Citadel Exploration (COIL) 10-Q 19 Nov 19 2019 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2019	Nov. 19, 2019
Document And Entity Information
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2019
Current Fiscal Year End Date	--12-31
Entity File Number	000-54639
Entity Registrant Name	Citadel Exploration, Inc.
Entity Central Index Key	0001482075
Entity Tax Identification Number	27-1550482
Entity Incorporation, State or Country Code	NV
Entity Address, Address Line One	417 31st Street
Entity Address, Address Line Two	Unit A
Entity Address, Address Line Three	Newport Beach
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92663
City Area Code	949
Local Phone Number	612-8040
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Common Stock, Shares Outstanding		48,956,151
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2019

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Current assets:
Cash	$ 5,741	$ 86,441
Accounts receivable		135,824
Prepaid expenses and other current assets	56,798	32,633
Total current assets	62,539	254,898
Long term assets
Right-of-use asset	15,372
Deposits	35,100	35,100
Restricted cash	200,000	200,000
Oil and gas properties, successful efforts basis
Proved, net	5,564,531	5,685,535
Unproved		1,172,034
Equipment, net	55,594	67,326
Total assets	5,933,136	7,414,893
Current liabilities:
Accounts payable and accrued payables	2,908,376	2,657,590
Accrued interest payable	661,460	390,224
Drilling obligation, net of discount of $0 and $42,000 as of September 30, 2019 and December 31, 2018 respectively	698,154	676,060
Notes payable, net of unamortized discount	2,444,457	2,353,003
Notes payable, related party	119,000
Operating lease liability	15,372
Production payment liability - related party	300,000	300,000
Total current liabilities	7,146,818	6,376,877
Asset retirement obligation	261,174	250,358
Total liabilities	7,407,992	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 September 30, 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 September 30, 2019 and December 31, 2018 respectively	8,012,300	7,912,300
Additional paid-in capital	6,146,914	6,150,871
Accumulated deficit	(15,683,027)	(13,320,513)
Total stockholders' equity	(1,474,856)	787,658
Total liabilities and stockholders' equity	$ 5,933,136	$ 7,414,893

CONSOLIDATED BALANCE SHEETS (_2

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 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		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Income Statement [Abstract]
Revenue	$ 28,404	$ 320,774	$ 279,488	$ 928,092
Operating expenses:
Lease operating expense	62,986	202,562	337,946	676,937
General and administrative	38,504	75,204	151,897	219,843
Depreciation, depletion and amortization	20,594	135,387	134,702	407,685
Professional fees	19,908	40,951	76,026	183,237
Executive compensation	90,000	180,000	390,000	540,000
Impairment of oil and gas properties	843,574		1,172,034
Total operating expenses	1,075,566	634,104	2,262,605	2,027,702
Other expenses:
Interest expense	(94,192)	(110,210)	(379,397)	(256,763)
Total other expenses	(94,192)	(110,210)	(379,397)	(256,763)
Loss before provision for income taxes	(1,141,354)	(423,540)	(2,362,514)	(1,356,373)
Provision for income taxes
Net loss	(1,141,354)	(423,540)	(2,362,514)	(1,356,373)
Series A preferred stock dividends	(201,954)	(199,433)	(597,468)	(591,488)
Net loss available to common stockholders	$ (1,343,308)	$ (622,973)	$ (2,959,982)	$ (1,947,861)
Weighted average number of common shares - outstanding - basic and diluted	48,956,151	45,000,000	48,956,151	44,907,286
Net loss per share - basic and diluted	$ (0.02)	$ (0.01)	$ (0.06)	$ (0.04)

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		89,601		90,051
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
Warrants issued on debt			214,088		214,088
Net loss				(1,356,373)	(1,356,373)
Ending Balance at Sep. 30, 2018	$ 45,000	$ 7,912,300	6,014,828	(12,144,862)	1,827,266
Ending Balance, Shares at Sep. 30, 2018	45,000,004	395,615
Beginning Balance at Jun. 30, 2018	$ 45,000	$ 7,912,300	5,959,407	(11,721,322)	2,195,385
Beginning Balance, Shares at Jun. 30, 2018	45,000,004	395,615
Warrants issued on debt			55,421		55,421
Net loss				(423,540)	(423,540)
Ending Balance at Sep. 30, 2018	$ 45,000	$ 7,912,300	6,014,828	(12,144,862)	1,827,266
Ending Balance, Shares at Sep. 30, 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				(2,362,514)	(2,362,514)
Ending Balance at Sep. 30, 2019	$ 48,957	$ 8,012,300	6,146,914	(15,683,027)	(1,474,856)
Ending Balance, Shares at Sep. 30, 2019	48,956,151	400,615
Beginning Balance at Jun. 30, 2019	$ 48,957	$ 8,012,300	6,146,914	(14,541,673)	(333,502)
Beginning Balance, Shares at Jun. 30, 2019	48,956,151	400,615
Net loss				(1,141,354)	(1,141,354)
Ending Balance at Sep. 30, 2019	$ 48,957	$ 8,012,300	$ 6,146,914	$ (15,683,027)	$ (1,474,856)
Ending Balance, Shares at Sep. 30, 2019	48,956,151	400,615

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018
OPERATING ACTIVITIES
Net loss	$ (2,362,514)	$ (1,356,373)
Adjustments to reconcile net loss to net cash used in operating activities:
Impairment of oil and gas properties	1,172,034
Noncash operating lease expense	76,859
Depreciation, amortization and accretion	134,702	407,685
Stock based compensation expense		90,051
Amortization of debt discount	104,923	151,807
Changes in operating assets and liabilities:
Decrease in operating lease obligations	(76,859)
Decrease (increase) in accounts receivable	135,824	(260,957)
Increase in deposits		(25,000)
Decrease (increase) in prepaid expenses and other current assets	50,026	33,337
Increase (decrease) in accrued interest payable	271,236	100,557
Increase (decrease) in accounts payable and accrued payables	286,339	329,857
Net cash used in operating activities	(207,430)	(529,037)
INVESTING ACTIVITIES
Additions to oil and gas properties	(26,704)	(1,383,024)
Purchase of fixed assets		(6,749)
Cash received from disposal of O&G asset		131,240
Net cash used in investing activities	(26,704)	(1,258,533)
FINANCING ACTIVITIES
Proceeds from sale of preferred stock, net of costs	100,000	25,000
Proceeds from notes payable, related party	119,000
Proceeds from notes payable		1,420,612
Payments to drilling liability	(19,906)	(62,258)
Repayments of notes payable	(45,660)	(60,506)
Net cash provided by financing activities	153,434	1,322,848
Net increase in cash and restricted cash	(80,700)	(464,722)
Cash and restricted cash at beginning of year	286,441	972,103
Cash and restricted cash at end of the period	205,741	507,381
SUPPLEMENTAL INFORMATION:
Income taxes paid
Interest paid		3,057
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Reclass of inventory to O&G properties		20,107
Right-of-use asset and operating lease obligation recognized upon adoption of Topic Eight Four Two	92,231
Shares issued to settle bonus payable		20,000
Common Stock issued for preferred stock dividend	3,957
Accrued interest payable rolled over to senior loan facility		229,388
Debt discount from warrants issued on debt		214,087
Asset retirement obligation		12,128
Non-cash addition of senior loan facility for payment of San Benito litigation		100,000
Insurance premium financing	$ 74,191	$ 70,744

SUMMARY OF SIGNIFICANT ACCOUNTI

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 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 September 30, 2019, management decided to impair all unproved oil and gas properties. This decision was driven by the fact that the Company is currently in default on its senior secured loan, and as such the lender through court order has appointed a third-party trustee to oversee operations at the Kern Bluff Oil Field. Without operational control, management felt it was prudent to impair these unproved leases as the Company will not be in the position to renew leases and or develop the leases in the near term. Consequently, the Company recognized an impairment loss of $1,172,034 for the nine months ended September 30, 2019. 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 September 30, 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	9 Months Ended
	Sep. 30, 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 September 30, 2019 of $15,683,027 and $7,084,279, 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 or debt 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	9 Months Ended
	Sep. 30, 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: September December Oil and Natural Gas: Proved properties $ 4,113,090 $ 4,121,940 Unproved properties — 1,172,034 Facilities 2,231,561 2,231,561 6,344,651 7,525,535 Less - accumulated depletion (780,120 ) (667,966 ) $ 5,564,531 $ 6,857,569 For the nine months ended September 30, 2019 and September 30, 2018 total depletion expense amounted to $112,154 and $378,912 respectively. During the nine months ending September 30, 2019, given the annual lease payments coupled with the Company being in default on its senior secured loan facility, the Company has decided to impair all remaining unproved properties. Consequently, the Company recognized an impairment loss of $1,172,034 of which $328,460 was recognized in the second quarter of 2019 and the remaining $843,574 was recognized during the three months ended September 30, 2019.

CASH AND RESTRICTED CASH

CASH AND RESTRICTED CASH	9 Months Ended
	Sep. 30, 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: September 30, 2019 December 31, 2018 Cash $ 5,741 $ 86,441 Restricted cash – long term 200,000 200,000 Total cash and restricted cash $ 205,741 $ 286,441 Restricted cash consists of one bond totaling $200,000 as of September 30, 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	9 Months Ended
	Sep. 30, 2019
Banking and Thrift [Abstract]
DEPOSITS	NOTE 5 – DEPOSITS The Company had deposits of $35,100 for September 30, 2019 and December 31, 2018, of which $25,000 was a deposit in natural gas purchases and the remaining $10,100 was incurred for rental of office space.

NOTES PAYABLE

NOTES PAYABLE	9 Months Ended
	Sep. 30, 2019
Notes to Financial Statements
NOTES PAYABLE	NOTE 6 – NOTES PAYABLE Notes payable consists of the following: September 30, 2019 December 31, 2018 Note payable to an entity for the financing of insurance — 13,939 Note payable to an entity for the financing of insurance $ 52,232 — Senior Secured Facility Loan 10% interest; due March 31, 2019. 2,350,000 2,350,000 Unamortized debt discount — (62,924 ) 3 Note s payable, related party, 15% simple interest, due November 16, 2019, February 4, 2020, and March 23, 2020 119,000 — Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022 20,888 25,598 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 21,337 26,390 Total – Notes Payable $ 2,563,457 $ 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. The unamortized debt discount as of December 31, 2018 of $62,973 was fully amortized during the nine months ended September 30, 2019. 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 September 30, 2019, the Company was in default on its loan. At this time, the Company has not been able to refinance the loan and remains in default. On September 11, 2019 a court in Kern County, granted the lender's request to appoint a third-party trustee to oversee the operations at the Kern Bluff Oil Field. Consequently, August's 2019 gross production revenue receipts were turned over to the third-party trustee on September 15, 2019 amounting to $16,097. As of September 30, 2019, the net receivable from the third-party trustee amounted to $10,624 which is included in the consolidated balance sheet under prepaid expenses and other current assets.

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 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 a 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 OPTIONS

STOCK OPTIONS	9 Months Ended
	Sep. 30, 2019
Notes to Financial Statements
STOCK OPTIONS	NOTE 8 – STOCK OPTIONS The following is a summary of the status of all of the Company’s stock options as of December 31, 2018 and changes during the nine months ended September 30, 2019: Number Weighted-Average Aggregate Weighted-Average Outstanding at December 31, 2018 10,000,000 $ 0.20 $ — 2.48 Exercisable at December 31, 2018 10,000,000 $ 0.20 $ — 2.48 Expired at September 30, 2018 (4,000,000 ) $ 0.20 $ — — Outstanding at September 30, 2019 6,000,000 $ 0.21 $ — 2.93 Exercisable at September 30, 2019 6,000,000 $ 0.21 $ — 2.93

WARRANTS

WARRANTS	9 Months Ended
	Sep. 30, 2019
Notes to Financial Statements
WARRANTS	NOTE 9 – WARRANTS The Company did not issue any new warrants during the nine months ended September 30, 2019. Warrant activity for the nine months ended September 30, 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 September 30, 2019 1,175,000 $ 0.10 3.60

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 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 September 30, 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. On May 20, 2019, the Company received a note payable in the amount of $50,000 with 15% interest, maturing on November 16, 2019. Consequently, the May 20, 2019 note is currently in default. On August 12, 2019, the Company received a note payable in the amount of $50,000 with 15% interest, maturing on February 4, 2020. On September 25, 2019, the Company received a note payable in the amount of $19,000 with 15% interest, maturing on March 23, 2020.

DRILLING OBLIGATION

DRILLING OBLIGATION	9 Months Ended
	Sep. 30, 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 was amortized over a period of 18 months. Amortization of debt discount for each of the nine months ended September 30, 2019 and 2018 amounted to $42,000 and $63,000 respectively.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2019
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 12 – SUBSEQUENT EVENTS On October 22, 2019 the Company was loaned $50,000 by a related party in the form of a 180-day unsecured bridge loan bearing interest at 15%.

SUMMARY OF SIGNIFICANT ACCOUN_2

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 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 September 30, 2019, management decided to impair all unproved oil and gas properties. This decision was driven by the fact that the Company is currently in default on its senior secured loan, and as such the lender through court order has appointed a third-party trustee to oversee operations at the Kern Bluff Oil Field. Without operational control, management felt it was prudent to impair these unproved leases as the Company will not be in the position to renew leases and or develop the leases in the near term. Consequently, the Company recognized an impairment loss of $1,172,034 for the nine months ended September 30, 2019.
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 September 30, 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)	9 Months Ended
	Sep. 30, 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: September December Oil and Natural Gas: Proved properties $ 4,113,090 $ 4,121,940 Unproved properties - 1,172,034 Facilities 2,231,561 2,231,561 6,344,651 7,525,535 Less - accumulated depletion (780,120 ) (667,966 ) $ 5,564,531 $ 6,857,569

CASH AND RESTRICTED CASH (Table

CASH AND RESTRICTED CASH (Tables)	9 Months Ended
	Sep. 30, 2019
Summary of the status of all of the Company’s stock warrants
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: September 30, 2019 December 31, 2018 Cash $ 5,741 $ 86,441 Restricted cash – long term 200,000 200,000 Total cash and restricted cash $ 205,741 $ 286,441

NOTES PAYABLE (Tables)

NOTES PAYABLE (Tables)	9 Months Ended
	Sep. 30, 2019
Notes to Financial Statements
Schedule of Notes Payable	Notes payable consists of the following: September 30, 2019 December 31, 2018 Note payable to an entity for the financing of insurance — 13,939 Note payable to an entity for the financing of insurance $ 52,232 — Senior Secured Facility Loan 10% interest; due March 31, 2019. 2,350,000 2,350,000 Unamortized debt discount — (62,924 ) 3 Notes payable, related party, 15% simple interest, due November 16, 2019, February 4, 2020, and March 23, 2020 119,000 — Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022 20,888 25,598 Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022 21,337 26,390 Total – Notes Payable $ 2,563,457 $ 2,353,003

STOCK OPTIONS (Tables)

STOCK OPTIONS (Tables)	9 Months Ended
	Sep. 30, 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 December 31, 2018 and changes during the nine months ended September 30, 2019: Number Weighted-Average Aggregate Weighted-Average Outstanding at December 31, 2018 10,000,000 $ 0.20 $ — 2.48 Exercisable at December 31, 2018 10,000,000 $ 0.20 $ — 2.48 Expired at September 30, 2018 (4,000,000 ) $ 0.20 $ — — Outstanding at September 30, 2019 6,000,000 $ 0.21 $ — 2.93 Exercisable at September 30, 2019 6,000,000 $ 0.21 $ — 2.93

WARRANTS (Tables)

WARRANTS (Tables)	9 Months Ended
	Sep. 30, 2019
Notes to Financial Statements
Schedule of Warrants	The Company did not issue any new warrants during the nine months ended September 30, 2019. Warrant activity for the nine months ended September 30, 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 September 30, 2019 1,175,000 $ 0.10 3.60

SUMMARY OF SIGNIFICANT ACCOUN_3

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019	Sep. 30, 2018
Summary Of Significant Accounting Policies
Impairment Loss on Oil and Gas	$ 843,574		$ 1,172,034

GOING CONCERN (Details Narrativ

GOING CONCERN (Details Narrative) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Notes payable consists of the following at:
Accumulated Deficit	$ 15,683,027	$ 13,320,513
Working Capital Deficit	$ 7,084,279

OIL AND GAS PROPERTIES (Details

OIL AND GAS PROPERTIES (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Oil and Natural Gas:
Proved properties	$ 4,113,090	$ 4,121,940
Unproved properties		1,172,034
Facilities	2,231,561	2,231,561
Oil and Natural Gas Total	6,344,651	7,525,535
Less accumulated depreciation, depletion, and amortization	(780,120)	(667,966)
Oil and Natural Gas, Net	$ 5,564,531	$ 6,857,569

OIL AND GAS PROPERTIES (Detai_2

OIL AND GAS PROPERTIES (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2019	Jun. 30, 2019	Sep. 30, 2019	Sep. 30, 2018
Oil And Gas Properties
Depletion expenses			$ 112,154	$ 378,912
Impairment loss	$ 843,574	$ 328,460

CASH AND RESTRICTED CASH (Detai

CASH AND RESTRICTED CASH (Details) - USD ($)	Sep. 30, 2019	Dec. 31, 2018	Sep. 30, 2018	Dec. 31, 2017
Disclosure Cash And Restricted Cash Details Abstract
Cash	$ 5,741	$ 86,441
Restricted cash - long term	200,000	200,000
Total cash and restricted cash	$ 205,741	$ 286,441	$ 507,381	$ 972,103

DEPOSITS (Details Narrative)

DEPOSITS (Details Narrative) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Banking and Thrift [Abstract]
Deposits	$ 35,100	$ 35,100

NOTES PAYABLE (Details Narrativ

NOTES PAYABLE (Details Narrative) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Notes Payable
Note payable to an entity for the financing of insurance premiums, unsecured; 7.99% interest, due March 2019		$ 13,939
Note payable to an entity for the financing of insurance premiums, unsecured; 8.63% interest, due March 2020	52,232
Senior Secured Facility Loan 10% interest; due March 31, 2019.	2,350,000	2,350,000
Unamortized debt discount		(62,924)
3 Notes payable, related party, 15% simple interest, due November 16, 2019, February 4, 2020, and March 23, 2020	119,000
Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due October 2022	20,888	25,598
Note payable to an entity for the financing of a company vehicle, secured; 4.95% interest, due November 2022	21,337	26,390
Notes payable	$ 2,563,457	$ 2,353,003

STOCKHOLDERS' EQUITY (Details N

STOCKHOLDERS' EQUITY (Details Narrative) - USD ($)	1 Months Ended		9 Months Ended
	Mar. 31, 2019	Jan. 31, 2019	Sep. 30, 2019	Sep. 30, 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 OPTIONS (Details)

STOCK OPTIONS (Details) - Stock Option [Member] - $ / shares	9 Months Ended
	Sep. 30, 2019	Dec. 31, 2018
Number of Options
Outstanding, Beginning	10,000,000
Expired during the period	(4,000,000)
Outstanding, Ending	6,000,000
Exercisable at end of period	6,000,000	10,000,000
Weighted-Average Exercise Price
Outstanding, Beginning	$ 0.20
Expired price (per share)	.20
Outstanding, Ending	0.21
Exercisable at end of period	$ .21	$ .20
Weighted-Average Remaining Life (Years)
Outstanding, Beginning	2 years 5 months 23 days
Outstanding, Ending	2 years 11 months 5 days
Exercisable at end of period	2 years 11 months 5 days

WARRANTS (Details)

WARRANTS (Details) - Warrant [Member]	9 Months Ended
	Sep. 30, 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	3 years 7 months 6 days

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	Sep. 30, 2019	Dec. 31, 2018
Outstanding at January 1, 2014
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 ($)	9 Months Ended		18 Months Ended
	Sep. 30, 2019	Sep. 30, 2018	Sep. 30, 2019
Drilling Obligation
Amortization of debt discount	$ 63,000	$ 63,000	$ 126,000