Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Dec. 15, 2013 | Mar. 31, 2013 | |
Document And Entity Information | ' | ' | ' |
Entity Registrant Name | 'Vanguard Energy Corp | ' | ' |
Entity Central Index Key | '0001497649 | ' | ' |
Document Type | '10-K | ' | ' |
Document Period End Date | 30-Sep-13 | ' | ' |
Amendment Flag | 'false | ' | ' |
Current Fiscal Year End Date | '--09-30 | ' | ' |
Is Entity a Well-known Seasoned Issuer? | 'No | ' | ' |
Is Entity a Voluntary Filer? | 'No | ' | ' |
Is Entity's Reporting Status Current? | 'Yes | ' | ' |
Entity Filer Category | 'Smaller Reporting Company | ' | ' |
Entity Public Float | ' | ' | $6,170,000 |
Entity Common Stock, Shares Outstanding | ' | 12,741,512 | ' |
Document Fiscal Period Focus | 'FY | ' | ' |
Document Fiscal Year Focus | '2013 | ' | ' |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Cash and cash equivalents | $1,334,285 | $3,090,422 |
Accounts receivable | 371,765 | 615,631 |
Other assets | 16,055 | 6,132 |
Total current assets | 1,722,105 | 3,712,185 |
Property and equipment - Oil and gas, on the basis of full cost accounting | ' | ' |
Proved properties | 12,994,766 | 9,288,166 |
Unproved properties and properties under development, not being amortized | 61,470 | 1,427,294 |
Furniture and equipment | 26,946 | 24,494 |
Less: accumulated depreciation, depletion and amortization | -6,594,081 | -1,108,956 |
Total property and equipment | 6,489,101 | 9,630,998 |
Debt issuance costs | 538,700 | 857,412 |
Other assets | 10,808 | 15,570 |
Total assets | 8,760,714 | 14,216,165 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ' | ' |
Accounts payable | 113,314 | 414,873 |
Other liabilities | 322,194 | 344,712 |
Current portion of notes payable, net of discount of $0 and $77,584 | 0 | 247,416 |
Current portion of conversion feature liability | 0 | 564 |
Total current liabilities | 435,508 | 1,007,565 |
Notes payable, net of discount of $441,132 and $635,748 | 7,813,368 | 7,618,752 |
Participation liability | 465,551 | 1,573,605 |
Conversion feature liability | 0 | 583,454 |
Warrant liabilities | 0 | 68,746 |
Asset retirement obligations | 177,685 | 96,410 |
Total liabilities | 8,892,112 | 10,948,532 |
Commitments and contingencies | ' | ' |
Stockholders' equity | ' | ' |
Preferred stock, $0.00001 par value; 5,000,000 shares authorized, none issued or outstanding | 0 | 0 |
Common stock, $0.00001 par value; 50,000,000 shares authorized, 12,741,512 shares issued and outstanding | 127 | 127 |
Additional paid-in capital | 5,522,204 | 5,522,204 |
Accumulated deficit | -5,653,729 | -2,254,698 |
Total stockholders' equity (deficit) | -131,398 | 3,267,633 |
Total liabilities and stockholders' equity (deficit) | $8,760,714 | $14,216,165 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Statement of Financial Position [Abstract] | ' | ' |
Discount on Note Payable Current portion | $0 | $77,584 |
Discount on Note Payable | $441,132 | $635,748 |
Stockholders' equity | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, authorized shares | 5,000,000 | 5,000,000 |
Preferred stock, issued shares | 0 | 0 |
Preferred stock, outstanding shares | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, authorized shares | 50,000,000 | 50,000,000 |
Common stock, issued shares | 12,741,512 | 12,741,512 |
Common stock, outstanding shares | 12,741,512 | 12,741,512 |
CONSOLIDATED_STATEMENT_OF_OPER
CONSOLIDATED STATEMENT OF OPERATIONS (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Revenues | ' | ' |
Oil and gas sales | $4,644,356 | $3,369,407 |
Costs and expenses | ' | ' |
Lease operating expense | 714,669 | 672,233 |
Production taxes | 214,127 | 155,616 |
Depreciation, depletion and amortization | 1,850,814 | 844,299 |
Impairment of oil and gas properties | 3,634,312 | 0 |
Asset retirement obligation accretion | 23,186 | 8,922 |
General and administrative | 1,373,122 | 1,564,475 |
Total costs and expenses | 7,810,230 | 3,245,545 |
Income (loss) from operations | -3,165,874 | 123,862 |
Other income (expense) | ' | ' |
Other income | 7,386 | ' |
Interest income | 1,340 | 3,062 |
Interest expense | -1,864,379 | -1,171,756 |
Change in fair value of warrant and conversion feature liabilities | 652,765 | 1,081,371 |
Change in estimate of participation liability | 969,731 | -653,057 |
Loss on debt extinguishment | 0 | -410,639 |
Total other income (expense) | -233,157 | -1,151,019 |
Loss before income taxes | -3,399,031 | -1,027,157 |
Provision for income taxes | 0 | 0 |
Net loss | ($3,399,031) | ($1,027,157) |
Loss per share – Basic | ($0.27) | ($0.09) |
Weighted average number of common shares | 12,741,512 | 11,901,830 |
Loss per share – Diluted | ($0.27) | ($0.09) |
Weighted average number of common and potential common shares | 12,741,512 | 11,901,830 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Cash flows from operating activities: | ' | ' |
Net income | ($3,399,031) | ($1,027,157) |
Adjustments to reconcile net loss to net cash from operating activities: | ' | ' |
Loss on debt extinguishment | 0 | -410,639 |
Change in estimate of participation liability | -969,731 | 653,057 |
Impairment of Oil and Gas Properties | 3,634,312 | 0 |
Depreciation, depletion and amortization | 1,850,814 | 844,299 |
Amortization of debt issuance costs | 318,712 | 237,809 |
Asset retirement obligation accretion | 81,275 | 8,922 |
Amortization of debt discount | 272,200 | 736,446 |
Accretion of participation liability | -138,323 | 97,535 |
Stock-based compensation expense | 0 | 59,700 |
Change in fair value of warrant and conversion feature liabilities | -652,765 | -1,081,371 |
Change in operating assets and liabilities: | ' | ' |
Accounts receivable | 243,866 | -358,484 |
Other assets | -5,161 | -14,680 |
Accounts payable | -284,967 | -54,291 |
Other liabilities | -22,518 | -129,341 |
Net cash from operating activities | 928,683 | 383,083 |
Cash flows from investing activities | ' | ' |
Purchase of furniture and equipment | -2,452 | -22,480 |
Capital expenditures on oil and gas properties | -2,357,368 | -6,113,295 |
Net cash from investing activities | -2,359,820 | -6,135,775 |
Cash flows from financing activities | ' | ' |
Debt issuance costs | 0 | -813,780 |
Equity offering costs | 0 | -199,849 |
Proceeds from issuance of common stock and warrants | 0 | 4,224,000 |
Proceeds from issuance (repayment) of notes payable | -325,000 | 5,179,500 |
Net cash from financing activities | -325,000 | 8,389,871 |
Net change in cash and cash equivalents | -1,756,137 | 2,637,179 |
Cash and cash equivalents Beginning of period | 3,090,422 | 453,243 |
Cash and cash equivalents End of period | $1,334,285 | $3,090,422 |
CONSOLIDATED_STATEMENTS_OF_CHA
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) (USD $) | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Beginning Balance, Amount at Sep. 30, 2011 | $79 | $1,866,110 | ($1,227,541) | $638,648 |
Beginning Balance, Shares at Sep. 30, 2011 | 7,880,822 | ' | ' | ' |
Stock-based compensation, Shares | 60,690 | ' | ' | ' |
Stock-based compensation | ' | 59,700 | ' | 59,700 |
Issuance of common stock units, Shares | 4,800,000 | ' | ' | ' |
Issuance of common stock units, Amount | 48 | 3,596,394 | ' | 3,596,442 |
Net loss | ' | ' | -1,027,157 | -1,027,157 |
Ending Balance, Amount at Sep. 30, 2012 | 48 | 5,522,204 | -2,254,698 | 3,267,633 |
Ending Balance, Shares at Sep. 30, 2012 | 12,741,512 | ' | ' | ' |
Stock-based compensation | ' | ' | ' | 0 |
Net loss | ' | ' | -3,399,031 | -3,399,031 |
Ending Balance, Amount at Sep. 30, 2013 | $127 | $5,522,204 | ($5,653,729) | ($131,398) |
Ending Balance, Shares at Sep. 30, 2013 | 12,741,512 | ' | ' | ' |
1_ORGANIZATION
1. ORGANIZATION | 12 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
1. ORGANIZATION | ' |
Organization—Vanguard Energy Corporation (the "Company") was organized under the laws of the State of Colorado on June 21, 2010. The Company conducts business in Texas through VE Corporation, a Colorado corporation and wholly owned subsidiary. The Company commenced operations on July 19, 2010 and is engaged in the acquisition, development and operation of onshore oil and gas properties in Texas. | |
In January of 2013, the Company announced that it was seeking ways to accelerate shareholder value. In that regard, the Company has been investigating the possibility of selling its oil and gas properties in Southeast Texas. The Company has not received any firm offers for the properties nor have established a price it would consider for them. If the Company reaches an agreement to sell at a price considered attractive, the net proceeds, after repayment of convertible debt and other liabilities, would be used to acquire new leases in East Texas with strong potential for value creation. The Company emphasizes that it is not committed to selling any of its properties and, depending on available capital, will continue with its current operating program. |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Sep. 30, 2013 | ||
Notes to Financial Statements | ' | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ' | |
Principles of Consolidation and Basis of Presentation— The consolidated financial statements include the accounts of Vanguard Energy Corporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||
The Company's fiscal year-end is September 30. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows. | ||
Management Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates. Significant estimates made in preparing these financial statements include the fair value of acquired assets and liabilities (Note 3), asset retirement obligations (Note 4), participation, conversion feature and warrant liabilities (Note 5), income taxes (Note 6) and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows used in the ceiling test (Notes 2 and 12). | ||
Reclassifications – Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net loss, working capital or equity previously reported. | ||
Cash and Cash Equivalents—The Company considers all highly liquid instruments purchased with a maturity date of three months or less to be cash equivalents. | ||
Oil and Gas Properties—The Company follows the full cost accounting method to account for oil and natural gas properties, whereby costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on nonproducing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to operations. | ||
The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves. | ||
The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful. | ||
All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. | ||
Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the "cost ceiling") equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the unweighted arithmetic average of the first day of the month price for each month within the 12 month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period. | ||
During the fourth quarter of fiscal year 2013 and based on the October 1, 2013 Reserve Report, the cost ceiling analysis established that the Company’s proved properties required the recording of an impairment reduction. The Company recorded an impairment expense of $3,634,312 \as a result of reductions in estimated proved reserves. Revised calculations of proved reserves were based on detailed analysis of producing formations drive systems and declines in production from certain wells at a greater rate than previously experienced. The interpretation of 3D seismic during the fiscal fourth quarter of 2013 provided additional input and helped delineate the field more precisely, resulting in limiting the estimates of remaining recoverable oil. The production declines resulted in greater DD&A expense of $919,313 during the fourth quarter. These adjustments were offset somewhat by a reduction in the Participation Liability of $969,731 resulting from lower estimated net cash flows from certain wells in which outside parties have a 20% net profits interest. | ||
Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that impairments of oil and gas properties could occur. In addition, it is reasonably possible that impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves. | ||
Revenue Recognition—Oil and gas sales result from undivided interests held by the Company in oil and gas properties. Sales of oil and gas produced from oil and gas operations are recognized when the product is delivered to the purchaser and title transfers to the purchaser. The Company had no natural gas sales imbalance positions at September 30, 2013 or 2012. Charges for gathering and transportation are included in production expenses. | ||
Asset Retirement Obligations—The Company records a liability for asset retirement obligations ("ARO") associated with its oil and gas wells when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of oil and gas properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value. | ||
Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. | ||
Capitalized Interest—Interest is capitalized as part of the historical cost of developing and constructing assets for significant projects. Significant oil and gas investments in unproved properties, significant exploration and development projects for which depreciation, depletion and amortization expense is not currently recognized, and exploration or development activities that are in progress qualify for interest capitalization. Interest is capitalized until the asset is ready for service. Capitalized interest is determined by multiplying the Company's weighted-average borrowing cost on debt by the average amount of qualifying costs incurred. Once an asset subject to interest capitalization is completed and placed in service, the associated capitalized interest is expensed through depletion or impairment, along with other capitalized costs related to that asset. | ||
Debt Issuance Costs—Costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the term of the related debt. | ||
Participation Liability—The participation liability associated with outstanding long-term debt is recorded at fair value as determined utilizing a present value factor of 10 applied to proved developed reserves. Payments made for the participation liability are reported as interest expense. Changes in the fair value of the participation liability are recorded as additions or deductions to the discount on the long-term debt to the extent this debt remains outstanding. Once the associated debt is repaid, changes in the participation liability are recorded to other expense in the statements of operations. | ||
Conversion Feature Liability and Warrant Liabilities—The conversion feature liability and warrant liabilities are recorded at fair value based upon valuation models utilizing relevant factors such as expected life, estimated volatility, risk-free interest and expected dividend rate. Changes in the fair value of these liabilities are reported in the statements of operations. | ||
Stock-Based Compensation—The Company accounts for employee stock-based compensation using the fair value method. The fair value attributable to stock options is calculated based on the Black-Scholes option pricing model and is amortized to expense over the service period which is equivalent to the time required to vest the stock options. | ||
Income Taxes—Income taxes are provided based on the liability method for financial reporting purposes. Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. | ||
Uncertain tax positions are recognized in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. | ||
The Company is required to file federal income tax returns in the United States and in various state and local jurisdictions. The Company's tax returns filed since inception are subject to examination by taxing authorities in the jurisdictions in which it operates in accordance with the normal statutes of limitations in the applicable jurisdiction. | ||
Earnings (Loss) Per Share—Basic earnings (loss) per share have been calculated based upon the weighted-average number of common shares outstanding. The weighted-average number of common shares outstanding used in the computations of earnings (loss) per share was 12,741,512 for 2013 and 11,901,830 for 2012. The calculation of diluted weighted-average shares outstanding for 2013 and 2012 excludes 19,261,860-shares and 19,751,560 shares, respectively, issuable pursuant to outstanding warrants, stock options and debt conversion features because their effect is anti-dilutive. | ||
Concentration of Credit Risk—The Company is subject to credit risk resulting from the concentration of its oil and natural gas receivables with significant purchasers. One purchaser accounted for all of the Company's oil and gas sales revenues for 2013 and 2012. The Company does not require collateral. While the Company believes its recorded receivable will be collected, in the event of default the Company would follow normal collection procedures. The Company does not believe the loss of this purchaser would materially impact its operating results as oil and gas are fungible products with well-established markets and numerous purchasers. | ||
At times, the Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management monitors the credit ratings and concentration of risk with these financial institutions on a continuing basis to safeguard cash deposits. | ||
Fair Value Measurements—The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to the Company for debt with similar terms and remaining maturities. The Company calculated that the estimated fair value of the long term debt is not significantly different than the carrying value of the debt. The participation liability associated with outstanding long-term debt was determined by utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled with the proceeds of the notes. | ||
Fair value is defined as the price that would be received to sell an asset or price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are classified for disclosure purposes according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three levels of the fair-value-measurement hierarchy are as follows: | ||
● | Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
● | Level 2—Inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
● | Level 3—Unobservable inputs reflecting the Company's own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. | |
In determining fair value, the Company utilizes observable market data when available, or models that incorporate observable market data. In addition to market information, the Company incorporates transaction-specific details that, in management's judgment, market participants would take into account in measuring fair value. The Company utilizes the most observable inputs available for the valuation technique employed. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement of both financial and nonfinancial assets and liabilities are characterized based upon the lowest level of input that is significant to the fair value measurement. | ||
Recently Issued Accounting Pronouncements –In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, which clarifies some existing fair value measurement concepts, eliminates wording differences between U.S. GAAP and International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some fair value measurement principles to achieve convergence between U.S. GAAP and IFRS. ASU 2011-04 is effective for the Company beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company's financial statements. | ||
In December 2011, the FASB issued Accounting Standards Update No. 2011-11 Balance Sheet: Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). ASU 2011-11 requires that an entity disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU 2011-11 is effective for annual periods beginning on or after January 1, 2013. The Company is currently evaluating the provisions of ASU 2011-11 and assessing the impact, if any, it may have on its consolidated financial position, results of operations or cash flows. | ||
Various other accounting standards updates were recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries, and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows. |
3_OIL_AND_GAS_PROPERTIES
3. OIL AND GAS PROPERTIES | 12 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
3. OIL AND GAS PROPERTIES | ' |
By agreement dated March 15, 2011, the Company entered into a farmout agreement with an unrelated third party pertaining to a 100-acre lease in the Batson Dome Field. As of September 30, 2013, the Company had drilled five wells on the lease. Pursuant to the farmout agreement the Company has the option of drilling additional wells on the lease; provided however, that if it does not drill at least six wells in any twelve month period the right to drill any additional wells on the lease will terminate. The estimated cost of drilling and completing any well on this lease is approximately $650,000. As of September 30, 2013, the Company had drilled five wells on this lease. | |
By agreement dated May 25, 2011, the Company entered into a farmout agreement with an unrelated third party pertaining to a 100-acre lease in the Batson Dome Field. Pursuant to the agreement, the Company had the obligation to commence drilling a well on the lease by June 14, 2013. In November 2013, the Company paid $10,000 to extend the agreement, whereby it now has an obligation to commence drilling by June 14, 2014. Subject to the commencement of drilling the first well by June 14, 2014, and completing the well if warranted, the Company has the option of drilling additional wells on the lease; provided however, that unless the Company commences drilling each well within 180 days of the date the latest well is completed or abandoned, the right to drill any additional wells on the lease will terminate. The estimated cost of drilling and completing any well on this lease is approximately $1,000,000. As of September 30, 2013, the Company had not commenced any drilling operations on the lease subject to the farmout agreement. | |
By agreement dated January 6, 2012, the Company entered into a three-year farmout agreement with an unrelated third party pertaining to another 70-acre lease in the Batson Dome Field. The estimated cost of drilling and completing any well on this lease is approximately $1,000,000. | |
By agreement dated May 1, 2012, the Company entered into a farmout agreement with an unrelated third party pertaining to a 45-acre lease in the Hull-Daisetta Field. Pursuant to the agreement, the Company had the obligation to commence drilling a well on the lease by January 31, 2013. Subject to the commencement of drilling the first well by January 31, 2013, and completing the well if warranted, the Company has the option of drilling additional wells on the lease; provided however, that unless the Company commences drilling each well within 180 days of the date the latest well is completed or abandoned, the right to drill any additional wells on the lease will terminate. The estimated cost of drilling and completing any well on this lease is approximately $750,000. The original agreement was extended one year providing until January 31, 2014 to commence drilling the first well. As of September 30, 2013, the Company did not drill any wells on this lease and is not expected to drilling any wells in the foreseeable future. | |
On September 30, 2010, the Company acquired a forty percent (40%) working interest in mineral leases for 220 acres in Hardin County, Texas, within the area known as the Batson Dome Field, from C.F.O., Inc., a corporation controlled by Delton Drum, one of the Company’s officers, for the total consideration of $325,668, consisting of a cash payment of $40,000 and a secured 90-day promissory note for $285,668. On October 1, 2010, the Company acquired an additional fifty percent (50%) working interest in the Batson Dome Field for the total consideration of $407,085, consisting of a cash payment of $50,000 and a secured 90-day promissory note for $357,085. The 90-day promissory notes bore interest at eight percent (8%) per annum and were repaid in December 2010. Although the leases are in a previously developed oil and gas field, these purchases excluded any interest in existing well bores or surface equipment. | |
On December 16, 2010, and in payment of $259,247 in cash, the Company acquired a ninety percent (90%) working interest in 10 acres adjacent to its existing 220 acres under lease in the Batson Dome Field, as well as a ninety percent (90%) working interest in two producing oil wells and three shut in wells located on the 10 acre lease. The leases and wells were acquired from C.F.O., Inc. | |
Through these acquisitions, the Company owns a ninety percent (90%) working interest in mineral leases for 230 acres in the Batson Dome Field. C.F.O., Inc. is a related party and owns the remaining ten percent (10%) working interest and is the operator for the mineral leases pursuant to a joint operating agreement between the Company and C.F.O., Inc. The Company has recorded a receivable from C.F.O., Inc. for their 10% share of capital expenditures. At September 30, 2013, this amount totaled $12,476 and was repaid in October 2013 from CFO’s production revenues. During the two years ended September 30, 2013, we paid C.F.O., Inc. $470,000 and $763,600 respectively for services provided to us. These amounts included reimbursements for drilling costs advanced by C.F.O., Inc. of $224,722 and $573,533 respectively. | |
As discussed in Note 2, the Company recorded an impairment expense of $3,634,312 during the year ended September 30, 2013 as a result of reductions in estimated proved reserves. |
4_ASSET_RETIREMENT_OBLIGATIONS
4. ASSET RETIREMENT OBLIGATIONS | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
4. ASSET RETIREMENT OBLIGATIONS | ' | ||||||||
The Company has asset retirement obligations for any wells that are permanently removed from service. The primary obligations involve the removal and disposal of surface equipment, plugging and abandoning the wells, and site restoration. For the purpose of determining the fair value of ARO incurred during the fiscal years presented, the Company used the following assumptions: | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Inflation rate | 4 | % | 4 | % | |||||
Estimated asset life | 3.9 years | 9.5 years | |||||||
Credit adjusted risk free interest rate | 30 | % | 18 | % | |||||
The assumptions used in calculating ARO as of September 30, 2013 were based on data presented in the October 1, 2013 Reserve Report and using the current costs of plugging and abandoning wells. | |||||||||
The following table shows: | |||||||||
Asset retirement obligations at September 30, 2011 | $ | 24,629 | |||||||
Additional retirement obligations incurred | 36,959 | ||||||||
Change in estimate | 49,428 | ||||||||
Accretion expense | 8,922 | ||||||||
Settlements | (23,528 | ) | |||||||
Asset retirement obligations at September 30, 2012 | $ | 96,410 | |||||||
Additional retirement obligations incurred | (28,290 | ) | |||||||
Change in estimate | 111,598 | ||||||||
Accretion expense | 23,186 | ||||||||
Settlements | (25,219 | ) | |||||||
Asset retirement obligations at September 30, 2013 | $ | 177,685 | |||||||
5_LONGTERM_DEBT
5. LONG-TERM DEBT | 12 Months Ended |
Sep. 30, 2013 | |
Notes to Financial Statements | ' |
5. LONG-TERM DEBT | ' |
2010 Convertible Promissory Notes – In December 2010, the Company completed the issuance of $3,400,000 in Convertible Promissory Notes, due and payable on October 31, 2012 and convertible, at the holder’s option, into common stock of the Company at $1.00 per share at any time after April 30, 2011. The 2010 Convertible Promissory Notes bore interest at 8% per year, payable quarterly. In addition, the note holders were issued 1,700,000 Series A warrants to purchase the Company’s common stock at $4.00 per share any time on or before October 31, 2014 and were additionally granted a twenty percent (20%) net profits interest payable quarterly from any net profits generated from wells drilled and completed with the proceeds of the notes. | |
Direct costs of $400,051 were incurred in connection with the issuance of the 2010 Convertible Promissory Notes. The Company also issued the placement agent Series B warrants for the purchase of up to 340,000 shares of common stock at a price of $1.20 per share at any time prior to October 31, 2014, 170,000 shares of common stock at a price of $4.00 per share at any time prior to October 31, 2014, and 453,322 shares of common stock at a price of $0.10 per share at any time prior to March 31, 2011. As of September 30, 2013, 453,322 warrants have been exercised. The warrants also provide for adjustment to their exercise prices under certain circumstances. | |
During 2012, $3,075,000 of the 2010 Convertible Promissory Notes outstanding were surrendered in exchange for new 2012 Convertible Promissory Notes as discussed below. The remaining notes, which had an outstanding principal balance of $325,000, were repaid in October 2012. | |
2012 Convertible Promissory Notes – During 2012, the Company issued $8,254,500 of Convertible Promissory Notes, due and payable on June 30, 2015 and convertible at the holder’s option, into common stock of the Company at $1.25 per share. The Convertible Promissory Notes bear interest at 15% per year, payable quarterly. Of the total amount raised, $5,179,500 represented new cash investors and $3,075,000 represented investors from the 2010 convertible note offering who chose to roll their investment in that earlier offering into the Company's new offering. Net proceeds from this financing were used to fund an accelerated developmental drilling program in the Company's oil fields located in Southeast Texas and to pay the 2010 Convertible Promissory Notes that remained outstanding on October 31, 2012, the maturity date of those notes. | |
Except in certain circumstances, the conversion price of the 2012 Convertible Promissory Notes will be lowered if the Company sells any additional shares of common stock or any securities convertible into common stock, at a price below the then applicable conversion price. The conversion price will also be proportionately adjusted in the event of any stock split, or capital reorganization. On or prior to December 31, 2013, the Company may repay the Notes, without penalty, upon twenty days written notice to the Note holders if, during any twenty trading days within a period of thirty consecutive trading days, the closing price of the Company’s common stock is $2.25 or greater and the Company’s common stock has an average daily trading volume of 100,000 shares or more during the twenty trading days. After December 31, 2013 the Company may prepay the Notes upon twenty days written notice to the Note holders. | |
Direct costs of $813,780 were incurred in connection with the issuance of the 2012 Convertible Promissory Notes. The Company recognized a loss on debt extinguishment of $410,639 related to the investors who chose to roll their investment in the 2010 Convertible Promissory Notes into the new offering. The placement agents for this offering received a cash commission of $619,905 as well as 537,360 Series E warrants. Each Series E warrant entitles the holder to purchase one share of the Company’s common stock. The Series E warrants may be exercised at any time on or before June 30, 2017 at a price of $1.55 per share. | |
The Company’s gross outstanding balance of the 2012 Convertible Promissory Notes was $8,254,500 as of September 30, 2013. As of September 30, 2013, the unamortized discount on the 2012 Convertible Promissory Notes totaled $441,116. Interest expense for the amortization of debt issuance costs and discount on the notes was $965,748 and $965,748 for the years ended September 30, 2013 and 2012, respectively. The effective interest rate of the 2012 Convertible Promissory Notes (net of the participation liability discussed below) was 25.1% as of September 30, 2013. | |
Net Profits Interest Participation Liability – The note holder’s twenty percent (20%) net profits interest granted with the issuance of the 2010 Convertible Promissory Notes is owned by Vanguard Net Profits, LLC, a Texas limited liability company (the “Fund”). The Company has a 1% interest in the Fund and is the Fund’s manager. Persons that purchased the Company’s 2010 Convertible Promissory Notes own the remaining interest in the Fund. | |
The Company has recognized a participation liability related to the net profits interest granted. This participation liability is reflected in the liability section of the balance sheets at its estimated fair value of $465,551 as of September 30, 2013 and $1,573,605 as of September 30, 2012. At any time, the Company may purchase the net profits interests held by the Fund for $3,400,000. | |
The Company estimated the fair value of the participation liability utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled and completed with the proceeds of the notes. Changes in the fair value of the participation liability are recorded as additions or deductions to the discount on the long-term debt to the extent 2010 Convertible Promissory Notes remain outstanding. Otherwise, changes in the participation liability are recorded to other expense in the statements of operations. | |
The Company incurred expense associated with this net profits interest during the years ended September 30, 2013 and 2012 of $123,312 and $97,535, respectively. This amount is reported as interest expense in the statement of operations. The Company also made payments under this arrangement of $261,635 and $375,470 during the years ended September 30, 2013 and 2012, respectively. |
6_INCOME_TAXES
6. INCOME TAXES | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
6. INCOME TAXES | ' | ||||||||
The provision for income taxes consists of the following: | |||||||||
Fiscal Year | Fiscal Year | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Current | $ | - | $ | - | |||||
Deferred | - | - | |||||||
Total | $ | - | $ | - | |||||
The provision for income taxes differs from the amount computed by applying the federal statutory income tax rate (34%) on operations as follows: | |||||||||
Fiscal Year | Fiscal Year | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Income tax expense computed at statutory rates | $ | (1,137,194 | ) | $ | (349,233 | ) | |||
Non-deductible items | (220,623 | ) | (366,608 | ) | |||||
Change in valuation allowance | 1,357,817 | 715,841 | |||||||
Total | $ | - | $ | - | |||||
The components of the net deferred tax asset were as follows: | |||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Deferred tax assets | |||||||||
Net operating loss carryforwards | $ | 3,665,319 | $ | 2,987,160 | |||||
Stock-based compensation | 222,936 | 103,367 | |||||||
Deferred tax liability - oil & gas properties | (1,380,769 | ) | (2,319,346 | ) | |||||
Participation liability | (273,638 | ) | 102,739 | ||||||
Subtotal | $ | 2,233,848 | 873,920 | ||||||
Valuation allowance | (2,233,848 | ) | (873,920 | ) | |||||
Net deferred tax asset | $ | - | $ | - | |||||
A valuation allowance has been established to offset reported deferred tax assets. The Company's accumulated net operating losses were approximately $10,800,000 at September 30, 2013 and begin to expire if not utilized in the year 2030. |
7_STOCKHOLDERS_EQUITY
7. STOCKHOLDERS EQUITY | 12 Months Ended | ||||||||||||||
Sep. 30, 2013 | |||||||||||||||
Stockholders' equity | ' | ||||||||||||||
7. STOCKHOLDERS EQUITY | ' | ||||||||||||||
Preferred Stock—5,000,000 shares authorized none issued or outstanding. | |||||||||||||||
Common Stock—The Company is authorized to issue an aggregate of 50,000,000 shares of common stock with $0.00001 par value. In July 2010, the Company sold 4,900,000 shares of common stock at $0.001 per share in a private placement. In September 2010, the Company completed a second private placement of 1,012,500 shares of common stock at $0.40 per share. Net proceeds from the private placements were used for general corporate purposes, including capital expenditures. | |||||||||||||||
In February and March 2011, the Company sold 1,500,000 units at a price of $1.00 per unit to private investors. Each unit consisted of one share of common stock and one Series C warrant. Each Series C warrant allows the holder to purchase one share of Company common stock at a price of $2.00 per share at any time prior to February 28, 2016. The Company also issued the placement agent Series D warrants for the purchase of up to 150,000 shares of common stock at a price of $1.20 per share at any time prior to February 28, 2016. | |||||||||||||||
On December 2, 2011 the Company sold 4,800,000 units in an initial public offering at a price of $1.00 per unit. Each unit consisted of one share of the Company's common stock and one Class A warrant. Each Class A warrant entitles its holder to purchase one share of the Company's common stock at an exercise price of $1.50. The Class A warrants are exercisable at any time on or before November 29, 2016. The underwriters for the offering were paid a commission of $432,000 (9% of the gross offering proceeds) and a non-accountable expense allowance of $144,000 (3% of the gross offering proceeds). The underwriters also received warrants to purchase up to 480,000 units. Proceeds from the IPO were approximately $3,498,900 net of the underwriters’ discount and offering expenses. | |||||||||||||||
During the years ended September 30, 2012 and 2011, the Company issued 60,690 and 15,000 shares, respectively, of restricted stock for investor relations consulting services. The Company recognized expense of $59,700 during 2012 and $15,000 during 2011 related to the issuance of these shares. | |||||||||||||||
Following the above issuances of common stock, the Company has 12,741,512 shares issued and outstanding as of September 30, 2013. | |||||||||||||||
Warrants—The following table summarizes certain information regarding outstanding warrants as of September 30, 2013 and 2012: | |||||||||||||||
Exercise | Shares Issuable Upon Exercise of Warrants | ||||||||||||||
Series | Issuance Date | Expiration Date | Price | 2013 | 2012 | ||||||||||
Series A | 1-Dec-10 | 31-Oct-14 | $ | 4 | 1,700,000 | 1,700,000 | |||||||||
Series B | 1-Dec-10 | 31-Oct-14 | $ | 1.2 | 340,000 | 340,000 | |||||||||
Series B | 1-Dec-10 | 31-Oct-14 | $ | 4 | 170,000 | 170,000 | |||||||||
Series B | 1-Dec-10 | March 31, 2011(1) | $ | 0.1 | - | - | |||||||||
Series C | 28-Feb-11 | 28-Feb-16 | $ | 2 | 1,500,000 | 1,500,000 | |||||||||
Series D | 28-Feb-11 | 28-Feb-16 | $ | 1.2 | 150,000 | 150,000 | |||||||||
Class A | 2-Dec-11 | 29-Nov-16 | $ | 1.5 | 4,800,000 | 4,800,000 | |||||||||
Series E | 29-Jun-12 | 15-Jun-17 | $ | 1.55 | 296,300 | 296,300 | |||||||||
Series E | 6-Jul-12 | 15-Jun-17 | $ | 1.55 | 72,500 | 72,500 | |||||||||
Series E | 31-Jul-12 | 15-Jun-17 | $ | 1.55 | 57,160 | 57,160 | |||||||||
Series E | 5-Sep-12 | 15-Jun-17 | $ | 1.55 | 111,400 | 111,400 | |||||||||
(1) Exercised in March 2011. |
8_STOCKBASED_COMPENSATION
8. STOCK-BASED COMPENSATION | 12 Months Ended |
Sep. 30, 2013 | |
Stockholders' equity | ' |
8. STOCK-BASED COMPENSATION | ' |
On January 10, 2011, the Board of Directors approved a Non-Qualified Stock Option Plan (the "Plan") which authorizes the issuance of up to 1,500,000 shares of Company common stock to persons that exercise options granted pursuant to the Plan. The Company's employees, directors, officers, consultants and advisors are eligible to be granted options pursuant to the Plan, provided however that bona fide services must be rendered by such consultants or advisors, and such services must not be in connection with the offer or sale of securities in a capital-raising transaction. | |
Options for the purchase of 850,000 shares of the Company's common stock were issued to members of executive management and the Board of Directors on January 10, 2011. The stock options have an exercise price of $1.00 per share and were fully vested on the date of grant. The Company recognized stock-based compensation expense of $243,731 during 2011 related to the issuance of these options. |
9_COMMITMENTS_AND_CONTINGENCIE
9. COMMITMENTS AND CONTINGENCIES | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
9. COMMITMENTS AND CONTINGENCIES | ' | ||||||||||||||||
Environmental Matters – The Company, as an owner or lessee and operator of oil and gas properties, is subject to various federal, state and local laws and regulations relating to discharge of materials into, and protection of, the environment. These laws and regulations may, among other things, impose liability on the lessee under an oil and gas lease for the cost of pollution clean-up resulting from operations and subject to the lessee to liability for pollution damages. In some instances, the Company may be directed to suspend or cease operations in the affected area. The Company maintains insurance coverage, which is believed customary in the industry, although the Company is not fully insured against all environmental risks. | |||||||||||||||||
The Company manages its exposure to environmental liabilities on properties to be acquired by identifying existing problems and assessing the potential liability. The Company also conducts periodic reviews, on a Company-wide basis, to identify changes in its environmental risk profile. | |||||||||||||||||
Management Agreements – In June 2010, the Company entered into an agreement with an entity controlled by its Chief Executive Officer ("CEO") to provide for his personal part-time management consulting services for $7,500 per month, on a month-to-month basis. Also in June 2010, the Company entered into a consulting services agreement with its Chairman of the Board to provide for his personal part-time management consulting services for $3,000 per month, on a month-to-month basis. Beginning in January 2011, the monthly payments were increased to $12,500 for the CEO and $10,000 for the Chairman. In May 2011, these consulting arrangements were replaced with employment agreements for each executive. In May 2013 the consulting arrangement were set at $10,000 for the CEO and $-0- for the Chairman. The Chairman resigned following the May 2013 modification. | |||||||||||||||||
Office Lease – The Company leases office space under an operating lease. Rent expense for 2013 and 2012 totaled $72,474 and $81,641, respectively. Future minimum payments on office leases are shown below. | |||||||||||||||||
Contractual Obligations – The Company’s material future contractual obligations by fiscal year as of September 30, 2013 were as follows: | |||||||||||||||||
Total | 2014 | 2015 | Thereafter | ||||||||||||||
Convertible notes | $ | 8,254,500 | $ | -0- | $ | 8,254,500 | - | ||||||||||
Office leases | $ | 12,900 | $ | 12,900 | - | - | |||||||||||
The Company has no contractual capital commitments outstanding at September 30, 2013. Management estimates the Company will spend approximately $150,000 during fiscal year 2014 for workover of wells in the Batson Dome Field and various other projects. |
10_FAIR_VALUE_OF_FINANCIAL_INS
10. FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
10. FAIR VALUE OF FINANCIAL INSTRUMENTS | ' | ||||||||||||||||
The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2013 and 2012: | |||||||||||||||||
September 30, | September 30, | ||||||||||||||||
Level | 2013 | 2012 | |||||||||||||||
Participation liability | 3 | $ | 465,551 | $ | 1,573,605 | ||||||||||||
Conversion feature liability | 3 | - | 584,018 | ||||||||||||||
Warrant liabilities | 3 | - | 68,746 | ||||||||||||||
Total liabilities | $ | 465,551 | $ | 2,226,369 | |||||||||||||
The following tables present a reconciliation of those liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3): | |||||||||||||||||
Participation Liability | Conversion Feature Liability | Warrant Liabilities | Total | ||||||||||||||
Balance at September 30, 2012 | $ | 1,573,605 | $ | 584,018 | $ | 68,746 | $ | 2,226,369 | |||||||||
Purchases, issuances and settlements | (138,323 | ) | - | - | (138,323 | ) | |||||||||||
(Gains) losses included in earnings | (969,731 | ) | (584,018 | ) | (68,746 | ) | (1,622,495 | ) | |||||||||
Balance at September 30, 2013 | $ | 465,551 | $ | - | $ | - | $ | 465,551 | |||||||||
11_SUPPLEMENTAL_CASH_FLOW_INFO
11. SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
11. SUPPLEMENTAL CASH FLOW INFORMATION | ' | ||||||||
Fiscal Year | Fiscal Year | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Interest paid | $ | 1,435,660 | $ | 250,734 | |||||
Interest capitalized (non-cash) | 63,040 | 350,142 | |||||||
Exchange of 2010 Notes for 2012 Notes | - | 3,075,000 | |||||||
Noncash investing and financing activities: | |||||||||
Capital expenditures included in accounts payable | 16,591 | 289,133 | |||||||
Issuance of Series E Warrants to placement agent | - | 97,583 | |||||||
Recognition of conversion feature liability | - | 670,893 | |||||||
Asset retirement obligations incurred | - | 86,386 |
12_SUPPLEMENTAL_INFORMATION_RE
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) | 12 Months Ended | ||||||||||||||
Sep. 30, 2013 | |||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) | ' | ||||||||||||||
Results of operations. Results of operations for producing activities consist of all activities for the exploration, production and sale of oil and gas. Net revenues from production include only the revenues from the production and sale of oil and natural gas. Production costs are those incurred to operate and maintain wells and related equipment and facilities used in oil and gas operations. Income tax expense is calculated by applying the current statutory tax rates to the revenues after deducting costs, which include depreciation, depletion and amortization allowances, after giving effect to permanent differences. The results of operations exclude general office overhead and interest expense attributable to oil and gas activities. | |||||||||||||||
Fiscal Year Ended September 30, | Fiscal Year Ended September 30, | ||||||||||||||
2013 | 2012 | ||||||||||||||
Net revenues from production | |||||||||||||||
Third-party sales | $ | 4,644,356 | $ | 3,369,407 | |||||||||||
Production costs | |||||||||||||||
Lease operating expense | 714,669 | 672,233 | |||||||||||||
Production taxes | 214,127 | 155,616 | |||||||||||||
Asset retirement obligation accretion | 23,186 | 8,922 | |||||||||||||
951,982 | 836,771 | ||||||||||||||
Impairment of O&G Properties | 3,634,312 | - | |||||||||||||
Depreciation, depletion and amortization | 1,846,583 | 842,571 | |||||||||||||
-1,788,521 | 1,690,065 | ||||||||||||||
Income tax expense | - | 573,270 | |||||||||||||
Results of operations from producing activities | $ | (1,788,521 | ) | $ | 1,116,795 | ||||||||||
Costs Incurred in Oil and Gas Property Acquisition, Exploration and Development. Amounts reported as costs incurred include both capitalized costs and costs charged to expense during the year for oil and gas property acquisition, exploration and development activities. Costs incurred also include new asset retirement obligations established in the current year, as well as increases or decreases to the asset retirement obligations resulting from changes to cost estimates during the year. Exploration costs presented below include the costs of drilling and equipping successful exploration wells, as well as dry hole costs, leasehold impairments, geological and geophysical expenses, and the costs of retaining undeveloped leaseholds. Development costs include the costs of drilling and equipping development wells, and construction of related production facilities. | |||||||||||||||
Fiscal Year Ended September 30, | Fiscal Year Ended September 30, | ||||||||||||||
2013 | 2012 | ||||||||||||||
Property acquisitions | |||||||||||||||
Unproved | $ | 19,206 | $ | 59,784 | |||||||||||
Proved | - | - | |||||||||||||
Exploration | 373,731 | 170,857 | |||||||||||||
Development | 1,947,841 | 6,258,174 | |||||||||||||
Total Costs Incurred | $ | 2,340,778 | $ | 6,488,815 | |||||||||||
Capitalized costs. Capitalized costs include the cost of properties, equipment and facilities for oil and natural-gas producing activities. Capitalized costs for proved properties include costs for oil and natural-gas leaseholds where proved reserves have been identified, development wells, and related equipment and facilities, including development wells in progress. | |||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | ||||||||||||||
Capitalized costs | |||||||||||||||
Unproved properties | $ | 61,470 | $ | 1,427,294 | |||||||||||
Proved properties | 12,994,766 | 9,288,166 | |||||||||||||
13,056,236 | 10,715,460 | ||||||||||||||
Less: Accumulated DD&A | 6,587,955 | 1,107,060 | |||||||||||||
Net capitalized costs | $ | 6,468,281 | $ | 9,608,400 | |||||||||||
Costs Not Being Amortized. The following table sets forth a summary of oil and gas property costs not being amortized at September 30, 2013, by the period in which such costs were incurred. There are no individually significant properties or significant development projects included in costs not being amortized. The majority of the evaluation activities are expected to be completed within five to ten years . | |||||||||||||||
Total | Fiscal Year Ended September 30, | Fiscal Year Ended September 30, | |||||||||||||
2013 | 2012 | ||||||||||||||
Property acquisition costs | $ | - | $ | - | $ | - | |||||||||
Exploration and development | 61,470 | - | 61,470 | ||||||||||||
Total | $ | 61,470 | $ | - | $ | 61,470 | |||||||||
Oil and Gas Reserve Information. Pressler Consultants, Inc., an independent engineering firm, prepared the estimates of the proved reserves, future production, and income attributable to the leasehold interests as of September 30, 2013 Nova Resources, Inc., an independent engineering firm, prepared the estimates of the proved reserves, future production, and income attributable to the leasehold interests as of September 30, 2012 and 2011 The estimated proved net recoverable reserves presented below include only those quantities that were expected to be commercially recoverable at prices and costs in effect at the balance sheet dates under the then existing regulatory practices and with conventional equipment and operating methods. Proved Developed Reserves represent only those reserves estimated to be recovered through existing wells. Proved Undeveloped Reserves include those reserves that may be recovered from new wells on undrilled acreage or from existing wells on which a relatively major expenditure for recompletion or secondary recovery operations is required. All of the Company's Proved Reserves are located onshore in the continental United States of America. | |||||||||||||||
Discounted future cash flow estimates like those shown below are not intended to represent estimates of the fair value of oil and gas properties. Estimates of fair value should also consider unproved reserves, anticipated future oil and gas prices, interest rates, changes in development and production costs and risks associated with future production. Because of these and other considerations, any estimate of fair value is subjective and imprecise. | |||||||||||||||
The following table sets forth estimates of the proved oil and gas reserves (net of royalty interests) for the Company and changes therein, for the periods indicated. | |||||||||||||||
Estimated Quantities of Proved Reserves | |||||||||||||||
Oil | |||||||||||||||
(Bbls) | |||||||||||||||
30-Sep-11 | 535,810 | ||||||||||||||
Revisions of prior estimates | 192,386 | ||||||||||||||
Purchases of reserves in place | 46,557 | ||||||||||||||
Production | (48,889 | ) | |||||||||||||
30-Sep-12 | 725,864 | ||||||||||||||
Revisions of prior estimates | (555,738 | ) | |||||||||||||
Purchases of reserves in place | - | ||||||||||||||
Production | (45,758 | ) | |||||||||||||
30-Sep-13 | 124,368 | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | ||||||||||||||
Estimated Quantities of Proved Developed Reserves | 124,368 | 313,617 | |||||||||||||
Estimated Quantities of Proved Undeveloped Reserves | - | 412,247 | |||||||||||||
The proved developed reserves estimate of 124,368 net barrels as of September 30, 2013 is a material reduction from that estimated as of last fiscal year end. Net production of 45,758 barrels accounted for a portion of the reduction, but the balance was due to calculations of reservoir potential that was influenced by further detailed analysis of the producing formations drive systems and the declines in production from certain wells at a greater rate than previously experienced. The interpretation of 3D seismic during the fourth quarter of fiscal year 2013 provided additional input and helped delineate the field more precisely, resulting in lowering the estimates of remaining recoverable oil. | |||||||||||||||
Although the Company reported proved undeveloped reserves of 412,247 barrels as of September 30, 2012, the reserve engineers determined this year that such classification was not appropriate due to the faulting system identified in the field, and were thus removed from the report. | |||||||||||||||
Standardized Measure of Discounted Future Net Cash Flows. The Standardized Measure related to proved oil and gas reserves is summarized below. Future cash inflows were computed by applying a twelve month average of the first day of the month prices adjusted for differentials to estimated future production, less estimated future expenditures (based on year end costs) to be incurred in developing and producing the proved reserves, less estimated future income tax expense. Future income tax expenses are calculated by applying appropriate year-end tax rates to future pretax net cash flows, less the tax basis of properties involved. Future net cash flows are discounted at a rate of 10% annually to derive the standardized measure of discounted future net cash flows. This calculation procedure does not necessarily result in an estimate of the fair market value or the present value of the Company. | |||||||||||||||
Standardized Measure of Oil and Gas | |||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||||
Future cash inflows | $ | 12,943,629 | $ | 74,669,619 | $ | 50,622,329 | |||||||||
Future production costs | (3,557,348 | ) | (9,364,444 | ) | (6,273,765 | ) | |||||||||
Future development costs | (804,500 | ) | (6,175,000 | ) | (5,557,500 | ) | |||||||||
Future income taxes | - | (13,639,715 | ) | (10,992,652 | ) | ||||||||||
Future net cash flows | 8,581,781 | 45,490,460 | 27,798,412 | ||||||||||||
Discount of future net cash flows at 10% per annum | (2,104,010 | ) | (8,509,198 | ) | (5,107,917 | ) | |||||||||
Standardized measure of discounted future net cash flows | $ | 6,477,771 | $ | 36,981,262 | $ | 22,690,495 | |||||||||
The following table sets forth the changes in standardized measure of discounted future net cash flows relating to proved oil and gas reserves for the periods indicated. | |||||||||||||||
Changes in Standardized Measure | |||||||||||||||
Fiscal Year Ended | Fiscal Year Ended | Fiscal Year Ended September 30, | |||||||||||||
September 30, | September 30, | 2011 | |||||||||||||
2013 | 2012 | ||||||||||||||
Sales of oil and gas produced, net of production costs | $ | (3,692,374 | ) | $ | (2,532,636 | ) | $ | (1,608,365 | ) | ||||||
Purchases of minerals in place | - | - | 11,457,772 | ||||||||||||
Net change due to revisions in quantity estimates | (28,337,652 | ) | 17,466,030 | - | |||||||||||
Net changes in prices and production costs | (11,151,435 | ) | 3,134,171 | 4,459,237 | |||||||||||
Accretion of discount before income taxes | 3,698,126 | 2,269,050 | 454,748 | ||||||||||||
Changes in timing and other | 8,979,844 | (6,045,848 | ) | 3,379,621 | |||||||||||
Net change | $ | (30,503,491 | ) | $ | 14,290,767 | $ | 18,143,013 | ||||||||
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Sep. 30, 2013 | ||
Notes to Financial Statements | ' | |
Principles of Consolidation and Basis of Presentation | ' | |
Principles of Consolidation and Basis of Presentation— The consolidated financial statements include the accounts of Vanguard Energy Corporation and its subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. | ||
The Company's fiscal year-end is September 30. The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") and pursuant to the accounting and disclosure rules and regulations of the U.S. Securities and Exchange Commission ("SEC"). A summary of the significant accounting policies applied in the preparation of the accompanying financial statements follows. | ||
Management Estimates | ' | |
Management Estimates—The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as certain financial statement disclosures. While management believes that the estimates and assumptions used in the preparation of the financial statements are appropriate, actual results could differ from these estimates. Significant estimates made in preparing these financial statements include the fair value of acquired assets and liabilities (Note 3), asset retirement obligations (Note 4), participation, conversion feature and warrant liabilities (Note 5), income taxes (Note 6) and the estimate of proved oil and gas reserves and related present value estimates of future net cash flows used in the ceiling test (Notes 2 and 12). | ||
Reclassifications | ' | |
Reclassifications – Certain amounts previously presented for prior periods have been reclassified to conform to the current presentation. The reclassifications had no effect on net loss, working capital or equity previously reported. | ||
Cash and Cash Equivalents | ' | |
Cash and Cash Equivalents—The Company considers all highly liquid instruments purchased with a maturity date of three months or less to be cash equivalents. | ||
Oil and Gas Properties | ' | |
Oil and Gas Properties—The Company follows the full cost accounting method to account for oil and natural gas properties, whereby costs incurred in the acquisition, exploration and development of oil and gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on nonproducing leases, drilling, completing and equipping of oil and gas wells and administrative costs directly attributable to those activities and asset retirement costs. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capital costs and proved reserves of oil and gas, in which case the gain or loss is recognized to operations. | ||
The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves. | ||
The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful. | ||
All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. | ||
Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the "cost ceiling") equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the unweighted arithmetic average of the first day of the month price for each month within the 12 month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period. | ||
During the fourth quarter of fiscal year 2013 and based on the October 1, 2013 Reserve Report, the cost ceiling analysis established that the Company’s proved properties required the recording of an impairment reduction. The Company recorded an impairment expense of $3,634,312 \as a result of reductions in estimated proved reserves. Revised calculations of proved reserves were based on detailed analysis of producing formations drive systems and declines in production from certain wells at a greater rate than previously experienced. The interpretation of 3D seismic during the fiscal fourth quarter of 2013 provided additional input and helped delineate the field more precisely, resulting in limiting the estimates of remaining recoverable oil. The production declines resulted in greater DD&A expense of $919,313 during the fourth quarter. These adjustments were offset somewhat by a reduction in the Participation Liability of $969,731 resulting from lower estimated net cash flows from certain wells in which outside parties have a 20% net profits interest. | ||
Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that impairments of oil and gas properties could occur. In addition, it is reasonably possible that impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves. | ||
Revenue Recognition | ' | |
Revenue Recognition—Oil and gas sales result from undivided interests held by the Company in oil and gas properties. Sales of oil and gas produced from oil and gas operations are recognized when the product is delivered to the purchaser and title transfers to the purchaser. The Company had no natural gas sales imbalance positions at September 30, 2013 or 2012. Charges for gathering and transportation are included in production expenses. | ||
Asset Retirement Obligations | ' | |
Asset Retirement Obligations—The Company records a liability for asset retirement obligations ("ARO") associated with its oil and gas wells when those assets are placed in service. The corresponding cost is capitalized as an asset and included in the carrying amount of oil and gas properties and is depleted over the useful life of the properties. Subsequently, the ARO liability is accreted to its then-present value. | ||
Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. | ||
Capitalized Interest | ' | |
Capitalized Interest—Interest is capitalized as part of the historical cost of developing and constructing assets for significant projects. Significant oil and gas investments in unproved properties, significant exploration and development projects for which depreciation, depletion and amortization expense is not currently recognized, and exploration or development activities that are in progress qualify for interest capitalization. Interest is capitalized until the asset is ready for service. Capitalized interest is determined by multiplying the Company's weighted-average borrowing cost on debt by the average amount of qualifying costs incurred. Once an asset subject to interest capitalization is completed and placed in service, the associated capitalized interest is expensed through depletion or impairment, along with other capitalized costs related to that asset. | ||
Debt Issuance Costs | ' | |
Debt Issuance Costs—Costs incurred in connection with the issuance of long-term debt are capitalized and amortized over the term of the related debt. | ||
Participation Liability | ' | |
Participation Liability—The participation liability associated with outstanding long-term debt is recorded at fair value as determined utilizing a present value factor of 10 applied to proved developed reserves. Payments made for the participation liability are reported as interest expense. Changes in the fair value of the participation liability are recorded as additions or deductions to the discount on the long-term debt to the extent this debt remains outstanding. Once the associated debt is repaid, changes in the participation liability are recorded to other expense in the statements of operations. | ||
Conversion Feature Liability and Warrant Liabilities | ' | |
Conversion Feature Liability and Warrant Liabilities—The conversion feature liability and warrant liabilities are recorded at fair value based upon valuation models utilizing relevant factors such as expected life, estimated volatility, risk-free interest and expected dividend rate. Changes in the fair value of these liabilities are reported in the statements of operations. | ||
Stock-Based Compensation | ' | |
Stock-Based Compensation—The Company accounts for employee stock-based compensation using the fair value method. The fair value attributable to stock options is calculated based on the Black-Scholes option pricing model and is amortized to expense over the service period which is equivalent to the time required to vest the stock options. | ||
Income Taxes | ' | |
Income Taxes—Income taxes are provided based on the liability method for financial reporting purposes. Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. Valuation allowances are established when necessary to reduce deferred income tax assets to the amount expected to be realized. | ||
Uncertain tax positions are recognized in the financial statements only if that position is more likely than not of being sustained upon examination by taxing authorities, based on the technical merits of the position. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. | ||
The Company is required to file federal income tax returns in the United States and in various state and local jurisdictions. The Company's tax returns filed since inception are subject to examination by taxing authorities in the jurisdictions in which it operates in accordance with the normal statutes of limitations in the applicable jurisdiction. | ||
Earnings (Loss) Per Share | ' | |
Earnings (Loss) Per Share—Basic earnings (loss) per share have been calculated based upon the weighted-average number of common shares outstanding. The weighted-average number of common shares outstanding used in the computations of earnings (loss) per share was 12,741,512 for 2013 and 11,901,830 for 2012. The calculation of diluted weighted-average shares outstanding for 2013 and 2012 excludes 19,261,860-shares and 19,751,560 shares, respectively, issuable pursuant to outstanding warrants, stock options and debt conversion features because their effect is anti-dilutive. | ||
Concentration of Credit Risk | ' | |
Concentration of Credit Risk—The Company is subject to credit risk resulting from the concentration of its oil and natural gas receivables with significant purchasers. One purchaser accounted for all of the Company's oil and gas sales revenues for 2013 and 2012. The Company does not require collateral. While the Company believes its recorded receivable will be collected, in the event of default the Company would follow normal collection procedures. The Company does not believe the loss of this purchaser would materially impact its operating results as oil and gas are fungible products with well-established markets and numerous purchasers. | ||
At times, the Company maintains deposits in federally insured financial institutions in excess of federally insured limits. Management monitors the credit ratings and concentration of risk with these financial institutions on a continuing basis to safeguard cash deposits. | ||
Fair Value Measurements | ' | |
Fair Value Measurements—The carrying value of cash and cash equivalents, accounts receivable, and accounts payable, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments. The estimated fair value of long-term debt was determined by discounting future cash flows using rates currently available to the Company for debt with similar terms and remaining maturities. The Company calculated that the estimated fair value of the long term debt is not significantly different than the carrying value of the debt. The participation liability associated with outstanding long-term debt was determined by utilizing a present value factor of 10 applied to proved developed reserves associated with the wells drilled with the proceeds of the notes. | ||
Fair value is defined as the price that would be received to sell an asset or price paid to transfer a liability in an orderly transaction between market participants at the measurement date. Inputs used in determining fair value are classified for disclosure purposes according to a hierarchy that prioritizes those inputs based upon the degree to which they are observable. The three levels of the fair-value-measurement hierarchy are as follows: | ||
● | Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets. | |
● | Level 2—Inputs that reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the asset or the liability; or inputs that are derived principally from or corroborated by observable market data by correlation or other means. | |
● | Level 3—Unobservable inputs reflecting the Company's own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available. | |
In determining fair value, the Company utilizes observable market data when available, or models that incorporate observable market data. In addition to market information, the Company incorporates transaction-specific details that, in management's judgment, market participants would take into account in measuring fair value. The Company utilizes the most observable inputs available for the valuation technique employed. If a fair value measurement reflects inputs at multiple levels within the hierarchy, the fair-value measurement of both financial and nonfinancial assets and liabilities are characterized based upon the lowest level of input that is significant to the fair value measurement. | ||
Recently Issued Accounting Pronouncements | ' | |
Recently Issued Accounting Pronouncements – In May 2011, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2011-04, which clarifies some existing fair value measurement concepts, eliminates wording differences between U.S. GAAP and International Financial Reporting Standards (“IFRS”), and in some limited cases, changes some fair value measurement principles to achieve convergence between U.S. GAAP and IFRS. ASU 2011-04 is effective for the Company beginning after December 15, 2011. The adoption of this guidance did not have a material impact on the Company's financial statements. | ||
In December 2011, the FASB issued Accounting Standards Update No. 2011-11 Balance Sheet: Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). ASU 2011-11 requires that an entity disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU 2011-11 is effective for annual periods beginning on or after January 1, 2013. The Company is currently evaluating the provisions of ASU 2011-11 and assessing the impact, if any, it may have on its consolidated financial position, results of operations or cash flows. | ||
Various other accounting standards updates were recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries, and are not expected to a have a material impact on the Company's financial position, results of operations or cash flows. |
4_ASSET_RETIREMENT_OBLIGATIONS1
4. ASSET RETIREMENT OBLIGATIONS (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Accounting Policies [Abstract] | ' | ||||||||
Assumptions for fair value of ARO | ' | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Inflation rate | 4 | % | 4 | % | |||||
Estimated asset life | 3.9 years | 9.5 years | |||||||
Credit adjusted risk free interest rate | 30 | % | 18 | % | |||||
SCHEDULE OF ASSET RETIREMENT OBLIGATIONS | ' | ||||||||
Asset retirement obligations at September 30, 2011 | $ | 24,629 | |||||||
Additional retirement obligations incurred | 36,959 | ||||||||
Change in estimate | 49,428 | ||||||||
Accretion expense | 8,922 | ||||||||
Settlements | (23,528 | ) | |||||||
Asset retirement obligations at September 30, 2012 | $ | 96,410 | |||||||
Additional retirement obligations incurred | (28,290 | ) | |||||||
Change in estimate | 111,598 | ||||||||
Accretion expense | 23,186 | ||||||||
Settlements | (25,219 | ) | |||||||
Asset retirement obligations at September 30, 2013 | $ | 177,685 |
6_INCOME_TAXES_Tables
6. INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Income Taxes Tables | ' | ||||||||
Schedule for the provision for income taxes | ' | ||||||||
Fiscal Year | Fiscal Year | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Current | $ | - | $ | - | |||||
Deferred | - | - | |||||||
Total | $ | - | $ | - | |||||
Schedule of income tax reconciliation | ' | ||||||||
Fiscal Year | Fiscal Year | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Income tax expense computed at statutory rates | $ | (1,137,194 | ) | $ | (349,233 | ) | |||
Non-deductible items | (220,623 | ) | (366,608 | ) | |||||
Change in valuation allowance | 1,357,817 | 715,841 | |||||||
Total | $ | - | $ | - | |||||
Schedule of components of the net deferred tax asset | ' | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Deferred tax assets | |||||||||
Net operating loss carryforwards | $ | 3,665,319 | $ | 2,987,160 | |||||
Stock-based compensation | 222,936 | 103,367 | |||||||
Deferred tax liability - oil & gas properties | (1,380,769 | ) | (2,319,346 | ) | |||||
Participation liability | (273,638 | ) | 102,739 | ||||||
Subtotal | $ | 2,233,848 | 873,920 | ||||||
Valuation allowance | (2,233,848 | ) | (873,920 | ) | |||||
Net deferred tax asset | $ | - | $ | - |
7_STOCKHOLDERS_EQUITY_Tables
7. STOCKHOLDERS EQUITY (Tables) | 12 Months Ended | ||||||||||||||
Sep. 30, 2013 | |||||||||||||||
Stockholders' equity | ' | ||||||||||||||
Schedule of Warrants | ' | ||||||||||||||
Exercise | Shares Issuable Upon Exercise of Warrants | ||||||||||||||
Series | Issuance Date | Expiration Date | Price | 2013 | 2012 | ||||||||||
Series A | 1-Dec-10 | 31-Oct-14 | $ | 4 | 1,700,000 | 1,700,000 | |||||||||
Series B | 1-Dec-10 | 31-Oct-14 | $ | 1.2 | 340,000 | 340,000 | |||||||||
Series B | 1-Dec-10 | 31-Oct-14 | $ | 4 | 170,000 | 170,000 | |||||||||
Series B | 1-Dec-10 | March 31, 2011(1) | $ | 0.1 | - | - | |||||||||
Series C | 28-Feb-11 | 28-Feb-16 | $ | 2 | 1,500,000 | 1,500,000 | |||||||||
Series D | 28-Feb-11 | 28-Feb-16 | $ | 1.2 | 150,000 | 150,000 | |||||||||
Class A | 2-Dec-11 | 29-Nov-16 | $ | 1.5 | 4,800,000 | 4,800,000 | |||||||||
Series E | 29-Jun-12 | 15-Jun-17 | $ | 1.55 | 296,300 | 296,300 | |||||||||
Series E | 6-Jul-12 | 15-Jun-17 | $ | 1.55 | 72,500 | 72,500 | |||||||||
Series E | 31-Jul-12 | 15-Jun-17 | $ | 1.55 | 57,160 | 57,160 | |||||||||
Series E | 5-Sep-12 | 15-Jun-17 | $ | 1.55 | 111,400 | 111,400 |
9_COMMITMENTS_AND_CONTINGENCIE1
9. COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Schedule of Contractual Obligations | ' | ||||||||||||||||
Total | 2014 | 2015 | Thereafter | ||||||||||||||
Convertible notes | $ | 8,254,500 | $ | -0- | $ | 8,254,500 | - | ||||||||||
Office leases | $ | 12,900 | $ | 12,900 | - | - |
10_FAIR_VALUE_OF_FINANCIAL_INS1
10. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2013 | |||||||||||||||||
Notes to Financial Statements | ' | ||||||||||||||||
Financial Liabilities | ' | ||||||||||||||||
September 30, | September 30, | ||||||||||||||||
Level | 2013 | 2012 | |||||||||||||||
Participation liability | 3 | $ | 465,551 | $ | 1,573,605 | ||||||||||||
Conversion feature liability | 3 | - | 584,018 | ||||||||||||||
Warrant liabilities | 3 | - | 68,746 | ||||||||||||||
Total liabilities | $ | 465,551 | $ | 2,226,369 | |||||||||||||
Liabilities Using Signigicant Unobservable Inputs | ' | ||||||||||||||||
Participation Liability | Conversion Feature Liability | Warrant Liabilities | Total | ||||||||||||||
Balance at September 30, 2012 | $ | 1,573,605 | $ | 584,018 | $ | 68,746 | $ | 2,226,369 | |||||||||
Purchases, issuances and settlements | (138,323 | ) | - | - | (138,323 | ) | |||||||||||
(Gains) losses included in earnings | (969,731 | ) | (584,018 | ) | (68,746 | ) | (1,622,495 | ) | |||||||||
Balance at September 30, 2013 | $ | 465,551 | $ | - | $ | - | $ | 465,551 |
11_SUPPLEMENTAL_CASH_FLOW_INFO1
11. SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2013 | |||||||||
Notes to Financial Statements | ' | ||||||||
Supplemental Cash Flow Information | ' | ||||||||
Fiscal Year | Fiscal Year | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2013 | 2012 | ||||||||
Interest paid | $ | 1,435,660 | $ | 250,734 | |||||
Interest capitalized (non-cash) | 63,040 | 350,142 | |||||||
Exchange of 2010 Notes for 2012 Notes | - | 3,075,000 | |||||||
Noncash investing and financing activities: | |||||||||
Capital expenditures included in accounts payable | 16,591 | 289,133 | |||||||
Issuance of Series E Warrants to placement agent | - | 97,583 | |||||||
Recognition of conversion feature liability | - | 670,893 | |||||||
Asset retirement obligations incurred | - | 86,386 |
12_SUPPLEMENTAL_INFORMATION_RE1
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (Tables) | 12 Months Ended | ||||||||||||||
Sep. 30, 2013 | |||||||||||||||
Supplemental Information Relating To Oil And Gas Producing Activities Tables | ' | ||||||||||||||
Schedule of operations | ' | ||||||||||||||
Fiscal Year Ended September 30, | Fiscal Year Ended September 30, | ||||||||||||||
2013 | 2012 | ||||||||||||||
Net revenues from production | |||||||||||||||
Third-party sales | $ | 4,644,356 | $ | 3,369,407 | |||||||||||
Production costs | |||||||||||||||
Lease operating expense | 714,669 | 672,233 | |||||||||||||
Production taxes | 214,127 | 155,616 | |||||||||||||
Asset retirement obligation accretion | 23,186 | 8,922 | |||||||||||||
951,982 | 836,771 | ||||||||||||||
Impairment of O&G Properties | 3,634,312 | - | |||||||||||||
Depreciation, depletion and amortization | 1,846,583 | 842,571 | |||||||||||||
-1,788,521 | 1,690,065 | ||||||||||||||
Income tax expense | - | 573,270 | |||||||||||||
Results of operations from producing activities | $ | (1,788,521 | ) | $ | 1,116,795 | ||||||||||
Schedule of development costs | ' | ||||||||||||||
Fiscal Year Ended September 30, | Fiscal Year Ended September 30, | ||||||||||||||
2013 | 2012 | ||||||||||||||
Property acquisitions | |||||||||||||||
Unproved | $ | 19,206 | $ | 59,784 | |||||||||||
Proved | - | - | |||||||||||||
Exploration | 373,731 | 170,857 | |||||||||||||
Development | 1,947,841 | 6,258,174 | |||||||||||||
Total Costs Incurred | $ | 2,340,778 | $ | 6,488,815 | |||||||||||
Schedule of capitalized costs | ' | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | ||||||||||||||
Capitalized costs | |||||||||||||||
Unproved properties | $ | 61,470 | $ | 1,427,294 | |||||||||||
Proved properties | 12,994,766 | 9,288,166 | |||||||||||||
13,056,236 | 10,715,460 | ||||||||||||||
Less: Accumulated DD&A | 6,587,955 | 1,107,060 | |||||||||||||
Net capitalized costs | $ | 6,468,281 | $ | 9,608,400 | |||||||||||
Schedule of costs not being amortized | ' | ||||||||||||||
Total | Fiscal Year Ended September 30, | Fiscal Year Ended September 30, | |||||||||||||
2013 | 2012 | ||||||||||||||
Property acquisition costs | $ | - | $ | - | $ | - | |||||||||
Exploration and development | 61,470 | - | 61,470 | ||||||||||||
Total | $ | 61,470 | $ | - | $ | 61,470 | |||||||||
Schedule of proved oil and gas reserves | ' | ||||||||||||||
Estimated Quantities of Proved Reserves | |||||||||||||||
Oil | |||||||||||||||
(Bbls) | |||||||||||||||
30-Sep-11 | 535,810 | ||||||||||||||
Revisions of prior estimates | 192,386 | ||||||||||||||
Purchases of reserves in place | 46,557 | ||||||||||||||
Production | (48,889 | ) | |||||||||||||
30-Sep-12 | 725,864 | ||||||||||||||
Revisions of prior estimates | (555,738 | ) | |||||||||||||
Purchases of reserves in place | - | ||||||||||||||
Production | (45,758 | ) | |||||||||||||
30-Sep-13 | 124,368 | ||||||||||||||
September 30, | September 30, | ||||||||||||||
2013 | 2012 | ||||||||||||||
Estimated Quantities of Proved Developed Reserves | 124,368 | 313,617 | |||||||||||||
Estimated Quantities of Proved Undeveloped Reserves | - | 412,247 | |||||||||||||
Schedule of standardized measure of discounted future net cash flows | ' | ||||||||||||||
Standardized Measure of Oil and Gas | |||||||||||||||
September 30, | September 30, | September 30, | |||||||||||||
2013 | 2012 | 2011 | |||||||||||||
Future cash inflows | $ | 12,943,629 | $ | 74,669,619 | $ | 50,622,329 | |||||||||
Future production costs | (3,557,348 | ) | (9,364,444 | ) | (6,273,765 | ) | |||||||||
Future development costs | (804,500 | ) | (6,175,000 | ) | (5,557,500 | ) | |||||||||
Future income taxes | - | (13,639,715 | ) | (10,992,652 | ) | ||||||||||
Future net cash flows | 8,581,781 | 45,490,460 | 27,798,412 | ||||||||||||
Discount of future net cash flows at 10% per annum | (2,104,010 | ) | (8,509,198 | ) | (5,107,917 | ) | |||||||||
Standardized measure of discounted future net cash flows | $ | 6,477,771 | $ | 36,981,262 | $ | 22,690,495 | |||||||||
The following table sets forth the changes in standardized measure of discounted future net cash flows relating to proved oil and gas reserves for the periods indicated. | |||||||||||||||
Changes in Standardized Measure | |||||||||||||||
Fiscal Year Ended | Fiscal Year Ended | Fiscal Year Ended September 30, | |||||||||||||
September 30, | September 30, | 2011 | |||||||||||||
2013 | 2012 | ||||||||||||||
Sales of oil and gas produced, net of production costs | $ | (3,692,374 | ) | $ | (2,532,636 | ) | $ | (1,608,365 | ) | ||||||
Purchases of minerals in place | - | - | 11,457,772 | ||||||||||||
Net change due to revisions in quantity estimates | (28,337,652 | ) | 17,466,030 | - | |||||||||||
Net changes in prices and production costs | (11,151,435 | ) | 3,134,171 | 4,459,237 | |||||||||||
Accretion of discount before income taxes | 3,698,126 | 2,269,050 | 454,748 | ||||||||||||
Changes in timing and other | 8,979,844 | (6,045,848 | ) | 3,379,621 | |||||||||||
Net change | $ | (30,503,491 | ) | $ | 14,290,767 | $ | 18,143,013 |
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Summary Of Significant Accounting Policies Details Narrative | ' | ' |
Anti-dilutive shares | 19,261,860 | 19,751,560 |
3_OIL_AND_GAS_PROPERTIES_Detai
3. OIL AND GAS PROPERTIES (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Oil And Gas Properties Details Narrative | ' | ' |
Receivable from CFO, Inc. 10% share of capital expenditures | $12,476 | ' |
Amount paid to related party CFO, Inc. for services provided | $470,000 | $763,600 |
4_ASSET_RETIREMENT_OBLIGATIONS2
4. ASSET RETIREMENT OBLIGATIONS (Details) | Sep. 30, 2013 | Sep. 30, 2012 |
Asset Retirement Obligations Details | ' | ' |
Inflation rate | 4.00% | 4.00% |
Estimated asset life | '3 years 10 months 24 days | '9 years 6 months |
Credit adjusted risk free interest rate | 30.00% | 18.00% |
4_ASSET_RETIREMENT_OBLIGATIONS3
4. ASSET RETIREMENT OBLIGATIONS (Details 1) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Asset Retirement Obligations Details 1 | ' | ' |
Asset retirement obligations at beginning of year | $96,410 | $24,629 |
Additional retirement obligations incurred | -28,290 | 36,959 |
Changes in estimate | 111,598 | 49,428 |
Accretion expense | 23,186 | 8,922 |
Settlements | -25,219 | -23,528 |
Asset retirement obligations at ending of year | $177,685 | $96,410 |
5_LONGTERM_DEBT_Details_Narrat
5. LONG-TERM DEBT (Details Narrative) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Long-Term Debt Details Narrative | ' | ' |
Warrants exercised | 453,322 | ' |
Convertible Notes Payable | $8,254,500 | ' |
Unamortized Discount on notes | 441,116 | ' |
Interest expense of debt issuance costs and discount | 965,748 | 965,748 |
Combined effective interest rate | 25.10% | ' |
Participation Liability Fair Value | 465,551 | 1,573,605 |
Net profits interest granted expenses | 123,312 | 97,535 |
Payments under participation arrangement | $261,635 | $375,470 |
6_INCOME_TAXES_Details
6. INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Income Taxes Details | ' | ' |
Current | $0 | $0 |
Deferred | 0 | 0 |
Total | $0 | $0 |
6_INCOME_TAXES_Details_1
6. INCOME TAXES (Details 1) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Income Taxes Details 1 | ' | ' |
Income tax expense computed at statutory rates | ($1,137,194) | ($349,233) |
Non-deductible items | -220,623 | -366,608 |
Change in valuation allowance | 1,357,817 | 715,841 |
Total | $0 | $0 |
6_INCOME_TAXES_Details_2
6. INCOME TAXES (Details 2) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Deferred tax assets | ' | ' |
Net operating loss carryforwards | $3,665,319 | $2,987,160 |
Stock-based compensation | 222,936 | 103,367 |
Deferred tax liability - oil & gas properties | -1,380,769 | -2,319,346 |
Participation liability | -273,638 | 102,739 |
Subtotal | 2,233,848 | 873,920 |
Valuation allowance | -2,233,848 | -873,920 |
Net deferred tax asset | $0 | $0 |
7_STOCKHOLDERS_EQUITY_Details
7. STOCKHOLDERS EQUITY (Details) (USD $) | Sep. 30, 2013 |
Series A1 | ' |
Issuance Date | 'DECEMBER 1, 2010 |
Expiration Date | 'OCTOBER 31, 2014 |
Exercise Price | $4 |
Warrants Outstanding-2013 | 1,700,000 |
Warrants Outstanding-2012 | 1,700,000 |
Series B1 | ' |
Issuance Date | 'DECEMBER 1, 2010 |
Expiration Date | 'OCTOBER 31, 2014 |
Exercise Price | $1.20 |
Warrants Outstanding-2013 | 340,000 |
Warrants Outstanding-2012 | 340,000 |
Series B2 | ' |
Issuance Date | 'DECEMBER 1, 2010 |
Expiration Date | 'OCTOBER 31, 2014 |
Exercise Price | $4 |
Warrants Outstanding-2013 | 170,000 |
Warrants Outstanding-2012 | 170,000 |
Series B3 | ' |
Issuance Date | 'DECEMBER 1, 2010 |
Expiration Date | 'MARCH 31, 2011 |
Exercise Price | $0.10 |
Warrants Outstanding-2013 | 0 |
Warrants Outstanding-2012 | 0 |
Series C | ' |
Issuance Date | 'FEBRUARY 28, 2011 |
Expiration Date | 'FEBRUARY 28, 2016 |
Exercise Price | $2 |
Warrants Outstanding-2013 | 1,500,000 |
Warrants Outstanding-2012 | 1,500,000 |
Series D | ' |
Issuance Date | 'FEBRUARY 28, 2011 |
Expiration Date | 'FEBRUARY 28, 2016 |
Exercise Price | $1.20 |
Warrants Outstanding-2013 | 150,000 |
Warrants Outstanding-2012 | 150,000 |
Class A | ' |
Issuance Date | 'DECEMBER 2, 2011 |
Expiration Date | 'NOVEMBER 29, 2016 |
Exercise Price | $1.50 |
Warrants Outstanding-2013 | 4,800,000 |
Warrants Outstanding-2012 | 4,800,000 |
Series E1 | ' |
Issuance Date | 'JUNE 29, 2012 |
Expiration Date | 'JUNE 15, 2017 |
Exercise Price | $1.55 |
Warrants Outstanding-2013 | 296,300 |
Warrants Outstanding-2012 | 296,300 |
Series E2 | ' |
Issuance Date | 'JULY 6, 2012 |
Expiration Date | 'JUNE 15, 2017 |
Exercise Price | $1.55 |
Warrants Outstanding-2013 | 72,500 |
Warrants Outstanding-2012 | 72,500 |
Series E3 | ' |
Issuance Date | 'JULY 31, 2012 |
Expiration Date | 'JUNE 15, 2017 |
Exercise Price | $1.55 |
Warrants Outstanding-2013 | 57,160 |
Warrants Outstanding-2012 | 57,160 |
Series E4 | ' |
Issuance Date | 'SEPTEMBER 5, 2012 |
Expiration Date | 'JUNE 15, 2017 |
Exercise Price | $1.55 |
Warrants Outstanding-2013 | 111,400 |
Warrants Outstanding-2012 | 111,400 |
9_COMMITMENTS_AND_CONTINGENCIE2
9. COMMITMENTS AND CONTINGENCIES (Details) (USD $) | Sep. 30, 2013 |
Notes to Financial Statements | ' |
Convertible notes, 2014 | $0 |
Convertible notes, 2015 | 8,254,500 |
Convertible notes, thereafter | 0 |
Total convertible notes due | 8,254,500 |
Office leases, 2014 | 12,900 |
Office leases, 2015 | 0 |
Office leases, thereafter | 0 |
Total office leases payment due | $12,900 |
10_FAIR_VALUE_OF_FINANCIAL_INS2
10. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Notes to Financial Statements | ' | ' |
Participation liability (Level 3) | $465,551 | $1,573,605 |
Conversion feature liability (Level 3) | 0 | 584,018 |
Warrant liabilities (Level 3) | 0 | 68,746 |
Total liabilities (Level 3) | $465,551 | $2,226,369 |
10_FAIR_VALUE_OF_FINANCIAL_INS3
10. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) (USD $) | 12 Months Ended |
Sep. 30, 2013 | |
Balance at September 30,2012 | $2,226,369 |
Purchases, issuances and settlements | -138,323 |
(Gains) losses included in earnings | -1,622,495 |
Balance at September 31, 2013 | 465,551 |
Participation Liability | ' |
Balance at September 30,2012 | 1,573,605 |
Purchases, issuances and settlements | -138,323 |
(Gains) losses included in earnings | -969,731 |
Balance at September 31, 2013 | 465,551 |
Conversion Feature Liabilities | ' |
Balance at September 30,2012 | 584,018 |
Purchases, issuances and settlements | 0 |
(Gains) losses included in earnings | -584,018 |
Balance at September 31, 2013 | 0 |
Warrant Liabilities | ' |
Balance at September 30,2012 | 68,746 |
Purchases, issuances and settlements | 0 |
(Gains) losses included in earnings | -68,746 |
Balance at September 31, 2013 | $0 |
11_SUPPLEMENTAL_CASH_FLOW_INFO2
11. SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Supplemental cash flow information: | ' | ' |
Interest paid | $1,435,660 | $250,734 |
Interest capitalized (non-cash) | 63,040 | 350,142 |
Exchange of 2010 Notes for 2012 Notes | 0 | 3,075,000 |
Noncash investing and financing activities: | ' | ' |
Capital expenditures included in accounts payable | 16,591 | 289,133 |
Issuance of Series E Warrants to placement agent | 0 | 97,583 |
Recognition of conversion feature liability | 0 | 670,893 |
Asset retirement obligations incurred | $0 | $86,386 |
12_SUPPLEMENTAL_INFORMATION_RE2
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Results of operations (UNAUDITED) (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Supplemental Information Relating To Oil And Gas Producing Activities - Results Of Operations Details | ' | ' |
Third-party sales | $4,644,356 | $3,369,407 |
Production costs | ' | ' |
Lease operating expense | 714,669 | 672,233 |
Production taxes | 214,127 | 155,616 |
Asset retirement obligation accretion | 23,186 | 8,922 |
Subtotal production costs | 951,982 | 836,771 |
Impairment of O&G Properties | 3,634,312 | ' |
Depreciation, depletion and amortization | 1,846,583 | 842,571 |
Total production costs | 1,788,521 | 1,690,065 |
Income tax expense | 0 | 573,270 |
Results of operations from producing activities | ($1,788,521) | $1,116,795 |
12_SUPPLEMENTAL_INFORMATION_RE3
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Costs Incurred (UNAUDITED) (Details 1) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Property acquisitions | ' | ' |
Unproved | $19,206 | $59,784 |
Proved | 0 | 0 |
Exploration | 373,731 | 170,857 |
Development | 1,947,841 | 6,258,174 |
Total Costs Incurred | $2,340,778 | $6,488,815 |
12_SUPPLEMENTAL_INFORMATION_RE4
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Capitalized costs (UNAUDITED) (Details 2) (USD $) | Sep. 30, 2013 | Sep. 30, 2012 |
Capitalized costs | ' | ' |
Unproved properties | $61,470 | $1,427,294 |
Proved properties | 12,994,766 | 9,288,166 |
Gross | 13,056,236 | 10,715,460 |
Less: Accumulated DD&A | 6,587,955 | 1,107,060 |
Net capitalized costs | $6,468,281 | $9,608,400 |
12_SUPPLEMENTAL_INFORMATION_RE5
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Costs Not Being Amortized (UNAUDITED) (Details 3) (USD $) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
Supplemental Information Relating To Oil And Gas Producing Activities - Costs Not Being Amortized Details 3 | ' | ' |
Property acquisition costs | $0 | ' |
Exploration and development | 61,470 | ' |
Total | 61,470 | ' |
Costs incurred for which costs are not being amortized | ' | ' |
Property acquisition costs | 0 | 0 |
Exploration and development | 0 | 61,470 |
Total | $0 | $61,470 |
12_INFORMATION_RELATING_TO_OIL
12. INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Estimated Quantities of Proved Reserves (UNAUDITED) (Details 4) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2012 | |
bbl | bbl | |
Information Relating To Oil And Gas Producing Activities - Estimated Quantities Of Proved Reserves Details 4 | ' | ' |
Oil Estimated Quantities of Proved Reserves, beginning balance | 725,864 | 535,810 |
Revisions of prior estimates | -555,738 | 192,386 |
Purchases of reserves in place | 0 | 46,557 |
Production | -45,758 | -48,889 |
Oil Estimated Quantities of Proved Reserves, ending balance | 124,368 | 725,864 |
Estimated Quantities of Proved Developed Reserves | 124,368 | 313,617 |
Estimated Quantities of Proved Undeveloped Reserves | 0 | 412,247 |
12_SUPPLEMENTAL_INFORMATION_RE6
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Net Cash Flows (UNAUDITED) (Details 5) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Supplemental Information Relating To Oil And Gas Producing Activities - Net Cash Flows Details 5 | ' | ' | ' |
Future cash inflows | $12,943,629 | $74,669,619 | $50,622,329 |
Future production costs | -3,557,348 | -9,364,444 | -6,273,765 |
Future development costs | -804,500 | -6,175,000 | -5,557,500 |
Future income taxes | 0 | -13,639,715 | -10,992,652 |
Future net cash flows | 8,581,781 | 45,490,460 | 27,798,412 |
Discount of future net cash flows at 10% per annum | -2,104,010 | -8,509,198 | -5,107,917 |
Standardized measure of discounted future net cash flows | $6,477,771 | $36,981,262 | $22,690,495 |
12_SUPPLEMENTAL_INFORMATION_RE7
12. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Standardized Measure (UNAUDITED) (Details 6) (USD $) | 12 Months Ended | ||
Sep. 30, 2013 | Sep. 30, 2012 | Sep. 30, 2011 | |
Supplemental Information Relating To Oil And Gas Producing Activities - Standardized Measure Details 6 | ' | ' | ' |
Sales of oil and gas produced, net of production costs | ($3,692,374) | ($2,532,636) | ($1,608,365) |
Purchases of minerals in place | 0 | 0 | 11,457,772 |
Net change due to revisions in quantity estimates | -28,337,652 | 17,466,030 | 0 |
Net changes in prices and production costs | -11,151,435 | 3,134,171 | 4,459,237 |
Accretion of discount before income taxes | 3,698,126 | 2,269,050 | 454,748 |
Changes in timing and other | 8,979,844 | -6,045,848 | 3,379,621 |
Net change | ($30,503,491) | $14,290,767 | $18,143,013 |