Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended |
Sep. 30, 2014 | |
Document and Entity Information: | ' |
Entity Registrant Name | 'Brenham Oil & Gas Corp. |
Document Type | '10-Q |
Document Period End Date | 30-Sep-14 |
Amendment Flag | 'false |
Entity Central Index Key | '0001501720 |
Current Fiscal Year End Date | '--12-31 |
Entity Common Stock, Shares Outstanding | 128,102,064 |
Entity Filer Category | 'Smaller Reporting Company |
Entity Current Reporting Status | 'No |
Entity Voluntary Filers | 'No |
Entity Well-known Seasoned Issuer | 'No |
Document Fiscal Year Focus | '2014 |
Document Fiscal Period Focus | 'Q3 |
BRENHAM_OIL_GAS_CORP_Balance_S
BRENHAM OIL & GAS CORP. - Balance Sheet (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Current assets: | ' | ' |
Cash and cash equivalents | $8,642 | $6,859 |
Accounts Receivable | 1,379 | 3,100 |
Total current assets | 10,021 | 9,959 |
Oil and gas properties, full cost method | ' | ' |
Costs Subject to amortization | 93,717 | 93,555 |
Costs not being amortized | 341,900 | 91,900 |
Accumulated depletion | 3,393 | 1,982 |
Total assets | 442,245 | 193,432 |
Current liabilities: | ' | ' |
Accounts payable and accrued expenses | 242,036 | 23,941 |
Accounts payable - related party | 470,195 | 284,412 |
Total current liabilities | 712,231 | 308,353 |
Long-term liabilities: | ' | ' |
Asset retirement obligations | 7,719 | 6,702 |
Total liabilities | 719,950 | 315,055 |
Stockholders' deficit: | ' | ' |
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, 0 shares issued and outstanding | 0 | 0 |
Common stock, $0.0001 par value, 200,000,000 shares authorized; 128,293,536 shares issued, 128,102,064 shares outstanding | 12,830 | 12,830 |
Additional paid-in capital | 992,981 | 992,981 |
Accumulated deficit, during the exploration stage | -1,279,055 | -1,124,679 |
Less treasury stock, at cost; 191,472 and 163,472 shares, respectively | -4,461 | -2,755 |
Total stockholders' deficit | -277,705 | -121,623 |
Total liabilities and stockholders' deficit | $442,245 | $193,432 |
BRENHAM_OIL_GAS_CORP_Statement
BRENHAM OIL & GAS CORP. Statement of Financial Position - Parenthetical (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position | ' | ' |
Preferred stock, par value (in dollars per share) | $0.00 | $0.00 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $0.00 | $0.00 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 128,293,536 | 128,293,536 |
Common stock, shares outstanding (in shares) | 128,102,064 | 128,102,064 |
Treasury stock, at cost (in shares) | 251,472 | 191,472 |
BRENHAM_OIL_GAS_CORP_CONSOLIDA
BRENHAM OIL & GAS CORP. - CONSOLIDATED STATEMENTS OF OPERATIONS (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ' | ' | ' | ' |
Oil and gas revenue | $9,016 | $11,186 | $25,080 | $27,908 |
Costs and expenses: | ' | ' | ' | ' |
Lease operating expenses | 9,580 | 8,799 | 26,248 | 23,190 |
General and administrative | 49,534 | 76,533 | 150,942 | 617,296 |
Depletion and accretion | 645 | 28 | 2,266 | 195 |
Total costs and expenses | 59,759 | 85,380 | 179,456 | 640,681 |
Net loss | ($50,743) | ($74,194) | ($154,376) | ($612,773) |
Net loss per share - basic and diluted | $0 | $0 | $0 | $0 |
Weighted average common shares outstanding - basic and diluted | 128,102,064 | 122,597,642 | 128,102,064 | 118,404,092 |
BRENHAM_OIL_GAS_CORP_CONSOLIDA1
BRENHAM OIL & GAS CORP. - CONSOLIDATED STATEMENTS OF CASH FLOWS (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($154,376) | ($612,773) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Depletion and accretion | 2,266 | 195 |
Stock-based compensation | 0 | 316,000 |
Changes in current assets and liabilities: | ' | ' |
Increase decrease in Accounts receivable | 1,721 | -3,976 |
Increase decrease in Accounts payable and accrued expenses | -11,905 | 475 |
Increase decrease in Accounts Payable-related party | 0 | 131,100 |
Net cash used in operating activities | -162,294 | -168,979 |
Cash flows from investing activities: | ' | ' |
Payment for acquisition of oil and gas property | 20,000 | 87,500 |
Net cash used in investing activities | -20,000 | -87,500 |
Cash flows from financing activities: | ' | ' |
Advances from related parties, net | 185,783 | 157,095 |
Payments for acquisition of treasury stock | 1,706 | 884 |
Proceeds from sale of common stock | 0 | 100,000 |
Net cash provided by financing activities | 184,077 | 256,211 |
Net increase (decrease) in cash | 1,783 | -268 |
Cash and cash equivalents, beginning of period | 6,859 | 6,679 |
Cash and cash equivalents, end of period | 8,642 | 6,411 |
Non-cash transactions: | ' | ' |
Unpaid portion of Inez oil and gas property acquisition | 230,000 | 0 |
Issuance of common stock to convert payable due to American International Industries, Inc | 0 | 267,171 |
Change in estimate of asset retirement costs | $162 | $1,966 |
Note_1_Summary_of_Significant_
Note 1 - Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
Note 1 - Summary of Significant Accounting Policies | ' |
Note 1. Summary of Significant Accounting Policies | |
Basis of Presentation | |
The accompanying unaudited interim consolidated financial statements of Brenham Oil & Gas Corp. (“Brenham”) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited consolidated financial statements and notes thereto contained in Brenham's Annual Report on Form 10-K filed with the SEC for the year ended December 31, 2013. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the unaudited interim consolidated financial statements that would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year as reported in the Form 10-K have been omitted. | |
Organization, Ownership and Business | |
Brenham Oil & Gas, Inc. was incorporated under the laws of the State of Texas in November 1997, and became a wholly-owned subsidiary of American International Industries, Inc. ("American") in November 1997. On April 21, 2010, the Company was re-domiciled in Nevada as Brenham Oil & Gas Corp. (“Brenham”), and Brenham Oil & Gas, Inc. became a wholly-owned subsidiary of Brenham. American was issued 64,977,093 shares of common stock of Brenham in connection with the reorganization in exchange for all shares outstanding of Brenham Oil & Gas, Inc. The reorganization has been retroactively applied to the consolidated financial statements for all periods presented. | |
Use of Estimates | |
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. | |
Going Concern | |
The consolidated financial statements have been prepared on a going concern basis, which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company incurred a loss from operations during the nine months ended September 30, 2014 and 2013, has financial commitments in excess of current capital resources, and expects to incur further losses in the future, thus raising substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management plans to obtain the necessary financing to meet its obligations during the remainder of 2014. These financials do not include any adjustments relating to the recoverability and reclassification of recorded asset amounts, or amounts and classifications of liabilities that might result from this uncertainty. | |
Reclassifications | |
Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented. | |
Cash and Cash Equivalents | |
Brenham considers all short-term securities purchased with a maturity of three months or less to be cash equivalents. | |
Accounts Receivable | |
Accounts receivable consist primarily of receivables from oil and gas revenue, and are carried at the expected net realizable value. | |
Oil & Gas Properties | |
The Company follows the full cost method of accounting for its investments in oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves, including unproductive wells, are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells, and administrative costs directly attributable to those activities, and asset retirement costs. General and administrative costs related to production and general overhead are expensed as incurred. | |
Disposition of oil 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, in which case the gain or loss is recognized in the statement of operations. | |
Future development, site restoration, dismantlement and abandonment costs, are estimated property by property, based upon current economic conditions and regulatory requirements, and are included in amortization of our oil and natural gas property costs. | |
Depletion of capitalized oil properties and estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves. | |
At the end of each quarter, the unamortized cost of oil and natural gas properties, net of related deferred income taxes, is limited to the sum of the estimated future after-tax net revenues from proved properties, after giving effect to cash flow hedge positions, discounted at 10%, and the lower of cost or fair value of unproved properties, adjusted for related income tax effects. This limitation is known as the “ceiling test,” and is based on SEC rules for the full cost oil and gas accounting method. There was no ceiling test write-down recorded during the nine months ended September 30, 2014 and 2013. | |
The Company assesses the carrying value of its unproved properties for impairment periodically. If the results of an assessment indicate that an unproved property is impaired (which was assessed in connection with the Company’s evaluation of goodwill impairment), then the carrying value of the unproved properties is added to the proved oil property costs to be amortized and subject to the ceiling test. There was no impairment during the nine months ended September 30, 2014 and 2013. | |
As of September 30, 2014 and December 31, 2013, the Company has properties in the amount of $341,900 and $91,900, respectively, which are being excluded from amortization because they have not been evaluated to determine whether proved reserves are associated with those properties. Costs in excess of the present value of estimated future net revenues as discussed above are charged to impairment expense. | |
Income Taxes | |
Brenham is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Interest and penalties associated with income taxes are included in selling, general and administrative expense. | |
Brenham has adopted ASC 740-10 “Accounting for Uncertainty in Income Taxes,” which prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740-10 states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. As of September 30, 2014, Brenham had not recorded any tax benefits from uncertain tax positions. | |
Net Loss Per Common Share | |
Net loss per common share is computed by dividing the net loss by the weighted average number of shares outstanding during a period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Basic and diluted net losses per share were the same, as there were no common stock equivalents outstanding. | |
For the nine months ended September 30, 2014 and 2013, 3,000,000 stock options were excluded from the computation of diluted net loss per share, as the inclusion of such stock options would be anti-dilutive. | |
Subsequent Events | |
Brenham has evaluated all transactions from September 30, 2014 through the financial statement issuance date for subsequent event disclosure consideration. | |
Recent Accounting Pronouncements | |
There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company’s financial position, operations, or cash flows. |
Note_2_Oil_and_Gas_Properties
Note 2 - Oil and Gas Properties | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Notes | ' | ||||
Note 2 - Oil and Gas Properties | ' | ||||
Note 2. Oil and Gas Properties | |||||
Brenham uses the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells, including directly related overhead costs and related asset retirement costs are capitalized. Properties not subject to amortization consist of exploration and development costs that are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved, or their values become impaired and the corresponding costs are added to the capitalized costs subject to amortization. During the three and nine months ended September 30, 2014, depletion of oil and gas properties of $118 and $1,411, respectively, was recorded. During the three and nine months ended September 30, 2013, depletion of oil and gas properties of $23 and $101, respectively, was recorded. Costs of oil and gas properties are amortized using the units of production method. Sales of oil and natural gas properties are accounted for as adjustments to the net full cost pool, and generally, no gain or loss is recognized. | |||||
In applying the full cost method, Brenham performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of oil and gas properties is compared to the “estimated present value” of its proved reserves discounted at a 10-percent interest rate of future net revenues, based on current economic and operating conditions at the end of the period, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment expense. During the nine months ended September 30, 2014 and 2013, no impairment of oil and gas properties was recorded. | |||||
Below are the components of the oil and gas properties balance: | |||||
30-Sep-14 | 31-Dec-13 | ||||
Royalty interest in 24 acres in Washington County, Texas (a) | $ | - | $ | - | |
Royalty interest in 700 acres in the Permian Basin (b) | 8,400 | 8,400 | |||
10% working interest in the Pierce Junction Field (c) | 87,500 | 87,500 | |||
Lease of 394 acres in the Gillock Field (d) | 83,500 | 83,500 | |||
Lease of 332 acres in Inez Prospect (e) | 250,000 | - | |||
Capitalized asset retirement costs | 6,217 | 6,055 | |||
Total oil and gas properties | 435,617 | 185,455 | |||
Accumulated depletion | -3,393 | -1,982 | |||
Net capitalized costs | $ | 432,224 | $ | 183,473 | |
a) Royalty interest in 24 acres in Washington County, Texas - The Company has an oil and gas mineral royalty interest, covering a twenty-four acre tract of land located in Washington County, Texas, which is carried on the balance sheet at $0. The royalty interest is currently leased by Anadarko Petroleum Corporation for a term continuing until the covered minerals are no longer produced in paying quantities from the leased premises. Royalties on the minerals produced are currently incidental and paid to the Company as follows: (i) for oil and other liquid hydrocarbons, and (ii) for gas (including casing-head gas); the royalty is one-ninth of the net proceeds realized by Anadarko Petroleum Corporation on the sale thereof, less a proportionate part of ad valorem taxes and production, severance, or other excise taxes. In addition, the Company is entitled to shut-in royalties of $1 per acre of land for every ninety-day period within which one or more of the wells in leased premises, or lands pooled therewith, are capable of producing paying quantities, but such wells are either shut-in or production is not being sold. | |||||
b) Royalty interest in 700 acres in the Permian Basin - On July 22, 2011, the Company entered into an Asset Purchase and Sale Agreement with Doug Pedrie, Davis Pedrie Associates, LLC and Energex Oil, Inc. (“Sellers”), pursuant to which the Company acquired 700 acres of unproved property located in the Permian Basin near Abilene, Texas. The agreement provided for the Sellers to complete all oil lease assignments by August 15, 2011. The purchase consideration for the acquisition is the issuance to Sellers of 2,000,000 restricted common shares of Brenham, valued at $8,400, with an additional 2,000,000 restricted common shares to be issued contingent upon realization of certain production targets in 2012. On March 8, 2012, this agreement was rescinded and replaced with an agreement that in consideration for the Brenham share issuance; Brenham has a 2.5% overriding royalty interest in all of the leases associated with this property and any properties acquired or renewed in the future within a ten-mile radius. In addition, the contingency to issue additional shares was removed. | |||||
c) 10% working interest in the Pierce Junction Field - On March 12, 2013, Brenham entered into an agreement with an effective date of January 1, 2013, to purchase a 10% working interest in the Pierce Junction Field for $50,000 cash and a $70,000 non-interest bearing note payable due on August 31, 2013. On May 30, 2013, the holder of this note payable accepted $37,500 as full payment and Brenham recorded $32,500 as a reduction in the value of the oil and gas property due to the decrease in the consideration given to acquire it. | |||||
d) Lease of 394 acres in the Gillock Field - Brenham leased 394 acres in Galveston County for the acquisition of 100% working interest in the Gillock Field from Kemah Development Texas, L.P. (“KDT”) and Daniel Dror II Trust of 2012 for $300 per acre, or $131,100 (recorded as accounts payable – related parties in the consolidated balance sheet as of September 30, 2014 and December 31, 2013) and 200,000 shares of American restricted common stock. Brenham issued 3,326,316 shares of Brenham restricted common stock to American as payment in full for the 200,000 shares issued by American on Brenham’s behalf. In 2002, KDT paid $1,175,000 for the original 437 acres and the mineral rights to 394 acres. However, KDT assigned no value to the mineral rights. Due to the related parties having no basis in the mineral rights, Brenham expensed the costs associated with the transaction, which totaled $447,100 and consisted of i) $316,000 of stock-based compensation calculated at the grant date fair value of the 3,326,316 shares of Brenham common stock issued to American (which equaled the grant date fair value of the common stock American issued to KDT and the Daniel Dror II Trust) and ii) the $131,100 related party payable. | |||||
e) Lease of 332 acres in the Inez Prospect - On January 8, 2014, the Company entered into a letter of intent with a third party to acquire a 332-acre oil and gas lease, the “Inez Prospect,” located in Victoria County, Texas, and the #1 Roberts Unit well-bore, and all the down-hole equipment and surface equipment associated therewith. On April 10, 2014, the Company and the third party entered into a prospect and lease acquisition agreement. Pursuant to the agreement, the Company has agreed to acquire 100% of the working interest for a total purchase price of $250,000, consisting of a $20,000 deposit, which was paid during the nine months ended September 30, 2014, and a payment of the remaining $230,000 prior to the beginning of any exploration which is recorded in accounts payable and accrued expenses at September 30, 2014. Exploration has not yet commenced, and the property is in the process of being sold. However, there can be no assurance that a sale will take place. |
Note_3_Payables_Related_Party
Note 3. Payables - Related Party | 9 Months Ended |
Sep. 30, 2014 | |
Notes | ' |
Note 3. Payables - Related Party | ' |
Note 3. Accounts Payable – Related Parties | |
Related party payables at September 30, 2014 consists of $339,095 owed to American as advances to assist with Brenham's operating expenses, and $131,100 owed to KDT for the acquisition of mineral rights for the Gillock Field. Related party payables at December 31, 2013 consists of $153,312 owed to American as advances to assist with Brenham's operating expenses, and $131,100 owed to KDT for the acquisition of mineral rights for the Gillock Field. KDT is owned by an entity which is controlled by the brother of Daniel Dror, Brenham’s Chairman, Chief Executive Officer and President. Scott Gaille is the former President of Brenham. The advances to Brenham are non-interest bearing and due on demand. |
Note_4_Asset_Retirement_Obliga
Note 4. Asset Retirement Obligations | 9 Months Ended | ||||
Sep. 30, 2014 | |||||
Notes | ' | ||||
Note 4. Asset Retirement Obligations | ' | ||||
Note 4. Asset Retirement Obligations | |||||
The Company estimates the present value of future costs of dismantlement and abandonment of its wells, facilities, and other tangible long-lived assets, recording them as liabilities in the period incurred. Asset retirement obligations are calculated using an expected present value technique. Salvage values are excluded from the estimation. When the liability is initially recorded, the entity increases the carrying amount of the related long-lived asset. Accretion of the liability is recognized each period, and the capitalized cost is amortized over the useful life of the related asset. Upon settlement of the liability, the Company incurs a gain or loss based upon the difference between the estimated and final liability amounts. The Company records gains or losses from settlements as adjustments to the full cost pool. | |||||
During the three and nine months ended September 30, 2014, accretion expense of $527 and $855, respectively, was recorded. During the three and nine months ended September 30, 2013, accretion expense of $5 and $94, respectively, was recorded. | |||||
The following table represents the change in the Company’s asset retirement obligations during the nine months ended September 30, 2014: | |||||
Amount | |||||
Asset retirement obligations as of December 31, 2013 | $ | 6,702 | |||
Additions | - | ||||
Current year revision to previous estimates | 162 | ||||
Accretion during the nine months ended September 30, 2014 | 855 | ||||
Asset retirement obligations as of September 30, 2014 | $ | 7,719 |
Note_5_Equity
Note 5. Equity | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Notes | ' | |||||
Note 5. Equity | ' | |||||
Note 5. Equity | ||||||
During the nine months ended September 30, 2014, Brenham paid $1,706 to repurchase 60,000 shares of its common stock for treasury. | ||||||
Stock Options | ||||||
A summary of the status of Brenham's stock options to employees during the nine months ended September 30, 2014 is presented below: | ||||||
Shares | Weighted Average Exercise Price | Intrinsic Value | ||||
Outstanding and exercisable as of December 31, 2013 | 3,000,000 | $ | 0.035 | $ | - | |
Granted | - | $ | - | |||
Exercised | - | N/A | ||||
Canceled / Expired | - | N/A | ||||
Outstanding and exercisable as of September 30, 2014 | 3,000,000 | $ | 0.035 | $ | - | |
The stock options outstanding at September 30, 2014 have a remaining life of 1.18 years. |
Note_1_Summary_of_Significant_1
Note 1 - Summary of Significant Accounting Policies: Organization, Ownership and Business (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Organization, Ownership and Business | ' |
Organization, Ownership and Business | |
Brenham Oil & Gas, Inc. was incorporated under the laws of the State of Texas in November 1997, and became a wholly-owned subsidiary of American International Industries, Inc. ("American") in November 1997. On April 21, 2010, the Company was re-domiciled in Nevada as Brenham Oil & Gas Corp. (“Brenham”), and Brenham Oil & Gas, Inc. became a wholly-owned subsidiary of Brenham. American was issued 64,977,093 shares of common stock of Brenham in connection with the reorganization in exchange for all shares outstanding of Brenham Oil & Gas, Inc. The reorganization has been retroactively applied to the consolidated financial statements for all periods presented. |
Note_1_Summary_of_Significant_2
Note 1 - Summary of Significant Accounting Policies: Use of Estimates (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Use of Estimates | ' |
Use of Estimates | |
In preparing financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. |
Note_1_Summary_of_Significant_3
Note 1 - Summary of Significant Accounting Policies: Reclassifications (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Reclassifications | ' |
Reclassifications | |
Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented. |
Note_1_Summary_of_Significant_4
Note 1 - Summary of Significant Accounting Policies: Cash and Cash Equivalents (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Cash and Cash Equivalents | ' |
Cash and Cash Equivalents | |
Brenham considers all short-term securities purchased with a maturity of three months or less to be cash equivalents. | |
Note_1_Summary_of_Significant_5
Note 1 - Summary of Significant Accounting Policies: Accounts Receivable (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Accounts Receivable | ' |
Accounts Receivable | |
Accounts receivable consist primarily of receivables from oil and gas revenue, and are carried at the expected net realizable value. |
Note_1_Summary_of_Significant_6
Note 1 - Summary of Significant Accounting Policies: Oil & Gas Properties - Unproved (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Oil & Gas Properties - Unproved | ' |
Oil & Gas Properties | |
The Company follows the full cost method of accounting for its investments in oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development of petroleum and natural gas reserves, including unproductive wells, are capitalized. Such costs include lease acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil and gas wells, and administrative costs directly attributable to those activities, and asset retirement costs. General and administrative costs related to production and general overhead are expensed as incurred. | |
Disposition of oil 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, in which case the gain or loss is recognized in the statement of operations. | |
Future development, site restoration, dismantlement and abandonment costs, are estimated property by property, based upon current economic conditions and regulatory requirements, and are included in amortization of our oil and natural gas property costs. | |
Depletion of capitalized oil properties and estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves. | |
At the end of each quarter, the unamortized cost of oil and natural gas properties, net of related deferred income taxes, is limited to the sum of the estimated future after-tax net revenues from proved properties, after giving effect to cash flow hedge positions, discounted at 10%, and the lower of cost or fair value of unproved properties, adjusted for related income tax effects. This limitation is known as the “ceiling test,” and is based on SEC rules for the full cost oil and gas accounting method. There was no ceiling test write-down recorded during the nine months ended September 30, 2014 and 2013. | |
The Company assesses the carrying value of its unproved properties for impairment periodically. If the results of an assessment indicate that an unproved property is impaired (which was assessed in connection with the Company’s evaluation of goodwill impairment), then the carrying value of the unproved properties is added to the proved oil property costs to be amortized and subject to the ceiling test. There was no impairment during the nine months ended September 30, 2014 and 2013. | |
As of September 30, 2014 and December 31, 2013, the Company has properties in the amount of $341,900 and $91,900, respectively, which are being excluded from amortization because they have not been evaluated to determine whether proved reserves are associated with those properties. Costs in excess of the present value of estimated future net revenues as discussed above are charged to impairment expense. | |
Note_1_Summary_of_Significant_7
Note 1 - Summary of Significant Accounting Policies: Income Taxes (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Income Taxes | ' |
Income Taxes | |
Brenham is a taxable entity and recognizes deferred tax assets and liabilities for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to be in effect when the temporary differences reverse. The effect on the deferred tax assets and liabilities of a change in tax rates is recognized in income in the year that includes the enactment date of the rate change. A valuation allowance is used to reduce deferred tax assets to the amount that is more likely than not to be realized. Interest and penalties associated with income taxes are included in selling, general and administrative expense. | |
Brenham has adopted ASC 740-10 “Accounting for Uncertainty in Income Taxes,” which prescribes a comprehensive model of how a company should recognize, measure, present, and disclose in its financial statements uncertain tax positions that the company has taken or expects to take on a tax return. ASC 740-10 states that a tax benefit from an uncertain position may be recognized if it is "more likely than not" that the position is sustainable, based upon its technical merits. The tax benefit of a qualifying position is the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement with a taxing authority having full knowledge of all relevant information. As of September 30, 2014, Brenham had not recorded any tax benefits from uncertain tax positions. |
Note_1_Summary_of_Significant_8
Note 1 - Summary of Significant Accounting Policies: Net Loss Per Share (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Net Loss Per Share | ' |
Net Loss Per Common Share | |
Net loss per common share is computed by dividing the net loss by the weighted average number of shares outstanding during a period. The weighted average number of shares was calculated by taking the number of shares outstanding and weighting them by the amount of time that they were outstanding. Basic and diluted net losses per share were the same, as there were no common stock equivalents outstanding. | |
For the nine months ended September 30, 2014 and 2013, 3,000,000 stock options were excluded from the computation of diluted net loss per share, as the inclusion of such stock options would be anti-dilutive. |
Note_1_Summary_of_Significant_9
Note 1 - Summary of Significant Accounting Policies: Subsequent Events (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Subsequent Events | ' |
Subsequent Events | |
Brenham has evaluated all transactions from September 30, 2014 through the financial statement issuance date for subsequent event disclosure consideration. |
Recovered_Sheet1
Note 1 - Summary of Significant Accounting Policies: Recent Accounting Pronouncements (Policies) | 9 Months Ended |
Sep. 30, 2014 | |
Policies | ' |
Recent Accounting Pronouncements | ' |
Recent Accounting Pronouncements | |
There were various accounting standards and interpretations issued recently, none of which are expected to a have a material impact on the Company’s financial position, operations, or cash flows. |
Note_5_Equity_Schedule_of_Shar
Note 5. Equity: Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions (Tables) | 9 Months Ended | |||||
Sep. 30, 2014 | ||||||
Tables/Schedules | ' | |||||
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions | ' | |||||
A summary of the status of Brenham's stock options to employees during the nine months ended September 30, 2014 is presented below: | ||||||
Shares | Weighted Average Exercise Price | Intrinsic Value | ||||
Outstanding and exercisable as of December 31, 2013 | 3,000,000 | $ | 0.035 | $ | - | |
Granted | - | $ | - | |||
Exercised | - | N/A | ||||
Canceled / Expired | - | N/A | ||||
Outstanding and exercisable as of September 30, 2014 | 3,000,000 | $ | 0.035 | $ | - |