Citadel Exploration (COIL) 10-Q 14 Nov 18 2018 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2018	Nov. 14, 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	Sep. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		45,000,000
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,018
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Ex Transition Period	false

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Current assets:
Cash	$ 307,381	$ 772,103
Unbilled and joint interest billing receivables	277,497	16,540
Prepaid expenses	66,687	29,280
Product inventory		20,107
Total current assets	651,565	838,030
Deposits	35,100	10,100
Restricted cash	200,000	200,000
Oil and gas properties, successful efforts basis
Proved, net	5,923,193	5,018,086
Unproved	1,170,000	1,170,000
Equipment, net	71,237	82,969
Total assets	8,051,095	7,319,185
Current liabilities:
Accounts payable and accrued payables	2,430,794	2,220,938
Accrued interest payable	330,585	459,416
Drilling obligation, net of discount of $63,000 and $126,000 as of September 30, 2018 and December 31, 2017 respectively	700,742	700,000
Notes payable, net	2,214,909	579,951
Total current liabilities	5,677,030	3,960,305
Asset retirement obligation	246,799	224,380
Related party production payment liability	300,000	300,000
Total liabilities	6,223,829	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 September 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 September 30, 2018 and December 31, 2017 respectively	7,912,300	7,887,300
Additional paid-in capital	6,014,828	5,691,239
Accumulated deficit	(12,144,862)	(10,788,489)
Total stockholders' equity	1,827,266	2,834,500
Total liabilities and stockholders' equity	$ 8,051,095	$ 7,319,185

CONSOLIDATED BALANCE SHEETS (_2

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 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		9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017	Sep. 30, 2018	Sep. 30, 2017
Income Statement [Abstract]
Revenue	$ 320,774	$ 46,824	$ 928,092	$ 133,472
Operating expenses:
Lease operating expense	202,562	94,069	676,937	216,844
General and administrative	75,204	60,632	219,843	178,821
Depreciation, depletion and amortization	135,387	8,844	407,684	26,965
Professional fees	40,951	37,738	183,237	160,855
Executive compensation	180,000	165,525	540,000	472,411
Total operating expenses	634,104	366,808	2,027,702	1,055,896
Loss from operations	(313,330)	(319,984)	(1,099,610)	(922,424)
Other expenses:
Interest expense	(110,210)	(198,070)	(256,763)	(572,636)
Total other expenses	(110,210)	(198,070)	(256,763)	(572,636)
Loss before provision for income taxes	(423,540)	(518,054)	(1,356,373)	(1,495,060)
Provision for income taxes		(2,188)		(2,300)
Net loss	(423,540)	(520,242)	(1,356,373)	(1,497,360)
Series A preferred stock dividends	(199,433)		(591,488)
Net loss available to common stockholders	$ (622,973)	$ (520,242)	$ (1,947,861)	$ (1,497,360)
Weighted average number of common shares - outstanding - basic and diluted	45,000,000	41,348,002	44,907,286	40,692,353
Net loss per share - basic and diluted	$ (0.01)	$ (0.01)	$ (0.04)	$ (0.04)

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
OPERATING ACTIVITIES
Net loss	$ (1,356,373)	$ (1,497,360)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation, amortization and accretion	407,684	26,965
Amortization of debt discount	151,807
Preferred stock dividend expense		406,800
Stock based compensation expense	90,051
Changes in operating assets and liabilities:
Increase in unbilled and joint interest billing receivables	(260,957)	(2,065)
Decrease (increase) in prepaid expenses	33,337	(12,414)
Increase in deposits	(25,000)	(200)
Increase in accrued interest payable	100,557	161,189
Increase in accounts payable and accrued	329,857	286,321
Net cash used in operating activities	(529,037)	(636,859)
INVESTING ACTIVITIES
Exploration and development of oil and gas properties	(1,383,024)	(345,117)
Property acquisitions		(600,000)
Cash received from disposal of O&G asset	131,240
Purchase of equipment	(6,749)	(2,215)
Net cash used in investing activities	(1,258,533)	(947,332)
FINANCING ACTIVITIES
Proceeds from sale of preferred stock, net of costs	25,000	875,000
Proceeds from notes payable	1,420,612	672,552
Repayments to drilling liability	(62,258)
Repayments of notes payable	(60,506)	(55,617)
Net cash provided by financing activities	1,322,848	1,491,935
Net increase in cash and restricted cash	(464,722)	(92,256)
Cash and restricted cash at beginning of year	972,103	433,793
Cash and restricted cash at end of the period	507,381	341,537
SUPPLEMENTAL INFORMATION:
Cash paid for interest	3,057
Reclass of inventory to O&G properties	20,107
Income taxes paid		2,300
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Insurance premium financing	70,744
Shares issued to pay off bonus payable	20,000
Debt Discount from senior secured credit facility	214,087
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	9 Months Ended
	Sep. 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 September 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 September 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 September 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 September 30, 2018 and 2017 w ere $320,774 and $46,824, respectively. Revenues for the nine months ending September 30, 2018 and 2017 w ere $928,092 and $133,472, respectively. 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. These accounting pronouncements were adopted by the Company as of January 1, 2018. The purpose of Update 2016 -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	9 Months Ended
	Sep. 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 $1,356,373 for the period ended September 30, 2018. The Company has incurred net losses since entering the crude oil and natural gas exploration industry and as of September 30, 2018 has an accumulated deficit of $12,144,862 and a working capital deficit of $5,025,465 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 unaudited consolidated financial statements as of September 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	9 Months Ended
	Sep. 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: September December Oil and Natural Gas: Proved properties $ 4,137,287 $ 3,468,306 Unproved properties 1,170,000 1,170,000 Facilities 2,297,724 2,244,716 7,605,011 6,883,022 Less oil property impairment — (562,030 ) Less accumulated depreciation, depletion, and amortization (511,818 ) (132,906 ) $ 7,093,193 $ 6,188,086 Total accumulated depreciation totaled $511,818 and $132,906, respectively, as of September 30, 2018 and December 31, 2017 , respectively. For the period ending September 30, 2018 and September 30, 2017 total depletion expense totaled $378,912 and $12, 588, respectively.

RESTRICTED CASH

RESTRICTED CASH	9 Months Ended
	Sep. 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. The detail breakdown of restricted cash and cash is depicted in the Consolidated Statement of Cash Flows as follows: Nine Months Ended 2018 2017 Cash and restricted cash at end of period $ 507,381 $ 341,537 Cash at end of period 307,381 141,537 Restricted cash at end of period 200,000 200,000 Cash and restricted cash, end of period $ 507,381 $ 341,537

DEPOSITS

DEPOSITS	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
DEPOSITS	NOTE 5 – DEPOSITS The Company had deposits at September 30, 2018 and December 31, 2017 totaling $35,100 and $10,100, respectively, which pertain to: a natural gas deposit to purchase gas per contract; deposit on building rent; and a deposit to the County of San Benito for a drilling program which we are in the process of trying to have the County refund.

NOTES PAYABLE

NOTES PAYABLE	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
NOTES PAYABLE	NOTE 6 – NOTES PAYABLE Notes payable consists of the following: September December Note payable to an entity for the financing of insurance premiums, unsecured; 7.99% interest, due February 2019 34,847 14,548 Debt Discount on Senior Secured Facility Loan (125,280 ) — Senior Secured Facility Loan 10% interest; due March 31, 2019. 2,250,000 — Chandler/Lloyd Trust-Notes Payable 10% interest — 500,000 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due December 2022 28,075 32,351 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 27,267 33,052 Total – Notes Payable $ 2,214,909 $ 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 $2,250,000 on the facility and issued 1,125,000 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)	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
STOCKHOLDERS' EQUITY (DEFICIT)	NOTE 7 – STOCKHOLDERS’ EQUITY 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 nine-months ended September 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 six and nine month s ended June 30, 2018 and September 30, 2018 the common stock balances were the same. The Company also issued 1,250 preferred shares for $25,000 cash. For the nine-months ended September 30, 2018 , the Company incurred a net loss of $1,356,37 3. For the six and nine months ended June 30, 2018 and September 30, 2018 the preferred stock balances were the same. On December 15, 2017, the Company adopted the 2017 Restricted Stock Unit Plan (RSU) authorizing the issuance of 10,000,000 restricted stock units to management and future employees.

STOCK OPTION PLAN

STOCK OPTION PLAN	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
STOCK OPTION PLAN	NOTE 8 – STOCK OPTION PLAN The following is a summary of the status of all the Company’s stock options as of September 30, 2018 and changes during the period ended on that date: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Life Outstanding as of December 31, 9,500,000 $ 0.20 3.26 Granted 500,000 $ 0.20 6.84 Exercised — $ 0.00 — Cancelled — $ 0.00 — Outstanding as of September 30, 2018 10,000,000 $ 0.20 2.73 Exercisable at September 30, 2018 10,000,000 $ 0.20 2.73

WARRANTS

WARRANTS	9 Months Ended
	Sep. 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. As of September 30, 2018, the Company has drawn $2,250,000. As per the terms of the facility, the Company has issued 1,125,000 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 Weighted-Average Weighted-Average Outstanding at December 31, $ 0.00 — Granted 1,125,000 $ 0.10 4. 58 Exercised — $ 0.00 — Cancelled — $ 0.00 — Total outstanding at 1,125,000 $ 0.10 4.58 Exercisable at September 1,125,000 $ 0.10 4. 58

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
RELATED PARTY TRANSACTIONS	NOTE 10 – RELATED PARTY TRANSACTIONS During the nine months ended September 30, 2018, the Company purchased $125,217 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 nine-month period ended September 30, 2018, the CEO & CFO deferred $360,000 in salary. Pursuant to the adoption of the 2017 Restricted Stock Unit Plan (RSU), the Company issued 5,500,000 shares to three employees. In March of 2018 the Board of Directors authorized a 2% Overriding Royalty Interest (ORRI) to two members of management. The Company plans to begin paying this accrued ORRI in the fourth quarter of 2018.

DRILLING OBLIGATION

DRILLING OBLIGATION	9 Months Ended
	Sep. 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 nine-month ended September 30, 2018, the company amortized $63,000 of the debt discount. During the period, the Company paid $62,258 towards this obligation from oil production.

REVISION OF PREVIOUSLY-ISSUED I

REVISION OF PREVIOUSLY-ISSUED INTERIM FINANCIAL STATEMENTS	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
REVISION OF PREVIOUSLY-ISSUED INTERIM FINANCIAL STATEMENTS	NOTE 12 – REVISION OF PREVIOUSLY-ISSUED INTERIM FINANCIAL STATEMENTS During the three months ended September 30, 2018, the Company identified errors in its financial statements for the second quarter of the period ended September 30 , 2018, as included in the Company’s 10-Q for the period ended June 30, 2018, related to the restatement of prior period revenues. Specifically, the Company accounted for a Joint Venture Partner as a royalty owner in the three and six months ended June 30, 2018. The Company made adjustments in the current quarter relating to this. The Company assessed the effect of the above errors in the aggregate on prior periods’ financial statements in accordance with the SEC’s Staff Accounting Bulletins No. 99 and 108 and, based on an analysis of quantitative and qualitative factors, determined that the errors were not material to any of the Company’s prior interim and annual financial statements. The Company determined that the correction of the cumulative amounts of the errors would be material to its consolidated financial statements for the three and nine months ended September 30, 2018. Therefore, the Company revised its previously-issued financial statements for the second quarter of fiscal 2018. The balance sheet as of June 30, 2018 and the statement of operations for the three and six months ended June 30, 2018 included in this Form 10- Q are revised as described below for those adjustments. All financial information contained in the accompanying notes to these financial statements has been revised to reflect the correction of these errors. The following tables present the effect of the aforementioned revisions on the Company’s consolidated balance sheet for the six months ended June 30, 2018: Six Months Ended June 30, 2018 As Reported Revision As Restated Drilling obligation, net of discount of $84,000 as of June 30, 2018 707,129 (34,871 ) 672,258 Accounts payable and accrued liabilities 2,175,964 (21,872 ) 2,154,092 Total current liabilities 4,920,137 (56,743 ) 4,863,394 Total liabilities 5,463,421 (56,743 ) 5,406,678 Accumulated deficit (11,778,065 ) 56, 743 (11,721,322 ) Total stockholders' equity 2,138,642 56, 743 2,195,385 Total liabilities and stockholders’ equity 7,602,063 — 7,602,063 The following tables present the effect of the aforementioned revisions on the Company’s consolidated statement of operations for the three and six months ended June 30, 2018: Three Months Ended June 30, 2018 As Reported Revision As Restated Revenue $ 299,989 84,455 384,444 Lease operating expense 150,546 33,819 184,365 Total operating expenses 630,527 33,819 664,346 Loss from operations (330,538 ) 50,636 (279,902 ) Loss before provision for income taxes (437,661 ) 50,636 (387,025 ) Net loss (437,661 ) 50,636 (387,025 ) Net loss attributable to common stockholders (634,927 ) 50,636 (584,291 ) Net loss per share (basic and diluted) (0.01 ) — (0.01 ) Six Months Ended June 30, 2018 As Reported Revision As Restated Revenue $ 512,542 94,776 607,318 Lease operating expense 436,342 38,033 398,309 Total operating expenses 1,355,565 38,033 1,317,532 Loss from operations (843,023 ) 56,743 (786,280 ) Loss before provision for income taxes (989,576 ) 56,743 (932,833 ) Net loss (989,576 ) 56,743 (932,833 ) Net loss attributable to common stockholders (1,381,631 ) 56,743 (1,324,888 ) Net loss per share (basic and diluted) (0.03 ) — (0.03 )

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 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 September 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 September 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.
Cash and Cash Equivalents	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 September 30, 2018 and December 31, 2017.
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 September 30, 2018 and 2017 w ere $320,774 and $46,824, respectively. Revenues for the nine months ending September 30, 2018 and 2017 w ere $928,092 and $133,472, respectively.
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. These accounting pronouncements were adopted by the Company as of January 1, 2018. The purpose of Update 2016 -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, BUILD_2

OIL AND GAS PROPERTIES, BUILDINGS AND EQUIPMENT (Tables)	9 Months Ended
	Sep. 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: September December Oil and Natural Gas: Proved properties $ 4,137,287 $ 3,468,306 Unproved properties 1,170,000 1,170,000 Facilities 2,297, 724 2,244,716 7,605,011 6,883,022 Less oil property impairment — (562,030 ) Less accumulated depreciation, depletion, and amortization (511,818 ) (132,906 ) $ 7,093,193 $ 6,188,086

RESTRICTED CASH (Tables)

RESTRICTED CASH (Tables)	9 Months Ended
	Sep. 30, 2018
Disclosure Restricted Cash Tables Abstract
Schedule of Cash and Restricted Cash	The detail breakdown of restricted cash and cash is depicted in the Consolidated Statement of Cash Flows as follows: Nine Months Ended 2018 2017 Cash and restricted cash at end of period $ 507,381 $ 341,537 Cash at end of period 307,381 141,537 Restricted cash at end of period 200,000 200,000 Cash and restricted cash, end of period $ 507,381 $ 341,537

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
Schedule of Notes Payable	Notes payable consists of the following: September December Note payable to an entity for the financing of insurance premiums, unsecured; 7.99% interest, due February 2019 34,847 14,548 Debt Discount on Senior Secured Facility Loan (125,280 ) — Senior Secured Facility Loan 10% interest; due March 31, 2019. 2,250,000 — Chandler/Lloyd Trust-Notes Payable 10% interest — 500,000 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due December 2022 28,075 32,351 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 27,267 33,052 Total – Notes Payable $ 2,214,909 $ 579,951

STOCK OPTION PLAN (Tables)

STOCK OPTION PLAN (Tables)	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
Schedule of Company's stock options	The following is a summary of the status of all the Company’s stock options as of September 30, 2018 and changes during the period ended on that date: Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Life Outstanding as of December 31, 9,500,000 $ 0.20 3.26 Granted 500,000 $ 0.20 6.84 Exercised — $ 0.00 — Cancelled — $ 0.00 — Outstanding as of September 30, 2018 10,000,000 $ 0.20 2.73 Exercisable at September 30, 2018 10,000,000 $ 0.20 2.73

WARRANTS (Tables)

WARRANTS (Tables)	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
Schedule of 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 Number Weighted-Average Weighted-Average Outstanding at December 31, $ 0.00 — Granted 1,125,000 $ 0.10 4. 58 Exercised — $ 0.00 — Cancelled — $ 0.00 — Total outstanding at 1,125,000 $ 0.10 4.58 Exercisable at September 1,125,000 $ 0.10 4. 58

REVISION OF PREVIOUSLY-ISSUED_2

REVISION OF PREVIOUSLY-ISSUED INTERIM FINANCIAL STATEMENTS (Tables)	9 Months Ended
	Sep. 30, 2018
Notes to Financial Statements
Schedule of Revision of Balance Sheet and Statement of Operations	The following tables present the effect of the aforementioned revisions on the Company’s consolidated balance sheet for the six months ended June 30, 2018: Six Months Ended June 30, 2018 As Reported Revision As Restated Drilling obligation, net of discount of $84,000 as of June 30, 2018 707,129 (34,871 ) 672,258 Accounts payable and accrued liabilities 2,175,964 (21,872 ) 2,154,092 Total current liabilities 4,920,137 (56,743 ) 4,863,394 Total liabilities 5,463,421 (56,743 ) 5,406,678 Accumulated deficit (11,778,065 ) 56, 743 (11,721,322 ) Total stockholders' equity 2,138,642 56, 743 2,195,385 Total liabilities and stockholders’ equity 7,602,063 — 7,602,063 The following tables present the effect of the aforementioned revisions on the Company’s consolidated statement of operations for the three and six months ended June 30, 2018: Three Months Ended June 30, 2018 As Reported Revision As Restated Revenue $ 299,989 84,455 384,444 Lease operating expense 150,546 33,819 184,365 Total operating expenses 630,527 33,819 664,346 Loss from operations (330,538 ) 50,636 (279,902 ) Loss before provision for income taxes (437,661 ) 50,636 (387,025 ) Net loss (437,661 ) 50,636 (387,025 ) Net loss attributable to common stockholders (634,927 ) 50,636 (584,291 ) Net loss per share (basic and diluted) (0.01 ) — (0.01 ) Six Months Ended June 30, 2018 As Reported Revision As Restated Revenue $ 512,542 94,776 607,318 Lease operating expense 436,342 38,033 398,309 Total operating expenses 1,355,565 38,033 1,317,532 Loss from operations (843,023 ) 56,743 (786,280 ) Loss before provision for income taxes (989,576 ) 56,743 (932,833 ) Net loss (989,576 ) 56,743 (932,833 ) Net loss attributable to common stockholders (1,381,631 ) 56,743 (1,324,888 ) Net loss per share (basic and diluted) (0.03 ) — (0.03 )

OIL AND GAS PROPERTIES, BUILD_3

OIL AND GAS PROPERTIES, BUILDINGS AND EQUIPMENT (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Oil and Natural Gas:
Proved properties	$ 5,923,193	$ 5,018,086
Unproved properties	1,170,000	1,170,000
Facilities	2,297,724	2,244,716
Oil and Natural Gas Total	7,605,011	6,883,022
Less oil property impairment		(562,030)
Less accumulated depreciation, depletion, and amortization	(511,818)	(132,906)
Oil and Natural Gas, Net	$ 7,093,193	$ 6,188,086

OIL AND GAS PROPERTIES, BUILD_4

OIL AND GAS PROPERTIES, BUILDINGS AND EQUIPMENT (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2018	Sep. 30, 2017
Disclosure Oil And Gas Properties Buildings And Equipment Details Narrative Abstract
Depletion Expense, Net	$ 378,912	$ 12,588

RESTRICTED CASH (Details Narrat

RESTRICTED CASH (Details Narrative) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Aug. 25, 2015
Disclosure Restricted Cash Details Narrative Abstract
Restricted Cash	$ 200,000	$ 200,000	$ 200,000	$ 200,000

RESTRICTED CASH (Details)

RESTRICTED CASH (Details) - USD ($)	Sep. 30, 2018	Dec. 31, 2017	Sep. 30, 2017	Dec. 31, 2016	Aug. 25, 2015
Disclosure Restricted Cash Details Abstract
Cash	$ 307,381	$ 772,103	$ 141,537
Restricted cash	200,000	200,000	200,000		$ 200,000
Cash and restricted cash	$ 507,381	$ 972,103	$ 341,537	$ 433,793

NOTES PAYABLE (Details Narrativ

NOTES PAYABLE (Details Narrative) - USD ($)	Sep. 30, 2018	Dec. 31, 2017
Notes Payable
Note payable to an entity for the financing of insurance premiums, unsecured; 7.99% interest, due February 2019	$ 34,847	$ 14,548
Debt Discount	(125,280)
Senior Secured Facility Loan 10% interest; due March 31, 2019.	2,250,000
Chandler/Lloyd Trust-Notes Payable		500,000
Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due December 2022	28,075	32,351
Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022	27,267	33,052
Notes payable	$ 2,214,909	$ 579,951

STOCK OPTION PLAN (Details)

STOCK OPTION PLAN (Details) - Stock Option [Member] - $ / shares	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Number of Options
Outstanding, Beginning	9,500,000
Granted	500,000
Exercised
Cancelled
Outstanding, Ending	10,000,000
Exercisable at June 30, 2018		10,000,000
Weighted-Average Exercise Price
Outstanding, Beginning	$ 0.20
Granted	0.20
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
Grants	6 years 10 months 2 days
Outstanding, Ending	2 years 8 months 23 days
Exercisable June 30	2 years 8 months 23 days

WARRANTS (Details)

WARRANTS (Details) - Warrant [Member] - $ / shares	9 Months Ended
	Sep. 30, 2018	Dec. 31, 2017
Number of Options
Outstanding, Beginning
Granted	1,125,000
Exercised
Cancelled
Outstanding, Ending	1,125,000
Exercisable at June 30	1,125,000
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	4 years 6 months 29 days
Outstanding at June 30	4 years 6 months 29 days
Exercisable at June 30	4 years 6 months 29 days

REVISION OF PREVIOUSLY-ISSUED_3

REVISION OF PREVIOUSLY-ISSUED INTERIM FINANCIAL STATEMENTS (Details) - USD ($)	Sep. 30, 2018	Jun. 30, 2018	Dec. 31, 2017
Drilling obligation, net of discount of $84,000 as of June 30, 2018	$ 700,742		$ 700,000
Accounts payable and accrued liabilities	2,430,794		2,220,938
Total current liabilities	5,677,030		3,960,305
Total liabilities	6,223,829		4,484,685
Accumulated deficit	(12,144,862)		(10,788,489)
Total stockholders' equity	1,827,266		2,834,500
Total liabilities and stockholders’' equity	$ 8,051,095		$ 7,319,185
As Reported
Drilling obligation, net of discount of $84,000 as of June 30, 2018		$ 707,129
Accounts payable and accrued liabilities		2,175,964
Total current liabilities		4,920,137
Total liabilities		5,463,421
Accumulated deficit		(11,778,065)
Total stockholders' equity		2,138,642
Total liabilities and stockholders’' equity		7,602,063
Revision
Drilling obligation, net of discount of $84,000 as of June 30, 2018		(34,871)
Accounts payable and accrued liabilities		(21,872)
Total current liabilities		(56,743)
Total liabilities		(56,743)
Accumulated deficit		56,743
Total stockholders' equity		56,743
Total liabilities and stockholders’' equity
As Restated
Drilling obligation, net of discount of $84,000 as of June 30, 2018		672,258
Accounts payable and accrued liabilities		2,154,092
Total current liabilities		4,863,394
Total liabilities		5,406,678
Accumulated deficit		(11,721,322)
Total stockholders' equity		2,195,385
Total liabilities and stockholders’' equity		$ 7,602,063

REVISION OF PREVIOUSLY-ISSUED_4

REVISION OF PREVIOUSLY-ISSUED INTERIM FINANCIAL STATEMENTS (Details 2) - USD ($)	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2018	Jun. 30, 2018	Sep. 30, 2017	Jun. 30, 2018	Sep. 30, 2018	Sep. 30, 2017
Revenue	$ 320,774		$ 46,824		$ 928,092	$ 133,472
Lease operating expense	202,562		94,069		676,937	216,844
Total operating expenses	634,104		366,808		2,027,702	1,055,896
Loss from operations	(313,330)		(319,984)		(1,099,610)	(922,424)
Loss before provision for income taxes	(423,540)		(518,054)		(1,356,373)	(1,495,060)
Net loss	(423,540)		(520,242)		(1,356,373)	(1,497,360)
Net loss attributable to common stockholders	$ (622,973)		$ (520,242)		$ (1,947,861)	$ (1,497,360)
Net loss per share (basic and diluted)	$ (0.01)		$ (0.01)		$ (0.04)	$ (0.04)
As Restated
Revenue		$ 384,444		$ 607,318
Lease operating expense		184,365		398,309
Total operating expenses		664,346		1,317,532
Loss from operations		(279,902)		(786,280)
Loss before provision for income taxes		(387,025)		(932,833)
Net loss		(387,025)		(932,833)
Net loss attributable to common stockholders		$ (584,291)		$ (1,324,888)
Net loss per share (basic and diluted)		$ (0.01)		$ (0.03)
As Reported
Revenue		$ 299,989		$ 512,542
Lease operating expense		150,546		436,342
Total operating expenses		630,527		1,355,565
Loss from operations		(330,538)		(843,023)
Loss before provision for income taxes		(437,661)		(989,576)
Net loss		(437,661)		(989,576)
Net loss attributable to common stockholders		$ (634,927)		$ (1,381,631)
Net loss per share (basic and diluted)		$ (0.01)		$ (0.03)
Revision
Revenue		$ 84,455		$ 94,776
Lease operating expense		33,819		38,033
Total operating expenses		33,819		38,033
Loss from operations		50,636		56,743
Loss before provision for income taxes		50,636		56,743
Net loss		50,636		56,743
Net loss attributable to common stockholders		$ 50,636		$ 56,743
Net loss per share (basic and diluted)