Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 15, 2014 | Mar. 31, 2014 | |
Document And Entity Information | |||
Entity Registrant Name | Vanguard Energy Corp | ||
Entity Central Index Key | 1497649 | ||
Document Type | 10-K | ||
Document Period End Date | 30-Sep-14 | ||
Amendment Flag | FALSE | ||
Current Fiscal Year End Date | -21 | ||
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 | $996,000 | ||
Entity Common Stock, Shares Outstanding | 975,623 | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2014 |
CONSOLIDATED_BALANCE_SHEETS
CONSOLIDATED BALANCE SHEETS (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Financial Position [Abstract] | ||
Cash and cash equivalents | $39,251 | $1,334,285 |
Accounts receivable | 0 | 371,765 |
Other assets | 12,500 | 16,055 |
Total current assets | 51,751 | 1,722,105 |
Property and equipment - Oil and gas, on the basis of full cost accounting | ||
Proved properties | 0 | 12,994,766 |
Unproved properties and properties under development, not being amortized | 0 | 61,470 |
Furniture and equipment | 0 | 26,946 |
Less: accumulated depreciation, depletion and amortization | 0 | -6,594,081 |
Total property and equipment | 0 | 6,489,101 |
Debt issuance costs | 83,654 | 538,700 |
Other assets | 0 | 10,808 |
Total assets | 135,405 | 8,760,714 |
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||
Accounts payable | 578 | 113,314 |
Accrued interest payable | 702,901 | 309,544 |
Other liabilities | 8,600 | 12,650 |
Current portion of notes payable, net of discount of $71,750 and $0 | 2,923,040 | 0 |
Total current liabilities | 3,635,119 | 435,508 |
Notes payable, net of discount of $0 and $441,132 | 0 | 7,813,368 |
Participation liability | 0 | 465,551 |
Asset retirement obligations | 0 | 177,685 |
Total liabilities | 3,635,119 | 8,892,112 |
Commitments and contingencies | ||
Stockholders' deficit | ||
Preferred stock, $0.00001 par value; 5,000,000 shares authorized, none issued or outstanding | 0 | 0 |
Common stock, $0.00001 par value; 100,000,000 and 50,000,000 shares authorized at September 20, 2014 and 2013 respectively, 115,243 and 12,741,512 shares issued and outstanding at September 30, 2014 and 2013, respectively | 127 | 127 |
Additional paid-in capital | 5,522,204 | 5,522,204 |
Accumulated deficit | -9,022,045 | -5,653,729 |
Total stockholders' deficit | -3,499,714 | -131,398 |
Total liabilities and stockholders' deficit | $135,405 | $8,760,714 |
CONSOLIDATED_BALANCE_SHEETS_Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Statement of Financial Position [Abstract] | ||
Discount on Note Payable Current portion | $71,754 | $0 |
Discount on Note Payable | $0 | $441,132 |
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 | 100,000,000 | 100,000,000 |
Common stock, issued shares | 115,243 | 115,243 |
Common stock, outstanding shares | 115,243 | 115,243 |
CONSOLIDATED_STATEMENTS_OF_OPE
CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Revenues | ||
Oil and gas sales | $1,676,231 | $4,644,356 |
Costs and expenses | ||
Lease operating expense | 544,045 | 714,669 |
Production taxes | 77,253 | 214,127 |
Depreciation, depletion and amortization | 984,200 | 1,850,814 |
Impairment of oil and gas properties | 861,579 | 3,634,312 |
Asset retirement obligation accretion | 29,088 | 23,186 |
General and administrative | 904,414 | 1,373,122 |
Total costs and expenses | 3,400,579 | 7,810,230 |
Loss from operations | -1,724,348 | -3,165,874 |
Other income (expense) | ||
Other income | 2,645 | 7,386 |
Interest income | 233 | 1,340 |
Gain on settlement of participation liability | 171,772 | 0 |
Interest expense | -1,458,898 | -1,864,379 |
Change in fair value of warrant and conversion feature liabilities | 0 | 652,765 |
Change in estimate of participation liability | 0 | 969,731 |
Other equipment write-off | 20,819 | 0 |
Loss on debt extinguishment | -380,539 | 0 |
Total other expense | -1,643,968 | -233,157 |
Loss before income taxes | -3,368,316 | -3,399,031 |
Provision for income taxes | 0 | 0 |
Net loss | ($3,368,316) | ($3,399,031) |
Loss per share - Basic and diluted | ($26.68) | ($26.74) |
Weighted average number of common shares | 125,130 | 127,114 |
CONSOLIDATED_STATEMENTS_OF_CAS
CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities: | ||
Net loss | ($3,368,316) | ($3,399,031) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Depreciation, depletion and amortization | 941,294 | 1,850,814 |
Impairment of Oil and Gas Properties | 861,579 | 3,634,312 |
Amortization of debt issuance costs | 274,740 | 318,712 |
Gain on settlement of participation liability | -171,772 | 0 |
Loss on debt extinguishment | 380,539 | 0 |
Asset retirement obligation accretion | 29,088 | 81,275 |
Amortization of debt discount | 169,145 | 272,200 |
Accretion of participation liability | -63,160 | -138,323 |
Other equipment write-off | 20,819 | 0 |
Change in estimate of participation liability | 0 | -969,731 |
Change in fair value of warrant and conversion feature liabilities | 0 | -652,765 |
Change in operating assets and liabilities: | ||
Accounts receivable | 343,194 | 243,866 |
Other assets | 14,363 | -5,161 |
Accounts payable | -112,736 | -284,967 |
Accrued interest payable | 393,357 | 0 |
Other liabilities | -4,050 | -22,518 |
Net cash from operating activities | -291,916 | 928,683 |
Cash flows from investing activities | ||
Capital expenditures on oil and gas properties | -1,012,793 | -2,357,368 |
Proceeds from sale of oil and gas properties | 5,500,000 | 0 |
Purchase of furniture and equipment | 0 | -2,452 |
Net cash from investing activities | 4,487,207 | -2,359,820 |
Cash flows from financing activities | ||
Proceeds from issuance (repayment) of notes payable | -5,259,706 | -325,000 |
Settlement of participation liability | -230,619 | 0 |
Net cash from financing activities | -5,490,325 | -325,000 |
Net change in cash and cash equivalents | -1,295,034 | -1,756,137 |
Cash and cash equivalents Beginning of period | 1,334,285 | 3,090,422 |
Cash and cash equivalents End of period | $39,251 | $1,334,285 |
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, 2012 | $127 | $5,522,204 | ($2,254,698) | $3,267,633 |
Beginning Balance, Shares at Sep. 30, 2012 | 127,114 | |||
Net loss | -3,399,031 | -3,399,031 | ||
Ending Balance, Amount at Sep. 30, 2013 | 127 | 5,522,204 | -5,653,729 | -131,398 |
Beginning Balance, Shares at Sep. 30, 2013 | 127,114 | |||
Return of common stock | -11,871 | |||
Net loss | -3,368,316 | -3,368,316 | ||
Ending Balance, Amount at Sep. 30, 2014 | $127 | $5,522,204 | ($9,022,045) | ($3,499,714) |
Ending Balance, Shares at Sep. 30, 2014 | 115,243 |
1_ORGANIZATION
1. ORGANIZATION | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
1. ORGANIZATION | Vanguard Energy Corporation (the "Company") was organized under the laws of the State of Colorado on June 21, 2010. The Company commenced operations on July 19, 2010 and has been engaged in the acquisition, development and operation of onshore oil and gas properties in Texas. |
Going Concern –These financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has incurred cumulative net losses since its inception and will require capital for future operating activities to take place. The Company's ability to raise funding through the future issuances of debt or common stock is unknown. The obtainment of additional financing, the successful development of a plan of operations, and its transition, ultimately, to the attainment of profitable operations are necessary for the Company to continue operations. The ability to successfully resolve these factors raise substantial doubt about the Company's ability to continue as a going concern. | |
Future issuances of the Company's equity or debt securities will be required in order for the Company to finance operations and continue as a going concern. The financial statements do not include any adjustments that may result from the outcome of these aforementioned uncertainties. | |
2_SUMMARY_OF_SIGNIFICANT_ACCOU
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended | |
Sep. 30, 2014 | ||
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 | ||
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. | ||
Recently Issued Accounting Pronouncements – Various accounting standards updates have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries. No new accounting pronouncements have been issued that are likely to have a material impact to the Company’s consolidated financial statements. | ||
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— As of September 30, 2014 the Company does not have any oil and gas properties as further explained in Note 3. Prior to the disposal of its oil and gas properties, the Company followed the full cost accounting method to account for oil and natural gas properties. Under the full cost accounting method, 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 had a 20% net profits interest. | ||
As discussed in Note 3, the Company recognized impairment charges of $861,579 during fiscal year 2014 for the amount by which the carrying value of its oil and gas properties exceeded the estimated net proceeds from their sale. | ||
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, 2014 or 2013. Charges for gathering and transportation are included in production expenses. | ||
Asset Retirement Obligations—The Company recorded 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. Since the Company sold all its oil and gas assets in the 3rd quarter of 2014, no additional ARO was recorded. As of September 30, 2014 the Company did not have an ARO liability. | ||
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—In prior periods the Company recognized a participation liability related to a net profits interest granted to persons who purchased the Company’s 2010 Convertible Promissory Notes. The net profits interest was held by Vanguard Net Profits, LLC and covered some of the Company’s oil and gas properties. On June 17, 2014, the Company settled the net profits interests for $230,619. The Company recognized a gain on the settlement of the participation liability of $171,772 during the quarter ended June 30, 2014 as a result. | ||
The Company incurred expense associated with the net profits interest during the nine-month period ended June 30, 2014 of fiscal year 2014. This amount is reported as interest expense in the consolidated statement of operations. The Company also made a final payment of $84,577 under this arrangement during year ended September 30, 2014. | ||
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 125,425 for 2014 and 127,415 for 2013. The calculation of diluted weighted-average shares outstanding for 2014 and 2013 excludes 162,142 shares and 176,110 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 2014 and 2013. 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 would maintain deposits in federally insured financial institutions in excess of federally insured limits. Management would monitor 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. | ||
3_SALE_OF_OIL_AND_GAS_PROPERTI
3. SALE OF OIL AND GAS PROPERTIES/ PAYMENT OF CONVERTIBLE NOTES | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
Notes to Financial Statements | |||||
3. OIL AND GAS PROPERTIES | During 2012, the Company sold $8,254,500 of Convertible Promissory Notes. On March 31, 2014 the Company failed to make the scheduled interest payments on the notes. As a result, the note holders were entitled to declare the notes in default, in which case the principal amount of the notes plus all accrued and unpaid interest would be immediately due and payable. | ||||
The Company’s inability to make the interest payment to the note holders was the result of the expenditure of considerable capital to work over some of the Company’s wells. The costs of the work far exceeded the Company’s expectations and yet the work was required in order to get the wells back into production. This depleted the Company’s cash position far below its expectations. Further, although the initial work on those wells was successful in boosting production momentarily, further complications resulted in lower production than anticipated, which was not adequate to replenish the cash expended and enable the Company to make required interest payments. | |||||
With a view to paying its note holders, the Company, on June 17, 2014 sold its oil and gas properties to Vast Exploration, Inc. for $5,500,000, after obtaining approvals from the holders of a majority of the Company’s outstanding shares of common stock and approvals of a majority of note holders. An impairment charge of $880,213 was recognized during the quarter ended March 31, 2014 for the amount by which the carrying value of the Company’s oil and gas properties exceeded the estimated net proceeds from the planned sale. The Company adjusted the impairment charge by $(18,634) during the quarter ended June 30, 2014 based on final closing of the transaction. The total impairment as of September 30, 2014 is $861,579. | |||||
The Company used the proceeds from the sale as follows: | |||||
Pay holders of the convertible notes | $ | 5,259,706 | |||
Purchase the net profits interest held by Vanguard Net Profits, LLC | 230,619 | ||||
Pay legal and closing costs | 9,675 | ||||
$ | 5,500,000 | ||||
A loss on early extinguishment of debt totaling $380,539 was recognized during the quarter ended June 30, 2014 for the write-off of a portion of the debt issuance costs and debt issuance discount associated with the debt repayment. After the payment of the $5,259,706, convertible notes totaling $2,994,794 remain to be paid together with accrued interest of $702,902. As of September 30, 2014 the unamortized discount on the convertible notes totaled $71,754. Interest expense for the amortization of debt issuance cost and discount on the notes for the period ending September 30, 2014 was $445,078. The effective interest rate of the convertible notes was 28.3% for the fiscal years ending September 30, 2014 and 2013. | |||||
In consideration for accepting less than the full amount due on the notes, and releasing their lien on the Company’s oil and gas properties, holders of notes in the approximated principal of amount of $2,404,197 as a group, have agreed to received 860,381 shares in the Company’s stock in payment of the remaining balances on their notes, plus accrued interest. The Company subsequently issued the additional shares as payment for the notes and accrued interest in November 2014. |
4_ASSET_RETIREMENT_OBLIGATIONS
4. ASSET RETIREMENT OBLIGATIONS | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
Accounting Policies [Abstract] | |||||
4. ASSET RETIREMENT OBLIGATIONS | The Company had asset retirement obligations for any wells that were permanently removed from service. Since the Company sold all its oil and gas assets in the 3rd quarter of 2014, the Company no longer has any ARO liability. For the purpose of determining the fair value of ARO during the fiscal years presented, the Company used the following assumptions: | ||||
September 30, | |||||
2014 | |||||
Inflation rate | 4 | % | |||
Estimated asset life | 9.5 years | ||||
Credit adjusted risk free interest rate | 18 | % | |||
The following table shows: | |||||
Asset retirement obligations at September 30, 2012 | $ | 96,410 | |||
Additional retirement obligations incurred | (28,291 | ) | |||
Change in estimate | 111,598 | ||||
Accretion expense | 23,186 | ||||
Settlements | (25,218 | ) | |||
Asset retirement obligations at September 30, 2013 | $ | 177,685 | |||
Accretion expense | (158,513 | ) | |||
Settlements | (19,172 | ) | |||
Asset retirement obligations at September 30, 2014 | $ | - | |||
5_INCOME_TAXES
5. INCOME TAXES | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
5. INCOME TAXES | The provision for income taxes consists of the following: | ||||||||
Fiscal Year | Fiscal Year | ||||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2014 | 2013 | ||||||||
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, | ||||||||
2014 | 2013 | ||||||||
Income tax expense computed at statutory rates | $ | -1,129,553 | $ | (1,137,194 | ) | ||||
Non-deductible items | -898,411 | (220,623 | ) | ||||||
Change in valuation allowance | 2,027,964 | 1,357,817 | |||||||
Total | $ | - | $ | - | |||||
The components of the net deferred tax asset were as follows: | |||||||||
September 30, | September 30, | ||||||||
2014 | 2013 | ||||||||
Deferred tax assets | |||||||||
Net operating loss carryforwards | $ | 5,165,180 | $ | 3,665,319 | |||||
Stock-based compensation | 222,936 | 222,936 | |||||||
Deferred tax liability - oil & gas properties | (794,263 | ) | (1,380,769 | ) | |||||
Participation liability | (332,041 | ) | (273,638 | ) | |||||
Subtotal | 4,261,812 | 2,233,848 | |||||||
Valuation allowance | (4,261,812 | ) | (2,233,848 | ) | |||||
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 $15,000,000 at September 30, 2014 and begin to expire if not utilized in the year 2033. | |||||||||
6_STOCKHOLDERS_EQUITY
6. STOCKHOLDERS EQUITY | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Stockholders' deficit | |||||||||||||||||
6. STOCKHOLDERS EQUITY | On August 19, 2014, upon receiving approval from the Financial Industry Regulatory Authority, a 100-for-1 reverse split of the Company’s common stock became effective. Common share amounts and per share amounts in these financial statements have been retroactively adjusted to reflect the reverse split. | ||||||||||||||||
Preferred Stock—5,000,000 shares authorized none issued or outstanding. | |||||||||||||||||
Common Stock—The Company is authorized to issue an aggregate of 100,000,000 shares of common stock with $0.00001 par value. | |||||||||||||||||
In July and November 2014, 11,871 and 2,450 shares previously issued to the Company’s founders were returned the Company, respectively. | |||||||||||||||||
Warrants—The following table summarizes certain information regarding outstanding warrants as of September 30, 2013 and 2012: As of September 30, 2014 these warrants were no longer trading in the OTC market. The last quote on August 16, 2014 was $-0-. | |||||||||||||||||
Exercise | Shares Issuable Upon Exercise of Warrants (1) | ||||||||||||||||
Series | Issuance Date | Expiration Date | Price | 2014 | 2013 | ||||||||||||
Series A | 1-Dec-10 | 31-Oct-14 | $ | 400 | 1,700 | 1,700 | |||||||||||
Series B | 1-Dec-10 | 31-Oct-14 | $ | 120 | 3,400 | 3,400 | |||||||||||
Series B | 1-Dec-10 | 31-Oct-14 | $ | 400 | 1,700 | 1,700 | |||||||||||
Series C | 28-Feb-11 | 28-Feb-16 | $ | 200 | 15,000 | 15,000 | |||||||||||
Series D | 28-Feb-11 | 28-Feb-16 | $ | 120 | 1,500 | 1,500 | |||||||||||
Class A | 2-Dec-11 | 29-Nov-16 | $ | 150 | 48,000 | 48,000 | |||||||||||
Series E | 29-Jun-12 | 15-Jun-17 | $ | 155 | 2,963 | 2,963 | |||||||||||
Series E | 6-Jul-12 | 15-Jun-17 | $ | 150 | 725 | 725 | |||||||||||
Series E | 31-Jul-12 | 15-Jun-17 | $ | 150 | 572 | 572 | |||||||||||
Series E | 5-Sep-12 | 15-Jun-17 | $ | 150 | 1,114 | 1,114 | |||||||||||
(1) Shares and prices are adjusted for the 100-1 reverse stock including retrospective adjustment. |
7_STOCKBASED_COMPENSATION
7. STOCK-BASED COMPENSATION | 12 Months Ended |
Sep. 30, 2014 | |
Stockholders' deficit | |
7. 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 had 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. The Company’s officers and consultants surrendered these options in July 2014. |
8_COMMITMENTS_AND_CONTINGENCIE
8. COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Sep. 30, 2014 | |
Notes to Financial Statements | |
8. COMMITMENTS AND CONTINGENCIES | 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 2014 and 2013 totaled $48,841 and $72,474, respectively. As of July 1, 2014 the Company is no longer leasing office space. The Company has a month-to-month virtual office lease in Houston. The lease for the satellite office in Los Angeles was allowed to expire. | |
9_FAIR_VALUE_OF_FINANCIAL_INST
9. FAIR VALUE OF FINANCIAL INSTRUMENTS | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Notes to Financial Statements | |||||||||||||
9. FAIR VALUE OF FINANCIAL INSTRUMENTS | The following table summarizes the financial liabilities measured at fair value on a recurring basis as of September 30, 2014 and 2013: | ||||||||||||
September 30, | September 30, | ||||||||||||
Level | 2014 | 2013 | |||||||||||
Participation liability | 3 | $ | - | $ | 465,551 | ||||||||
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 | |||||||||||||
Balance at September 30, 2013 | $ | 465,551 | |||||||||||
Purchases, issuances and settlements | (230,619 | ) | |||||||||||
(Gains) losses included in earnings | (234,932 | ) | |||||||||||
Balance at September 30, 2014 | $ | - |
10_SUPPLEMENTAL_CASH_FLOW_INFO
10. SUPPLEMENTAL CASH FLOW INFORMATION | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
10. SUPPLEMENTAL CASH FLOW INFORMATION | Fiscal Year | Fiscal Year | |||||||
Ended | Ended | ||||||||
30-Sep-14 | 30-Sep-13 | ||||||||
Interest paid | $ | 312,111 | $ | 1,435,660 | |||||
Interest capitalized (non-cash) | - | 63,040 | |||||||
Noncash investing and financing activities: | |||||||||
Asset retirement obligations incurred | 29,088 | - | |||||||
Capital expenditures included in accounts payable | - | 16,591 | |||||||
11_SUPPLEMENTAL_INFORMATION_RE
11. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Notes to Financial Statements | |||||||||||||
11. 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 | Fiscal Year Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Net revenues from production | |||||||||||||
Third-party sales | $ | 1,676,231 | $ | 4,644,356 | |||||||||
Production costs | |||||||||||||
Lease operating expense | 544,045 | 714,669 | |||||||||||
Production taxes | 77,253 | 214,127 | |||||||||||
Asset retirement obligation accretion | 29,088 | 23,186 | |||||||||||
650,386 | 951,982 | ||||||||||||
Impairment of O&G Properties | 861,579 | 3,634,312 | |||||||||||
Depreciation, depletion and amortization | 984,200 | 1,846,583 | |||||||||||
(819,934 | ) | -1,788,521 | |||||||||||
Income tax expense | - | - | |||||||||||
Results of operations from producing activities | $ | (819,934 | ) | $ | -1,788,521 | ||||||||
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 | Fiscal Year Ended | ||||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Property acquisitions | |||||||||||||
Unproved | $ | - | $ | 19,206 | |||||||||
Proved | - | - | |||||||||||
Exploration | - | 373,731 | |||||||||||
Development | 1,947,841 | ||||||||||||
Total Costs Incurred | $ | - | $ | 2,340,778 | |||||||||
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, | ||||||||||||
2014 | 2013 | ||||||||||||
Capitalized costs | |||||||||||||
Unproved properties | $ | - | $ | 61,470 | |||||||||
Proved properties | - | 12,994,766 | |||||||||||
- | 13,056,236 | ||||||||||||
Less: Accumulated DD&A | - | 6,587,955 | |||||||||||
Net capitalized costs | $ | - | $ | 6,468,281 | |||||||||
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. 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 were located onshore in the continental United States of America. A reserve report for the September 30, 2014 was not prepared. | |||||||||||||
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-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, | ||||||||||||
2014 | 2013 | ||||||||||||
Estimated Quantities of Proved Developed Reserves | - | 124,368 | |||||||||||
Estimated Quantities of Proved Undeveloped Reserves | - | - | |||||||||||
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. | |||||||||||||
A Reserve Report was not prepared for period ending September 30, 2014 as the Company did not own any oil and gas properties at that date. | |||||||||||||
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. | |||||||||||||
September 30, | September 30, | 30-Sep | |||||||||||
2014 | 2013 | 2012 | |||||||||||
Future cash inflows | $ | - | $ | 12,943,629 | $ | 74,669,619 | |||||||
Future production costs | - | (3,557,348 | ) | (9,364,444 | ) | ||||||||
Future development costs | - | (804,500 | ) | 6,175,000 | ) | ||||||||
Future income taxes | - | - | (13,639,715 | ) | |||||||||
Future net cash flows | - | 8,581,781 | 45,490,460 | ||||||||||
Discount of future net cash flows at 10% per annum | - | (2,104,010 | ) | (8,509,198 | ) | ||||||||
Standardized measure of discounted future net cash flows | $ | - | $ | 6,477,771 | $ | 36,981,262 | |||||||
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, | |||||||||||
2014 | 2013 | 2012 | |||||||||||
Sales of oil and gas produced, net of production costs | $ | - | $ | (3,692,374 | ) | $ | (2,532,636 | ) | |||||
Purchases of minerals in place | - | - | - | ||||||||||
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 | ||||||||||
Accretion of discount before income taxes | - | 3,698,126 | 2,269,050 | ||||||||||
Changes in timing and other | - | 8,979,844 | -6,045,848 | ||||||||||
Net change | $ | - | $ | -30,503,491 | $ | 14,290,767 | |||||||
2_SUMMARY_OF_SIGNIFICANT_ACCOU1
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended | |
Sep. 30, 2014 | ||
Notes to Financial Statements | ||
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 | ||
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. | |
Recently Issued Accounting Pronouncements | Various accounting standards updates have been recently issued, most of which represented technical corrections to the accounting literature or were applicable to specific industries. No new accounting pronouncements have been issued that are likely to have a material impact to the Company’s consolidated financial statements. | |
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 | As of September 30, 2014 the Company does not have any oil and gas properties as further explained in Note 3. Prior to the disposal of its oil and gas properties, the Company followed the full cost accounting method to account for oil and natural gas properties. Under the full cost accounting method, 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 had a 20% net profits interest. | ||
As discussed in Note 3, the Company recognized impairment charges of $861,579 during fiscal year 2014 for the amount by which the carrying value of its oil and gas properties exceeded the net proceeds from their sale. | ||
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, 2014 or 2013. Charges for gathering and transportation are included in production expenses. | |
Asset Retirement Obligations | The Company recorded 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. Since the Company sold all its oil and gas assets in the 3rd quarter of 2014, no additional ARO was recorded. As of September 30, 2014 the Company did not have an ARO liability. | |
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 | In prior periods the Company recognized a participation liability related to a net profits interest granted to persons who purchased the Company’s 2010 Convertible Promissory Notes. The net profits interest was held by Vanguard Net Profits, LLC and covered some of the Company’s oil and gas properties. On June 17, 2014, the Company settled the net profits interests for $230,619. The Company recognized a gain on the settlement of the participation liability of $171,772 during the quarter ended June 30, 2014 as a result. | |
The Company incurred expense associated with the net profits interest during the nine-month period ended June 30, 2014 of fiscal year 2014. This amount is reported as interest expense in the consolidated statement of operations. The Company also made a final payment of $84,577 under this arrangement during year ended September 30, 2014. | ||
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 125,425 for 2014 and 127,415for 2013. The calculation of diluted weighted-average shares outstanding for 2014 and 2013 excludes 162,142 shares and 176,110 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 2014 and 2013. 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 would maintain deposits in federally insured financial institutions in excess of federally insured limits. Management would monitor 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. | ||
3_SALE_OF_OIL_AND_GAS_PROPERTI1
3. SALE OF OIL AND GAS PROPERTIES PAYMENT OF CONVERTIBLE NOTES (Tables) | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
Notes to Financial Statements | |||||
Sale of oil and gas properties/payment of convertible notes | Pay holders of the convertible notes | $ | 5,259,706 | ||
Purchase the net profits interest held by Vanguard Net Profits, LLC | 230,619 | ||||
Pay legal and closing costs | 9,675 | ||||
$ | 5,500,000 |
4_ASSET_RETIREMENT_OBLIGATIONS1
4. ASSET RETIREMENT OBLIGATIONS (Tables) | 12 Months Ended | ||||
Sep. 30, 2014 | |||||
Accounting Policies [Abstract] | |||||
Assumptions for fair value of ARO | September 30, | ||||
2014 | |||||
Inflation rate | 4 | % | |||
Estimated asset life | 9.5 years | ||||
Credit adjusted risk free interest rate | 18 | % | |||
SCHEDULE OF ASSET RETIREMENT OBLIGATIONS | Asset retirement obligations at September 30, 2012 | $ | 96,410 | ||
Additional retirement obligations incurred | (28,291 | ) | |||
Change in estimate | 111,598 | ||||
Accretion expense | 23,186 | ||||
Settlements | (25,218 | ) | |||
Asset retirement obligations at September 30, 2013 | $ | 177,685 | |||
Accretion expense | (158,513 | ) | |||
Settlements | (19,172 | ) | |||
Asset retirement obligations at September 30, 2014 | $ | - |
5_INCOME_TAXES_Tables
5. INCOME TAXES (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Income Taxes Tables | |||||||||
Schedule for the provision for income taxes | Fiscal Year | Fiscal Year | |||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2014 | 2013 | ||||||||
Current | $ | - | $ | - | |||||
Deferred | - | - | |||||||
Total | $ | - | $ | - | |||||
Schedule of income tax reconciliation | Fiscal Year | Fiscal Year | |||||||
Ended | Ended | ||||||||
September 30, | September 30, | ||||||||
2014 | 2013 | ||||||||
Income tax expense computed at statutory rates | $ | -1,129,553 | $ | (1,137,194 | ) | ||||
Non-deductible items | -898,411 | (220,623 | ) | ||||||
Change in valuation allowance | 2,027,964 | 1,357,817 | |||||||
Total | $ | - | $ | - | |||||
Schedule of components of the net deferred tax asset | September 30, | September 30, | |||||||
2014 | 2013 | ||||||||
Deferred tax assets | |||||||||
Net operating loss carryforwards | $ | 5,165,180 | $ | 3,665,319 | |||||
Stock-based compensation | 222,936 | 222,936 | |||||||
Deferred tax liability - oil & gas properties | (794,263 | ) | (1,380,769 | ) | |||||
Participation liability | (332,041 | ) | (273,638 | ) | |||||
Subtotal | 4,261,812 | 2,233,848 | |||||||
Valuation allowance | (4,261,812 | ) | (2,233,848 | ) | |||||
Net deferred tax asset | $ | - | $ | - |
6_STOCKHOLDERS_EQUITY_Tables
6. STOCKHOLDERS EQUITY (Tables) | 12 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Stockholders' deficit | |||||||||||||||||
Schedule of Warrants | Exercise | Shares Issuable Upon Exercise of Warrants (1) | |||||||||||||||
Series | Issuance Date | Expiration Date | Price | 2014 | 2013 | ||||||||||||
Series A | 1-Dec-10 | 31-Oct-14 | $ | 400 | 1,700 | 1,700 | |||||||||||
Series B | 1-Dec-10 | 31-Oct-14 | $ | 120 | 3,400 | 3,400 | |||||||||||
Series B | 1-Dec-10 | 31-Oct-14 | $ | 400 | 1,700 | 1,700 | |||||||||||
Series C | 28-Feb-11 | 28-Feb-16 | $ | 200 | 15,000 | 15,000 | |||||||||||
Series D | 28-Feb-11 | 28-Feb-16 | $ | 120 | 1,500 | 1,500 | |||||||||||
Class A | 2-Dec-11 | 29-Nov-16 | $ | 150 | 48,000 | 48,000 | |||||||||||
Series E | 29-Jun-12 | 15-Jun-17 | $ | 155 | 2,963 | 2,963 | |||||||||||
Series E | 6-Jul-12 | 15-Jun-17 | $ | 150 | 725 | 725 | |||||||||||
Series E | 31-Jul-12 | 15-Jun-17 | $ | 150 | 572 | 572 | |||||||||||
Series E | 5-Sep-12 | 15-Jun-17 | $ | 150 | 1,114 | 1,114 |
9_FAIR_VALUE_OF_FINANCIAL_INST1
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (Tables) | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Notes to Financial Statements | |||||||||||||
Financial Liabilities | September 30, | September 30, | |||||||||||
Level | 2014 | 2013 | |||||||||||
Participation liability | 3 | $ | - | $ | 465,551 | ||||||||
Liabilities Using Signigicant Unobservable Inputs | Participation Liability | ||||||||||||
Balance at September 30, 2013 | $ | 465,551 | |||||||||||
Purchases, issuances and settlements | (230,619 | ) | |||||||||||
(Gains) losses included in earnings | (234,932 | ) | |||||||||||
Balance at September 30, 2014 | $ | - |
10_SUPPLEMENTAL_CASH_FLOW_INFO1
10. SUPPLEMENTAL CASH FLOW INFORMATION (Tables) | 12 Months Ended | ||||||||
Sep. 30, 2014 | |||||||||
Notes to Financial Statements | |||||||||
Supplemental Cash Flow Information | Fiscal Year | Fiscal Year | |||||||
Ended | Ended | ||||||||
30-Sep-14 | 30-Sep-13 | ||||||||
Interest paid | $ | 312,111 | $ | 1,435,660 | |||||
Interest capitalized (non-cash) | - | 63,040 | |||||||
Noncash investing and financing activities: | |||||||||
Asset retirement obligations incurred | 29,088 | - | |||||||
Capital expenditures included in accounts payable | - | 16,591 |
11_SUPPLEMENTAL_INFORMATION_RE1
11. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED) (Tables) | 12 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Supplemental Information Relating To Oil And Gas Producing Activities Tables | |||||||||||||
Schedule of operations | Fiscal Year Ended | Fiscal Year Ended | |||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Net revenues from production | |||||||||||||
Third-party sales | $ | 1,676,231 | $ | 4,644,356 | |||||||||
Production costs | |||||||||||||
Lease operating expense | 544,045 | 714,669 | |||||||||||
Production taxes | 77,253 | 214,127 | |||||||||||
Asset retirement obligation accretion | 29,088 | 23,186 | |||||||||||
650,386 | 951,982 | ||||||||||||
Impairment of O&G Properties | 861,579 | 3,634,312 | |||||||||||
Depreciation, depletion and amortization | 984,200 | 1,846,583 | |||||||||||
(819,934 | ) | -1,788,521 | |||||||||||
Income tax expense | - | - | |||||||||||
Results of operations from producing activities | $ | (819,934 | ) | $ | -1,788,521 | ||||||||
Schedule of development costs | Fiscal Year Ended | Fiscal Year Ended | |||||||||||
September 30, | September 30, | ||||||||||||
2014 | 2013 | ||||||||||||
Property acquisitions | |||||||||||||
Unproved | $ | - | $ | 19,206 | |||||||||
Proved | - | - | |||||||||||
Exploration | - | 373,731 | |||||||||||
Development | 1,947,841 | ||||||||||||
Total Costs Incurred | $ | - | $ | 2,340,778 | |||||||||
Schedule of capitalized costs | September 30, | September 30, | |||||||||||
2014 | 2013 | ||||||||||||
Capitalized costs | |||||||||||||
Unproved properties | $ | - | $ | 61,470 | |||||||||
Proved properties | - | 12,994,766 | |||||||||||
- | 13,056,236 | ||||||||||||
Less: Accumulated DD&A | - | 6,587,955 | |||||||||||
Net capitalized costs | $ | - | $ | 6,468,281 | |||||||||
Schedule of proved oil and gas reserves | Oil | ||||||||||||
(Bbls) | |||||||||||||
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, | ||||||||||||
2014 | 2013 | ||||||||||||
Estimated Quantities of Proved Developed Reserves | - | 124,368 | |||||||||||
Estimated Quantities of Proved Undeveloped Reserves | - | - | |||||||||||
Schedule of standardized measure of discounted future net cash flows | September 30, | September 30, | 30-Sep | ||||||||||
2014 | 2013 | 2012 | |||||||||||
Future cash inflows | $ | - | $ | 12,943,629 | $ | 74,669,619 | |||||||
Future production costs | - | (3,557,348 | ) | (9,364,444 | ) | ||||||||
Future development costs | - | (804,500 | ) | 6,175,000 | ) | ||||||||
Future income taxes | - | - | (13,639,715 | ) | |||||||||
Future net cash flows | - | 8,581,781 | 45,490,460 | ||||||||||
Discount of future net cash flows at 10% per annum | - | (2,104,010 | ) | (8,509,198 | ) | ||||||||
Standardized measure of discounted future net cash flows | $ | - | $ | 6,477,771 | $ | 36,981,262 | |||||||
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, | |||||||||||
2014 | 2013 | 2012 | |||||||||||
Sales of oil and gas produced, net of production costs | $ | - | $ | (3,692,374 | ) | $ | (2,532,636 | ) | |||||
Purchases of minerals in place | - | - | - | ||||||||||
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 | ||||||||||
Accretion of discount before income taxes | - | 3,698,126 | 2,269,050 | ||||||||||
Changes in timing and other | - | 8,979,844 | -6,045,848 | ||||||||||
Net change | $ | - | $ | -30,503,491 | $ | 14,290,767 | |||||||
2_SUMMARY_OF_SIGNIFICANT_ACCOU2
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Summary Of Significant Accounting Policies Details Narrative | ||
Anti-dilutive shares | 167,610 | 176,110 |
3_SALE_OF_OIL_AND_GAS_PROPERTI2
3. SALE OF OIL AND GAS PROPERTIES/PAYMENT OF CONVERTIBLE NOTES (details) (USD $) | 12 Months Ended |
Sep. 30, 2014 | |
Proceeds from sale used to: | |
Pay holders of the convertible notes | $5,259,706 |
Purchase the net profits interest held by Vanguard Net Profits, LLC | 230,619 |
Pay legal and closing costs | 9,675 |
Total | $5,500,000 |
4_ASSET_RETIREMENT_OBLIGATIONS2
4. ASSET RETIREMENT OBLIGATIONS (Details) | 12 Months Ended |
Sep. 30, 2014 | |
Asset Retirement Obligations Details | |
Inflation rate | 4.00% |
Estimated asset life | 9.5 years |
Credit adjusted risk free interest rate | 18.00% |
4_ASSET_RETIREMENT_OBLIGATIONS3
4. ASSET RETIREMENT OBLIGATIONS (Details 1) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Asset Retirement Obligations Details 1 | ||
Asset retirement obligations at beginning of year | $177,685 | $96,410 |
Obligations assumed in acquisition | 29,088 | 0 |
Additional retirement obligations incurred | -28,291 | |
Changes in estimate | 111,598 | |
Accretion expense | 29,088 | 23,186 |
Settlements | -19,172 | -25,218 |
Asset retirement obligations at ending of year | $0 | $177,685 |
5_INCOME_TAXES_Details
5. INCOME TAXES (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Income Taxes Details | ||
Current | $0 | $0 |
Deferred | 0 | 0 |
Total | $0 | $0 |
5_INCOME_TAXES_Details_1
5. INCOME TAXES (Details 1) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Income Taxes Details 1 | ||
Income tax expense computed at statutory rates | ($1,129,553) | ($1,137,194) |
Non-deductible items | -898,410 | -220,623 |
Change in valuation allowance | 2,027,963 | 1,357,817 |
Total | $0 | $0 |
5_INCOME_TAXES_Details_2
5. INCOME TAXES (Details 2) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Deferred tax assets | ||
Net operating loss carryforwards | $5,165,180 | $3,665,319 |
Stock-based compensation | 222,936 | 222,936 |
Deferred tax liability - oil & gas properties | -794,263 | -1,380,769 |
Participation liability | -332,041 | -273,638 |
Subtotal | 4,261,812 | 2,233,848 |
Valuation allowance | -4,261,812 | -2,233,848 |
Net deferred tax asset | $0 | $0 |
6_STOCKHOLDERS_EQUITY_Details
6. STOCKHOLDERS EQUITY (Details) (USD $) | 12 Months Ended |
Sep. 30, 2014 | |
Series A | |
Issuance Date | 1-Dec-10 |
Expiration Date | 31-Oct-14 |
Exercise Price | $400 |
Warrants Outstanding-2014 | 17,000 |
Warrants Outstanding-2013 | 17,000 |
Series B1 | |
Issuance Date | 1-Dec-10 |
Expiration Date | 31-Oct-14 |
Exercise Price | $120 |
Warrants Outstanding-2014 | 3,400 |
Warrants Outstanding-2013 | 3,400 |
Series B2 | |
Issuance Date | 1-Dec-10 |
Expiration Date | 31-Oct-14 |
Exercise Price | $400 |
Warrants Outstanding-2014 | 1,700 |
Warrants Outstanding-2013 | 1,700 |
Series C | |
Issuance Date | 28-Feb-11 |
Expiration Date | 28-Feb-16 |
Exercise Price | $200 |
Warrants Outstanding-2014 | 15,000 |
Warrants Outstanding-2013 | 15,000 |
Series D | |
Issuance Date | 28-Feb-11 |
Expiration Date | 28-Feb-16 |
Exercise Price | $120 |
Warrants Outstanding-2014 | 1,500 |
Warrants Outstanding-2013 | 1,500 |
Class A | |
Issuance Date | 2-Dec-11 |
Expiration Date | 29-Nov-16 |
Exercise Price | $150 |
Warrants Outstanding-2014 | 48,000 |
Warrants Outstanding-2013 | 48,000 |
Series E1 | |
Issuance Date | 29-Jun-12 |
Expiration Date | 15-Jun-17 |
Exercise Price | $155 |
Warrants Outstanding-2014 | 2,963 |
Warrants Outstanding-2013 | 2,963 |
Series E2 | |
Issuance Date | 6-Jul-12 |
Expiration Date | 15-Jun-17 |
Exercise Price | $150 |
Warrants Outstanding-2014 | 725 |
Warrants Outstanding-2013 | 725 |
Series E3 | |
Issuance Date | 31-Jul-12 |
Expiration Date | 15-Jun-17 |
Exercise Price | $150 |
Warrants Outstanding-2014 | 572 |
Warrants Outstanding-2013 | 572 |
Series E4 | |
Issuance Date | 5-Sep-12 |
Expiration Date | 15-Jun-17 |
Exercise Price | $150 |
Warrants Outstanding-2014 | 1,114 |
Warrants Outstanding-2013 | 1,114 |
9_FAIR_VALUE_OF_FINANCIAL_INST2
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Notes to Financial Statements | ||
Participation liability (Level 3) | $0 | $465,551 |
9_FAIR_VALUE_OF_FINANCIAL_INST3
9. FAIR VALUE OF FINANCIAL INSTRUMENTS (Details 1) (Participation Liability, USD $) | 12 Months Ended |
Sep. 30, 2014 | |
Participation Liability | |
Balance at September 30,2013 | $465,551 |
Purchases, issuances and settlements | -230,619 |
(Gains) losses included in earnings | -234,932 |
Balance at September 30, 2014 | $0 |
10_SUPPLEMENTAL_CASH_FLOW_INFO2
10. SUPPLEMENTAL CASH FLOW INFORMATION (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Supplemental cash flow information: | ||
Interest capitalized (non-cash) | $0 | $63,040 |
Noncash investing and financing activities: | ||
Asset retirement obligations incurred | 29,088 | 0 |
Capital expenditures included in accounts payable | $0 | $16,591 |
11_SUPPLEMENTAL_INFORMATION_RE2
11. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Results of operations (UNAUDITED) (Details) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Supplemental Information Relating To Oil And Gas Producing Activities - Results Of Operations Details | ||
Third-party sales | $1,676,231 | $4,644,356 |
Production costs | ||
Lease operating expense | 544,045 | 714,669 |
Production taxes | 77,253 | 214,127 |
Asset retirement obligation accretion | 29,088 | 23,186 |
Subtotal production costs | 650,386 | 951,982 |
Impairment of O&G Properties | 861,579 | 3,634,312 |
Depreciation, depletion and amortization | 984,200 | 1,846,583 |
Total production costs | -819,934 | -1,788,521 |
Income tax expense | 0 | 0 |
Results of operations from producing activities | ($819,934) | ($1,788,521) |
11_SUPPLEMENTAL_INFORMATION_RE3
11. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Costs Incurred (UNAUDITED) (Details 1) (USD $) | 12 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Property acquisitions | ||
Unproved | $0 | $19,206 |
Proved | 0 | 0 |
Exploration | 0 | 373,731 |
Development | 0 | 1,947,841 |
Total Costs Incurred | $0 | $2,340,778 |
11_SUPPLEMENTAL_INFORMATION_RE4
11. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Capitalized costs (UNAUDITED) (Details 2) (USD $) | Sep. 30, 2014 | Sep. 30, 2013 |
Capitalized costs | ||
Unproved properties | $0 | $61,470 |
Proved properties | 0 | 12,994,766 |
Gross | 0 | 13,056,236 |
Less: Accumulated DD&A | 0 | 6,587,955 |
Net capitalized costs | $0 | $6,468,281 |
11_INFORMATION_RELATING_TO_OIL
11. INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Estimated Quantities of Proved Reserves (UNAUDITED) (Details 4) | 12 Months Ended | |
Sep. 30, 2013 | Sep. 30, 2014 | |
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 | 0 |
Revisions of prior estimates | -555,738 | |
Purchases of reserves in place | 0 | |
Production | -45,758 | |
Oil Estimated Quantities of Proved Reserves, ending balance | 124,368 | 0 |
Estimated Quantities of Proved Developed Reserves | 124,368 | 0 |
Estimated Quantities of Proved Undeveloped Reserves | 0 | 0 |
11_SUPPLEMENTAL_INFORMATION_RE5
11. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Net Cash Flows (UNAUDITED) (Details 5) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Supplemental Information Relating To Oil And Gas Producing Activities - Net Cash Flows Details 5 | |||
Future cash inflows | $0 | $12,943,629 | $74,669,619 |
Future production costs | 0 | -3,557,348 | -9,364,444 |
Future development costs | 0 | -804,500 | 6,175,000 |
Future income taxes | 0 | -13,639,715 | |
Future net cash flows | 0 | 8,581,781 | 45,490,460 |
Discount of future net cash flows at 10% per annum | 0 | -2,104,010 | -8,509,198 |
Standardized measure of discounted future net cash flows | $0 | $6,477,771 | $36,981,262 |
11_SUPPLEMENTAL_INFORMATION_RE6
11. SUPPLEMENTAL INFORMATION RELATING TO OIL AND GAS PRODUCING ACTIVITIES - Standardized Measure (UNAUDITED) (Details 6) (USD $) | 12 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2012 | |
Supplemental Information Relating To Oil And Gas Producing Activities - Standardized Measure Details 6 | |||
Sales of oil and gas produced, net of production costs | $0 | ($3,692,374) | ($2,532,636) |
Purchases of minerals in place | 0 | 0 | 0 |
Net change due to revisions in quantity estimates | 0 | -28,337,652 | 17,466,030 |
Net changes in prices and production costs | 0 | -11,151,435 | 3,134,171 |
Accretion of discount before income taxes | 0 | 3,698,126 | 2,269,050 |
Changes in timing and other | 0 | 8,979,844 | -6,045,848 |
Net change | $0 | ($30,503,491) | $14,290,767 |