Citadel Exploration (COIL) 10-Q 13 Aug 18 2018 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 13, 2018
Document And Entity Information
Entity Registrant Name	Citadel Exploration, Inc.
Entity Central Index Key	1,482,075
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
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		45,000,000
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,018

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 19,377	$ 772,103
Other receivable	126,962	16,540
Prepaid expenses	88,161	29,280
Product inventory		20,107
Total current assets	234,500	838,030
Deposits	35,100	10,100
Restricted cash	200,000	200,000
Oil and gas properties, successful efforts basis
Proved, net	5,887,316	5,018,086
Unproved	1,170,000	1,170,000
Equipment, net	75,147	82,969
Total assets	7,602,063	7,319,185
Current liabilities:
Accounts payable and accrued payables	2,175,964	2,220,938
Accrued interest payable	284,613	459,416
Drilling obligation, net of discount of $84,000 and $126,000 as of June 30, 2018 and December 31, 2017 respectively	707,129	700,000
Notes payable, net	1,752,431	579,951
Total current liabilities	4,920,137	3,960,305
Asset retirement obligation	243,284	224,380
Related party production payment liability	300,000	300,000
Total liabilities	5,463,421	4,484,685
Stockholders' equity:
Common stock, $0.001 par value, 300,000,000 shares authorized, 45,000,000 and 44,449,742 shares issued and outstanding as of June 30, 2018 and December 31, 2017 respectively	45,000	44,450
Series A Preferred stock, $20.00 par value, 500,000 shares authorized, 395,615 and 394,365 shares issued and outstanding as of June 30, 2018 and December 31, 2017 respectively	7,912,300	7,887,300
Additional paid-in capital	5,959,407	5,691,239
Accumulated deficit	(11,778,065)	(10,788,489)
Total stockholders' equity	2,138,642	2,834,500
Total liabilities and stockholders' equity	$ 7,602,063	$ 7,319,185

CONSOLIDATED BALANCE SHEETS (U3

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	100,000,000	100,000,000
Common stock, issued	45,000,000	44,449,742
Common stock, outstanding	45,000,000	44,449,742
Preferred stock, par value	$ 20	$ 20
Preferred stock, shares authorized	500,000	500,000
Preferred stock, issued	395,615	394,365
Preferred stock, outstanding	395,615	394,365

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Revenue	$ 299,989	$ 49,723	$ 512,542	$ 86,648
Operating expenses:
Lease operating expense	150,546	74,094	436,342	122,775
General and administrative	71,513	52,907	144,639	118,189
Depreciation, depletion and amortization	166,826	10,024	272,298	18,122
Professional fees	61,642	59,969	142,286	123,117
Executive compensation	180,000	152,295	360,000	306,885
Total operating expenses	630,527	349,289	1,355,565	689,088
Loss from operations	(330,538)	(299,566)	(843,023)	(602,440)
Other expenses:
Interest expense	(107,123)	(349,235)	(146,553)	(374,567)
Total other expenses	(107,123)	(349,235)	(146,553)	(374,567)
Loss before provision for income taxes	(437,661)	(648,801)	(989,576)	(977,007)
Provision for income taxes				(112)
Net loss	(437,661)	(648,801)	(989,576)	(976,895)
Series A preferred stock dividends	(197,266)		(392,055)
Net loss available to common stockholders	$ (634,927)	$ (648,801)	$ (1,381,631)	$ (976,895)
Weighted average number of common shares - outstanding - basic and diluted	45,000,000	40,336,620	44,863,194	40,336,620
Net loss per share - basic and diluted	$ (0.01)	$ (0.02)	$ (0.03)	$ (0.02)

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
OPERATING ACTIVITIES
Net loss	$ (989,576)	$ (976,895)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and accretion	272,298	18,122
Amortization of debt discount	88,622
Stock based preferred stock interest expense		406,800
Stock based compensation expense	90,051
Changes in operating assets and liabilities:
Increase/(Decrease) in other receivable	(110,422)	(10,315)
Decrease (increase) in prepaid expenses	10,814	(40,398)
Increase (decrease) in deposits	(25,000)
Increase (decrease) in accrued interest payable	54,585	(33,170)
Increase in accounts payable and accrued payables	75,026	218,644
Net cash used in operating activities	(533,602)	(417,212)
INVESTING ACTIVITIES
Exploration and development of oil and gas properties	(1,219,186)	(229,129)
Purchase of equipment	(6,749)	(2,215)
Cash received from disposal of O&G asset	131,240
Net cash used in investing activities	(1,094,695)	(231,344)
FINANCING ACTIVITIES
Proceeds from sale of preferred stock, net of costs	25,000	475,000
Repayments to drilling liability	920,612	67,552
Proceeds from notes payable	(34,871)
Repayments of notes payable	(35,170)	(46,994)
Net cash provided by financing activities	875,571	495,558
Net increase in cash, cash equivalents, and restricted cash	(752,726)	(152,998)
Cash, cash equivalents, and restricted cash at beginning of year	772,103	433,793
Cash, cash equivalents, and restricted cash at end of the period	19,377	280,795
SUPPLEMENTAL INFORMATION:
Reclass of inventory to O&G properties	20,107
Income taxes paid		(112)
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Insurance premium financing	69,695
Shares issued to pay off bonus payable	20,000
Debt Discount from senior secured credit facility	158,667
Asset retirement obligation	12,128
Non-cash addition of senior loan facility for payment of San Benito litigation	100,000
Accrued interest payable rolled over to senior loan facility	229,388
Conversion from preferred stock issuable		6,514,600
Issuance for preferred stock for services		92,708
Issuance of common stock for preferred stock interest		$ 406,800

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	6 Months Ended
	Jun. 30, 2018
Accounting Policies [Abstract]
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The accompanying unaudited interim financial statements and notes for the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim consolidated financial statements be read in conjunction with the financial statements of the Company for the period ended June 30, 2018 and notes thereto included in the Company’s 10-K annual report and all amendments. The Company follows the same accounting policies in the preparation of interim reports. Results of operations for the interim period are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018 . Principles of consolidation The consolidated financial statements include the accounts of Citadel Exploration, Inc., Citadel Exploration, LLC and Citadel Kern Bluff, LLC, the Company’s wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Citadel Exploration, Inc., Citadel Exploration, LLC and Citadel Kern Bluff, LLC will be collectively referred herein to as the “Company”. Nature of operations Currently, the Company is focused on the acquisition and development of oil and gas properties in California. Impairment The Company evaluates the impairment of its proved oil and natural gas properties on a field-by-field basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying values of proved properties are reduced to fair value when the expected undiscounted future cash flows are less than net book value. The fair values of proved properties are measured using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount. Significant inputs used to determine the fair values of proved properties include estimates of: (i) reserves; (ii) future operating and development costs; (iii) future commodity prices; and (iv) a market-based weighted average cost of capital rate. As of June 30, 2018, management believes that no impairment indicators exist. Use of estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates. The accounting policies most affected by management’s estimates and assumptions are the following. The reliance on estimates of proved reserves to compute the provision for depreciation, depletion and amortization and to determine the amount of any impairment of proved properties. The valuation of unproved acreage and proved crude oil and natural gas properties to determine the amount of any impairment of crude oil and natural gas properties. Judgement regarding the productive status of in-progress exploratory wells to determine the amount of any provision for abandonment and estimates regarding abandonment liabilities Fair value of financial instruments The carrying value of the Company’s financial instruments, including cash, due to shareholders/related parties and accounts and other payables approximate their fair values due to the immediate or short-term maturity of these instruments. It is management’s opinion that the Company is not exposed to significant interest, price or credit risks arising from these financial instruments. Reclassification and comparative figures Certain reclassifications have been made to conform the prior period’s financial information to the current period’s presentation. These reclassifications had no effect on previously reported net loss or accumulated deficit. Cash and cash equivalents The Company considers all highly liquid instruments with maturity of three months or less at the time of issuance to be cash equivalents. The Company had no cash equivalents as of June 30, 2018 and December 31, 2017. Earnings per share The Company follows ASC Topic 260 to account for the earnings per share. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. Disaggregation of revenue The Company does not disaggregate revenue, as all revenue is generated from oil at one property located in California. Revenues for the three months ending June 30, 2018 and 2017 was $299,989 and $49,723. Revenues for the six months ending June 30, 2018 and 2017 was $512,542 and $86,648. Recent accounting pronouncements In May 2014, the FASB issued ASC updated No. 2014-09, Revenue from Contracts with Customers (Topic 606 (ASU 2014-09) In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). The update is effective for years beginning December 15, 2017, including interim reporting periods within those fiscal years. Early adoption is permitted. The purpose of Update 216-18 is to clarify guidance and presentation related to restricted cash in the Statements of Cash Flows. The amendment requires beginning-of-period and end-of-period total amounts shown on the Statements of Cash Flows to include cash and cash equivalents as well as restricted cash and restricted cash equivalents. Adoption of this new standard did not have a material impact on the Company’s financial statements.

GOING CONCERN

GOING CONCERN	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
GOING CONCERN	NOTE 2 – GOING CONCERN The accompanying unaudited consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing. There can be no assurance that the Company will be successful to raise sufficient cash to operate over the 12 months immediately following the issuance of its financial reports . The Company incurred a net loss in the amount of $989,576 for the period ended June 30, 2018. The Company has incurred net losses since entering the crude oil and natural gas exploration industry and as of June 30, 2018 has an accumulated deficit of $11,778,065 and a working capital deficit of $4,685,637 which raises substantial doubt about the Company’s ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These consolidated financial statements as of June 30, 2018, do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from this uncertainty.

OIL AND GAS PROPERTIES, BUILDIN

OIL AND GAS PROPERTIES, BUILDINGS AND EQUIPMENT	6 Months Ended
	Jun. 30, 2018
Extractive Industries [Abstract]
OIL AND GAS PROPERTIES, BUILDINGS AND EQUIPMENT	NOTE 3 – OIL AND GAS PROPERTIES Oil and natural gas properties, buildings and equipment consist of the following: June December Oil and Natural Gas: Proved properties $ 3,973,449 $ 3,468,306 Unproved properties 1,170,000 1,170,000 Facilities 2,297,724 2,244,716 7,441,173 6,883,022 Less oil property impairment — (562,030 ) Less accumulated depreciation, depletion, and amortization (383,858 ) (132,906 ) 7,057,315 $ 6,188,086 Total accumulated depreciation totaled $383,858 and $132,906, respectively, as of June 30, 2018 and December 31, 2017. For the period ending June 30, 2018 and June 30, 2017 total depletion expense totaled $250,951 and $8,242, respectively.

RESTRICTED CASH

RESTRICTED CASH	6 Months Ended
	Jun. 30, 2018
Restricted Cash
RESTRICTED CASH	NOTE 4 – RESTRICTED CASH Restricted cash consists of one bond totaling $200,000 , which is a blanket bond that will cover up to 50 wells. This bond was required in the normal course of business in the oil and gas industry. The bond totaling $200,000 was purchased in August 2015 following the acquisition of the Kern Bluff Oil Field.

DEPOSITS

DEPOSITS	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
DEPOSITS	NOTE 5 – DEPOSITS The Company had deposits at June 30, 2018 and December 31, 2017 totaling $35,100 and $10,100, respectively. For the period ended June 30, 2018, the Company incurred a $25,000 deposit for natural gas purchases.

NOTES PAYABLE

NOTES PAYABLE	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
NOTES PAYABLE	NOTE 6 – NOTES PAYABLE Notes payable consists of the following: June December Note payable to an entity for the financing of insurance $ 55,779 $ 14,548 Debt Discount on Senior Secured Facility Loan $ (112,044 ) — Senior Secured Facility Loan 10% interest; due March 31, 2019. 1,750,000 — Chandler/Lloyd Trust-Notes Payable — 500,000 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022 29,759 32,351 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 28,937 33,052 Total – Notes Payable $ 1,752,431 $ 579,951 In March of 2018, the Company closed on a $3,000,000 senior secured credit facility. The facility bears 10% interest and has a one-year term. For every two dollars drawn on the facility, the investor receives one five-year warrant to purchase common stock at a price of $0.10. The Company has drawn down $1,750,000 on the facility and issued 875,000 warrants. The warrants were valued using the relative fair value and the amount recorded as a debt discount amortized over the life of the line of credit using effective interest method. Future drawdowns are at the discretion of the lender. The senior secured facility is secured by a deed of trust on the Kern Bluff Oil Field. Proceeds from the first draw where used to retire the previous bridge loan and accrued interest. The balance was used for general corporate purposes, including the drilling of a well.

STOCKHOLDERS' EQUITY (DEFICIT)

STOCKHOLDERS' EQUITY (DEFICIT)	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
STOCKHOLDERS' EQUITY (DEFICIT)	NOTE 7 – STOCKHOLDERS’ EQUITY (DEFICIT) The Company is authorized to issue 300,000,000 shares of its $0.001 par value common stock. The Company is authorized to issue 500,000 shares of Series A Convertible Participating Preferred Stock. For the six-months ended June 30, 2018, the Company issued 450,262 and 100,000 common shares for $90,051 of services rendered and $20,000 of bonus payable, respectively. For the three and six month ended March 31, 2018 and June 30, 2018 the common stock balances were the same. The Company also issued 1,250 preferred shares for $25,000 cash. For the six-months ended June 30, 2018, the Company incurred a net loss of $989,576. For the three and six month ended March 31, 2018 and June 30, 2018 the preferred stock balances were the same.

STOCK OPTION PLAN

STOCK OPTION PLAN	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
STOCK OPTION PLAN	NOTE 8 – STOCK OPTION PLAN The following is a summary of the status of all of the Company’s stock options as of June 30, 2018 and changes during the period ended on that date: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Life (Years) Outstanding as of December 31, 2017 9,500,000 $ 0.20 3.26 Granted — $ 0.00 — Exercised — $ 0.00 — Cancelled — $ 0.00 — Outstanding as of June 30, 2018 9,500,000 $ 0.20 2.76 Exercisable at June 30, 2018 9,500,000 $ 0.20 2.76

WARRANTS

WARRANTS	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
WARRANTS	NOTE 9 – WARRANTS In March 2018, the Company closed on a $3,000,000 Senior Secured Credit Facility. The Company drew down $1,750,000 at close. As per the terms of the facility, the Company issued 875,000 warrants to the lender. The warrants were valued using the relative fair value and the amount recorded as a debt discount amortized over the life of the line of credit using effective interest method Number of Warrants Weighted-Average Exercise Price Weighted-Average Remaining Life (Years) Outstanding at December 31, 2017 $ 0.00 — Granted 875,000 $ 0.10 5.00 Exercised — $ 0.00 — Cancelled — $ 0.00 — Total Outstanding at June 30, 2018 875,000 $ 0.10 4.71 Exercisable at June 30, 2018 875,000 $ 0.10 4.71

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
RELATED PARTY TRANSACTIONS	NOTE 10 – RELATED PARTY TRANSACTIONS During the six months ended June 30, 2018, the Company purchased $120,717 of equipment from Grey Energy. Grey Energy is owned by a member of the Board of Directors of the Company. As of the end of the period, the Company had a production payment liability of $300,000 outstanding to a related party. The CEO & CFO continue to defer $20,000 a month of their $30,000 per month salary. For the six-month period ended June 30, 2018, the CEO & CFO deferred $240,000 in salary.

DRILLING OBLIGATION

DRILLING OBLIGATION	6 Months Ended
	Jun. 30, 2018
Drilling Obligation
DRILLING OBLIGATION	NOTE 11 – DRILLING OBLIGATION The Company entered into a joint venture agreement with investors to drill two wells in the fourth quarter of 2017. The $700,000 liability has an 18% rate of return. The Company originally booked a debt discount of $126,000 and will be amortized over the next 18 months. During the six-month ended, the company amortized $42,000 of the debt discount. During the period , the Company paid $34,871 towards this obligation from oil production.

SUMMARY OF SIGNIFICANT ACCOUN17

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	6 Months Ended
	Jun. 30, 2018
Accounting Policies [Abstract]
Basis of presentation	Basis of presentation The accompanying unaudited interim financial statements and notes for the Company have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. It is suggested that these interim consolidated financial statements be read in conjunction with the financial statements of the Company for the period ended June 30, 2018 and notes thereto included in the Company’s 10-K annual report and all amendments. The Company follows the same accounting policies in the preparation of interim reports. Results of operations for the interim period are not necessarily indicative of the results that may be expected for the fiscal year ending December 31, 2018 .
Principles of consolidation	Principles of consolidation The consolidated financial statements include the accounts of Citadel Exploration, Inc., Citadel Exploration, LLC and Citadel Kern Bluff, LLC, the Company’s wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated. Citadel Exploration, Inc., Citadel Exploration, LLC and Citadel Kern Bluff, LLC will be collectively referred herein to as the “Company”.
Nature of operations	Nature of operations Currently, the Company is focused on the acquisition and development of oil and gas properties in California.
Impairment	Impairment The Company evaluates the impairment of its proved oil and natural gas properties on a field-by-field basis whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The carrying values of proved properties are reduced to fair value when the expected undiscounted future cash flows are less than net book value. The fair values of proved properties are measured using valuation techniques consistent with the income approach, converting future cash flows to a single discounted amount. Significant inputs used to determine the fair values of proved properties include estimates of: (i) reserves; (ii) future operating and development costs; (iii) future commodity prices; and (iv) a market-based weighted average cost of capital rate. As of June 30, 2018, management believes that no impairment indicators exist.
Use of estimate	Use of estimates The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates. The accounting policies most affected by management’s estimates and assumptions are the following. The reliance on estimates of proved reserves to compute the provision for depreciation, depletion and amortization and to determine the amount of any impairment of proved properties. The valuation of unproved acreage and proved crude oil and natural gas properties to determine the amount of any impairment of crude oil and natural gas properties. Judgement regarding the productive status of in-progress exploratory wells to determine the amount of any provision for abandonment and estimates regarding abandonment liabilities.
Fair value of financial instruments	Fair value of financial instruments The carrying value of the Company’s financial instruments, including cash, due to shareholders/related parties and accounts and other payables approximate their fair values due to the immediate or short-term maturity of these instruments. It is management’s opinion that the Company is not exposed to significant interest, price or credit risks arising from these financial instruments.
Reclassification and comparative figures	Reclassification and comparative figures Certain reclassifications have been made to conform the prior period’s financial information to the current period’s presentation. These reclassifications had no effect on previously reported net loss or accumulated deficit.
Earnings per share	Earnings per share The Company follows ASC Topic 260 to account for the earnings per share. Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.
Disaggregation of revenue	Disaggregation of revenue The Company does not disaggregate revenue, as all revenue is generated from oil at one property located in California. Revenues for the three months ending June 30, 2018 and 2017 was $299,989 and $49,723. Revenues for the six months ending June 30, 2018 and 2017 was $512,542 and $86,648.
Recent pronouncements	Recent accounting pronouncements In May 2014, the FASB issued ASC updated No. 2014-09, Revenue from Contracts with Customers (Topic 606 (ASU 2014-09) In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” (“ASU 2016-18”). The update is effective for years beginning December 15, 2017, including interim reporting periods within those fiscal years. Early adoption is permitted. The purpose of Update 216-18 is to clarify guidance and presentation related to restricted cash in the Statements of Cash Flows. The amendment requires beginning-of-period and end-of-period total amounts shown on the Statements of Cash Flows to include cash and cash equivalents as well as restricted cash and restricted cash equivalents. Adoption of this new standard did not have a material impact on the Company’s financial statements.

OIL AND GAS PROPERTIES, BUILD18

OIL AND GAS PROPERTIES, BUILDINGS AND EQUIPMENT (Tables)	6 Months Ended
	Jun. 30, 2018
Extractive Industries [Abstract]
Schedule of Oil and natural gas properties, buildings and equipment	Oil and natural gas properties, buildings and equipment consist of the following: June December Oil and Natural Gas: Proved properties $ 3,973,449 $ 3,468,306 Unproved properties 1,170,000 1,170,000 Facilities 2,297,724 2,244,716 7,441,173 6,883,022 Less oil property impairment — (562,030 ) Less accumulated depreciation, depletion, and amortization (383,858 ) (132,906 ) 7,057,315 $ 6,188,086

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
Schedule of Notes Payable	Notes payable consists of the following: June December Note payable to an entity for the financing of insurance $ 55,779 $ 14,548 Debt Discount on Senior Secured Facility Loan $ (112,044 ) — Senior Secured Facility Loan 10% interest; due March 31, 2019. 1,750,000 — Chandler/Lloyd Trust-Notes Payable — 500,000 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022 29,759 32,351 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 28,937 33,052 Total – Notes Payable $ 1,752,431 $ 579,951

STOCK OPTION PLAN (Tables)

STOCK OPTION PLAN (Tables)	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
Schedule of Company's stock options	The following is a summary of the status of all of the Company’s stock options as of June 30, 2018 and changes during the period ended on that date: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Life (Years) Outstanding as of December 31, 2017 9,500,000 $ 0.20 3.26 Granted — $ 0.00 — Exercised — $ 0.00 — Cancelled — $ 0.00 — Outstanding as of June 30, 2018 9,500,000 $ 0.20 2.76 Exercisable at June 30, 2018 9,500,000 $ 0.20 2.76

WARRANTS (Tables)

WARRANTS (Tables)	6 Months Ended
	Jun. 30, 2018
Notes to Financial Statements
Schedule of Warrants	In March 2018, the Company closed on a $3,000,000 Senior Secured Credit Facility. The Company drew down $1,750,000 at close. As per the terms of the facility, the Company issued 875,000 warrants to the lender. The warrants were valued using the relative fair value and the amount recorded as a debt discount amortized over the life of the line of credit using effective interest method Number of Warrants Weighted-Average Exercise Price Weighted-Average Remaining Life (Years) Outstanding at December 31, 2017 $ 0.00 — Granted 875,000 $ 0.10 5.00 Exercised — $ 0.00 — Cancelled — $ 0.00 — Total Outstanding at June 30, 2018 875,000 $ 0.10 4.71 Exercisable at June 30, 2018 875,000 $ 0.10 4.71

OIL AND GAS PROPERTIES, BUILD22

OIL AND GAS PROPERTIES, BUILDINGS AND EQUIPMENT (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Oil and Natural Gas:
Proved properties	$ 3,973,449	$ 3,468,306
Unproved properties	1,170,000	1,170,000
Facilities	2,297,724	2,244,716
Oil and Natural Gas Total	7,441,173	6,883,022
Less oil property impairment		(562,030)
Less accumulated depreciation, depletion, and amortization	(383,858)	(132,906)
Oil and Natural Gas, Net	$ 7,057,315	$ 6,188,086

OIL AND GAS PROPERTIES, BUILD23

OIL AND GAS PROPERTIES, BUILDINGS AND EQUIPMENT (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Oil And Gas Properties Buildings And Equipment Details Narrative
Depletion Expense, Net	$ 250,951	$ 8,242

RESTRICTED CASH (Details Narrat

RESTRICTED CASH (Details Narrative)	Aug. 25, 2015USD ($)
Restricted Cash Details Narrative
Restricted Cash	$ 200,000

NOTES PAYABLE (Details Narrativ

NOTES PAYABLE (Details Narrative) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Notes Payable Details Narrative
Note payable to an entity for the financing of insurance premiums, unsecured; 7.75% interest, due March 2018	$ 55,779	$ 14,548
Debt Discount	(112,044)
Senior Secured Facility Loan 10% interest; due March 31, 2019.	1,750,000
Chandler/Lloyd Trust-Notes Payable		500,000
Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022	29,759	32,351
Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022	28,937	33,052
Notes payable	$ 1,752,431	$ 579,951

STOCK OPTION PLAN (Details)

STOCK OPTION PLAN (Details) - $ / shares	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Number of Options
Outstanding, Beginning	9,500,000
Granted
Exercised
Cancelled
Outstanding, Ending	9,500,000
Exercisable at June 30, 2018		9,500,000
Weighted-Average Exercise Price
Outstanding, Beginning	$ 0.20
Granted	0
Exercised	0
Cancelled	0
Outstanding, Ending	$ 0.20
Exercisable at June 30		$ 0.20
Weighted-Average Remaining Life (Years)
Outstanding, Beginning	3 years 3 months 4 days
Outstanding, Ending	2 years 8 months 12 days
Exercisable June 30	2 years 8 months 12 days

WARRANTS (Details)

WARRANTS (Details) - $ / shares	6 Months Ended
	Jun. 30, 2018	Dec. 31, 2017
Number of Options
Outstanding, Beginning	9,500,000
Granted
Exercised
Cancelled
Outstanding, Ending	9,500,000
Exercisable at June 30		9,500,000
Weighted-Average Exercise Price
Outstanding, Beginning	$ 0.20
Granted	0
Exercised	0
Cancelled	0
Outstanding, Ending	$ 0.20
Exercisable at June 30		$ 0.20
Weighted-Average Remaining Life (Years)
Outstanding, Beginning	3 years 3 months 4 days
Outstanding at June 30	2 years 8 months 12 days
Exercisable at June 30	2 years 8 months 12 days
Warrant [Member]
Number of Options
Outstanding, Beginning
Granted	875,000
Exercised
Cancelled
Outstanding, Ending	875,000
Exercisable at June 30	875,000
Weighted-Average Exercise Price
Outstanding, Beginning	$ 0
Granted	0.10
Exercised	0
Cancelled	0
Outstanding, Ending	0.10
Exercisable at June 30	$ 0.10	$ 0
Weighted-Average Remaining Life (Years)
Outstanding, Beginning
Grants	5 years
Outstanding at June 30	4 years 8 months 16 days
Exercisable at June 30	4 years 8 months 16 days