Brushy Resources 10-Q/A 16 Nov 15 2015 Q3 Quarterly report (amended) Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2015	Nov. 11, 2015
Document And Entity Information
Entity Registrant Name	Brushy Resources, Inc.
Entity Central Index Key	1,554,970
Document Type	10-Q
Document Period End Date	Sep. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
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 Common Stock, Shares Outstanding		12,711,986
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,015

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Current assets
Cash	$ 5,779	$ 3,574
Trade receivables	879	1,860
Joint interest receivables	229	508
Current derivative assets	918	1,699
Prepaid expenses	300	284
Total current assets	8,105	7,925
Oil and natural gas properties and other equipment
Oil and natural gas properties, successful efforts method, net of accumulated depletion	86,974	91,766
Other property and equipment, net of depreciation	75	104
Total oil and natural gas properties and other equipment, net	87,049	91,870
Other assets
Goodwill	960	960
Derivative assets	59	67
Other	884	981
Total other assets	1,903	2,008
Total assets	97,057	101,803
Current liabilities
Accounts payable and accrued liabilities	6,092	5,835
Joint interest revenues payable	791	$ 829
Current maturities of related party notes payable	20,071
Current maturities of notes payable	16,421	$ 2,353
Current asset retirement obligations	452	428
Total current liabilities	$ 43,827	$ 9,445
Long-term liabilities
Derivative liabilities
Notes payable	$ 41	$ 23,162
Related party note payable		10,180
Deferred tax liabilities	$ 10,740	14,040
Asset retirement obligations	3,197	3,177
Total long-term liabilities	$ 13,978	$ 50,559
Commitments and contingencies
Stockholders' equity
Preferred stock, $.001 par value, authorized 10,000,000 shares; none issued and outstanding
Common stock, $.001 par value, authorized 150,000,000 shares; 12,711,986 shares issued at September 30, 2015 and 12,362,336 shares issued at December 31, 2014	$ 13	$ 12
Paid-in capital	56,838	55,920
Accumulated deficit	(17,599)	(14,133)
Total stockholders' equity	39,252	41,799
Total liabilities and stockholders' equity	$ 97,057	$ 101,803

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2015	Dec. 31, 2014
Statement of Financial Position [Abstract]
Preferred Stock, par value	$ .001	$ .001
Preferred Stock, Authorized	10,000,000	10,000,000
Preferred Stock, Shares issued	0	0
Preferred Stock, Shares Outstanding	0	0
Common Stock, par value	$ .001	$ .001
Common Stock, Authorized	150,000,000	150,000,000
Common Stock, Issued	12,711,986	12,362,336

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Sep. 30, 2015	Sep. 30, 2014
Income Statement [Abstract]
Oil, natural gas, and related product sales	$ 1,745	$ 5,783	$ 7,029	$ 15,485
Expenses
Depreciation, depletion and amortization	1,934	2,858	6,576	7,287
Lease operating	884	1,633	2,963	3,946
General and administrative	797	956	2,885	2,737
Professional fees	96	220	525	737
Production taxes	83	176	289	514
Accretion of discount on asset retirement obligation	58	66	187	255
Exploration	8	$ 27	48	$ 60
Impairment of oil and gas properties	863		863
Total expenses	4,723	$ 5,936	14,336	$ 15,536
Operating income (loss)	(2,978)	(153)	(7,307)	(51)
Other income (expense)
Interest expense	(1,068)	(803)	(2,814)	(1,820)
Gain (loss) from derivative contracts	1,100	(51)	867	61
Gain on sale of assets, net	2,373	$ 827	2,375	$ 1,546
Other Income	141		141
Total other income (expense)	2,546	$ (27)	569	$ (213)
Income (loss) before income taxes	(432)	(180)	(6,738)	(264)
Income tax benefit / (expense):
Current income tax benefit / (expense)	(23)	(7)	(23)	(7)
Deferred income tax benefit / (expense)	683	87	3,296	171
Net income (loss)	$ 228	$ (100)	$ (3,465)	$ (100)
Net income (loss) per basic and diluted common share	$ 0.02	$ (0.01)	$ (0.27)	$ (0.01)
Weighted average basic common shares outstanding	12,711,986	12,362,336	12,636,421	12,362,336
Weighted average diluted common shares outstanding	12,711,986	12,362,336	12,636,421	12,362,336

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Cash flows from operating activities
Net loss	$ (3,465)	$ (100)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and depletion	6,576	$ 7,287
Impairment of oil and gas properties	863
Deferred income taxes	(3,296)	$ (171)
Stock-based compensation	918	968
Accretion of asset retirement obligation	$ 187	255
Cash received (paid) for settlement of derivative instruments		(89)
Unrealized loss (gain) from derivative contracts	$ 789	(61)
(Gain)on asset sales	(2,375)	(1,546)
Amortization of debt issuance costs	249	141
Increase (decrease) in cash attributable to changes in operating assets and liabilities:
Trade receivables	981	729
Joint interest receivables	279	(1,902)
Prepaid expenses and other assets	1	117
Accounts payable and accrued liabilities	(1,408)	(1,133)
Joint interest revenues payable	(38)	518
Net cash provided by operating activities	261	5,013
Cash flows from investing activities
Acquisition and development of oil and natural gas properties	$ (3,913)	(14,107)
Acquisition of White Oak Resources VI, LLC and Permian Atlantis LLC oil and natural gas properties		(16,803)
Proceeds from sales of oil and natural gas properties	$ 7,084	$ 1,000
Oil and natural gas abandonment costs
Net cash provided (used) in investing activities	$ 3,171	$ (29,910)
Cash flows from financing activities
Proceeds from notes payable	8,000	24,060
Debt issuance costs	(167)	(209)
Repayments of notes payable	(9,053)	(539)
Deferred offering costs	(7)	(77)
Net cash (used) provided by financing activities	(1,227)	23,235
Net increase (decrease) in cash	2,205	(1,662)
Cash, beginning of period	3,574	5,794
Cash, end of period	5,779	4,132
Supplemental disclosure of cash flow information
Cash paid during the period for interest	626	1,505
Supplemental disclosure of non-cash investing transactions
Payables related to oil and natural gas capitalized expenditures	$ 3,551	923
Capitalized asset retirement cost		(855)
Settlement of accounts payable through sale of oil and natural gas properties		$ 3,873

1. NATURE OF OPERATIONS

1. NATURE OF OPERATIONS	9 Months Ended
	Sep. 30, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]
1. NATURE OF OPERATIONS	We were originally formed as Starboard Resources LLC in Delaware on June 2, 2011 as a limited liability company to acquire, own, operate, produce, and develop oil and natural gas properties primarily in Texas and Oklahoma. On June 28, 2012, Starboard converted from a Delaware limited liability company to a Delaware C-Corporation and was named Starboard Resources, Inc. The membership units of Starboard Resources LLC were exchanged on a 1:1 basis for common shares of the Company. On July 31, 2015 we sold all of our Oklahoma properties and are now focused on our Texas properties. On August 25, 2015 we changed our name to Brushy Resources, Inc. (the “Company”).

2. SUMMARY OF SIGNIFICANT ACCOU

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	Revision of prior period financial statements In November 2015, during the preparation of our condensed financial statements, the Company discovered an error in the computation of impairment of Oklahoma properties for the quarterly period ended June 30, 2015. Specifically, the impairment calculation included in the Company’s financial statements for period ended June 30, 2015 did not take into account previously recorded impairment on the Oklahoma properties resulting in improper recording of $1,350,000 in impairment – which was the entirety of the impairment recorded in the quarterly period ended June 30, 2015. The changes in the impairment resulted in a non-cash reduction of the loss to the financial statements. The Company has determined that the impact of non-cash item on its quarterly financial statements for the quarter ended June 30, 2015 to be sufficiently material to warrant restatement of the Company’s Quarterly Report on Form 10-Q. The line items that have been amended and restated are set forth below: Balance Sheets June 30, 2015 As Previously Reported Adjustment As Restated ASSETS Oil and natural gas properties, successful efforts method, net of accumulated depletion $ 88,955 1,350 $ 90,305 Total oil and natural gas properties and other equipment, net Total assets $ 96,809 1,350 $ 98,159 LIABILITIES AND STOCKHOLDERS' EQUITY Accumulated deficit $ (19,176 ) 1,350 $ (17,826 ) Total stockholders' equity 37,469 1,350 38,819 Total liabilities and stockholders' equity $ 96,809 1,350 $ 98,159 Statements of Operations Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 As Previously As Previously Reported Adjustment As Restated Reported Adjustment As Restated Impairment of oil and gas properties $ 1,350 (1,350 ) $ - $ 1,350 (1,350 ) $ - Net income (loss) $ (2,354 ) 1,350 $ (1,004 ) $ (5,043 ) 1,350 $ (3,693 ) Net income (loss) per basic and diluted common share $ (0.19 ) $ (0.08 ) $ (0.40 ) $ (0.29 Statements of Cash Flows Six Months Ended June 30, 2015 As Previously Reported Adjustment As Restated Net loss $ (5,043 ) 1,350 $ (3,693 ) Impairment of oil and gas properties 1,350 (1,350 ) $ - Basis of Presentation The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Additionally, the accompanying unaudited condensed consolidated financial statements as of September 30, 2015 and for the nine months ended September 30, 2015 and 2014 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q, and reflect, in the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2014. Principles of Consolidation The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, ImPetro Resources, LLC (“ImPetro”) and ImPetro Operating (“Operating”) (Collectively the “Company”). All intercompany transactions and balances have been eliminated in consolidation. Oil and Gas Natural Gas Properties The Company uses the successful efforts method of accounting for oil and natural gas producing activities, as further defined under ASC 932, Extractive Activities - Oil and Natural Gas Exploratory drilling costs are capitalized when incurred pending the determination of whether a well has found proved reserves. A determination of whether a well has found proved reserves is made shortly after drilling is completed. The determination is based on a process that relies on interpretations of available geologic, geophysic and engineering data. If a well is determined to be successful, the capitalized drilling costs will be reclassified as part of the cost of the well. Capitalized costs of producing oil and natural gas interests are depleted on a unit-of-production basis at the field level. If an exploratory well is determined to be unsuccessful, the capitalized drilling costs are charged to expense in the period the determination is made. If a determination cannot be made as to whether the reserves that have been found can be classified as proved, the cost of drilling the exploratory well is not carried as an asset for more than one year following completion of drilling. If, after that year has passed, a determination that proved reserves exist cannot be made, the well is assumed to be impaired and its costs are charged to expense. Its cost can, however, continue to be capitalized if a sufficient quantity of reserves is discovered in the well to justify its completion as a producing well and the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project. The carrying value of oil and gas properties is assessed for possible impairment on a field by field basis and on at least an annual basis, or as circumstances warrant, based on geological analysis or changes in proved reserve estimates. When impairment occurs, an adjustment is recorded as a reduction of the asset carrying value. For the nine months ended September 30, 2015 and the year December 31, 2014, the Company’s impairment charge was $863,028 and $4,428,378. Other Property and Equipment Other property and equipment, which includes field equipment, vehicles, and office equipment, is stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Vehicles and office equipment are generally depreciated over a useful life of five years and field equipment is generally depreciated over a useful life of twenty years. Revenue Recognition and Natural Gas Imbalances The Company utilizes the accrual method of accounting for natural gas and crude oil revenues, whereby revenues are recognized based on the Company’s net revenue interest in the wells upon delivery to third parties. The Company will also enter into physical contract sale agreements through its normal operations. Gas imbalances are accounted for using the sales method. Under this method, revenues are recognized based on actual volumes of oil and gas sold to purchasers. However, the Company has no history of significant gas imbalances. Income Taxes Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. The Company is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that increases expense in that period. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of September 30, 2015. The Company’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have been recognized as of September 30, 2015. The Company’s tax returns for the last four years remain subject to examination. Net Income (Loss) Per Common Share Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated in the same manner, but also considers the impact to common shares for the potential dilution from stock options, non-vested share appreciation rights and non-vested restricted shares. For the nine month period ended September 30, 2015, there were 900,000 potentially dilutive non-vested and vested stock options and 2,542,397 stock warrants. For the nine month period ended September 30, 2014, there were 349,650 potentially dilutive non-vested restricted shares and stock options. The potentially dilutive shares, options,and warrants for September 30, 2015 and 2014, are considered antidilutive since the Company is in a net loss position and thus result in the basic net income (loss) per common share equaling the diluted net income (loss) per common share. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s estimates of oil and natural gas reserves are, by necessity, projections based on geologic and engineering data, and there are uncertainties inherent in the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures. Reserve engineering is a subjective process of estimating underground accumulations of natural gas and oil that are difficult to measure. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. Estimates of economically recoverable natural gas and oil reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, the assumed effect of regulations by governmental agencies, and assumptions governing future natural gas and oil prices, future operating costs, severance taxes, development costs and workover costs, all of which may in fact vary considerably from actual results. The future drilling costs associated with reserves assigned to prove undeveloped locations may ultimately increase to the extent that these reserves are later determined to be uneconomic. For these reasons, estimates of the economically recoverable quantities of expected natural gas and oil attributable to any particular group of properties, classifications of such reserves based on risk of recovery, and estimates of the future net cash flows may vary substantially. Any significant variance in the assumptions could materially affect the estimated quantity of the reserves, which could affect the carrying value of the Company’s oil and natural gas properties and/or the rate of depletion related to the oil and natural gas properties. New Accounting Pronouncement

3. FAIR VALUE MEASUREMENTS

3. FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2015
Fair Value Disclosures [Abstract]
3. FAIR VALUE MEASUREMENTS	The following tables present information about the Company’s financial assets and liabilities measured at fair value as of September 30, 2015 and December 31, 2014: Balance as of September 30, ($ in thousands) Level 1 Level 2 Level 3 2015 Assets Derivative assets (oil collar and put options) $ - $ 977 $ - $ 977 Liabilities Derivative liabilities (oil collar and put options) $ - $ - $ - $ - Balance as of December 31, ($ in thousands) Level 1 Level 2 Level 3 2014 Assets Derivative assets (oil put options) $ - $ 1,766 $ - $ 1,766

4. PROPERTY ACQUISITION AND SAL

4. PROPERTY ACQUISITION AND SALE	9 Months Ended
	Sep. 30, 2015
Business Combinations [Abstract]
4. PROPERTY ACQUISITION AND SALE	On March 26, 2014 (the “Acquisition Date”), the Company completed the purchase of oil and natural gas leases and leasehold interests (the “Oil and Natural Gas Properties”) from White Oak Resources VI, LLC and Permian Atlantis LLC (collectively the “Seller”) for the purpose of increasing the Company’s oil and natural gas operations in the Permian Basin. The assets acquired are: (a) oil and natural gas leases and leasehold interests in Winkler and Loving Counties in Texas and Lea County, New Mexico; (b) twenty-nine wellbores; and (c) any contracts or agreements related to the foregoing lands, leases and wells. The Oil and Natural Gas Properties include total acreage held by production of 5,160 gross developed acres (1,983.61 net developed acres). Additionally, producing wells and surrounding acreage have been unitized under Texas Railroad Commission regulations. Under the terms of the agreement, the Company purchased the Oil and Natural Gas Properties for $16,803,000 in cash, including before purchase price adjustments. On July 31, 2015, the Company sold all of its Oklahoma properties, which were located in Logan and Kingfisher Counties, Oklahoma, to Remora Petroleum, LP (Austin, TX) for $7,249,390. The purchaser is not affiliated with any Company officers, directors or material stockholders. The following table summarized the results of operation from the properties sold: ($ in thousands) Nine Month Period Ended September 30, 2015 Nine Month Period Ended September 30, 2014 Oil, natural gas, and related product sales $ 1,368 $ 5,470 Expenses 261 624 Operating income $ 1,107 $ 4,846 As part of this transaction, the Company entered into the Fifth Amendment to its Credit Agreement with Independent Bank (“Amendment”). The Amendment provides that $4,000,000 of the purchase price was paid to Independent Bank to pay down its credit facility with Independent Bank. The Amendment requires that an additional $2,000,000 would be held by Independent Bank in a control account. The Amendment further states that the Credit Agreement’s $21,000,000 borrowing base is reduced to $17,000,000 and that the Company cannot demand further funds under this Credit Agreement until the next redetermination of the borrowing base and the cure of any deficiency loan amount over the adjusted borrowing base. The Amendment also places limits on the use of the $2,000,000 in the control account. It provides that the control account funds shall be applied, first, to any borrowing base deficiency after redetermination, and second, to any remaining amount on the loan or to the Company in the sole discretion of Independent Bank. The Amendment also requires the Company to use the funds it has received from the Oklahoma properties transaction (after payment of the $4,000,000 to Independent Bank and the $2,000,000 to the control account) to its outstanding third party accounts payables. Independent Bank took that $2,000,000 from the control account and applied it to the Independent Bank Credit Facility on October 30, 2015.

5. OIL AND NATURAL GAS PROPERTI

5. OIL AND NATURAL GAS PROPERTIES	9 Months Ended
	Sep. 30, 2015
Extractive Industries [Abstract]
5. OIL AND NATURAL GAS PROPERTIES	The following table presents a summary of the Company’s oil and natural gas properties at September 30, 2015 and December 31, 2014: ($ in thousands) Nine Month period Ended September 30, 2015 Year Ended December 31, 2014 Oil and natural gas properties Proved-developed producing properties $ 87,256 $ 96,691 Proved-developed non-producing properties 4,850 2,880 Proved-undeveloped properties 13,275 13,330 Unproved properties 2,072 1,996 Less: Accumulated depletion (20,479 ) (23,131 ) Total oil and natural gas properties, net of accumulated depletion $ 86,974 $ 91,766

6. ASSET RETIREMENT OBLIGATIONS

6. ASSET RETIREMENT OBLIGATIONS	9 Months Ended
	Sep. 30, 2015
Asset Retirement Obligation Disclosure [Abstract]
6. ASSET RETIREMENT OBLIGATIONS	The Company has recognized the fair value of its asset retirement obligations related to the future costs of plugging, abandonment, and remediation of oil and natural gas producing properties. The present value of the estimated asset retirement obligations has been capitalized as part of the carrying amount of the related oil and natural gas properties. The liability has been accreted to its present value as of the end of each period. At September 30, 2015 and December 31, 2014, the Company has determined a range of abandonment dates through March 2061. The following table represents a reconciliation of the asset retirement obligations: ($ in thousands) Nine month period Ended September 30, 2015 Year Ended December 31, 2014 Asset retirement obligations, beginning of period $ 3,605 $ 2,436 Additions to asset retirement obligation - 859 Liabilities settled during the period (143 ) - Accretion of discount 187 320 Revision of estimate - (10 ) Asset retirement obligations, end of period $ 3,649 $ 3,605 The asset retirement liability is measured using primarily Level 3 inputs. The significant unobservable inputs to this fair value measurement include estimates of plugging costs, remediation costs, inflation rate and well life. The inputs are calculated based on historical data as well as current estimated costs.

7. GOING PUBLIC DELAY FEE

7. GOING PUBLIC DELAY FEE	9 Months Ended
	Sep. 30, 2015
Notes to Financial Statements
7. GOING PUBLIC DELAY FEE	We entered a “Securities Purchase and Exchange Agreement” dated June 10, 2011, with Longview Marquis Master Fund, L.P., Summerview Marquis Fund, L.P., Longview Marquis Fund, L.P., LMIF Investments, LLC, SMF Investments, LLC, and Summerline Capital Partners, LLC (collectively “Summerline”). The Agreement provides that the Company, for any reason, does not go public on or before that date that is one hundred fifty days after the June 13, 2011 (the “Going Public Delay Date”), the Company shall pay to each applicable stockholder an aggregate amount equal to the product of (i) such stockholder’s allocation percentage multiplied by (ii) $60,715 (the “Going Public Delay Fee”) on the last business day of each calendar month, for each such calendar month following the Going Public Delay Date through and including the date of going public (the “Going Public Delay Period”). For any partial calendar months during the Going Public Delay Period, the Going Public Delay Fee shall be pro-rated appropriately. For the year ended December 31, 2013, the Company incurred a delay fee of approximately $425,000 which is currently included in accrued liabilities on the accompanying condensed consolidated balance sheets. Effective August 6, 2013, the Company ceased to incur Going Public Delay Fees due to an effective Form 10 filing.

8. DERIVATIVES

8. DERIVATIVES	9 Months Ended
	Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
8. DERIVATIVES	We use derivatives to hedge our oil production. Our current hedge position consists of put options, of which some have deferred premiums paid at settlement. These contracts and any future hedging arrangements may expose us to risk of financial loss in certain circumstances, including instances where production is less than expected or oil prices increase. In addition, these arrangements may limit the benefit to us of increases in the price of oil. Accordingly, our earnings may fluctuate significantly as a result of changes in the fair value of our derivative instrument, which we utilize entirely to hedge our production and do not enter into for speculative purposes. We have not designated the derivative contracts as hedges for accounting purposes, and accordingly, we record the derivative contracts at fair value and recognize changes in fair value in earnings as they occur. At September 30, 2015, we had the following open crude oil derivative contracts: Instrument Commodity Volume (bbl / month) Floor Price Ceilings Price Purchased Put Option Price Fair Value (in thousands) Oct 2015 Put Crude Oil 6,000 50.00 - 80.00 161 Nov 2015 - Dec 2015 Put Crude Oil 2,800 80.00 173 Oct 2015 - Dec 2015 Put Crude Oil 4,000 70.00 291 Jan 2016 - Mar 2016 Put Crude Oil 1,500 75.00 108 Jan 2016 - Dec 2016 Put Crude Oil 3,000 50.00 94 Jan 2016 - Dec 2016 Collar Crude Oil 3,000 54.00 79.30 150 The following tables identify the fair value amounts of derivative instruments included in the accompanying consolidated balance sheets as derivative contracts, categorized by primary underlying risk. Balances are presented on a gross basis, prior to the application of the impact of counterparty and collateral netting. The following tables also identify the net gain (loss) amounts included in the accompanying consolidated statements of operations as gain (loss) from derivative contracts. Fair Value of Derivative Financial Instruments ($ in thousands) September 30, 2015 December 31, 2014 Derivative financial instruments - Current asset 918 1,699 Derivative financial instruments - Long-term assets 59 67 Derivative financial instruments - Current liabilities - Derivative financial instruments - Long-term liabilities - Net derivative financial instruments 977 1,766 Effect of Derivative Financial Instruments September 30, December 31 ($ in thousands) 2015 2015 Realized gain/(loss) on settlement of derivative contracts $ 1,656 $ (19 ) Unrealized gain/(loss) from derivative contracts (789 ) 17 Realized/Unrealized gain/(loss) from derivative contracts $ 867 $ (2 )

9. NOTES PAYABLE

9. NOTES PAYABLE	9 Months Ended
	Sep. 30, 2015
Debt Disclosure [Abstract]
9. NOTES PAYABLE	On June 27, 2013, the Company entered into a credit agreement (“Credit Agreement”) with Independent Bank to borrow up to $100,000,000 at a current rate of 4.00% annum. The Credit Agreement was obtained to fund the development of the Company’s oil and natural gas properties and refinance the prior bank facility. At September 30, 2015 and December 31, 2014, the Company had approximately $21,000,000 and $22,500,000 in borrowings outstanding under the Credit Agreement, respectively. The Credit Agreement provides for a borrowing base of $16,400,000 as of September 30, 2015, which is re-determined semi-annually and upon requested special redeterminations. Further, under the April 15, 2015 Amendment to the Credit Agreement, the borrowing base is reduced by $250,000 per month before September 1, 2015 and $350,000 per month thereafter, unless re-determined after 150 days from the date of the Amendment. The Company is obligated to provide Independent Bank an engineering report acceptable to the Bank as of September 1, 2015 showing proven and producing and proven undeveloped oil and gas reserves, discounted present value of future net income for the Company’s oil and gas properties as of September 1, 2015, projections of annual rate of production, gross income and net income relating to these reserves and take-or-pay, prepayment and gas balancing obligations. Additionally, the borrowing base may be adjusted at the financial institution’s discretion which is based in part upon external factors over which the Company has no control. If the re-determined borrowing base were to be less than outstanding borrowings under the Credit Agreement, the Company would be required to repay the deficit. The Company incurs a commitment fee of 0.5% on the unused portion of the credit facility or if less, the borrowing base. The Credit Agreement matures on June 1, 2016. Loans under the Credit Agreement bear interest at the greater of: (1) the prime rate, the annual rate of interest announced by the Wall Street Journal as its “prime rate”, or (2) the floor rate of 4.00%. The Credit Agreement is collateralized by the oil and natural gas properties and contains several restrictive covenants including, among others: (1) a requirement to maintain a current ratio, of not less than 1.0 to 1.0; (2) a maximum permitted ratio of debt to adjusted EBITDAX of not more than 3.5 to 1.0; (3) a maximum permitted ratio of adjusted EBITDAX to interest expense of not more than 3.0 to 1.0; and (4) a prohibition against incurring debt, subject to permitted exceptions. The Company is not in compliance with its debt covenants at September 30, 2015 however, it is currently working with Independent bank on a waiver for these violations. The Amendment also allows the assignment of an overriding royalty interest as stated in the related amendment to the Intercreditors’ Agreement between Independent Bank, the Company and SOSventures, LLC. The Company is obligated to commence drilling a well in the Crittenden Field within 45 days of the date of the Amendment and a second well in the Crittenden Field within 90 days of the date of the Amendment. The Amendment includes a suspension of Independent Bank’s rights to exercise its remedies prior to 150 days after the Amendment caused solely by the occurrence of a borrowing base deficiency. It also includes a suspension of Independent Bank’s obligation to extend loans, letters of credit or renewals or extensions of letters of credit agreement under the Credit Agreement for 150 days after the date of the Amendment. The Amendment further provides that the Company will be required execute and maintain crude oil hedges on a minimum of 80.0% of Projected Production on a rolling 20 months basis. The Company repaid its term loan at closing with both principal and interest, repaid the note principal to reduce the note to no more than the borrowing base, including the repayment of interest, pay certain fees, deposit $5,000,000 into a special account and SOSventures provided an additional $2,000,000 of availability under the Subordinated credit facility with SOSventures, LLC for drilling capital. On March 26, 2014, the Company entered into a term loan agreement with Independent Bank totaling $4,000,000 at a current rate of 6.75% annum. The agreement was obtained to fund the development of the Company’s acquisition of oil and natural gas properties. The term loan had an outstanding balance of approximately $2,941,000 outstanding at December 31, 2014. The term loan was paid in full on April 15, 2015.

10. STOCK BASED COMPENSATION AN

10. STOCK BASED COMPENSATION AND CONDITIONAL PERFORMANCE AWARDS	9 Months Ended
	Sep. 30, 2015
Equity [Abstract]
10. STOCK BASED COMPENSATION AND CONDITIONAL PERFORMANCE AWARDS	On April 1, 2012, the Company entered into employment agreements (the “Employment Agreement”) which provided a restricted stock grant and a conditional performance award to key members of management. The restricted stock grant of 349,650 shares had a grant date fair value of $10.00 per share and vests in full upon the earlier of an initial public offering (“IPO”) which includes the sale of shares to the public, a business combination whereas 50% or more of the voting power is transferred to the new owners, or March 1, 2015. Those 349,650 shares were earned by the employee recipients and issued to them during the three month period ending March 31, 2015. During the nine months ended September 30, 2015 and 2014, the Company incurred a stock-based compensation expense of approximately $300,000 and $900,000, respectively, related to the restricted stock grant, which is included in the accompanying condensed consolidated statements of operations in general and administrative expenses. Additionally, the employment agreements provide for a conditional performance award where if an IPO occurs, the employee will receive: (1) a cash payment of 1% of the difference between the Company market capital and the book value at the time of the IPO, (2) common stock options to purchase 1.0% of the fully-diluted capital stock as of the IPO date and IPO price which will vest over a four year period and contain a cashless exercise, (3) common stock options to purchase 1.0% of the fully-diluted capital stock as of the 2nd anniversary of the IPO date at the closing price of the common stock on the 2nd anniversary date of the IPO and will vest six years after the grant and contain a cashless exercise. As of the nine month period ended September 30, 2015 and 2014, the conditional performance feature is not probable and as such, no compensation expense related to the conditional performance feature has been recognized. On August 30, 2014, the Company amended and restated the Employment Agreement which provided for additional stock options. The equity award of options to purchase 900,000 shares at the exercise price of $4.75 per share and vesting over three years from September 4, 2014 with a one-year cliff (in respect of 300,000 shares) and monthly vesting thereafter of 25,000 shares over the remaining two years. During the nine months ended September 30, 2015, the Company incurred a stock-based compensation expense of approximately $619,000 related to stock option, which is included in the accompanying condensed consolidated statements of operations in general and administrative expenses. As of September 30, 2015, there was approximately $1,581,000 of unrecognized stock-based compensation related to the non-vested stock options. The assumptions used in the Black-Scholes Option Pricing Model for the stock options granted were as follows: 2014 Risk-free interest rate 1.87 % Expected volatility of common stock 92 % Dividend yield $ 0.00 Expected life of options 5.72 years The following table summarizes information about stock option activity and related information for the nine months ended September 30, 2015 Number of Shares Underlying Options Weighted Average Exercise Price per Share Weighted Average Grant Date Fair Value per Share Weighted Average Remaining Contractual Life (in Years) Outstanding at December 31, 2014 900,000 $ - $ - - Granted - 4.75 2.75 9 Exercised - - - - Forfeited - - - - Outstanding at September 30, 2015 900,000 4.75 2.75 9 Exercisable at September 30, 2015 350,000 4.75 - -

11. RELATED PARTY TRANSACTIONS

11. RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2015
Related Party Transactions [Abstract]
11. RELATED PARTY TRANSACTIONS	Related Party Credit Agreement On March 29, 2013, the Company entered a credit agreement with SOSventures, LLC providing for a term loan through February 16, 2016 in an amount up to $10,000,000 at a 17.00% interest rate through March 29, 2014 and 22.00% interest rate thereafter. The Company may not incur further indebtedness beyond this loan and the Credit Agreement without the consent of SOS Ventures, until such time as the SOS Ventures loan is fully repaid. On May 30, 2014, the Company amended its credit agreement with SOSventures, LLC providing for a term loan through February 1, 2016 in an amount up to $20,000,000 at an 18.00% interest rate. As of September 30, 2015, the Company has borrowed $15,500,000 under this agreement. The term loan is collateralized under a second lien by the oil and natural gas properties and contains several restrictive covenants including, among others: (1) a requirement to maintain a current ratio, of not less than 1.0 to 1.0; (2) a maximum permitted ratio of debt to adjusted EBITDAX of not more than 4.0 to 1.0; (3) a maximum permitted ratio of adjusted EBITDAX to interest expense of not more than 3.0 to 1.0; and (4) a prohibition against incurring debt, subject to permitted exceptions. On April 15, 2015 the Company entered the Second Amendment to the First Amendment and Restated Credit Agreement and several other agreements which provided that SOSventures, LLC will provide an additional $3 million on its credit facility to be used to pay the outstanding balance of the Independent Bank term loan, pay on the Independent Bank credit facility and for operations. Additionally, SOSventures deposit $5 million into a controlled account at Independent Bank to be used to drill two wells in the Crittenden Field referenced in the Independent Bank Amendment. Further, SOSventures, LLC will receive interest on its credit facility and a 1% overriding royalty interest on the Company’s Crittenden Field properties effective upon the drilling of these two oil and gas wells until such time as the credit facility is repaid. Finally, SOSventures, LLC shall receive warrants to purchase 2,542,397 of the Company's common shares for $1.00 per share with a two-year term. The Company utilized a standard option pricing model, (Black Scholes), to measure the fair value of the warrants to SOSventures. If fully purchased 2,542,397 would equal 20% of our currently outstanding common stock.

12. LEGAL PROCEEDINGS

12. LEGAL PROCEEDINGS	9 Months Ended
	Sep. 30, 2015
Commitments and Contingencies Disclosure [Abstract]
12. LEGAL PROCEEDINGS	From time-to-time, the Company may become subject to proceedings, lawsuits and other claims in the ordinary course of business including proceedings related to environmental and other matters. Such matters are subject to many uncertainties, and outcomes are not predictable with assurance. The Company is subject to various possible contingencies that arise primarily from interpretation of federal and state laws and regulations affecting the oil and natural gas industry. Such contingencies include differing interpretations as to the prices at which oil and natural gas sales may be made, the prices at which royalty owners may be paid for production from their leases, environmental issues and other matters. Although management believes that it has complied with the various laws and regulations, administrative rulings and interpretations thereof, adjustments could be required as new interpretations and regulations are issued. In addition, environmental matters are subject to regulation by various federal and state agencies. Stockholder Lawsuit On April 17, 2015, we were served with a lawsuit filed in Bexar County, Texas by William F. Pettinati, Jr., Nicholas Garofolo, Sigma Gas Barbastella Fund and Sigma Gas Antrozous Fund against Starboard Resources, Inc. (now Brushy Resources, Inc.), its directors, its Chief Operating Officer, Edward Shaw, its former Chief Financial Officer, Eric Alfuth, our stockholder, Bradford Higgins, and Sean O’Sullivan, the managing director of our stockholder, SOSventures, LLC. Mr. Pettinati, Mr. Garofalo and the Sigma Gas Antrozous Fund are stockholders. Mr. Pettinati owns 145,112 shares, Mr. Garofalo owns 226,680 common stock shares and Sigma Gas Antrozous Fund owns 44,610 common stock shares. Combined these stockholders account for approximately 3.3% of our outstanding common stock. These stockholders became our stockholders in February 2014. The Plaintiffs allege several derivative and direct causes of action, many of which relate to alleged actions that pre-date their becoming stockholders in February 2014. These derivative claims include, breach of fiduciary duty, waste of corporate assets, concerted action and conspiracy, joint enterprise, agency, alter ego, exemplary damages, and unjust enrichment. The direct claims include, breach of fiduciary duty, conversion, shareholder oppression, concerted action and conspiracy, declaratory judgment that the distribution of stock to the plaintiffs was invalid, joint enterprise, agency, alter ego, exemplary damages, concerted action and conspiracy and failure to allow for inspection of books and records. Many of the allegations relate to events that allegedly happened before the plaintiffs became stockholders, including the distributions from certain partnerships that led to the Plaintiffs becoming stockholders in February 2014. For actions after February 2014, Plaintiffs complain that our common stock still lacks a trading venue, that a books and records request was not honored, that we “delayed” our public offering, that SOSventures LLC had allegedly taken steps to “foreclose” on our assets under our subordinated credit agreement with SOSventures, LLC and that we filed for an extension to the filing date for our Form 10-K for the year ending December 31, 2014. On October 6, 2015 Plaintiffs withdrew the claim about not honoring a books and records request. The matter is styled Sigma Barbastella Fund et al v. Charles S. Henry, III et al. and it is Cause No. 20105-CI-05672 in the 224th District Court in Bexar County, Texas.

2. SUMMARY OF SIGNIFICANT ACC18

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2015
Summary Of Significant Accounting Policies Policies
Basis of Presentation	The condensed consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Additionally, the accompanying unaudited condensed consolidated financial statements as of September 30, 2015 and for the nine months ended September 30, 2015 and 2014 have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial statements and with the instructions to Form 10-Q, and reflect, in the opinion of management, all adjustments, which are of a normal and recurring nature, necessary for a fair presentation of the results for such periods. Operating results for the nine months ended September 30, 2015 are not necessarily indicative of the results that may be expected for the year ending December 31, 2015. Certain information and footnote disclosures normally included in the consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted in this Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in our Form 10-K for the year ended December 31, 2014.
Principles of Consolidation	The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries, ImPetro Resources, LLC (“ImPetro”) and ImPetro Operating (“Operating”) (Collectively the “Company”). All intercompany transactions and balances have been eliminated in consolidation.
Oil and Gas Natural Gas Properties	The Company uses the successful efforts method of accounting for oil and natural gas producing activities, as further defined under ASC 932, Extractive Activities - Oil and Natural Gas Exploratory drilling costs are capitalized when incurred pending the determination of whether a well has found proved reserves. A determination of whether a well has found proved reserves is made shortly after drilling is completed. The determination is based on a process that relies on interpretations of available geologic, geophysic and engineering data. If a well is determined to be successful, the capitalized drilling costs will be reclassified as part of the cost of the well. Capitalized costs of producing oil and natural gas interests are depleted on a unit-of-production basis at the field level. If an exploratory well is determined to be unsuccessful, the capitalized drilling costs are charged to expense in the period the determination is made. If a determination cannot be made as to whether the reserves that have been found can be classified as proved, the cost of drilling the exploratory well is not carried as an asset for more than one year following completion of drilling. If, after that year has passed, a determination that proved reserves exist cannot be made, the well is assumed to be impaired and its costs are charged to expense. Its cost can, however, continue to be capitalized if a sufficient quantity of reserves is discovered in the well to justify its completion as a producing well and the Company is making sufficient progress assessing the reserves and the economic and operating viability of the project. The carrying value of oil and gas properties is assessed for possible impairment on a field by field basis and on at least an annual basis, or as circumstances warrant, based on geological analysis or changes in proved reserve estimates. When impairment occurs, an adjustment is recorded as a reduction of the asset carrying value. For the nine months ended September 30, 2015 and the year December 31, 2014, the Company’s impairment charge was $863,028 and $4,428,378.
Other Property and Equipment	Other property and equipment, which includes field equipment, vehicles, and office equipment, is stated at cost less accumulated depreciation and amortization. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Vehicles and office equipment are generally depreciated over a useful life of five years and field equipment is generally depreciated over a useful life of twenty years.
Revenue Recognition and Natural Gas Imbalances	The Company utilizes the accrual method of accounting for natural gas and crude oil revenues, whereby revenues are recognized based on the Company’s net revenue interest in the wells upon delivery to third parties. The Company will also enter into physical contract sale agreements through its normal operations. Gas imbalances are accounted for using the sales method. Under this method, revenues are recognized based on actual volumes of oil and gas sold to purchasers. However, the Company has no history of significant gas imbalances.
Income Taxes	Deferred income tax assets and liabilities are computed for differences between the financial statement and tax basis of assets and liabilities that will result in future taxable or deductible amounts, based on enacted tax laws and rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred income tax assets to the amount expected to be realized. The Company is required to determine whether its tax positions are more likely than not to be sustained upon examination by the applicable taxing authority, including resolution of any related appeals or litigation processes, based on the technical merits of the position. The tax benefit recognized is measured as the largest amount of benefit that has a greater than fifty percent likelihood of being realized upon ultimate settlement with the relevant taxing authority. De-recognition of a tax benefit previously recognized results in the Company recording a tax liability that increases expense in that period. Based on its analysis, the Company has determined that it has not incurred any liability for unrecognized tax benefits as of September 30, 2015. The Company’s conclusions may be subject to review and adjustment at a later date based on factors including, but not limited to, on-going analyses of and changes to tax laws, regulations and interpretations thereof. The Company recognizes interest and penalties related to unrecognized tax benefits in interest expense and other expenses, respectively. No interest expense or penalties have been recognized as of September 30, 2015. The Company’s tax returns for the last four years remain subject to examination.
Net Income (Loss) Per Common Share	Basic net income (loss) per common share is computed by dividing the net income (loss) attributable to stockholders by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated in the same manner, but also considers the impact to common shares for the potential dilution from stock options, non-vested share appreciation rights and non-vested restricted shares. For the nine month period ended September 30, 2015, there were 900,000 potentially dilutive non-vested and vested stock options and 2,542,397 stock warrants. For the nine month period ended September 30, 2014, there were 349,650 potentially dilutive non-vested restricted shares and stock options. The potentially dilutive shares, options,and warrants for September 30, 2015 and 2014, are considered antidilutive since the Company is in a net loss position and thus result in the basic net income (loss) per common share equaling the diluted net income (loss) per common share.
Use of Estimates	The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The Company’s estimates of oil and natural gas reserves are, by necessity, projections based on geologic and engineering data, and there are uncertainties inherent in the interpretation of such data as well as the projection of future rates of production and the timing of development expenditures. Reserve engineering is a subjective process of estimating underground accumulations of natural gas and oil that are difficult to measure. The accuracy of any reserve estimate is a function of the quality of available data, engineering and geological interpretation and judgment. Estimates of economically recoverable natural gas and oil reserves and future net cash flows necessarily depend upon a number of variable factors and assumptions, such as historical production from the area compared with production from other producing areas, the assumed effect of regulations by governmental agencies, and assumptions governing future natural gas and oil prices, future operating costs, severance taxes, development costs and workover costs, all of which may in fact vary considerably from actual results. The future drilling costs associated with reserves assigned to prove undeveloped locations may ultimately increase to the extent that these reserves are later determined to be uneconomic. For these reasons, estimates of the economically recoverable quantities of expected natural gas and oil attributable to any particular group of properties, classifications of such reserves based on risk of recovery, and estimates of the future net cash flows may vary substantially. Any significant variance in the assumptions could materially affect the estimated quantity of the reserves, which could affect the carrying value of the Company’s oil and natural gas properties and/or the rate of depletion related to the oil and natural gas properties.
New Accounting Pronouncement	In May 2014, the Financial Accounting Standards Board issued a new accounting pronouncement regarding revenue from contracts with customers. This new standard provides guidance on recognizing revenue, including a five step model to determine when revenue recognition is appropriate. The standard requires that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Adoption of the new standard is effective for reporting periods beginning after December 15, 2017 with early adoption not permitted. The Company is currently evaluating the potential impact that the adoption of this standard will have on its financial position, results of operations, and related disclosures, and will adopt the provisions of this new standard in the first quarter of 2018.

2. SUMMARY OF SIGNIFICANT ACC19

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2015
Accounting Policies [Abstract]
Revision of prior period financial statements	Balance Sheets June 30, 2015 As Previously Reported Adjustment As Restated ASSETS Oil and natural gas properties, successful efforts method, net of accumulated depletion $ 88,955 1,350 $ 90,305 Total oil and natural gas properties and other equipment, net Total assets $ 96,809 1,350 $ 98,159 LIABILITIES AND STOCKHOLDERS' EQUITY Accumulated deficit $ (19,176 ) 1,350 $ (17,826 ) Total stockholders' equity 37,469 1,350 38,819 Total liabilities and stockholders' equity $ 96,809 1,350 $ 98,159 Statements of Operations Three Months Ended June 30, 2015 Six Months Ended June 30, 2015 As Previously As Previously Reported Adjustment As Restated Reported Adjustment As Restated Impairment of oil and gas properties $ 1,350 (1,350 ) $ - $ 1,350 (1,350 ) $ - Net income (loss) $ (2,354 ) 1,350 $ (1,004 ) $ (5,043 ) 1,350 $ (3,693 ) Net income (loss) per basic and diluted common share $ (0.19 ) $ (0.08 ) $ (0.40 ) $ (0.29 Statements of Cash Flows Six Months Ended June 30, 2015 As Previously Reported Adjustment As Restated Net loss $ (5,043 ) 1,350 $ (3,693 ) Impairment of oil and gas properties 1,350 (1,350 ) $ -

3. FAIR VALUE MEASUREMENTS (Tab

3. FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2015
Fair Value Measurements Tables
Schedule of fair value measurements	Balance as of September 30, ($ in thousands) Level 1 Level 2 Level 3 2015 Assets Derivative assets (oil collar and put options) $ - $ 977 $ - $ 977 Liabilities Derivative liabilities (oil collar and put options) $ - $ - $ - $ - Balance as of December 31, ($ in thousands) Level 1 Level 2 Level 3 2014 Assets Derivative assets (oil put options) $ - $ 1,766 $ - $ 1,766

4. PROPERTY ACQUISITION AND S21

4. PROPERTY ACQUISITION AND SALE (Tables)	9 Months Ended
	Sep. 30, 2015
Property Acquisition And Sale Tables
Schedule of property acquisition and sale	($ in thousands) Nine Month Period Ended 2015 Nine Month Period Ended 2014 Oil, natural gas, and related product sales $ 1,368 $ 5,470 Expenses 261 624 Operating income $ 1,107 $ 4,846

5. OIL AND NATURAL GAS PROPER22

5. OIL AND NATURAL GAS PROPERTIES (Tables)	9 Months Ended
	Sep. 30, 2015
Oil And Natural Gas Properties Tables
Schedule of oil and gas properties	($ in thousands) Nine Month period Ended September 30, 2015 Year Ended December 31, 2014 Oil and natural gas properties Proved-developed producing properties $ 87,256 $ 96,691 Proved-developed non-producing properties 4,850 2,880 Proved-undeveloped properties 13,275 13,330 Unproved properties 2,072 1,996 Less: Accumulated depletion (20,479 ) (23,131 ) Total oil and natural gas properties, net of accumulated depletion $ 86,974 $ 91,766

6. ASSET RETIREMENT OBLIGATIO23

6. ASSET RETIREMENT OBLIGATIONS (Tables)	9 Months Ended
	Sep. 30, 2015
Asset Retirement Obligations Tables
Schedule of Asset Retirement Obligations	($ in thousands) Nine month period Ended September 30, 2015 Year Ended December 31, 2014 Asset retirement obligations, beginning of period $ 3,605 $ 2,436 Additions to asset retirement obligation - 859 Liabilities settled during the period (143 ) - Accretion of discount 187 320 Revision of estimate - (10 ) Asset retirement obligations, end of period $ 3,649 $ 3,605

8. DERIVATIVES (Tables)

8. DERIVATIVES (Tables)	9 Months Ended
	Sep. 30, 2015
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Oil derivative contracts	Instrument Commodity Volume (bbl / month) Floor Price Ceilings Price Purchased Put Option Price Fair Value (in thousands) Oct 2015 Put Crude Oil 6,000 50.00 - 80.00 161 Nov 2015 - Dec 2015 Put Crude Oil 2,800 80.00 173 Oct 2015 - Dec 2015 Put Crude Oil 4,000 70.00 291 Jan 2016 - Mar 2016 Put Crude Oil 1,500 75.00 108 Jan 2016 - Dec 2016 Put Crude Oil 3,000 50.00 94 Jan 2016 - Dec 2016 Collar Crude Oil 3,000 54.00 79.30 150
Fair Value of Derivative Financial Instruments	($ in thousands) September 30, 2015 December 31, 2014 Derivative financial instruments - Current asset 918 1,699 Derivative financial instruments - Long-term assets 59 67 Derivative financial instruments - Current liabilities - Derivative financial instruments - Long-term liabilities - Net derivative financial instruments 977 1,766
Effect of Derivative Financial Instruments	September 30, December 31 ($ in thousands) 2015 2015 Realized gain/(loss) on settlement of derivative contracts $ 1,656 $ (19 ) Unrealized gain/(loss) from derivative contracts (789 ) 17 Realized/Unrealized gain/(loss) from derivative contracts $ 867 $ (2 )

10. STOCK BASED COMPENSATION 25

10. STOCK BASED COMPENSATION AND CONDITIONAL PERFORMANCE AWARDS (Tables)	9 Months Ended
	Sep. 30, 2015
Stock Based Compensation And Conditional Performance Awards Tables
Assumptions used in Black-Scholes Model	2014 Risk-free interest rate 1.87 % Expected volatility of common stock 92 % Dividend yield $ 0.00 Expected life of options 5.72 years
Stock Option Activity	Number of Shares Underlying Options Weighted Average Exercise Price per Share Weighted Average Grant Date Fair Value per Share Weighted Average Remaining Contractual Life (in Years) Outstanding at December 31, 2014 900,000 $ - $ - - Granted - 4.75 2.75 9 Exercised - - - - Forfeited - - - - Outstanding at September 30, 2015 900,000 4.75 2.75 9 Exercisable at September 30, 2015 350,000 4.75 - -

2. SUMMARY OF SIGNIFICANT ACC26

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended			6 Months Ended	9 Months Ended
	Sep. 30, 2015	Jun. 30, 2015	Sep. 30, 2014	Jun. 30, 2015	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
ASSETS
Total assets	$ 97,057				$ 97,057		$ 101,803
LIABILITIES AND STOCKHOLDERS' EQUITY
Accumulated deficit	(17,599)				(17,599)		(14,133)
Total stockholders' equity	39,252				39,252		41,799
Total liabilities and stockholders' equity	97,057				97,057		$ 101,803
Impairment of oil and gas properties	863				863
Net income (loss)	$ 228		$ (100)		$ (3,465)	$ (100)
Net income (loss) per basic and diluted common share	$ 0.02		$ (0.01)		$ (0.27)	$ (0.01)
As Previously Reported [Member]
ASSETS
Oil and natural gas properties, successful efforts method, net of accumulated depletion		$ 88,955		$ 88,955
Total assets		96,809		96,809
LIABILITIES AND STOCKHOLDERS' EQUITY
Accumulated deficit		(19,176)		(19,176)
Total stockholders' equity		37,469		37,469
Total liabilities and stockholders' equity		96,809		96,809
Impairment of oil and gas properties		1,350		1,350
Net income (loss)		$ (2,354)		$ (5,043)
Net income (loss) per basic and diluted common share		$ (0.19)		$ (0.40)
Adjustment [Member]
ASSETS
Oil and natural gas properties, successful efforts method, net of accumulated depletion		$ 1,350		$ 1,350
Total assets		1,350		1,350
LIABILITIES AND STOCKHOLDERS' EQUITY
Accumulated deficit		1,350		1,350
Total stockholders' equity		1,350		1,350
Total liabilities and stockholders' equity		1,350		1,350
Impairment of oil and gas properties		(1,350)		(1,350)
Net income (loss)		1,350		1,350
As Restated [Member]
ASSETS
Oil and natural gas properties, successful efforts method, net of accumulated depletion		90,305		90,305
Total assets		98,159		98,159
LIABILITIES AND STOCKHOLDERS' EQUITY
Accumulated deficit		(17,826)		(17,826)
Total stockholders' equity		38,819		38,819
Total liabilities and stockholders' equity		$ 98,159		$ 98,159
Impairment of oil and gas properties
Net income (loss)		$ (1,004)		$ (3,693)
Net income (loss) per basic and diluted common share		$ (0.08)		$ (0.29)

2. SUMMARY OF SIGNIFICANT ACC27

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2015	Sep. 30, 2014	Dec. 31, 2014
Accounting Policies [Abstract]
Impairment charge	$ 863,028		$ 4,428,378
Potentially dilutive non-vested and vested stock options	900,000	349,650
Potentially dilutive warrant	2,542,397

3. FAIR VALUE MEASUREMENTS (Det

3. FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Assets (at fair value):
Derivative assets (oil collar and put options)	$ 977	$ 1,766
Liabilities (at fair value):
Derivative liabilities (oil collar and put options)	0
Level 1
Assets (at fair value):
Derivative assets (oil collar and put options)	0	0
Liabilities (at fair value):
Derivative liabilities (oil collar and put options)	0
Level 2
Assets (at fair value):
Derivative assets (oil collar and put options)	977	1,766
Liabilities (at fair value):
Derivative liabilities (oil collar and put options)	0
Level 3
Assets (at fair value):
Derivative assets (oil collar and put options)	0	$ 0
Liabilities (at fair value):
Derivative liabilities (oil collar and put options)	$ 0

4. PROPERTY ACQUISITION AND S29

4. PROPERTY ACQUISITION AND SALE (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Business Combinations [Abstract]
Oil, natural gas, and related product sales	$ 1,368	$ 5,470
Expenses	261	624
Operating income	$ 1,107	$ 4,846

5. OIL AND NATURAL GAS PROPER30

5. OIL AND NATURAL GAS PROPERTIES (Details) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Oil and natural gas properties
Proved-developed producing properties	$ 87,256	$ 96,691
Proved-developed non-producing properties	4,850	2,880
Proved-undeveloped properties	13,275	13,330
Unproved properties	2,072	1,996
Less: Accumulated depletion	(20,479)	(23,131)
Total oil and natural gas properties, net of accumulated depletion	$ 86,974	$ 91,766

6. ASSET RETIREMENT OBLIGATIO31

6. ASSET RETIREMENT OBLIGATIONS (Details) - USD ($) $ in Thousands	9 Months Ended	12 Months Ended
	Sep. 30, 2015	Dec. 31, 2014
Asset Retirement Obligations Details
Asset retirement obligations, beginning of period	$ 3,605	$ 2,436
Additions to asset retirement obligation	0	859
Liabilities settled during the period	(143)	0
Accretion of discount	187	320
Revision of estimate	0	(10)
Asset retirement obligations, end of period	$ 3,649	$ 3,605

7. GOING PUBLIC DELAY FEE (Deta

7. GOING PUBLIC DELAY FEE (Details Narratives) $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Notes to Financial Statements
Penalty for going public delay	$ 425

8. DERIVATIVES (Details)

8. DERIVATIVES (Details) $ in Thousands	9 Months Ended
	Sep. 30, 2015USD ($)
Instrument 1
Derivative	50.00-80.00
Fair value	$ 161
Instrument 2
Derivative	80
Fair value	$ 173
Instrument 3
Derivative	70
Fair value	$ 291
Instrument 4
Derivative	75
Fair value	$ 108
Instrument 5
Derivative	50
Fair value	$ 94
Instrument 6
Derivative	54.00-79.30
Fair value	$ 150

8. DERIVATIVES - Fair value (De

8. DERIVATIVES - Fair value (Details 1) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Derivatives - Fair Value Details 1
Derivative financial instruments - Current asset	$ 918	$ 1,699
Derivative financial instruments - Long-term assets	59	67
Derivative financial instruments - Current liabilities		0
Derivative financial instruments - Long-term liabilities		0
Net derivative financial instruments	$ 977	$ 1,766

8. DERIVATIVES - Effect (Detai

8. DERIVATIVES - Effect (Details 2) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Derivatives - Effect Details 2
Realized gain/(loss) on settlement of derivative contracts	$ 1,656	$ (19)
Unrealized gain/(loss) from derivative contracts	(789)	17
Realized/Unrealized gain/(loss) from derivative contracts	$ 867	$ (2)

9. NOTES PAYABLE (Details Narra

9. NOTES PAYABLE (Details Narrative) - USD ($) $ in Thousands	Sep. 30, 2015	Dec. 31, 2014
Independent Bank
Borrowings outstanding	$ 21,000,000	$ 22,500,000
Borrowing base	$ 16,400,000
Interest rate		4.00%
Independent Bank 2
Borrowings outstanding		$ 2,941,000

10. STOCK BASED COMPENSATION 37

10. STOCK BASED COMPENSATION AND CONDITIONAL PERFORMANCE AWARDS (Details)	9 Months Ended
	Sep. 30, 2015
Equity [Abstract]
Risk-free interest rate	1.87%
Expected volatility of common stock	92.00%
Dividend yield	0.00%
Expected life of options	5 years 8 months 19 days

10. STOCK BASED COMPENSATION 38

10. STOCK BASED COMPENSATION AND CONDITIONAL PERFORMANCE AWARDS (Details 1)	9 Months Ended
	Sep. 30, 2015$ / sharesshares
Summary of option activity
Number of options, Outstanding Beginning | shares	900,000
Number of options, Granted | shares	0
Number of options, Exercised | shares	0
Number of options, Forfeited | shares	0
Number of options, Outstanding Ending | shares	900,000
Number of options, Exercisable | shares	350,000
Weighted Average Exercise Price per Share, Beginning	$ 0
Weighted Average Exercise Price per Share, Granted	4.75
Weighted Average Exercise Price per Share, Exercised	0
Weighted Average Exercise Price per Share, Forfeited	0
Weighted Average Exercise Price per Share, Ending	4.75
Weighted Average Exercise Price per Share, Exercisable	4.75
Weighted Average Grant Date Fair Value, Beginning	0
Weighted Average Grant Date Fair Value, Granted	2.75
Weighted Average Grant Date Fair Value, Exercised	0
Weighted Average Grant Date Fair Value, Forfeited	0
Weighted Average Grant Date Fair Value, Ending	$ 2.75
Weighted Average Remaining Contractual Life (in Years), Granted	9 years
Weighted Average Remaining Contractual Life (in Years), Outstanding	9 years

10. STOCK BASED COMPENSATION 39

10. STOCK BASED COMPENSATION AND CONDITIONAL PERFORMANCE AWARDS (Details Narrative) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2015	Sep. 30, 2014
Equity [Abstract]
Stock-based compensation expense related to restricted stock	$ 300,000	$ 900,000
Stock-based compensation expense related to stock options	619,000
Unrecognized stock-based compensation related to the non-vested stock options	$ 1,581,000