Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | May 20, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | Citadel Exploration, Inc. | |
Entity Central Index Key | 0001482075 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
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 | 48,956,151 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 | |
Entity Emerging Growth Company | false | |
Entity Small Business | true |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 94,322 | $ 86,441 |
Accounts receivable | 39,269 | 135,824 |
Prepaid expenses | 11,158 | 32,633 |
Total current assets | 144,749 | 254,898 |
Long term assets | ||
Right-of-use asset | 69,173 | |
Deposits | 35,100 | 35,100 |
Restricted cash | 200,000 | 200,000 |
Oil and gas properties, successful efforts basis | ||
Proved, net | 5,612,675 | 5,685,535 |
Unproved | 1,172,034 | 1,172,034 |
Equipment, net | 63,415 | 67,326 |
Total assets | 7,297,146 | 7,414,893 |
Current liabilities: | ||
Accounts payable and accrued payables | 2,723,515 | 2,657,590 |
Accrued interest payable | 478,350 | 390,224 |
Drilling obligation, net of discount of $21,000 and $42,000 as of March 31, 2019 and December 31, 2018 respectively | 686,082 | 676,060 |
Notes payable, net of unamortized discount | 2,398,628 | 2,353,003 |
Operating lease liability | 69,173 | |
Production payment liability - related party | 300,000 | 300,000 |
Total current liabilities | 6,655,748 | 6,376,877 |
Asset retirement obligation | 253,880 | 250,358 |
Total liabilities | 6,909,628 | 6,627,235 |
Stockholders' equity: | ||
Common stock, $0.001 par value, 300,000,000 shares authorized, 48,956,151 and 45,000,004 shares issued and outstanding as of March 31, 2019 and December 31, 2018 respectively | 48,957 | 45,000 |
Series A Preferred stock, $20.00 par value, 500,000 shares authorized, 400,615 and 395,615 shares issued and outstanding as of March 31, 2019 and December 31, 2018 respectively | 8,012,300 | 7,912,300 |
Additional paid-in capital | 6,146,914 | 6,150,871 |
Accumulated deficit | (13,820,653) | (13,320,513) |
Total stockholders' equity | 387,518 | 787,658 |
Total liabilities and stockholders' equity | $ 7,297,146 | $ 7,414,893 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, issued | 48,956,151 | 45,000,004 |
Common stock, outstanding | 48,956,151 | 45,000,004 |
Preferred stock, par value | $ 20 | $ 20 |
Preferred stock, shares authorized | 500,000 | 500,000 |
Preferred stock, issued | 400,615 | 395,615 |
Preferred stock, outstanding | 400,615 | 395,615 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenue | $ 175,592 | $ 212,554 |
Operating expenses: | ||
Lease operating expense | 169,020 | 285,796 |
General and administrative | 56,806 | 73,126 |
Depreciation, depletion and amortization | 75,024 | 133,426 |
Professional fees | 21,973 | 80,645 |
Executive compensation | 180,000 | 180,000 |
Total operating expenses | 502,823 | 752,993 |
Other expenses: | ||
Interest expense | (172,909) | (11,476) |
Total other expenses | (172,909) | (11,476) |
Loss before provision for income taxes | (500,140) | (551,915) |
Provision for income taxes | ||
Net loss | (500,140) | (551,915) |
Series A preferred stock dividends | (195,755) | (194,789) |
Net loss available to common stockholders | $ (695,895) | $ (746,704) |
Weighted average number of common shares - outstanding - basic and diluted | 48,164,922 | 44,718,759 |
Net loss per share - basic and diluted | $ (0.01) | $ (0.02) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDER EQUITY (Unaudited) - USD ($) | Common Stock | Preferred Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance at Dec. 31, 2017 | $ 44,450 | $ 7,887,300 | $ 5,691,239 | $ (10,788,489) | $ 2,834,500 |
Beginning Balance, Shares at Dec. 31, 2017 | 44,449,742 | 394,365 | |||
Common shares issued for services rendered | $ 450 | 89,602 | 90,052 | ||
Common shares issued for services rendered, Shares | 450,262 | ||||
Shares issued to settle bonus payable | $ 100 | 19,900 | 20,000 | ||
Shares issued to settle bonus payable, Shares | 100,000 | ||||
Preferred shares issued for cash | $ 25,000 | 25,000 | |||
Preferred shares issued for cash, Shares | 1,250 | ||||
Debt discount on warrants issued | 158,666 | 158,666 | |||
Net loss | (551,915) | (551,915) | |||
Ending Balance at Mar. 31, 2018 | $ 45,000 | $ 7,912,300 | 5,959,407 | (11,340,404) | 2,576,303 |
Ending Balance, Shares at Mar. 31, 2018 | 45,000,004 | 395,615 | |||
Beginning Balance at Dec. 31, 2018 | $ 45,000 | $ 7,912,300 | 6,150,871 | (13,320,513) | 787,658 |
Beginning Balance, Shares at Dec. 31, 2018 | 45,000,004 | 395,615 | |||
Common shares issued for special preferred stock dividend | $ 3,957 | (3,957) | |||
Common shares issued for special preferred stock dividend, Shares | 3,956,147 | ||||
Shares issued to settle bonus payable | |||||
Preferred shares issued for cash | $ 100,000 | 100,000 | |||
Preferred shares issued for cash, Shares | 5,000 | ||||
Net loss | (500,140) | (500,140) | |||
Ending Balance at Mar. 31, 2019 | $ 48,957 | $ 8,012,300 | $ 6,146,914 | $ (13,820,653) | $ 387,518 |
Ending Balance, Shares at Mar. 31, 2019 | 48,956,151 | 400,615 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
OPERATING ACTIVITIES | ||
Net loss | $ (500,140) | $ (551,915) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation, amortization and accretion | 75,024 | 133,426 |
Stock based compensation expense | 90,051 | |
Amortization of debt discount | 83,918 | |
Changes in operating assets and liabilities: | ||
Decrease (increase) in other receivable | 96,555 | 82,420 |
Decrease (increase) in prepaid expenses | 21,475 | 23,984 |
Increase (decrease) in accrued interest payable | 88,126 | 10,349 |
Increase (decrease) in accounts payable and accrued payables | 80,412 | 131,492 |
Net cash used in operating activities | (54,630) | (508,017) |
INVESTING ACTIVITIES | ||
Exploration and development of oil and gas properties | (9,218) | (1,039,413) |
Cash received from disposal of O&G asset | 100,215 | |
Net cash used in investing activities | (9,218) | (939,198) |
FINANCING ACTIVITIES | ||
Proceeds from sale of preferred stock, net of costs | 100,000 | 25,000 |
Proceeds from notes payable | 920,612 | |
Proceeds (payments) from (to) drilling liability | (10,978) | |
Repayments of notes payable | (17,293) | (19,229) |
Net cash provided by financing activities | 71,729 | 926,383 |
Net increase in cash and restricted cash | 7,881 | (520,832) |
Cash and restricted cash at beginning of year | 286,441 | 972,103 |
Cash and restricted cash at end of the period | 294,322 | 451,271 |
SUPPLEMENTAL INFORMATION: | ||
Income taxes paid | ||
Interest paid | ||
NON-CASH INVESTING AND FINANCING ACTIVITIES: | ||
ROU asset and operating lease obligation recognized upon adoption of Topic Eight Hundred Fourty Two in Two Thousand Ninteen | 92,231 | |
Shares issued to settle bonus payable | 20,000 | |
Common Stock issued for preferred stock dividend | 3,957 | |
Debt discount from senior secured credit facility | 158,667 | |
Asset retirement obligation | 12,128 | |
O&G property purchased still in AP | 14,487 | 26,248 |
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 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation The interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, 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 year ended December 31, 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 indicative of annual results. 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 “we”, “our or 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 March 31, 2019, 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. Fair value of financial instruments The carrying value of the Company’s financial instruments, including cash, due to shareholders/related parties, accounts and other payables and notes payable 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. 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 March 31, 2019 and December 31, 2018. Earnings per share The Company follows ASC Topic 260 to account for 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. Revenue Recognition Policy On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers, Recent pronouncements In February 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) to increase the transparency and comparability about leases among entities. Additional ASUs have been issued subsequent to ASU 2016-02 to provide supplementary clarification and implementation guidance for leases related to, among other things, the application of certain practical expedients, the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2016-02 and these additional ASUs are now codified as Accounting Standards Codification Standard 842 - “Leases” (“ASC 842”). ASC 842 supersedes the lease accounting guidance in Accounting Standards Codification 840 “Leases” (“ASC 840”) and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The Company elected to utilize the “package” of three expedients, as defined in ASC 842, which retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. The Company’s consolidated financial statements for the periods prior to the adoption of ASC 842 are not adjusted and are reported in accordance with the Company’s historical accounting policy. As of the date of implementation on January 1, 2019, the impact of the adoption of ASC 842 resulted in the recognition of a right of use asset and lease payable obligation on the Company’s consolidated balance sheet of approximately $92,231. As the right of use asset and the lease payable obligation were the same upon adoption of ASC 842, there was no cumulative effect impact on the Company’s retained earnings. |
GOING CONCERN
GOING CONCERN | 3 Months Ended |
Mar. 31, 2019 | |
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. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring startup costs and expenses. As a result, the Company has experienced recurring losses resulting in an accumulated deficit and a working capital deficit as of March 31, 2019 of $13,820,653 and $6,510,999, respectively. In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing. These factors raised substantial doubt as to the Company’s ability to continue as a going concern. 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 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 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
OIL AND GAS PROPERTIES | 3 Months Ended |
Mar. 31, 2019 | |
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: March 31, 2019 December 31, 2018 Oil and Natural Gas: Proved properties $ 4,116,671 $ 4,121,940 Unproved properties 1,172,034 1,172,034 Facilities 2,231,561 2,231,561 7,520,266 7,525,535 Less - accumulated depreciation, depletion, and amortization (735,557 ) (667,966 ) $ 6,784,709 $ 6,857,569 For the three months ended March 31, 2019 and March 31, 2018 total depreciation and depletion expense amounted to $75,024 and $133,426, respectively. |
CASH AND RESTRICTED CASH
CASH AND RESTRICTED CASH | 3 Months Ended |
Mar. 31, 2019 | |
Cash And Restricted Cash | |
CASH AND RESTRICTED CASH | NOTE 4 – CASH AND RESTRICTED CASH Amounts in consolidated balance sheets included as cash and restricted cash on the Company’s consolidated statements of cash flows are as follows: March 31, 2019 December 31, 2018 Cash $ 94,322 86,441 Restricted cash – long term 200,000 200,000 Total cash and restricted cash $ 294,322 $ 286,441 Restricted cash consists of one bond totaling $200,000 as of March 31, 2019. 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. This was a blanket bond, which will cover 50 wells. |
DEPOSITS
DEPOSITS | 3 Months Ended |
Mar. 31, 2019 | |
Banking and Thrift [Abstract] | |
DEPOSITS | NOTE 5 – DEPOSITS The Company had deposits of $35,100 for March 31, 2019 and December 31, 2018. |
NOTES PAYABLE
NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
NOTES PAYABLE | NOTE 6 – NOTES PAYABLE Notes payable consists of the following: March 31, 2019 (unaudited) December 31, 2018 Note payable to an entity for the financing of insurance $ — $ 13,939 — Senior Secured Facility Loan 10% interest; due March 31, 2019. 2,350,000 2,350,000 Unamortized debt discount — (62,924 ) Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022 23,928 25,598 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 24,700 26,390 Total – Notes Payable $ 2,398,628 $ 2,353,003 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 $2,350,000 on the facility and issued 1,175,000 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. Subsequent draws were used for general corporate purposes. The facility required the Company to achieve $1,000,000 in EBITDA as of December 31, 2018, which it did not attain. As such, the Company was in default of the facility’s covenants as of January 1, 2019 requiring the Company to pay a default interest rate of 15%. As of March 31, 2019 the Company was in default on its loan. The lender granted the Company a 45-day extension to refinance the loan. At this time, the Company has not been able to refinance the loan and remains in default. |
STOCKHOLDERS' EQUITY
STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
STOCKHOLDERS' EQUITY | 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. In January of 2019, we issued 3,956,147 shares of our common stock valued at $0.20 as dividend payment on our Series A Preferred Stock. In March of 2019, we sold an additional 5,000 shares of Series A Convertible Participating Preferred Stock for cash proceeds of $100,000. |
STOCK OPTION PLAN
STOCK OPTION PLAN | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and changes during the three months ended March 31, 2019: Number of Options Weighted-Average Exercise Price Aggregate Intrinsic Value Weighted-Average Remaining Life (Years) Outstanding at December 31, 2018 10,000,000 $ 0.20 $ — 2.48 Exercisable at December 31, 2018 10,000,000 $ 0.20 $ — 2.48 Outstanding at March 31, 2019 10,000,000 $ 0.20 $ — 2.23 Exercisable at March 31, 2019 10,000,000 $ 0.20 $ — 2.23 |
WARRANTS
WARRANTS | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
WARRANTS | NOTE 9 – WARRANTS The Company did not issue any new warrants during the three months ended March 31, 2019. Warrant activity for the three months ended March 31, 2019 is as follows: Number Weighted-Average Weighted-Average Outstanding at December 31, 2018 1,175,000 $ 0.10 4.34 Granted — $ 0.00 — Exercised — $ 0.00 — Outstanding at March 31, 2019 1,175,000 $ 0.10 4.10 |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
RELATED PARTY TRANSACTIONS | NOTE 10 – RELATED PARTY TRANSACTIONS During the period the Company did not have any purchases of equipment from related parties; historically the Company had purchased oil field equipment from one of its board members. As of March 31, 2019 and December 31, 2018, the Company had a production payment liability of $300,000 outstanding to a related party. The Company also has accrued interest related to a loan of $233,085 due to a related party. |
DRILLING OBLIGATION
DRILLING OBLIGATION | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
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 on this obligation which is amortized over a period of 18 months. Amortization of debt discount for each of the three months ended March 31, 2019 and 2018 amounted to $21,000. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2019 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 12 – SUBSEQUENT EVENTS On April 15, 2019 the Company executed an extension agreement with its Senior Secured lender which extended the maturity date of the loan to May 15, 2019. The Company was not able to settle the loan on the extended maturity date and is currently in default of its obligation. We continue to work with our lender to refinance the loan. The loan is secured by a deed of trust on the Kern Bluff Oil Field. On May 1, 2019 Armen Nahabedian tendered his resignation as Director, CEO & President of the Company. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
Accounting Policies [Abstract] | |
Basis of presentation | Basis of presentation The interim consolidated financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, 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 year ended December 31, 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 indicative of annual results. |
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 “we”, “our or 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 March 31, 2019, management believes that no impairment indicators exist. |
Use of estimates | 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. |
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, accounts and other payables and notes payable 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. |
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 March 31, 2019 and December 31, 2018. |
Earnings per share | Earnings per share The Company follows ASC Topic 260 to account for 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. |
Revenue recognition policy | Revenue Recognition Policy On January 1, 2018, we adopted ASU 2014-09, Revenue from Contracts with Customers, |
Recent pronouncements | Recent pronouncements In February 2016, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, “Leases (Topic 842)” (“ASU 2016-02”) to increase the transparency and comparability about leases among entities. Additional ASUs have been issued subsequent to ASU 2016-02 to provide supplementary clarification and implementation guidance for leases related to, among other things, the application of certain practical expedients, the rate implicit in the lease, lessee reassessment of lease classification, lessor reassessment of lease term and purchase options, variable payments that depend on an index or rate and certain transition adjustments. ASU 2016-02 and these additional ASUs are now codified as Accounting Standards Codification Standard 842 - “Leases” (“ASC 842”). ASC 842 supersedes the lease accounting guidance in Accounting Standards Codification 840 “Leases” (“ASC 840”) and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. It also requires additional disclosures about leasing arrangements. The Company elected to utilize the “package” of three expedients, as defined in ASC 842, which retain the lease classification and initial direct costs for any leases that existed prior to adoption of the standard. The Company’s consolidated financial statements for the periods prior to the adoption of ASC 842 are not adjusted and are reported in accordance with the Company’s historical accounting policy. As of the date of implementation on January 1, 2019, the impact of the adoption of ASC 842 resulted in the recognition of a right of use asset and lease payable obligation on the Company’s consolidated balance sheet of approximately $92,231. As the right of use asset and the lease payable obligation were the same upon adoption of ASC 842, there was no cumulative effect impact on the Company’s retained earnings. |
OIL AND GAS PROPERTIES (Tables)
OIL AND GAS PROPERTIES (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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: March 31, 2019 December 31, 2018 Oil and Natural Gas: Proved properties $ 4,116,671 $ 4,121,940 Unproved properties 1,172,034 1,172,034 Facilities 2,231,561 2,231,561 7,520,266 7,525,535 Less - accumulated depreciation, depletion, and amortization (735,557 ) (667,966 ) $ 6,784,709 $ 6,857,569 |
CASH AND RESTRICTED CASH (Table
CASH AND RESTRICTED CASH (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Disclosure Restricted Cash Tables Abstract | |
Schedule of Cash and Restricted Cash | Amounts in consolidated balance sheets included as cash and restricted cash on the Company’s consolidated statements of cash flows are as follows: March 31, 2019 December 31, 2018 Cash $ 94,322 86,441 Restricted cash – long term 200,000 200,000 Total cash and restricted cash $ 294,322 $ 286,441 |
NOTES PAYABLE (Tables)
NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Schedule of Notes Payable | Notes payable consists of the following: March 31, 2019 (unaudited) December 31, 2018 Note payable to an entity for the financing of insurance $ — $ 13,939 — Senior Secured Facility Loan 10% interest; due March 31, 2019. 2,350,000 2,350,000 Unamortized debt discount — (62,924 ) Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022 23,928 25,598 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 24,700 26,390 Total – Notes Payable $ 2,398,628 $ 2,353,003 |
STOCK OPTION PLAN (Tables)
STOCK OPTION PLAN (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and changes during the three months ended March 31, 2019: Number of Options Weighted-Average Exercise Price Aggregate Intrinsic Value Weighted-Average Remaining Life (Years) Outstanding at December 31, 2018 10,000,000 $ 0.20 $ — 2.48 Exercisable at December 31, 2018 10,000,000 $ 0.20 $ — 2.48 Outstanding at March 31, 2019 10,000,000 $ 0.20 $ — 2.23 Exercisable at March 31, 2019 10,000,000 $ 0.20 $ — 2.23 |
WARRANTS (Tables)
WARRANTS (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Notes to Financial Statements | |
Schedule of Warrants | Warrant activity for the three months ended March 31, 2019 is as follows: Number Weighted-Average Weighted-Average Outstanding at December 31, 2018 1,175,000 $ 0.10 4.34 Granted — $ 0.00 — Exercised — $ 0.00 — Outstanding at March 31, 2019 1,175,000 $ 0.10 4.10 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Going Concern | ||
Accumulated Deficit | $ 13,820,653 | $ 13,320,513 |
Working Capital Deficit | $ 6,510,999 |
OIL AND GAS PROPERTIES (Details
OIL AND GAS PROPERTIES (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Oil and Natural Gas: | ||
Proved properties | $ 5,612,675 | $ 5,685,535 |
Unproved properties | 1,172,034 | 1,172,034 |
Facilities | 2,231,561 | 2,231,561 |
Oil and Natural Gas Total | 7,520,266 | 7,525,535 |
Less accumulated depreciation, depletion, and amortization | (735,557) | (667,967) |
Oil and Natural Gas, Net | $ 6,784,709 | $ 6,869,697 |
OIL AND GAS PROPERTIES (Detai_2
OIL AND GAS PROPERTIES (Details Narrative) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Disclosure Oil And Gas Properties Details Narrative Abstract | ||
Depreciation and depletion expenses | $ 75,024 | $ 133,426 |
CASH AND RESTRICTED CASH (Detai
CASH AND RESTRICTED CASH (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Mar. 31, 2018 | Dec. 31, 2017 |
Disclosure Cash And Restricted Cash Details Abstract | ||||
Cash | $ 94,322 | $ 86,441 | ||
Restricted cash - long term | 200,000 | 200,000 | ||
Total cash and restricted cash | $ 294,322 | $ 286,441 | $ 451,271 | $ 972,103 |
DEPOSITS (Details Narrative)
DEPOSITS (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Banking and Thrift [Abstract] | ||
Deposits | $ 35,100 | $ 35,100 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Notes Payable | ||
Note payable to an entity for the financing of insurance premiums, unsecured; 7.75% interest, due March 2018 | $ 13,939 | |
Senior Secured Facility Loan 10% interest; due March 31, 2019. | 2,350,000 | 2,350,000 |
Unamortized debt discount | (62,924) | |
Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022 | 23,928 | 25,598 |
Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 | 24,700 | 26,390 |
Notes payable | $ 2,398,628 | $ 2,353,003 |
STOCKHOLDERS' EQUITY (Details N
STOCKHOLDERS' EQUITY (Details Narrative) - USD ($) | 1 Months Ended | 3 Months Ended | ||
Mar. 31, 2019 | Jan. 31, 2019 | Mar. 31, 2019 | Mar. 31, 2018 | |
Preferred shares issued for cash | $ 100,000 | $ 25,000 | ||
Series A Preferred Stock [Member] | ||||
Common shares issued as dividend payment on our Series A Preferred Stock | 3,956,147 | |||
Preferred shares issued for cash | $ 100,000 | |||
Preferred shares issued for cash, Shares | 5,000 |
STOCK OPTION PLAN (Details)
STOCK OPTION PLAN (Details) - Stock Option [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of Options | |
Outstanding, Beginning | shares | 10,000,000 |
Outstanding, Ending | shares | 10,000,000 |
Exercisable at end of period | shares | 10,000,000 |
Weighted-Average Exercise Price | |
Outstanding, Beginning | $ / shares | $ 0.20 |
Outstanding, Ending | $ / shares | 0.20 |
Exercisable at end of period | $ / shares | $ 0.20 |
Weighted-Average Remaining Life (Years) | |
Outstanding, Beginning | 2 years 5 months 23 days |
Outstanding, Ending | 2 years 2 months 23 days |
Exercisable at end of period | 2 years 2 months 23 days |
WARRANTS (Details)
WARRANTS (Details) - Warrant [Member] | 3 Months Ended |
Mar. 31, 2019$ / sharesshares | |
Number of Warrants | |
Outstanding, Beginning | shares | 1,175,000 |
Granted | shares | |
Exercised | shares | |
Outstanding, Ending | shares | 1,175,000 |
Weighted-Average Exercise Price | |
Outstanding, Beginning | $ / shares | $ .10 |
Granted | $ / shares | .00 |
Exercised | $ / shares | .00 |
Outstanding, Ending | $ / shares | $ .10 |
Weighted-Average Remaining Life (Years) | |
Outstanding, Beginning | 4 years 4 months 2 days |
Outstanding at at end of period | 4 years 1 month 6 days |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Related Party Transactions | ||
Production payment liability - related party | $ 300,000 | $ 300,000 |
Accrued Interest due to related party | $ 233,085 |
DRILLING OBLIGATION (Details Na
DRILLING OBLIGATION (Details Narrative) - USD ($) | 3 Months Ended | 18 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2019 | |
Drilling Obligation | |||
Amortization of debt discount | $ 21,000 | $ 21,000 | $ 126,000 |