going concern, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company has incurred a net loss of $2,175,555 for the nine month period ended September 30, 2013 (2012 - $7,355,368) and at September 30, 2013 had an accumulated deficit of $21,996,778 (2012 – $18,850,528). While the Company has recognized revenues from operations, the revenues generated are not sufficient to sustain operations. The Company does not have sufficient funds to acquire new business assets or maintain its existing operations at this time. Management’s plan is to raise equity and/or debt financing as required but there is no certainty that such financing will be available or that it will be available at acceptable terms. The outcome of these matters cannot be predicted at this time. | ||
These financial statements do not include any adjustments to reflect the future effects on the recoverability and classification of assets or the amounts and classification of liabilities that might result from the outcome of this uncertainty. | ||
Subsequent events | ' | |
Subsequent events | ||
Subsequent to September 30, 2013 the Company entered into 2 convertible notes payable in the total amount of $145,000 with a financial institution. The notes bear interest at 8% and the conversion terms are a 50% discount of the stock market price based on the average of the three lowest closing prices for the ten trading days before conversion. The Company also entered into 3 convertible notes payable in the total amount of $149,000 with another financial institution. These notes bear interest at 9% and the conversion terms are a 50% discount from the lowest closing bid price during the ten trading days before conversion. |
Summary_of_Significant_Account2
Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2013 | Sep. 30, 2012 | Dec. 31, 2012 | |
Accounting Policies [Abstract] | ' | ' | ' | ' | ' |
Net loss | ($468,921) | ($330,223) | ($2,175,555) | ($7,355,368) | ' |
Accumulated deficit | -21,996,778 | -18,850,528 | -21,996,778 | -18,850,528 | -19,821,223 |
Convertible notes payable | 145,000 | ' | 145,000 | ' | ' |
Additional convertible notes payable | $149,000 | ' | $149,000 | ' | ' |