Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Aug. 31, 2013 | Oct. 14, 2013 | |
Document and Entity Information | ||
Entity Registrant Name | Buckeye Oil & Gas, Inc. | |
Document Type | 10-Q | |
Document Period End Date | 31-Aug-13 | |
Amendment Flag | FALSE | |
Entity Central Index Key | 1495648 | |
Current Fiscal Year End Date | -26 | |
Entity Common Stock, Shares Outstanding | 620,500 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Current Reporting Status | Yes | |
Entity Voluntary Filers | No | |
Entity Well-known Seasoned Issuer | No | |
Document Fiscal Year Focus | 2014 | |
Document Fiscal Period Focus | Q1 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Aug. 31, 2013 | 31-May-13 |
Current Assets | ||
Cash | $44,124 | $51,077 |
Accounts Receivable | 1,097 | 1,085 |
Prepaid Expenses | 1,494 | 1,955 |
Total Current Assets | 46,715 | 54,117 |
Oil and Gas Property Interests (note 4) | 1,015,408 | 1,015,408 |
Total Assets | 1,062,123 | 1,069,525 |
Current Liabilities | ||
Accounts Payable and Accrued Liabilities | 81,037 | 84,614 |
Total Current Liabilities | 81,037 | 84,614 |
Long Term Liabilities | ||
Asset Retirement Obligations (note 5) | 10,953 | 10,832 |
Total Long Term Liabilities | 10,953 | 10,832 |
Total Liabilities | 91,990 | 95,446 |
Stockholders' Equity, | ||
Common Stock, Par Value $.0001 Authorized 500,000,000 shares, 620,500 shares issued and outstanding at August 31, 2013 and May 31, 2013 | 62 | 62 |
Paid-In Capital | 1,230,938 | 1,230,938 |
Deficit Accumulated During Exploration Stage | -260,867 | -256,921 |
Total Stockholders' Equity | 970,133 | 974,079 |
Total Liabilities and Stockholders' Equity | $1,062,123 | $1,069,525 |
CONSOLIDATED_BALANCE_SHEETS_PA
CONSOLIDATED BALANCE SHEETS PARENTHETICALS (USD $) | Aug. 31, 2013 | 31-May-13 |
Parentheticals | ||
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 500,000,000 | 500,000,000 |
Common Stock, shares issued | 620,500 | 620,500 |
Common Stock, shares outstanding | 620,500 | 620,500 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 40 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | Aug. 31, 2013 | |
Revenues {1} | |||
Oil & Gas Revenue | $0 | $0 | $8,401 |
Expenses | |||
Operating Expenses | 0 | 4,450 | 77,668 |
Accretion | 291 | 362 | 2,227 |
Professional Fees | 1,737 | 750 | 55,057 |
Office and Sundry | 2,507 | 3,468 | 78,008 |
Rent | 450 | 450 | 4,350 |
Management and Directors' Fees | 0 | 8,670 | 53,064 |
Total Expenses | -4,985 | -18,150 | -270,374 |
Net Loss from Operations | -4,985 | -18,150 | -261,973 |
Other Income (Expenses) | |||
Foreign Exchange Gain (Loss) | 1,039 | -1,132 | 1,106 |
Net Other Income (Expenses) | 1,039 | -1,132 | 1,106 |
Net Loss | ($3,946) | ($19,282) | ($260,867) |
Basic and Diluted Loss per Share (1) | ($0.01) | ($0.03) | $0 |
Weighted Average Shares Outstanding | 620,500 | 617,500 | 0 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 3 Months Ended | 40 Months Ended | |
Aug. 31, 2013 | Aug. 31, 2012 | Aug. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | |||
Net Loss | ($3,946) | ($19,282) | ($260,867) |
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities | |||
Accretion Expenses | 291 | 362 | 2,227 |
Asset Retirement Obligation net of Foreign Exchange | -170 | 0 | -170 |
Change in Operating Assets and Liabilities | |||
Decrease (Increase) In Sales Tax Refund Receivable | -12 | -47 | -1,097 |
Decrease (Increase) in Prepaid Expenses | 461 | -3,421 | -1,494 |
Increase (Decrease) in Accounts Payable | -3,577 | -15,061 | -36,659 |
Net Cash Used in Operating Activities | -6,953 | -37,449 | -224,742 |
CASH FLOWS FROM INVESTING ACTIVITIES | |||
Acquisition of Oil and Gas Property Interests | 0 | 0 | -802,295 |
Cash Acquired on Business Combination | 0 | 0 | 240,161 |
Net Cash Used in Investing Activities | 0 | 0 | -562,134 |
CASH FLOWS FROM FINANCING ACTIVITIES | |||
Proceeds from the Sale of Common Stock | 0 | 0 | 831,000 |
Net Cash Provided by Financing Activities | 0 | 0 | 831,000 |
Net (Decrease) Increase in Cash and Cash Equivalents | -6,953 | -37,449 | 44,124 |
Cash and Cash Equivalents at Beginning of Period | 51,077 | 61,654 | 0 |
Cash and Cash Equivalents at End of Period | 44,124 | 24,205 | 44,124 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | |||
Interest | 0 | 0 | 0 |
Income taxes | 0 | 0 | 0 |
SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION | |||
Accounts payable related to acquisition of oil and gas property interests | 44,552 | 0 | 44,552 |
Long Term Liabilities - Asset Retirement Obligation | 0 | 0 | 9,696 |
Shares issued on acquisition of Buckeye Oil & Gas (Canada), Inc. | $0 | $0 | $400,000 |
NATURE_OF_BUSINESS_AND_OPERATI
NATURE OF BUSINESS AND OPERATIONS | 3 Months Ended |
Aug. 31, 2013 | |
NATURE OF BUSINESS AND OPERATIONS | |
NATURE OF BUSINESS AND OPERATIONS | NOTE 1 – NATURE OF BUSINESS AND OPERATIONS |
Organization and Basis of Presentation | |
Buckeye Oil & Gas, Inc. (an exploration stage company) (the “Company”) was incorporated in the state of Florida on May 11, 2010 under the name Benefit Solutions Outsourcing Corp. On May 19, 2011 the Board of Directors and majority shareholder of the Company approved a change to the Company’s Articles of Incorporation which affected a name change of the company to “Buckeye Oil & Gas, Inc.”, and changed the business of the Company to oil and gas exploration. The changes became effective at the close of business on June 1, 2011. | |
On June 23, 2011 the Company entered into a Stock Purchase Agreement to acquire all of the issued and outstanding shares of a private Canadian business owned by the Company’s principal executive officer called Buckeye Oil & Gas (Canada) Inc. (“Buckeye Canada”), a company incorporated in Alberta, Canada. The purchase price paid for the shares of Buckeye Canada was $400,000, which was paid by the issuance to Pol Brisset, the Company's principal officer and a director, of 10,000 shares of common stock of the Company. As a result of the acquisition, Buckeye Canada became a wholly-owned subsidiary of the Company. | |
Effective July 8, 2013, the Company and the Board of Directors of the Company adopted resolutions to effectuate a reverse split of its issued and outstanding shares of common stock on the basis of 1 post consolidation share for each 100 pre-consolidation shares. All share and per share amounts in the consolidated financial statements of the Company have been adjusted to reflect the reverse split. | |
The accompanying financial statements have been prepared in U.S. dollars and in accordance with accounting principles generally accepted in the United States on a going concern basis. | |
Nature of Operations | |
The Company has commenced limited production from its properties as of August 31, 2013. The Company is engaged in the acquisition, exploration and if warranted and feasible, the development of exploration of oil and gas properties. The Company has a 28% working interest in two properties located in Alberta, Canada and has drilled an exploration well on each respective property, but neither well is currently in production (notes 4 and 5). | |
Interim Reporting | |
The unaudited financial information furnished herein reflects all adjustments, which in the opinion of management are necessary to fairly state the financial position of Buckeye Oil & Gas, Inc. and the results of its operations for the periods presented. This report on Form 10-Q should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s Form 10-K for the fiscal year ended May 31, 2013. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-K for the fiscal year ended May 31, 2013 has been omitted. The results of operations for the three-month period ended August 31, 2013 are not necessary indicative of results for the entire year ending May 31, 2014 or for any future annual or interim period. | |
ABILITY_TO_CONTINUE_AS_A_GOING
ABILITY TO CONTINUE AS A GOING CONCERN | 3 Months Ended |
Aug. 31, 2013 | |
ABILITY TO CONTINUE AS A GOING CONCERN | |
ABILITY TO CONTINUE AS A GOING CONCERN | NOTE 2 – ABILITY TO CONTINUE AS A GOING CONCERN |
The accompanying financial statements have been prepared in US dollars and in accordance with accounting principles generally accepted in the United States (GAAP) on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities and commitments in the normal course of business. The Company only commenced its oil and gas exploration activities in June 2011. The Company has realized only limited revenue from its present operations. During the three-months ended August 31, 2013, the Company incurred a net loss of $3,946. Since inception on May 11, 2010 the Company has an accumulated deficit of $260,867 to August 31, 2013. Current cash on hand is not sufficient to fund all of our planned operations for the next twelve months. These conditions raise substantial doubt about the Company's ability to continue as a going concern. | |
The Company's ability to continue as a going concern is dependent on its ability to develop its oil and gas properties and ultimately achieve profitable operations and to generate sufficient cash flow from financing and operations to meet its obligations as they become payable. The Company expects that it will need approximately $47,000 to fund its operations during the next twelve months which will include capital payments under its property agreement (note 4) and the costs associated with maintaining an office. Management may seek additional capital through a private placement and public offering of its common stock. Although there are no assurances that management’s plans will be realized, management believes that the Company will be able to continue operations in the future. Accordingly, no adjustment relating to the recoverability and classification of recorded asset amounts and the classification of liabilities has been made to the accompanying financial statements in anticipation of the Company not being able to continue as a going concern. |
SUMMARY_OF_SIGNIFICANT_ACCOUNT
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended | ||
Aug. 31, 2013 | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |||
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Management’s Estimates and Assumptions | |||
The preparation of financial statements in conformity with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect the amounts reported in these financial statements and notes. Significant areas requiring the use of estimates relate to accrued liabilities, asset retirement obligation, and the impairment of long-lived assets. Management believes the estimates utilized in preparing these financial statements are reasonable and prudent and are based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results could differ from those estimates. | |||
Cash and Cash Equivalents | |||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. | |||
Foreign Currency | |||
The Company has oil and gas property interests in Canada and as a result incurs transactions in Canadian dollars. The Company translates its Canadian dollar balances to US dollars in the following manner: assets and liabilities have been translated using the rate of exchange at the balance sheet date. The Company’s results of operations have been translated using average rates. | |||
Concentration of Credit Risk | |||
The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains all of its cash balances with one financial institution in the form of a demand deposit. | |||
Loss per Share | |||
Net income (loss) per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. The Company did not have any dilutive instruments outstanding at August 31, 2013. | |||
Comprehensive Income | |||
The Company has adopted ASC 220 (formerly SFAS No. 130, “Reporting Comprehensive Income”), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company has disclosed this information on its Statement of Operations. Comprehensive income is comprised of net income (loss) and all changes to capital deficit except those resulting from investments by owners and distribution to owners. | |||
Income Taxes | |||
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. | |||
Uncertain Tax Positions | |||
The Company adopted the provisions of ASC 740-10-50, formerly FIN 48, Accounting for Uncertainty in Income Taxes. The Company had no material unrecognized income tax assets or liabilities for the year ended May 31, 2013 or for the year ended May 31, 2012. The Company’s policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the year ended May 31, 2013 and 2012, there were no income tax, or related interest and penalty items in the income statement, or liability on the balance sheet. The Company files income tax returns in the U.S. federal jurisdiction and Florida State. Tax years 2011 to present remain open to income tax examination. The Company is not currently involved in any income tax examinations. | |||
Fair Value of Financial Instruments | |||
The book values of cash, prepaid expenses, and accounts payable approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: | |||
• | Level one — Quoted market prices in active markets for identical assets or liabilities; | ||
• | Level two — Inputs other than level one inputs that are either directly or indirectly observable; and | ||
• | Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. | ||
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter. | |||
Oil and Gas Property Payments and Exploration Costs | |||
The Company follows the full cost method of accounting for natural gas and oil operations. Under the full cost method all costs incurred in the acquisition, exploration and development of natural gas and oil reserves are initially capitalized into cost centers on a country-by-country basis. The Company’s current cost center is located in Canada. Such costs include land acquisition costs, geological and geophysical expenditures, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition, exploration and development activities. | |||
Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated net proved reserves, as determined by independent petroleum engineers. The Company has adopted revised oil and gas reserve estimation and disclosure requirements. The primary impact of the new disclosures is to conform the definition of proved reserves with the SEC Modernization of Oil and Gas Reporting rules, which were issued by the SEC at the end of 2008. The accounting standards update revised the definition of proved oil and gas reserves to require that the average, first-day-of-the-month price during the 12-month period before the end of the year rather than the year-end price, must be used when estimating whether reserve quantities are economical to produce. This same 12-month average price is also used in calculating the aggregate amount of (and changes in) future cash inflows related to the standardized measure of discounted future net cash flows. The percentage of total reserve volumes produced during the year is multiplied by the net capitalized investment plus future estimated development costs in those reserves. Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations. | |||
Under full cost accounting rules, capitalized costs, less accumulated amortization and related deferred income taxes, shall not exceed an amount (the ceiling) equal to the sum of: (i) the after tax present value of estimated future net revenues computed by applying current prices of oil and gas reserves to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on currents costs) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; (ii) the cost of properties not being amortized; and (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized. If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the ceiling, the excess shall be charged to expense and separately disclosed during the period in which the excess occurs. Amounts thus required to be written off shall not be reinstated for any subsequent increase in the cost center ceiling. | |||
Impairment of Long-lived Assets | |||
In accordance with ASC 360, Property, Plant and Equipment, long lived assets such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount of fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. | |||
Asset Retirement Obligations | |||
In accordance with ASC 410, Asset Retirement and Environmental Obligations the fair value of an asset retirement cost, and corresponding liability, should be recorded as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. The Company provides for future asset retirement obligations on its oil and natural gas properties based on estimates established by current legislation. The asset retirement obligation is initially measured at fair value and capitalized to capital assets as an asset retirement cost. The asset retirement obligation accretes until the time the asset retirement obligation is expected to settle while the asset retirement cost is amortized over the useful life of the underlying capital assets. The amortization of the asset retirement cost and the accretion of the asset retirement obligation are included in depletion and accretion expense. Actual asset retirement costs are recorded against the obligation when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred is recorded as a gain or loss in the period of settlement. | |||
Revenue recognition | |||
Revenue from the production of crude oil and natural gas is recognized when title passes to the customer and when collection of the revenue is reasonably assured. The Company does not operate its wells and is reliant on the wells’ operator to market and sell its proportion of oil and gas produced from its wells. The customers take title when the crude oil is transferred to their pipeline or collection facility. | |||
The Company has recognized only minimal revenue from its oil and gas exploration activities as of August 31, 2013. The Company began earning revenue from its 28% working interest it has in its Valhalla Property commencing in October, 2011 and its 28% working interest in its Spirit Rycroft Property in March 2012. Currently, neither property is in production. Both properties are located in Alberta, Canada. | |||
New Accounting Pronouncements | |||
The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to August 31, 2013 through the date these financial statements were issued. |
OIL_AND_GAS_PROPERTY_INTERESTS
OIL AND GAS PROPERTY INTERESTS (Unproven) | 3 Months Ended | ||||||||||||
Aug. 31, 2013 | |||||||||||||
OIL AND GAS PROPERTY INTERESTS (Unproven) | |||||||||||||
OIL AND GAS PROPERTY INTERESTS (Unproven) | NOTE 4 – OIL AND GAS PROPERTY INTERESTS (Unproven) | ||||||||||||
August 31, 2013 (Cumulative) | |||||||||||||
Valhalla | Sprit Rycroft | Total | |||||||||||
(unproven) | (unproven) | ||||||||||||
Property acquisition costs | $ | 378,462 | $ | 622,470 | $ | 1,000,932 | |||||||
Geological and geophysical | 2,593 | 2,187 | 4,780 | ||||||||||
Asset Retirement Obligation | 4,848 | 4,848 | 9,696 | ||||||||||
Total expenditures | $ | 385,903 | 629,505 | 1,015,408 | |||||||||
Farmout and Participation Agreement with Luxor | |||||||||||||
The Company’s sole assets are rights acquired by Buckeye Canada pursuant to a May 12, 2011 Farmout and Participation Agreement with Luxor Oil & Gas, Inc. (“Luxor”). Under this agreement Buckeye Canada has agreed to incur 80% of the cost of drilling a well on one of Luxor’s properties in exchange for a 56% working interest in said well. In a separate agreement, on May 16, 2011 Buckeye Canada entered into a Participation Agreement whereby the Company agreed to share its obligations and rights under the agreement with Luxor with a partner on a 50% basis. The partner is a privately-owned company called Pioneer Marketing Group, Ltd. (“Pioneer”). The Participation Agreement requires Buckeye Canada and Pioneer to equally fund Buckeye Canada’s obligations under the Luxor agreement and to participate equally in the interest in the well. Accordingly, Buckeye Canada and Pioneer will each pay a net 40% of the initial capital costs and earn a 28% working interest each in any wells drilled by Luxor, as long as Pioneer continues to fund its half of the required amount of expenses. | |||||||||||||
The first well drilled under the agreement with Luxor is located the Valhalla area of Alberta (“Valhalla Well”), Canada and was drilled in July 2011. The Valhalla Well was completed in August, 2011 and initial production began in October 2011. Due to water accumulation issues, the Valhalla Well has had only limited production and is currently shut-in and not producing. It is not yet known if the Valhalla Well will be economic. Buckeye Canada has now earned its 28% interest in the Valhalla Well as well as the entire property on which the Valhalla Well is located. | |||||||||||||
Buckeye Canada also has the right of first refusal to participate on two additional properties if Luxor determines that it desires to pursue drilling on those properties. If Buckeye Canada exercises this right, it will need to pay 80% of such expenses in exchange for a 56% working interest. On July 26, 2011 Buckeye Canada exercised its rights to participate in a second well drilled by Luxor. The second property is called Spirit Rycroft and the well on this property was drilled in August 2011 (the “SR Well”). The SR Well started producing oil and liquids in March 2012 but has had only limited production to date and is currently shut in and not producing. It is not yet known if the SR Well will be economic. Buckeye Canada has now earned its 28% interest in the SR Well as well as the entire property on which the SR Well is located. | |||||||||||||
The agreement with Luxor provides for Buckeye Canada to earn its working interest on the entire property and not just on the respective well. As a result, now that Buckeye Canada has earned-in on the Valhalla and Spirit Rycroft Properties, Buckeye Canada will pay 28% of the capital costs on any new wells drilled on either property and earn a 28% working interest. On the potentially three properties that are part of the Luxor agreement, Buckeye Canada pays 40% of the capital costs to earn a 28% working interest on the first well but pays 28% of the capital costs to earn a 28% working interest on all subsequent wells drilled on the respective property. Luxor has indicated that they will not be proceeding on a third property. As a result, the agreement with Luxor will include the two properties currently under the Luxor agreement. | |||||||||||||
None of the Company’s properties currently contain any assigned reserves or resources. None of the Company’s properties are currently in production. |
ASSET_RETIREMENT_OBLIGATION
ASSET RETIREMENT OBLIGATION | 3 Months Ended |
Aug. 31, 2013 | |
ASSET RETIREMENT OBLIGATION | |
ASSET RETIREMENT OBLIGATION | NOTE 5 – ASSET RETIREMENT OBLIGATION |
As at August 31, 2013 the Company’s asset retirement obligation was comprised of its 28% working interest in the Valhalla and SR Wells. The Company has estimated its August 31, 2013 obligation at $10,953 which includes accretion expense of $291 for the three-months ended August 31, 2013. | |
RELATED_PARTY_TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Aug. 31, 2013 | |
RELATED PARTY TRANSACTIONS | |
RELATED PARTY TRANSACTIONS | NOTE 6 – RELATED PARTY TRANSACTIONS |
Effective September 1, 2011 the Company entered into a service agreement with Pol Brisset, its principal executive officer, requiring a monthly payment of $2,374. In order to preserve working capital for the Company Mr. Brisset has agreed to forgo his pay effective December 1, 2012. | |
Effective as of April 2, 2012, Michal Gnitecki was appointed as Secretary and a director of the Company and will be compensated at $475 per month to serve as secretary and director. In order to preserve working capital for the Company Mr. Gnitecki has agreed to forgo his pay effective March 1, 2013. |
ACCOUNTING_POLICIES_Policies
ACCOUNTING POLICIES (Policies) | 3 Months Ended | ||
Aug. 31, 2013 | |||
ACCOUNTING POLICIES | |||
Management's Estimates and Assumptions | Management’s Estimates and Assumptions | ||
The preparation of financial statements in conformity with generally accepted accounting principles requires the Company’s management to make estimates and assumptions that affect the amounts reported in these financial statements and notes. Significant areas requiring the use of estimates relate to accrued liabilities, asset retirement obligation, and the impairment of long-lived assets. Management believes the estimates utilized in preparing these financial statements are reasonable and prudent and are based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results could differ from those estimates. | |||
Cash and Cash Equivalents Policy | Cash and Cash Equivalents | ||
For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents to the extent the funds are not being held for investment purposes. | |||
Foreign Currency | Foreign Currency | ||
The Company has oil and gas property interests in Canada and as a result incurs transactions in Canadian dollars. The Company translates its Canadian dollar balances to US dollars in the following manner: assets and liabilities have been translated using the rate of exchange at the balance sheet date. The Company’s results of operations have been translated using average rates. | |||
Concentration of Credit Risk | Concentration of Credit Risk | ||
The Company has no off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains all of its cash balances with one financial institution in the form of a demand deposit. | |||
Loss per Share | Loss per Share | ||
Net income (loss) per share is computed by dividing the net income by the weighted average number of shares outstanding during the period. The Company did not have any dilutive instruments outstanding at August 31, 2013. | |||
Comprehensive Income, Policy | Comprehensive Income | ||
The Company has adopted ASC 220 (formerly SFAS No. 130, “Reporting Comprehensive Income”), which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. The Company has disclosed this information on its Statement of Operations. Comprehensive income is comprised of net income (loss) and all changes to capital deficit except those resulting from investments by owners and distribution to owners. | |||
Income Taxes Policy | Income Taxes | ||
Deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. | |||
Uncertain Tax Positions | Uncertain Tax Positions | ||
The Company adopted the provisions of ASC 740-10-50, formerly FIN 48, Accounting for Uncertainty in Income Taxes. The Company had no material unrecognized income tax assets or liabilities for the year ended May 31, 2013 or for the year ended May 31, 2012. The Company’s policy regarding income tax interest and penalties is to expense those items as general and administrative expense but to identify them for tax purposes. During the year ended May 31, 2013 and 2012, there were no income tax, or related interest and penalty items in the income statement, or liability on the balance sheet. The Company files income tax returns in the U.S. federal jurisdiction and Florida State. Tax years 2011 to present remain open to income tax examination. The Company is not currently involved in any income tax examinations. | |||
Fair Value of Financial Instruments | Fair Value of Financial Instruments | ||
The book values of cash, prepaid expenses, and accounts payable approximate their respective fair values due to the short-term nature of these instruments. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels: | |||
• | Level one — Quoted market prices in active markets for identical assets or liabilities; | ||
• | Level two — Inputs other than level one inputs that are either directly or indirectly observable; and | ||
• | Level three — Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. | ||
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter. | |||
Oil And Gas Property Payments And Exploration Costs | Oil and Gas Property Payments and Exploration Costs | ||
The Company follows the full cost method of accounting for natural gas and oil operations. Under the full cost method all costs incurred in the acquisition, exploration and development of natural gas and oil reserves are initially capitalized into cost centers on a country-by-country basis. The Company’s current cost center is located in Canada. Such costs include land acquisition costs, geological and geophysical expenditures, carrying charges on non-producing properties, costs of drilling and overhead charges directly related to acquisition, exploration and development activities. | |||
Costs capitalized, together with the costs of production equipment, are depleted and amortized on the unit-of-production method based on the estimated net proved reserves, as determined by independent petroleum engineers. The Company has adopted revised oil and gas reserve estimation and disclosure requirements. The primary impact of the new disclosures is to conform the definition of proved reserves with the SEC Modernization of Oil and Gas Reporting rules, which were issued by the SEC at the end of 2008. The accounting standards update revised the definition of proved oil and gas reserves to require that the average, first-day-of-the-month price during the 12-month period before the end of the year rather than the year-end price, must be used when estimating whether reserve quantities are economical to produce. This same 12-month average price is also used in calculating the aggregate amount of (and changes in) future cash inflows related to the standardized measure of discounted future net cash flows. The percentage of total reserve volumes produced during the year is multiplied by the net capitalized investment plus future estimated development costs in those reserves. Costs of acquiring and evaluating unproved properties are initially excluded from depletion calculations. These unevaluated properties are assessed periodically to ascertain whether impairment has occurred. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion calculations. | |||
Under full cost accounting rules, capitalized costs, less accumulated amortization and related deferred income taxes, shall not exceed an amount (the ceiling) equal to the sum of: (i) the after tax present value of estimated future net revenues computed by applying current prices of oil and gas reserves to estimated future production of proved oil and gas reserves as of the date of the latest balance sheet presented, less estimated future expenditures (based on currents costs) to be incurred in developing and producing the proved reserves computed using a discount factor of ten percent and assuming continuation of existing economic conditions; (ii) the cost of properties not being amortized; and (iii) the lower of cost or estimated fair value of unproven properties included in the costs being amortized. If unamortized costs capitalized within a cost center, less related deferred income taxes, exceed the ceiling, the excess shall be charged to expense and separately disclosed during the period in which the excess occurs. Amounts thus required to be written off shall not be reinstated for any subsequent increase in the cost center ceiling. | |||
Impairment of Long-lived Assets | Impairment of Long-lived Assets | ||
In accordance with ASC 360, Property, Plant and Equipment, long lived assets such as equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount of fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet. | |||
Asset Retirement Obligations | Asset Retirement Obligations | ||
In accordance with ASC 410, Asset Retirement and Environmental Obligations the fair value of an asset retirement cost, and corresponding liability, should be recorded as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method. The Company provides for future asset retirement obligations on its oil and natural gas properties based on estimates established by current legislation. The asset retirement obligation is initially measured at fair value and capitalized to capital assets as an asset retirement cost. The asset retirement obligation accretes until the time the asset retirement obligation is expected to settle while the asset retirement cost is amortized over the useful life of the underlying capital assets. The amortization of the asset retirement cost and the accretion of the asset retirement obligation are included in depletion and accretion expense. Actual asset retirement costs are recorded against the obligation when incurred. Any difference between the recorded asset retirement obligations and the actual retirement costs incurred is recorded as a gain or loss in the period of settlement. | |||
Revenue recognition | Revenue recognition | ||
Revenue from the production of crude oil and natural gas is recognized when title passes to the customer and when collection of the revenue is reasonably assured. The Company does not operate its wells and is reliant on the wells’ operator to market and sell its proportion of oil and gas produced from its wells. The customers take title when the crude oil is transferred to their pipeline or collection facility. | |||
The Company has recognized only minimal revenue from its oil and gas exploration activities as of August 31, 2013. The Company began earning revenue from its 28% working interest it has in its Valhalla Property commencing in October, 2011 and its 28% working interest in its Spirit Rycroft Property in March 2012. Currently, neither property is in production. Both properties are located in Alberta, Canada. | |||
New Accounting Pronouncements | New Accounting Pronouncements | ||
The Company reviews new accounting standards as issued. No new standards had any material effect on these financial statements. The accounting pronouncements issued subsequent to the date of these financial statements that were considered significant by management were evaluated for the potential effect on these financial statements. Management does not believe any of the subsequent pronouncements will have a material effect on these financial statements as presented and does not anticipate the need for any future restatement of these financial statements because of the retro-active application of any accounting pronouncements issued subsequent to August 31, 2013 through the date these financial statements were issued. | |||
Recovered_Sheet1
Oil And Gas Property Interests As Follows (Tables) | 3 Months Ended | |||||||||||
Aug. 31, 2013 | ||||||||||||
Oil And Gas Property Interests As Follows | ||||||||||||
Oil And Gas Property Interests As Follows | August 31, 2013 (Cumulative) | |||||||||||
Valhalla | Sprit Rycroft | Total | ||||||||||
(unproven) | (unproven) | |||||||||||
Property acquisition costs | $ | 378,462 | $ | 622,470 | $ | 1,000,932 | ||||||
Geological and geophysical | 2,593 | 2,187 | 4,780 | |||||||||
Asset Retirement Obligation | 4,848 | 4,848 | 9,696 | |||||||||
Total expenditures | $ | 385,903 | 629,505 | 1,015,408 |
Organization_and_Basis_of_Pres
Organization and Basis of Presentation (Details) (USD $) | Jun. 23, 2011 |
Organization and Basis of Presentation: | |
Purchase price paid for the shares of Buckeye Canada | $400,000 |
Shares issued as per the purchase agreement | 10,000 |
Working interests in properties of Canada | 28.00% |
GOING_CONCERN_Details
GOING CONCERN (Details) (USD $) | 3 Months Ended | 40 Months Ended |
Aug. 31, 2013 | Aug. 31, 2013 | |
GOING CONCERN: | ||
Fund for Operational Requirement | $47,000 | |
Net loss for the Period | 3,946 | |
Deficit accumulated during the period | $260,867 |
Recovered_Sheet2
Oil and Gas Property Interests - Acquisition and lease (Details) (USD $) | Aug. 31, 2013 |
Property acquisition costs | $1,000,932 |
Property acquisition costs | 1,000,932 |
Geological and geophysical | 4,780 |
Asset Retirement Obligation | 9,696 |
Total expenditures | 1,015,408 |
Valhalla (unproven) | |
Property acquisition costs | 378,462 |
Property acquisition costs | 378,462 |
Geological and geophysical | 2,593 |
Asset Retirement Obligation | 4,848 |
Total expenditures | 385,903 |
Sprit Rycroft (unproven) | |
Property acquisition costs | 622,470 |
Property acquisition costs | 622,470 |
Geological and geophysical | 2,187 |
Asset Retirement Obligation | 4,848 |
Total expenditures | $629,505 |
Farmout_and_Participation_Agre
Farmout and Participation Agreement (Details) | 12-May-11 |
Farmout and Participation Agreement: | |
Percentage of cost of drilling a well to incur as per Farmout and Participation Agreement with Luxor Oil & Gas, Inc. | 80.00% |
Percentage of working interest to be given as per Farmout and Participation Agreement with Luxor Oil & Gas, Inc. | 56.00% |
Share of obligations and rights under the agreement with Luxor with a partner | 50.00% |
Initial capital costs payable by Buckeye | 40.00% |
Percentage of interest earned in the Luxor Well | 28.00% |
ASSET_RETIREMENT_OBLIGATION_CO
ASSET RETIREMENT OBLIGATION CONSISTS OF (Details) (USD $) | Aug. 31, 2013 |
ASSET RETIREMENT OBLIGATION CONSISTS OF: | |
Asset retirement obligation. | $10,953 |
Accretion expense included in asset retirement obligation | $291 |
Asset retirement obligation as Percentage of working interest in the Valhalla and SR Wells. | 28.00% |
RELATED_PARTY_TRANSACTIONS_CON
RELATED PARTY TRANSACTIONS CONSISTS OF THE FOLLOWING (Details) (USD $) | Apr. 02, 2012 | Sep. 01, 2011 |
RELATED PARTY TRANSACTIONS CONSISTS OF THE FOLLOWING: | ||
Payment towards service agreement to the principal executive officer a monthly payment | $2,374 | |
Compensation for Secretary and a director of per month. | $475 |