PetroShare (PRHRQ) 10-Q 17 Nov 16 2016 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2016	Nov. 16, 2016
Document And Entity Information [Abstract]
Entity Registrant Name	PetroShare Corp.
Entity Central Index Key	1,568,079
Document Type	10-Q
Document Period End Date	Sep. 30, 2016
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		21,919,857
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,016

Condensed Balance Sheets

Condensed Balance Sheets - USD ($)	Sep. 30, 2016	Dec. 31, 2015
Current Assets:
Cash and cash equivalents	$ 1,096,468	$ 3,011,291
Accounts receivable - joint interest billing	36,143	384,618
Accounts receivable - crude oil and natural gas production	13,860
Accounts receivable - other	93,761
Deferred offering costs	243,726
Prepaid expenses and other assets	801,946	29,119
Total current assets	2,285,904	3,425,028
Crude Oil and Natural Gas Properties-using successful efforts method
Unproven crude oil and natural gas properties	455,480	715,594
Proven crude oil and natural gas properties	4,998,367	724,058
Wells in progress	2,114,234	40,505
Less: Accumulated depletion and depreciation	(747,582)	(724,058)
Crude oil and natural gas properties, net	6,820,499	756,099
Property, plant and equipment, net	14,083	1,828
Other assets	15,757	3,851
Total Assets	9,136,243	4,186,806
Current Liabilities:
Accounts payable and accrued liabilities	1,960,729	312,590
Accounts payable - related party	290,078
Accounts payable - working interest and royalty owners	120,691	949
Total current liabilities	2,371,498	313,539
Long-term debt	5,000,000	1,062,185
Asset retirement obligation	592,636	34,776
Total Liabilities	7,964,134	1,410,500
Commitments and contingencies - Note 11
Shareholders' Equity:
Preferred stock-$.01 par value: 10,000,000 shares authorized; 0 shares issued and outstanding
Common stock-$.001 par value: 100,000,000 shares authorized; 21,919,857 shares and 21,633,191 shares issued and outstanding, respectively	21,920	21,633
Additional paid in capital	9,313,011	8,124,443
Accumulated deficit	(8,162,822)	(5,369,770)
Total Shareholders' Equity	1,172,109	2,776,306
Total Liabilities and Shareholders' Equity	$ 9,136,243	$ 4,186,806

Condensed Balance Sheets (Paren

Condensed Balance Sheets (Parenthetical) - $ / shares	Sep. 30, 2016	Dec. 31, 2015
Condensed Balance Sheets
Preferred stock par value (in dollars per share)	$ 0.01	$ 0.01
Preferred stock shares authorized	10,000,000	10,000,000
Preferred stock shares issued	0	0
Preferred stock shares outstanding	0	0
Common stock par value (in dollars per share)	$ 0.001	$ 0.001
Common stock shares authorized	100,000,000	100,000,000
Common stock shares issued	21,919,857	21,633,191
Common stock shares outstanding	21,919,857	21,633,191

Condensed Statements of Operati

Condensed Statements of Operations - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
Revenues
Crude oil and natural gas production revenue	$ 87,157		$ 87,157	$ 1,328
Costs and Expenses
Lease operating expense	64,716	$ 12,971	70,309	19,907
Exploration costs	14,740		17,440
General and administrative expense	980,870	267,076	2,535,789	695,587
Depreciation, depletion, amortization, and accretion	39,064	1,006	43,425	12,915
Plugging expense	33,847		33,847
Loss on impairment of oil and gas properties	9,841		26,880
Total Costs and Expenses	1,143,078	281,053	2,727,690	728,409
Operating (Loss)	(1,055,921)	(281,053)	(2,640,533)	(727,081)
Other Income (Expense)
Interest income	33	7	534	9
Interest expense	(96,157)	(17,205)	(153,053)	(27,944)
Net (Loss)	$ (1,152,045)	$ (298,251)	$ (2,793,052)	$ (755,016)
Net (Loss) per Common Share
Basic and Diluted (in dollars per share)	$ (0.05)	$ (0.02)	$ (0.13)	$ (0.04)
Weighted Average Number of Common Shares Outstanding
Basic and Diluted (in shares)	21,878,553	17,348,191	21,798,185	17,212,561

Condensed Statements of Cash Fl

Condensed Statements of Cash Flows - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015
Cash flows from operating activities
Net (loss)	$ (2,793,052)	$ (755,016)
Adjustments to reconcile net loss to net cash (used in) operating activities
Depreciation and depletion expense	27,687	10,620
Accretion of asset retirement obligation	15,737	2,296
Share based compensation	1,093,854	80,685
Impairment of oil and gas properties	26,880
Changes in operating assets and liabilities
Accounts receivable - joint interest billing	348,475	(58,409)
Accounts receivable - crude oil and natural gas	(13,860)	1,004
Accounts receivable - other	(138,788)
Deferred offering costs	(243,726)	109,965
Prepaid expenses and other assets	(784,735)	16,574
Accounts payable and accrued liabilities	1,648,139	(14,086)
Accounts payable - related party	290,078
Accounts payable - working interest partners and royalty owners	119,742	(25,509)
Net cash (used in) operating activities	(403,569)	(631,876)
Cash flows from investing activities
Additions of furniture, fixtures and equipment	(16,417)
Development of crude oil and natural gas properties	(2,127,869)	(132,055)
Acquisition of Crude oil and natural gas properties - business combination	(2,260,890)
Acquisitions of crude oil and natural gas properties	(1,138,893)	(806,416)
Net cash (used in) investing activities	(5,544,069)	(938,471)
Cash flows from financing activities
Long-term debt - advances on line of credit	3,937,815	1,890,000
Repayment of long term debt		(540,000)
Common stock issued for cash (net of offering costs)	95,000	14,575
Net cash provided by financing activities	4,032,815	1,364,575
Net (decrease) in cash	(1,914,823)	(205,772)
Cash
Beginning of period	3,011,291	425,358
End of period	1,096,468	219,586
Non-cash investing and financing activities:
Acquisition of crude oil and natural gas properties - business combination	$ 635,836
Repayment of long-term debt in connection with the assignment of an interest in crude oil and natural gas properties		$ 287,815

ORGANIZATION AND NATURE OF BUSI

ORGANIZATION AND NATURE OF BUSINESS	9 Months Ended
	Sep. 30, 2016
ORGANIZATION AND NATURE OF BUSINESS
ORGANIZATION AND NATURE OF BUSINESS	NOTE 1—ORGANIZATION AND NATURE OF BUSINESS PetroShare Corp. ("PetroShare" or the "Company") is a corporation organized under the laws of the State of Colorado on September 4, 2012 to investigate, acquire and develop crude oil and natural gas properties in the Rocky Mountain or mid-continent portion of the United States. Since inception, PetroShare has focused on financing activities and the acquisition, exploration and development of crude oil and natural gas prospects in the Rocky Mountain and mid-continent region of the United States. The Company's current focus is on the Wattenberg Field, part of the Denver-Julesburg Basin in northeast Colorado. The Company is in the process of developing its operated and non-operated Wattenberg assets, including those located within its Todd Creek Farms prospect. Currently, all of the Company's properties are located in the State of Colorado.

BASIS OF PRESENTATION AND SUMMA

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2016
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 2—BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited condensed financial statements of the Company have been prepared in accordance with Section 8-03 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission ("SEC"). Certain information normally included in financial statements and the accompanying notes prepared in accordance with generally accepted accounting principles of the United States of America ("U.S. GAAP") have been condensed or omitted, although the Company believes that the disclosures are adequate to make the information not misleading. These financial statements should be read in conjunction with the Company's Audited Financial Statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2015, and the Company's other filings with the SEC. The information furnished herein reflects all adjustments, consisting of normal recurring items, that are, in the opinion of management, necessary for the fair presentation of the Company's Condensed Balance Sheet as of September 30, 2016; the Condensed Statements of Operations for the three and nine months ended September 30, 2016 and 2015; and the Condensed Statements of Cash Flows for the nine months ended September 30, 2016 and 2015, on a basis consistent with that of the prior audited financial statements. Interim period results are not necessarily indicative of results of operations or cash flows for the full year. The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 2 to the Financial Statements contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The Company has evaluated events or transactions through the date of issuance of these unaudited condensed financial statements. Except as otherwise set forth herein, there have been no material changes to the Notes from those included with the Audited Financial Statements included in the Form 10-K. Summary of Significant Accounting Policies Business Combinations The Company accounts for the acquisition of oil and gas properties, that are not commonly controlled, based on the requirements of FASB ASC Topic 805, Business Combinations , which requires an acquiring entity to recognize the assets acquired and liabilities assumed at fair value under the acquisition method of accounting, provided such assets and liabilities qualify for acquisition accounting under the standard. The Company accounts for certain property acquisitions of proved developed oil and gas property as business combinations. Deferred Offering Costs The Company defers as other current assets the direct incremental costs of raising capital through equity offerings until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated. As of September 30, 2016, the Company's deferred offering costs totaled $243,726, with no such charges recorded as of December 31, 2015. New Accounting Pronouncements Recently Issued From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption. In September 2015, the FASB issued update 2015-16 Business Combinations (Topic 805), which updated guidance that eliminates the requirement to restate prior periods to reflect adjustments made to provisional amounts recognized in a business combination. The updated guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The standards update was effective prospectively for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this standard update, as required, effective January 1, 2016, which did not have a material impact on its Condensed Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of the new guidance on its financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to employee share-based payment accounting, which includes provisions intended to simplify various aspects related to how share-based compensation payments are accounted for and presented in the financial statements. This amendment will be effective prospectively for reporting periods beginning on or after December 15, 2016, and early adoption is permitted. The Company is currently assessing the impact of the ASU on the Company's financial statements. Recent Accounting Pronouncements Not Yet Adopted Various accounting standards and interpretations were issued in 2015 with effective dates subsequent to December 31, 2015. The Company has evaluated the recently issued accounting pronouncements that are effective in 2016 and believes that none of them will have a material effect on its financial position, results of operations or cash flows when adopted. Further, the Company is monitoring the joint standard-setting efforts of the Financial Accounting Standards Board. There are a large number of pending accounting standards that are being targeted for completion in 2016 and beyond, including, but not limited to, standards relating to revenue recognition, accounting for leases, fair value measurements, accounting for financial instruments, disclosure of loss contingencies and financial statement presentation. Because these pending standards have not yet been finalized, at this time the Company is not able to determine the potential future impact that these standards will have, if any, on its financial position, results of operations or cash flows.

ACQUISITIONS

ACQUISITIONS	9 Months Ended
	Sep. 30, 2016
ACQUISITIONS
ACQUISITIONS	NOTE 3—ACQUISITIONS PDC Acquisition On June 30, 2016, the Company completed the acquisition of certain oil and gas assets from PDC Energy, Inc. ("PDC"), including leases covering approximately 3,652 gross (1,410 net) acres of lands located in Adams County, Colorado and PDC's interest in 35 producing wells ("PDC assets"). Simultaneous with the closing, the Company's working interest partner and primary lender exercised its option under a participation agreement (the "Participation Agreement") (Note 10) and acquired 50% of the Company's interest in the PDC assets. The acquisition was effective April 1, 2016. Following a final proration of costs and revenues from the operation of the PDC assets and the Company's working interest partner's exercise of its option under the Participation Agreement, the Company's net purchase price for the PDC assets was $2,260,890. A final allocation of the purchase price was prepared using, among other things, an internally prepared reserve analysis. The following table summarizes the consideration transferred, fair value of assets acquired and liabilities assumed: September 30, Consideration: Cash $ ​ ​ ​ ​ ​ Total consideration $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value of Liabilities Assumed: Current liabilities $ Asset retirement obligations ​ ​ ​ ​ ​ Total consideration plus liabilities assumed $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value of Assets Acquired: Proved crude oil and gas properties $ Unproved crude oil and gas properties ​ ​ ​ ​ ​ Amount attributable to assets acquired $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ In accordance with FASB Topic ASC 805, the following unaudited supplemental pro forma condensed results of operations present combined information as though the business combination had been completed as of January 1, 2015. The unaudited supplemental pro forma financial information was derived from the historical revenues and direct operating expenses of PDC and the Company and adjusted to include: (i) depletion expense applied to the adjusted basis of the properties acquired, and (ii) accretion expense associated with the asset retirement obligations recorded using the Company's assumptions about the future liabilities. These unaudited supplemental pro forma results of operations are provided for illustrative purposes only and do not purport to be indicative of the actual results that would have been achieved by the combined company for the periods presented or that may be achieved by the combined company in the future. Future results may vary significantly from the results reflected in this unaudited pro forma financial information. Three months ended September 30, 2016 Three months ended September 30, 2015 PetroShare Corp. PDC assets Combined PetroShare Corp. PDC assets Combined (unaudited) Revenue $ — $ $ $ — $ $ Net income (loss) $ ) $ ) $ ) $ ) $ $ ) Net income (loss) available to PetroShare common shareholders $ ) $ ) $ ) $ ) $ $ ) Pro forma income (loss) per common share: Basic and diluted $ ) $ ) $ ) $ ) $ $ ) Nine months ended September 30, 2016 Nine months ended September 30, 2015 PetroShare Corp. PDC assets Combined PetroShare Corp. PDC assets Combined (unaudited) Revenue $ — $ $ $ $ $ Net income (loss) $ ) $ ) $ ) $ ) $ $ ) Net income (loss) available to PetroShare common shareholders $ ) $ ) $ ) $ ) $ $ ) Pro forma income (loss) per common share: Basic and diluted $ ) $ ) $ ) $ ) $ $ ) Other Acquisitions On March 10, 2016, the Company acquired certain surface rights and easements on lands located in Township 1 South, Range 67 West located on its Todd Creek Farms prospect in exchange for $184,360 in cash. The surface rights and easements permit the Company to access its Shook well pad. On March 31, 2016, the Company acquired additional oil and gas assets on land adjacent to the Company's Todd Creek Farms prospect, including: (i) oil and gas leases covering approximately 320 net acres located in Section 10, Township 1 South, Range 67 West; (ii) a 100% working interest in one well located on the aforementioned leases; (iii) the seller's interest in all of the oil, gas, natural gas liquids, and associated hydrocarbons produced from the well; (iv) the seller's interest in and to certain contracts and agreements applicable to the well and leases; (v) machinery, fixtures, gathering and flow lines, tanks, boilers and other equipment, tangible personal property and improvements located on and used or held in connection with the leases and the well; and (vi) the seller's interest in all easements, permits, licenses and rights of way associated with the foregoing. The Company paid $1,180,547 for the foregoing assets. In addition to the acquisition, the Company assumed certain of the seller's obligations and liabilities. The transaction has an effective date of January 1, 2016. The Company's working interest partner and primary lender exercised its option under the Participation Agreement and acquired a 50% interest in the leases and the well by paying the Company $590,274 in cash on April 19, 2016. On April 14, 2016, the Company acquired additional oil and gas leases near the Company's existing leases in its Todd Creek Farms prospect covering approximately 378 net acres in Section 5, Township 1 South, Range 67 West. The Company also acquired the seller's right to participate in, and agreed to pay all of the seller's costs and expenses related to, the drilling, completion, equipping and producing of up to 14 wells covering part of these leases proposed to be drilled by a third-party operator. The Company paid $576,112 for this acquisition. The transaction was effective on March 1, 2016. The Company's working interest partner and primary lender exercised its option under the Participation Agreement and acquired a 50% interest in the foregoing assets and paid the Company $288,056 in cash on August 24, 2016.

CRUDE OIL AND NATURAL GAS PROPE

CRUDE OIL AND NATURAL GAS PROPERTIES	9 Months Ended
	Sep. 30, 2016
CRUDE OIL AND NATURAL GAS PROPERTIES
CRUDE OIL AND NATURAL GAS PROPERTIES	NOTE 4—CRUDE OIL AND NATURAL GAS PROPERTIES Aggregate Capitalized Costs. The Company has recorded aggregate capitalized costs relating to its crude oil and natural gas activities as shown below: September 30, December 31, Proved $ $ Wells in progress Unproved Less: Accumulated depletion and depreciation ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Costs Incurred in Crude Oil and Natural Gas Activities. Costs incurred in connection with PetroShare's crude oil and natural gas acquisition, exploration and development activities for each of the periods are shown below: Nine months ended 2016 2015 Exploration costs $ $ — Development costs Acquisition of properties: Proved — Unproved ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ During both the three and nine months ended September 30, 2016, the Company recorded depletion expense of $23,525. The Company recorded depletion expense of $nil and $9,898 during the corresponding prior periods.

ASSET RETIREMENT OBLIGATION

ASSET RETIREMENT OBLIGATION	9 Months Ended
	Sep. 30, 2016
ASSET RETIREMENT OBLIGATION
ASSET RETIREMENT OBLIGATION	NOTE 5—ASSET RETIREMENT OBLIGATION For the purpose of determining the fair value of the asset retirement obligation incurred during the nine months ended September 30, 2016, the Company assumed an inflation rate of 2.0%, an average estimated asset life of 11.8 years, and a credit adjusted risk free interest rate of 9.48%. The following table reconciles the value of the asset retirement obligation for the periods presented: September 30, December 31, Asset retirement obligation, beginning of year $ $ Liabilities settled ) — Liabilities incurred — Revisions in estimated liabilities — Accretion ​ ​ ​ ​ ​ ​ ​ ​ Asset retirement obligation, end of year $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accretion expense recorded for the three and nine months ended September 30, 2016 was $13,931 and $15,737 respectively. Accretion expense for the three and nine months ended September 30, 2015 was $765 and $2,296 respectively.

LINE OF CREDIT

LINE OF CREDIT	9 Months Ended
	Sep. 30, 2016
LINE OF CREDIT
LINE OF CREDIT	NOTE 6—LINE OF CREDIT On May 13, 2015, the Company entered into a Revolving Line of Credit Facility Agreement ("initial line of credit") with Providence Energy Operators, LLC ("Providence"), which provides to the Company a revolving line of credit of up to $5,000,000. As of September 30, 2016, the outstanding balance on the initial line of credit was $5,000,000 plus accrued interest of $201,655. During the nine months ended September 30, 2016, the Company borrowed $3,937,815, primarily to fund the acquisition and development of crude oil and natural gas properties (Note 3). See also Note 12.

ACCOUNTS PAYABLE AND ACCRUED LI

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	9 Months Ended
	Sep. 30, 2016
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	NOTE 7—ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liability balances were comprised of trade accounts payable and accrued liabilities, drilling advances, crude oil and natural gas distributions payable and are shown below: September 30, December 31, Trade payables and accrued liabilities $ $ Accrued interest payable Liabilities incurred in connection with acquisition of crude oil and natural gas properties — Crude oil and natural gas distributions payable ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2016
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY	NOTE 8—SHAREHOLDERS' EQUITY Public Offering On August 12, 2016, the Company filed a registration statement on Form S-1 (File No. 333-213113), as amended, pursuant to which the Company seeks to raise up to approximately $27,000,000 in a public offering of its common stock. Closing of the offering is subject to a number of conditions, including an effective date for its registration statement from the SEC and execution of a definitive underwriting agreement with the underwriters. Common Stock As of September 30, 2016 and December 31, 2015, the Company had 100,000,000 shares of common stock authorized with a par value of $0.001 per share. As of September 30, 2016 and December 31, 2015, 21,919,857 and 21,633,191 shares were issued and outstanding, respectively. Activity for the nine months ended September 30, 2016 included the following: • In January 2016, the Company sold 95,000 shares of common stock at $1.00 per share to one accredited investor pursuant to a private placement of its common stock. • On April 8, 2016, the Company issued 50,000 shares of common stock valued at $0.73 per share to an investor relations company in connection with the certain services to be provided pursuant to an investor relations agreement. • On May 4, 2016, the Company issued an aggregate of 50,000 shares of common stock valued at $1.01 per share to two of the Company's Directors in connection with their appointment to the Board (Note 11). • On July 5, 2016, the Company issued 25,000 shares of common stock valued at $1.60 per share to a Director in connection with his appointment to the Board (Note 11). • On July 22, 2016 the Company issued 8,333 shares of common stock valued at $1.65 per share and on August 22, 2016 the Company issued 8,333 shares of common stock valued at $1.40 per share, each to an investor relations company in connection with certain services to be provided to the Company. • On August 30, 2016, the Company issued 50,000 shares of common stock valued at $1.44 per share to an investor relations company in connection with a termination agreement. Warrants As of September 30, 2016 warrants to purchase up to 255,600 shares of the Company's common stock remain outstanding. The warrants are exercisable $1.25 per share and expire on November 12, 2020. No warrants were issued during the nine months ended September 30, 2016.

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2016
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION	NOTE 9—STOCK-BASED COMPENSATION On August 18, 2016, the Company's Board of Directors adopted the Amended and Restated PetroShare Corp. Equity Incentive Plan (the "Plan"), which replaced and restated the Company's original equity incentive plan. The Plan terminates by its terms on August 17, 2026. Among other things, the Plan increased the number of shares of common stock reserved for issuance thereunder from 5,000,000 to 10,000,000 shares. The Company's shareholders approved the Plan at the Company's annual meeting of shareholders on September 8, 2016. During the nine months ended September 30, 2016, the Board of Directors granted non-qualified options to employees, directors and consultants of the Company under the Plan to acquire 2,275,000 shares of PetroShare's common stock. A summary of activity under the Plan through September 30, 2016 is as follows: Number of Weighted Weighted Outstanding, December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Granted Exercised — — — Forfeited — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, September 30, 2016 $ Exercisable, September 30, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Activity under the Plan for the nine months ended September 30, 2016 is as follows: On January 28, 2016, the Company issued 875,000 options to purchase its common stock in connection with the employment of its Chief Operating Officer. The options are exercisable at a price of $1.00 per share and expire on December 31, 2022. The option vests as follows: (i) 125,000 upon the date of grant, and (ii) 750,000 on January 1, 2017, provided that the optionee has been continuously employed by the Company up to that date. The options are subject to the terms and conditions of the Plan and a stock option agreement. On April 12, 2016, the Company issued 250,000 options to purchase its common stock in connection with the hiring of the Company's Vice President of Land. The option vests as follows: (i) 50,000 on the date of grant; (ii) 100,000 on April 15, 2017; and (iii) 100,000 on April 15, 2018, provided that the optionee has been continuously employed by the Company up to each vesting date. The options are exercisable at a price of $0.80 per share and expire on April 15, 2021. The options are subject to the terms and conditions of the Plan and a stock option agreement. On May 4, 2016, the Company issued 50,000 options to purchase its common stock in connection with the addition and appointment of two members of the Company's the Board of Directors (Note 11). The options vested on the date of the grant. The options are exercisable at a price of $1.10 per share and expire on December 31, 2022. The options are subject to the terms and conditions of the Plan and a stock option agreement. On July 5, 2016, the Company issued 25,000 options to purchase its common stock in connection with the addition and appointment of one member of the Company's Board of Directors (Note 11). The options vested on the date of grant. The options are exercisable at a price of $1.60 per share and expire on December 31, 2022. The options are subject to the terms and conditions of the Plan and a stock option agreement. On July 5, 2016, the Company issued 25,000 options to purchase its common stock in connection with the hiring of the Company's senior lease analyst. The option vests as follows: (i) 12,500 on the one-year anniversary of the date of grant; and (ii) 12,500 on the second anniversary of the date of grant, provided that the optionee has been continuously employed by the Company up to each vesting date. The options are exercisable at a price of $1.60 per share and expire on July 5, 2021. The options are subject to the terms and conditions of the Plan and a stock option agreement. On August 19, 2016, the Company issued 800,000 options to purchase its common stock in connection with the execution of a consulting agreement with an investor relations consultant. The option vests as follows: (i) 100,000 on the six-month anniversary of the date of grant; (ii) 100,000 on the one-year anniversary of the date of grant; (iii) in the event the Company and the optionee enter into an employment agreement during the term of the consulting agreement, the option shares in (i) and (ii) above shall vest immediately upon the effective date of the employment agreement if not previously vested; (iv) 300,000 on the one-year anniversary of the employment agreement; and (v) 300,000 on the second anniversary of the employment agreement, each so long as the optionee remains an employee of the Company. The options are exercisable at a price of $1.40 per share and expire on August 19, 2021. The options are subject to the terms and conditions of the Plan and a stock option agreement. The fair value of each share-based award was estimated on the date of the grant using the Black-Scholes pricing model that incorporates key assumptions including volatility, dividend yield and risk-free interest rates. As PetroShare's common stock has limited historical trading data, the expected stock price volatility is based primarily on the historical volatility of a group of publicly-traded companies that share similar operating metrics and histories. The expected term of the awards represents the period of time that management anticipates awards will be outstanding. As there was insufficient historical data available to ascertain a forfeiture rate, the plain vanilla method was applied in calculating the expected term of the options. The risk-free rates for the periods within the contractual life of the options are based on the US Treasury bond rate in effect at the time of the grant for bonds with maturity dates at the expected term of the options. PetroShare has never paid dividends on its common stock and currently does not intend to do so, and as such, the expected dividend yield is zero. Compensation expense related to stock options was recorded net of estimated forfeitures, which for options remaining at December 31, 2016, the Company expects no additional forfeitures. The table below summarizes assumptions utilized in the Black-Scholes pricing model for nine-month period ended: September 30, Expected option term—years 1.5 - 2.5 Weighted-average risk-free interest rate 1.22 - 1.31% Expected dividend yield 0 Weighted-average volatility 201 - 214% Forfeiture rate 0 During the three and nine months ended September 30, 2016, the Company recorded share-based compensation of $378,870 and $1,093,854, respectively. Share-based compensation in the comparable prior periods, was $80,685 and $80,685, respectively. Unvested share-based compensation at September 30, 2016 amounted to $1,124,654.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	9 Months Ended
	Sep. 30, 2016
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS	NOTE 10—RELATED PARTY TRANSACTIONS In May 2015, the Company entered into the Participation Agreement with Providence. As discussed elsewhere in this report, Providence is also the Company's primary lender through which the Company currently maintains the $5,000,000 initial line of credit (Note 6). The Participation Agreement grants Providence the option to acquire up to a 50% interest and participate in any oil and gas development on acreage the Company obtains through its Kingdom services agreement and any other leases acquired by the Company within an area of mutual interest ("AMI"). The AMI covers an area in Adams County, Colorado containing all of Township 1 South, Range 67 West, consisting of approximately 23,100 gross acres, with an additional one-mile border around the township, plus any other mutually agreeable areas. Providence currently holds 13.7% of our outstanding common stock.

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2016
COMMITMENTS AND CONTINGENCIES.
COMMITMENTS AND CONTINGENCIES	NOTE 11—COMMITMENTS AND CONTINGENCIES On May 4, 2016, the Board of Directors expanded its membership from three to five members and appointed Mr. Scott Chandler and Mr. James Sinclair to fill the vacancies created by the increase. In connection with their appointment to the Board, Mr. Chandler and Mr. Sinclair were each granted 25,000 shares of the Company's common stock (Note 8) and options to purchase an additional 25,000 shares of common stock, which options are exercisable at a price of $1.10 per share until December 31, 2022 (Note 9). Each individual receives a quarterly director fee in the amount of $3,000. On June 15, 2016, the Company entered into a consulting services agreement whereby the Company received investor relations services in exchange for $6,000 per month and 100,000 shares of the Company's common stock, which was to be issued monthly at a rate of 8,333 shares as long as the agreement remained in effect. The Company issued a total of 16,666 shares pursuant to the consulting services agreement. On August 30, 2016, the Company terminated the consulting services agreement and issued the investor relations company 50,000 shares in consideration of a termination agreement (Note 8). On July 5, 2016, the Board of Directors expanded its membership from five to six members and appointed Mr. Douglas Harris to fill the vacancy created by the increase. In connection with his appointment to the Board, Mr. Harris was granted 25,000 shares of the Company's common stock (Note 8) and options to purchase an additional 25,000 shares of common stock, which options are exercisable at a price of $1.60 per share until December 31, 2022 (Note 9). Mr. Harris receives a quarterly director fee in the amount of $3,000.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2016
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS	NOTE 12—SUBSEQUENT EVENTS On October 13, 2016, the Company entered into a revolving line of credit facility ("supplemental line of credit") with Providence Energy Partners III, LP, a Texas limited partnership ("PEP III") and an affiliate of Providence (Notes 6 and 10). The supplemental line of credit provides the Company the right to borrow up to $10,000,000 for the acquisition and development of oil and gas properties. All amounts borrowed under the supplemental line of credit accrue interest at the rate of 8% per year and are due and payable in full on April 13, 2017. In part consideration of the supplemental line of credit, the Company assigned to PEP III 10% of its working interest in 378 gross (170 net) acres in the Wattenberg Field, including the Company's interest in the Jacobucci wells in which the Company is participating as a non-operator and any other wells that might be drilled on that acreage in the future. PEP III agreed to reimburse the Company for 10% of all of the Company's expenses associated with the Jacobucci wells and to pay any future expenses incurred in connection with the interest assigned by the Company. As of November 14, 2016, the supplemental line of credit had $1,870,000 principal outstanding plus accrued interest of approximately $12,000. On October 14, 2016, the Company acquired royalty interests in certain oil and gas leases underlying non-operated oil and gas properties. The Company paid $1,900,000 for this acquisition. The Company's working interest partner and primary lender exercised its option under the Participation Agreement and acquired a 50% interest in the foregoing assets and paid the Company $950,000 cash on October 14, 2016. On November 1, 2016, the Company acquired 370 gross (152 net) undeveloped acres in its Todd Creek Farms prospect in exchange for $633,936. The Company's working interest partner and primary lender notified the Company of its intention to exercise its option under the Participation Agreement and acquire a 50% interest in the foregoing assets, however as of November 14, 2016, the Company had not received payment.

BASIS OF PRESENTATION AND SUM18

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2016
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Business Combinations	Business Combinations The Company accounts for the acquisition of oil and gas properties, that are not commonly controlled, based on the requirements of FASB ASC Topic 805, Business Combinations , which requires an acquiring entity to recognize the assets acquired and liabilities assumed at fair value under the acquisition method of accounting, provided such assets and liabilities qualify for acquisition accounting under the standard. The Company accounts for certain property acquisitions of proved developed oil and gas property as business combinations.
Deferred Offering Costs	Deferred Offering Costs The Company defers as other current assets the direct incremental costs of raising capital through equity offerings until such time as the offering is completed. At the time of the completion of the offering, the costs are charged against the capital raised. Should the offering be terminated, deferred offering costs are charged to operations during the period in which the offering is terminated. As of September 30, 2016, the Company's deferred offering costs totaled $243,726, with no such charges recorded as of December 31, 2015.
New Accounting Pronouncements	New Accounting Pronouncements Recently Issued From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board ("FASB") that are adopted by the Company as of the specified effective date. If not discussed, management believes that the impact of recently issued standards, which are not yet effective, will not have a material impact on the Company's financial statements upon adoption. In September 2015, the FASB issued update 2015-16 Business Combinations (Topic 805), which updated guidance that eliminates the requirement to restate prior periods to reflect adjustments made to provisional amounts recognized in a business combination. The updated guidance requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The standards update was effective prospectively for interim and annual periods beginning after December 15, 2015, with early adoption permitted. The Company adopted this standard update, as required, effective January 1, 2016, which did not have a material impact on its Condensed Financial Statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The standard requires lessees to recognize the assets and liabilities that arise from leases on the balance sheet. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. The new guidance is effective for annual and interim reporting periods beginning after December 15, 2018. The amendments should be applied at the beginning of the earliest period presented using a modified retrospective approach with earlier application permitted as of the beginning of an interim or annual reporting period. The Company is currently evaluating the impact of the new guidance on its financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to employee share-based payment accounting, which includes provisions intended to simplify various aspects related to how share-based compensation payments are accounted for and presented in the financial statements. This amendment will be effective prospectively for reporting periods beginning on or after December 15, 2016, and early adoption is permitted. The Company is currently assessing the impact of the ASU on the Company's financial statements. Recent Accounting Pronouncements Not Yet Adopted Various accounting standards and interpretations were issued in 2015 with effective dates subsequent to December 31, 2015. The Company has evaluated the recently issued accounting pronouncements that are effective in 2016 and believes that none of them will have a material effect on its financial position, results of operations or cash flows when adopted. Further, the Company is monitoring the joint standard-setting efforts of the Financial Accounting Standards Board. There are a large number of pending accounting standards that are being targeted for completion in 2016 and beyond, including, but not limited to, standards relating to revenue recognition, accounting for leases, fair value measurements, accounting for financial instruments, disclosure of loss contingencies and financial statement presentation. Because these pending standards have not yet been finalized, at this time the Company is not able to determine the potential future impact that these standards will have, if any, on its financial position, results of operations or cash flows.

ACQUISITIONS (Tables)

ACQUISITIONS (Tables)	9 Months Ended
	Sep. 30, 2016
ACQUISITIONS
Summary of Fair Value of Assets Acquired and Liabilities Assumed	September 30, Consideration: Cash $ ​ ​ ​ ​ ​ Total consideration $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value of Liabilities Assumed: Current liabilities $ Asset retirement obligations ​ ​ ​ ​ ​ Total consideration plus liabilities assumed $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value of Assets Acquired: Proved crude oil and gas properties $ Unproved crude oil and gas properties ​ ​ ​ ​ ​ Amount attributable to assets acquired $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Pro forma Financial Information	Three months ended September 30, 2016 Three months ended September 30, 2015 PetroShare Corp. PDC assets Combined PetroShare Corp. PDC assets Combined (unaudited) Revenue $ — $ $ $ — $ $ Net income (loss) $ ) $ ) $ ) $ ) $ $ ) Net income (loss) available to PetroShare common shareholders $ ) $ ) $ ) $ ) $ $ ) Pro forma income (loss) per common share: Basic and diluted $ ) $ ) $ ) $ ) $ $ ) Nine months ended September 30, 2016 Nine months ended September 30, 2015 PetroShare Corp. PDC assets Combined PetroShare Corp. PDC assets Combined (unaudited) Revenue $ — $ $ $ $ $ Net income (loss) $ ) $ ) $ ) $ ) $ $ ) Net income (loss) available to PetroShare common shareholders $ ) $ ) $ ) $ ) $ $ ) Pro forma income (loss) per common share: Basic and diluted $ ) $ ) $ ) $ ) $ $ )

CRUDE OIL AND NATURAL GAS PRO20

CRUDE OIL AND NATURAL GAS PROPERTIES (Tables)	9 Months Ended
	Sep. 30, 2016
CRUDE OIL AND NATURAL GAS PROPERTIES
Components of Aggregate Capitalized Costs	September 30, December 31, Proved $ $ Wells in progress Unproved Less: Accumulated depletion and depreciation ) ) ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Components of Costs Incurred in Crude Oil and Natural Gas Activities	Nine months ended 2016 2015 Exploration costs $ $ — Development costs Acquisition of properties: Proved — Unproved ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

ASSET RETIREMENT OBLIGATION (Ta

ASSET RETIREMENT OBLIGATION (Tables)	9 Months Ended
	Sep. 30, 2016
ASSET RETIREMENT OBLIGATION
Reconciliation of the Asset Retirement Obligation	September 30, December 31, Asset retirement obligation, beginning of year $ $ Liabilities settled ) — Liabilities incurred — Revisions in estimated liabilities — Accretion ​ ​ ​ ​ ​ ​ ​ ​ Asset retirement obligation, end of year $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

ACCOUNTS PAYABLE AND ACCRUED 22

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)	9 Months Ended
	Sep. 30, 2016
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Components of Accounts Payable and Accrued Liabilities	September 30, December 31, Trade payables and accrued liabilities $ $ Accrued interest payable Liabilities incurred in connection with acquisition of crude oil and natural gas properties — Crude oil and natural gas distributions payable ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​

STOCK-BASED COMPENSATION (Table

STOCK-BASED COMPENSATION (Tables)	9 Months Ended
	Sep. 30, 2016
STOCK-BASED COMPENSATION
Summary of Stock Option Activity	Number of Weighted Weighted Outstanding, December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Exercisable, December 31, 2015 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Granted Exercised — — — Forfeited — — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding, September 30, 2016 $ Exercisable, September 30, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​
Summary of Fair Value Assumptions	September 30, Expected option term—years 1.5 - 2.5 Weighted-average risk-free interest rate 1.22 - 1.31% Expected dividend yield 0 Weighted-average volatility 201 - 214% Forfeiture rate 0

BASIS OF PRESENTATION AND SUM24

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details)	Sep. 30, 2016USD ($)
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Deferred Offering Costs	$ 243,726

ACQUISITIONS (Detail)

ACQUISITIONS (Detail)	Aug. 24, 2016USD ($)	Apr. 19, 2016USD ($)	Apr. 14, 2016USD ($)aitem	Mar. 31, 2016USD ($)aitem	Mar. 10, 2016USD ($)	Sep. 30, 2016USD ($)$ / shares	Sep. 30, 2015USD ($)$ / shares	Sep. 30, 2016USD ($)$ / shares	Sep. 30, 2015USD ($)$ / shares	Jun. 30, 2016aitem	May 31, 2015a
Acquisitions
Gross purchase price								$ 2,260,890
Purchase price								1,138,893	$ 806,416
Pro forma information
Revenue									1,328
Net income (loss)						$ (1,117,608)	$ (298,251)	(2,758,615)	(755,016)
Net income (loss) available to PetroShare common shareholders						$ (1,117,608)	$ (298,251)	$ (2,758,615)	$ (755,016)
Pro forma income (loss) per common share: Basic and diluted (dollars per share) | $ / shares						$ (0.05)	$ (0.02)	$ (0.13)	$ (0.04)
Todd Creek Farms | Oil and Gas Leases
Acquisitions
Acres, net | a			378	320
Purchase price			$ 576,112	$ 1,180,547	$ 184,360
Working interest in well (as a percent)				100.00%
Number of wells under Leases | item				1
Todd Creek Farms | Oil and Gas Leases | Maximum
Acquisitions
Number of wells, proposed to be drilled | item			14
Todd Creek Farms | Oil and Gas Leases | Providence Energy Operators, LLC | Participation Agreement
Acquisitions
Ownership interest acquired by the option holder (as a percent)	50.00%	50.00%
Cash received from option exercised	$ 288,056	$ 590,274
Adams County, Colorado | Providence Energy Operators, LLC | Participation Agreement
Acquisitions
Acres, gross | a											23,100
Adams County, Colorado | PDC Assets
Acquisitions
Acres, gross | a										3,652
Acres, net | a										1,410
Number of producing wells | item										35
Consideration:
Cash						$ 2,260,890		$ 2,260,890
Total consideration						2,260,890		2,260,890
Fair Value of Liabilities Assumed:
Current liabilities						93,225		93,225
Asset retirement obligations						542,611		542,611
Total consideration plus liabilities assumed						2,896,726		2,896,726
Fair Value of Assets Acquired:
Proved crude oil and gas properties						2,473,082		2,473,082
Unproved crude oil and gas properties						423,644		423,644
Amount attributable to assets acquired						2,896,726		2,896,726
Pro forma information
Revenue						87,157	$ 86,909	215,444	$ 287,421
Net income (loss)						(34,437)	141	(53,305)	31,182
Net income (loss) available to PetroShare common shareholders						$ (34,437)	$ 141	$ (53,305)	$ 31,182
Pro forma income (loss) per common share: Basic and diluted (dollars per share) | $ / shares						$ 0	$ 0	$ 0	$ 0
Adams County, Colorado | PDC Assets | Participation Agreement
Acquisitions
Purchase price								$ 2,260,890
Adams County, Colorado | PDC Assets | Providence Energy Operators, LLC | Participation Agreement
Acquisitions
Ownership interest acquired by the option holder (as a percent)										50.00%
Adams County, Colorado | PDC Assets | Pro Forma
Pro forma information
Revenue						$ 87,157	$ 86,909	215,444	$ 288,749
Net income (loss)						(1,152,045)	(298,110)	(2,811,920)	(723,834)
Net income (loss) available to PetroShare common shareholders						$ (1,152,045)	$ (298,110)	$ (2,811,920)	$ (723,834)
Pro forma income (loss) per common share: Basic and diluted (dollars per share) | $ / shares						$ (0.05)	$ (0.02)	$ (0.13)	$ (0.04)

CRUDE OIL AND NATURAL GAS PRO26

CRUDE OIL AND NATURAL GAS PROPERTIES - Aggregate Capitalized Costs (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
CRUDE OIL AND NATURAL GAS PROPERTIES
Proved	$ 4,998,367	$ 724,058
Wells in progress	2,114,234	40,505
Unproved	455,480	715,594
Less: Accumulated depletion and depreciation	(747,582)	(724,058)
Crude oil and natural gas properties, net	$ 6,820,499	$ 756,099

CRUDE OIL AND NATURAL GAS PRO27

CRUDE OIL AND NATURAL GAS PROPERTIES - Costs Incurred in Crude Oil and Natural Gas Activities (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
CRUDE OIL AND NATURAL GAS PROPERTIES
Exploration costs			$ 17,440
Development costs			2,127,869	$ 132,055
Acquisition of properties:
Proved			2,811,546
Unproved			633,264	518,601
Total			5,590,119	650,656
Depletion of oil and gas properties	$ 23,525	$ 0	$ 23,525	$ 9,898

ASSET RETIREMENT OBLIGATION (De

ASSET RETIREMENT OBLIGATION (Details) - USD ($)	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015
ASSET RETIREMENT OBLIGATION
Assumed inflation rate (as a percent)			2.00%
Average estimated asset life			11 years 9 months 18 days
Credit adjusted risk free interest rate (as a percent)			9.48%
Activity related to asset retirement obligation
Asset retirement obligation, beginning of year			$ 34,776	$ 31,715	$ 31,715
Liabilities settled			(5,653)
Liabilities incurred			542,611
Revisions in estimated liabilities			5,165
Accretion	$ 13,931	$ 765	15,737	$ 2,296	3,061
Asset retirement obligation, end of year	$ 592,636		$ 592,636		$ 34,776

LINE OF CREDIT (Details)

LINE OF CREDIT (Details) - USD ($)	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Dec. 31, 2015	May 13, 2015
Line of credit outstanding balance	$ 5,000,000		$ 1,062,185
Accrued interest	201,655		$ 48,602
Revolving line of credit amount borrowed to fund portion of the purchase crude oil and natural gas properties including 320 net acres in the Todd Creek Farms prospect	3,937,815	$ 1,890,000
Revolving Credit Facility | Initial Line Of Credit | Providence Energy Operators, LLC
Borrowing capacity of the revolving line of credit				$ 5,000,000
Line of credit outstanding balance	5,000,000
Accrued interest	201,655
Revolving line of credit amount borrowed to fund portion of the purchase crude oil and natural gas properties including 320 net acres in the Todd Creek Farms prospect	$ 3,937,815

ACCOUNTS PAYABLE AND ACCRUED 30

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($)	Sep. 30, 2016	Dec. 31, 2015
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Trade payables and accrued liabilities	$ 1,759,074	$ 263,988
Accrued interest payable	201,655	48,602
Liabilities incurred in connection with acquisition of crude oil and natural gas properties	290,078
Crude oil and natural gas distributions payable	120,691	949
Total current liabilities	$ 2,371,498	$ 313,539

SHAREHOLDERS' EQUITY (Details)

SHAREHOLDERS' EQUITY (Details)	Aug. 30, 2016$ / sharesshares	Aug. 22, 2016$ / sharesshares	Jul. 22, 2016$ / sharesshares	Jul. 05, 2016$ / sharesshares	May 04, 2016director$ / sharesshares	Apr. 08, 2016$ / sharesshares	Jan. 31, 2016item$ / sharesshares	Sep. 30, 2016$ / sharesshares	Aug. 12, 2016USD ($)	Dec. 31, 2015$ / sharesshares
Common Stock
Common stock shares authorized								100,000,000		100,000,000
Common stock par value (in dollars per share) | $ / shares								$ 0.001		$ 0.001
Common stock shares issued								21,919,857		21,633,191
Common stock shares outstanding								21,919,857		21,633,191
Common stock authorized value | $									$ 27,000,000
Common Stock | Directors
Common Stock
Common stock number of shares sold or issued				25,000	50,000
Common stock price (in dollars per share) | $ / shares				$ 1.60	$ 1.01
Number of directors issued stock | director					2
Common Stock | Private Placement
Common Stock
Common stock number of shares sold or issued							95,000
Common stock price (in dollars per share) | $ / shares							$ 1
Number of accredited investors in the transaction | item							1
Common Stock | Investor Relations Agreement
Common Stock
Common stock number of shares sold or issued	50,000	8,333	8,333			50,000
Common stock price (in dollars per share) | $ / shares	$ 1.44	$ 1.40	$ 1.65			$ 0.73
Warrants
Warrants
Warrants to purchase common stock								0
Warrants exercisable expire date								Nov. 12, 2020
Options to purchase common stock exercise price (in dollars per share) | $ / shares								$ 1.25
Warrants | Maximum
Warrants
Warrants to purchase common stock								255,600

STOCK-BASED COMPENSATION - Acti

STOCK-BASED COMPENSATION - Activity Table (Details) - $ / shares	9 Months Ended	12 Months Ended
	Sep. 30, 2016	Dec. 31, 2015	Aug. 18, 2016	Aug. 17, 2016
Number of Shares
Shares reserved for issuance			10,000,000	5,000,000
Options granted to employees, directors and consultants	2,275,000
Outstanding Number of Options, Beginning balance (in shares)	2,275,000
Options Granted (in shares)	2,275,000
Outstanding Number of Options, Ending balance (in shares)	4,550,000	2,275,000
Exercisable, End of period (in shares)	2,625,000	2,200,000
Weighted Average Exercise Price
Outstanding, Beginning, Weighted-Average Exercise Price (in dollars per share)	$ 0.33
Options granted (in dollars per share)	1.13
Outstanding, Ending, Weighted-Average Exercise Price (in dollars per share)	0.74	$ 0.33
Exercisable Weighted Average Exercise Price (in dollars per share)	$ 0.43	$ 0.30
Weighted Remaining Contractual Term (Years)
Contractual Life of Outstanding Options	6 years 7 months 28 days	6 years 6 months
Contractual Life of Outstanding Options, Granted	6 years 5 months 16 days
Exercisable Average Remaining Contractual Life in Years	6 years 1 month 2 days	6 years 8 months 19 days

STOCK-BASED COMPENSATION - Ac33

STOCK-BASED COMPENSATION - Activity Narrative (Details)

Jul. 05, 2018shares

Apr. 15, 2018shares

Aug. 19, 2017shares

Jul. 05, 2017shares

Apr. 15, 2017shares

Feb. 19, 2017shares

Jan. 01, 2017shares

Aug. 19, 2016$ / sharesshares

Jul. 05, 2016director$ / sharesshares

May 04, 2016director$ / sharesshares

Apr. 12, 2016$ / sharesshares

Jan. 28, 2016$ / sharesshares

Sep. 30, 2016$ / sharesshares

STOCK-BASED COMPENSATION

Options issued

2,275,000

Exercise Price (in dollars per share) | $ / shares

$ 1.13

Chief Operating Officer

STOCK-BASED COMPENSATION

Options issued

875,000

Exercise Price (in dollars per share) | $ / shares

$ 1

Chief Operating Officer | Tranche One

STOCK-BASED COMPENSATION

Vesting

125,000

Chief Operating Officer | Tranche Two | Forecast

STOCK-BASED COMPENSATION

Vesting

750,000

Vice President of Land Operations

STOCK-BASED COMPENSATION

Options issued

250,000

Exercise Price (in dollars per share) | $ / shares

$ 0.80

Vice President of Land Operations | Tranche One

STOCK-BASED COMPENSATION

Vesting

50,000

Vice President of Land Operations | Tranche Two | Forecast

STOCK-BASED COMPENSATION

Vesting

100,000

Vice President of Land Operations | Tranche Three | Forecast

STOCK-BASED COMPENSATION

Vesting

100,000

Directors

STOCK-BASED COMPENSATION

Options issued

25,000

50,000

Exercise Price (in dollars per share) | $ / shares

$ 1.60

$ 1.10

Number of directors appointed | director

1

2

Senior lease analyst

STOCK-BASED COMPENSATION

Options issued

25,000

Exercise Price (in dollars per share) | $ / shares

$ 1.60

Senior lease analyst | Tranche One | Forecast

STOCK-BASED COMPENSATION

Vesting

12,500

Senior lease analyst | Tranche Two | Forecast

STOCK-BASED COMPENSATION

Vesting

12,500

Investor relations consultant

STOCK-BASED COMPENSATION

Options issued

800,000

Exercise Price (in dollars per share) | $ / shares

$ 1.40

Investor relations consultant | Tranche One | Forecast

STOCK-BASED COMPENSATION

Vesting

100,000

Investor relations consultant | Tranche Two | Employment agreement

STOCK-BASED COMPENSATION

Vesting

300,000

Investor relations consultant | Tranche Two | Forecast

STOCK-BASED COMPENSATION

Vesting

100,000

Investor relations consultant | Tranche Three | Employment agreement

STOCK-BASED COMPENSATION

Vesting

300,000

STOCK-BASED COMPENSATION - Assu

STOCK-BASED COMPENSATION - Assumptions (Details) - Options - USD ($)	3 Months Ended	9 Months Ended
	Sep. 30, 2016	Sep. 30, 2016
Pricing model assumptions
Expected dividend yield	$ 0
Weighted-average risk-free interest rate, minimum		1.22%
Weighted-average risk-free interest rate, maximum		1.31%
Dividend yield (as a percent)		0.00%
Weighted-average volatility, minimum (as a percent)		201.00%
Weighted-average volatility (as a percent), maximum		214.00%
Forfeiture rate (as a percent)		0.00%
Minimum
Pricing model assumptions
Expected option term - years		1 year 6 months
Maximum
Pricing model assumptions
Expected option term - years		2 years 6 months

STOCK-BASED COMPENSATION - Expe

STOCK-BASED COMPENSATION - Expense and Unvested (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2016	Sep. 30, 2015	Sep. 30, 2016	Sep. 30, 2015
STOCK-BASED COMPENSATION
Share based compensation	$ 378,870	$ 80,685	$ 1,093,854	$ 80,685
Unvested share based compensation	$ 1,124,654		$ 1,124,654

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details) - Providence Energy Operators, LLC	1 Months Ended
	May 31, 2015USD ($)ami
Related Party Transactions
Related Party Transaction, Ownership Percentage	13.70%
Revolving Credit Facility | Initial Line Of Credit
Related Party Transactions
Line of credit borrowing capacity | $	$ 5,000,000
Participation Agreement | Adams County, Colorado
Related Party Transactions
Participation Agreement acquisition interest in any oil and gas development acres in area of mutual interest (as a percent)	50.00%
Gross Acres | a	23,100
Additional border area around AMI (in miles) | mi	1

COMMITMENTS AND CONTINGENCIES (

COMMITMENTS AND CONTINGENCIES (Details)	Aug. 30, 2016shares	Jul. 05, 2016USD ($)director$ / sharesshares	Jul. 04, 2016director	Jun. 15, 2016USD ($)shares	May 04, 2016USD ($)director$ / sharesshares	May 03, 2016director	Sep. 30, 2016$ / shares
Commitments and Contingencies
Exercise Price (in dollars per share) | $ / shares							$ 1.13
Number of Board of Director members | director		6	5		5	3
Consulting services agreement monthly fee | $				$ 6,000
Consulting services agreement total stock consideration (in shares)				100,000
Consulting services agreement monthly stock allotment (in shares)				8,333
Consulting services agreement number of shares issued				16,666
Consulting services agreement termination stock issued (in shares)	50,000
Mr. Scott Chandler, Director
Commitments and Contingencies
Quarterly Director fee | $					$ 3,000
Mr. Scott Chandler, Director | Common Stock
Commitments and Contingencies
Exercise Price (in dollars per share) | $ / shares					$ 1.10
Number of shares granted					25,000
Number of options granted					25,000
Mr. James Sinclair, Director
Commitments and Contingencies
Quarterly Director fee | $					$ 3,000
Mr. James Sinclair, Director | Common Stock
Commitments and Contingencies
Exercise Price (in dollars per share) | $ / shares					$ 1.10
Number of shares granted					25,000
Number of options granted					25,000
Mr. Douglas Harris, Director
Commitments and Contingencies
Quarterly Director fee | $		$ 3,000
Mr. Douglas Harris, Director | Common Stock
Commitments and Contingencies
Exercise Price (in dollars per share) | $ / shares		$ 1.60
Number of shares granted		25,000
Number of options granted		25,000

SUBSEQUENT EVENTS (Details)

SUBSEQUENT EVENTS (Details)	Nov. 01, 2016USD ($)a	Oct. 14, 2016USD ($)	Oct. 13, 2016USD ($)a	Apr. 14, 2016USD ($)a	Mar. 31, 2016USD ($)a	Mar. 10, 2016USD ($)	Sep. 30, 2016USD ($)	Sep. 30, 2015USD ($)	Nov. 14, 2016USD ($)	Dec. 31, 2015USD ($)
SUBSEQUENT EVENTS
Line of credit outstanding balance							$ 5,000,000			$ 1,062,185
Accrued interest							201,655			$ 48,602
Purchase price							1,138,893	$ 806,416
Net proceeds from issuance of common stock							$ 95,000	$ 14,575
Oil and Gas Leases | Todd Creek Farms
SUBSEQUENT EVENTS
Working interest in well (as a percent)					100.00%
Acres, net | a				378	320
Purchase price				$ 576,112	$ 1,180,547	$ 184,360
Subsequent Event | Oil and Gas Leases
SUBSEQUENT EVENTS
Payments to acquire royalty interests in oil and gas leases		$ 1,900,000
Subsequent Event | Oil and Gas Leases | Todd Creek Farms
SUBSEQUENT EVENTS
Acres, gross | a	370
Acres, net | a	152
Purchase price	$ 633,936
Subsequent Event | Oil and Gas Leases | Todd Creek Farms | Participation Agreement
SUBSEQUENT EVENTS
Ownership interest acquired by the option holder (as a percent)									50.00%
Subsequent Event | Providence Energy Partners III, LP | Oil and Gas Leases | Participation Agreement
SUBSEQUENT EVENTS
Ownership interest acquired by the option holder (as a percent)		50.00%
Cash received from option exercised		$ 950,000
Subsequent Event | Supplemental Line Of Credit | Providence Energy Partners III, LP | Oil and Gas Leases
SUBSEQUENT EVENTS
Percentage of expenses to be reimbursed			10.00%
Subsequent Event | Supplemental Line Of Credit | Providence Energy Partners III, LP | Oil and Gas Leases | Wattenberg Field
SUBSEQUENT EVENTS
Working interest in well (as a percent)			10.00%
Acres, gross | a			378
Acres, net | a			170
Subsequent Event | Revolving Credit Facility | Supplemental Line Of Credit | Providence Energy Partners III, LP
SUBSEQUENT EVENTS
Borrowing capacity of the revolving line of credit			$ 10,000,000
Line of credit interest rate (as a percent)			8.00%
Line of credit outstanding balance									$ 1,870,000
Accrued interest									$ 12,000