PetroShare (PRHRQ) 10-Q 15 May 19 2019 Q1 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	3 Months Ended
	Mar. 31, 2019	May 15, 2019
Document And Entity Information [Abstract]
Entity Registrant Name	PetroShare Corp.
Entity Central Index Key	0001568079
Document Type	10-Q
Document Period End Date	Mar. 31, 2019
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Non-accelerated Filer
Entity Emerging Growth Company	true
Entity Ex Transition Period	true
Entity Small Business	true
Entity Common Stock, Shares Outstanding		28,077,332
Document Fiscal Period Focus	Q1
Document Fiscal Year Focus	2019

Condensed Consolidated Balance

Condensed Consolidated Balance Sheets - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Current assets:
Cash	$ 2,309,517	$ 2,636,943
Accounts receivable - joint interest billing	580,586	495,911
Accounts receivable - joint interest billing - related party	1,101,501	1,158,213
Accounts receivable - crude oil, natural gas and NGL sales	5,431,408	11,659,479
Prepaid expenses and other assets	295,750	178,259
Assets held for sale, net of costs to sell	0	16,090,898
Total current assets	9,718,762	32,219,703
Crude oil and natural gas properties - using successful efforts method:
Proved crude oil and natural gas properties	41,975,719	41,017,944
Unproved crude oil and natural gas properties	1,530,114	2,055,752
Wells in progress	222,587	1,194,114
Less: accumulated depletion, depreciation and amortization	(15,524,353)	(14,395,458)
Crude oil and natural gas properties, net	28,204,067	29,872,352
Property, plant and equipment, net	102,790	115,350
Other assets	542,591	357,070
TOTAL ASSETS	38,568,210	62,564,475
Current liabilities:
Accounts payable and accrued liabilities	16,896,928	24,385,417
Accounts payable and accrued liabilities - related party	2,137,473	7,624,877
Oil and gas revenue distributions payable	2,331,576	2,501,095
Asset retirement obligation	809,580	843,796
Secured credit facility - related party, net	14,299,436	20,182,264
Convertible notes payable, net	9,358,100	9,358,100
Derivative liabilities – Secured credit facility	165,088	241,800
Total current liabilities	45,998,181	65,137,349
Long-term liabilities
Other long-term liabilities	1,062,189	448,465
Asset retirement obligation	1,250,237	1,246,151
Total liabilities	48,310,607	66,831,965
Shareholders' equity:
Preferred stock, $0.01 par value, 10,000,000 shares authorized, none issued or outstanding	0	0
Common stock, $0.001 par value, 200,000,000 shares authorized, 28,077,332 and 28,089,765 shares issued and outstanding, respectively	28,077	28,090
Additional paid-in capital	33,839,734	33,710,588
Accumulated deficit	(43,610,208)	(38,006,168)
Total Shareholders’ (Deficit)	(9,742,397)	(4,267,490)
TOTAL LIABILITIES & SHAREHOLDERS’ (DEFICIT)	$ 38,568,210	$ 62,564,475

Condensed Consolidated Balanc_2

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Preferred stock par value	$ .01	$ .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	$ .001	$ 0.001
Common stock shares authorized	100,000,000	100,000,000
Common stock shares issued	28,077,332	28,089,765
Common stock shares outstanding	28,077,332	28,089,765

Condensed Consolidated Statemen

Condensed Consolidated Statements of Operations - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
REVENUE:
Total revenue	$ 4,971,530	$ 2,068,932
COSTS AND EXPENSES:
Lease operating expense	473,427	305,809
Production taxes, gathering and marketing	902,915	230,919
Depletion, depreciation and amortization	1,203,239	741,954
Loss on sale and abandonment of properties	822,290	0
Gain on settlement of asset retirement obligation	0	(55,067)
General and administrative expense	2,086,612	597,012
Total costs and expenses	5,488,483	1,820,627
Operating (loss) income	(516,953)	248,305
OTHER INCOME (EXPENSE):
Change in fair value - derivative liability	76,712	89,887
Interest expense	(5,162,222)	(1,826,733)
Other income (expense)	(1,577)	798
Total other income (expense)	(5,087,087)	(1,736,048)
Net (loss)	$ (5,604,040)	$ (1,487,743)
Net (loss) per share:
Basic and diluted (in dollars per share)	$ (0.20)	$ (0.05)
Weighted average number of shares outstanding:
Basic and diluted (in shares)	28,077,470	27,775,505
Crude Oil [Member]
REVENUE:
Total revenue	$ 4,178,946	$ 1,425,233
Natural Gas Excluding Natural Gas Liquids [Member]
REVENUE:
Total revenue	617,138	394,411
Natural Gas Liquids [Member]
REVENUE:
Total revenue	$ 175,446	$ 249,288

Condensed Consolidated Statem_2

Condensed Consolidated Statements of Changes in Shareholders’ (Deficit) - USD ($)	Common Stock [Member]	Additional Paid In Capital [Member]	Retained Earnings [Member]	Total
Beginning Balance, Shares at Dec. 31, 2017	27,718,802
Beginning Balance, Amount at Dec. 31, 2017	$ 27,719	$ 28,553,736	$ (20,698,421)	$ 7,833,034
Issuance of common stock in connection with conversion of convertible notes payable, Shares	135,963
Issuance of common stock in connection with conversion of convertible notes payable, Amount	$ 136	203,811		203,947
Issuance of common shares as compensation, Shares	145,000
Issuance of common shares as compensation, Amount	$ 145	162,105		162,250
Issuance of common stock for lease acquisition, Amount				0
Issuance of restricted shares, Shares	90,000
Issuance of restricted shares, Amount	$ 90	101,018		101,108
Beneficial conversion feature on convertible notes payable		2,272,775		2,272,775
Warrants issued		1,521,451		1,521,451
Stock-based compensation		895,692		895,692
Net (loss)			(17,307,747)	(17,307,747)
Ending Balance, Shares at Dec. 31, 2018	28,089,765
Ending Balance, Amount at Dec. 31, 2018	$ 28,090	33,710,588	(38,006,168)	(4,267,490)
Issuance of common stock in connection with conversion of convertible notes payable, Amount				0
Restricted shares surrendered to satisfy tax withholding requirements, Shares	(12,433)
Restricted shares surrendered to satisfy tax withholding requirements, Amount	$ (13)	13
Stock-based compensation		129,133		129,133
Net (loss)			(5,604,040)	(5,604,040)
Ending Balance, Shares at Mar. 31, 2019	28,077,332
Ending Balance, Amount at Mar. 31, 2019	$ 28,077	$ 33,839,734	$ (43,610,208)	$ (9,742,397)

Condensed Consolidated Statem_3

Condensed Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net (loss)	$ (5,604,040)	$ (1,487,743)
Adjustments to reconcile net (loss) to net cash provided by (used in) operating activities:
Depletion, depreciation, and amortization	1,141,455	713,598
Amortize lease assets and obligation	(6,154)	(5,068)
Accretion of asset retirement obligation	61,784	28,356
Accretion of debt discounts	4,817,734	1,497,192
Loss on sale and abandonment of properties	822,290	0
Share-based compensation	129,133	287,589
Change in fair value - derivative liability	(76,712)	(89,887)
Bad debt expense	7,530	0
Changes in operating assets and liabilities:
Accounts receivable - joint interest billing	44,355	(316,377)
Accounts receivable - joint interest billing - related party	(33,371)	(218,961)
Accounts receivable - crude oil, natural gas and NGL sales	(909,567)	3,316
Prepaid expenses and other assets	400,684	(46,543)
Accounts payable and accrued liabilities	2,147,827	(596,378)
Oil and gas revenue distributions payable	(169,519)	92,750
Accounts payable and accrued liabilities - related party	(916,903)	74,184
Asset retirement obligations	(81,408)	(55,067)
Drilling advances - related party	0	(680,248)
Net cash (used in) provided by operating activities	1,775,118	(799,287)
Cash flows from investing activities:
Development of crude oil and natural gas properties	(2,042,358)	(1,559,997)
Acquisitions of crude oil and natural gas properties	(60,186)	(161,682)
Net cash (used in) investing activities	(2,102,544)	(1,721,679)
Cash flows from financing activities:
Borrowings under Secured Credit Facility	0	11,163,192
Net cash provided by financing activities	0	11,163,192
Cash:
Net (decrease) increase in cash	(327,426)	8,642,226
Cash, beginning of period	2,636,943	713,924
Cash, end of period	2,309,517	9,356,150
Supplemental cash flow disclosure:
Cash paid for interest, net of amounts capitalized	349,873	1,393,312
Non-cash investing and financing activities:
Accrued development costs - crude oil and natural gas properties	(2,242,719)	6,070,025
Asset retirement obligation - additions	0	612
Change in working interests – crude oil and natural gas properties	(430,632)	0
Recognize right of use benefits and obligations for leased assets	205,447	0
Exchange proceeds from sale of assets for obligations to secured lender – related party	15,538,766	0
Issuance of common stock warrants in connection with Secured Credit Facility	0	1,603,432
Issuance of common stock in connection with conversion of notes payable and accrued interest	0	203,944
Lender fees - Secured credit facility	0	1,250,000
Beneficial conversion feature in connection with private placements	0	1,365,207
Embedded discount features - Secured credit facility	0	530,255
Initial line of credit - paid through Secured credit facility	0	5,000,000
Supplemental line of credit - paid through Secured credit facility	0	1,500,000
Accrued interest - paid through Secured credit facility	$ 0	$ 1,086,808

ORGANIZATION AND NATURE OF BUSI

ORGANIZATION AND NATURE OF BUSINESS	3 Months Ended
	Mar. 31, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]
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, the Company has focused on financing activities and the acquisition, exploration and development of crude oil and natural gas prospects and is currently focused in the Denver-Julesburg Basin, or DJ Basin, in northeast Colorado.

BASIS OF PRESENTATION AND SUMMA

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION	3 Months Ended
	Mar. 31, 2019
Accounting Policies [Abstract]
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION	Basis of Presentation The interim condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included are adequate to make the information presented not misleading. In management’s opinion, the Condensed Consolidated Balance Sheet as of December 31, 2018, which has been derived from the audited financial statements, and the unaudited Condensed Consolidated Balance Sheet as of March 31, 2019, the unaudited Condensed Consolidated Statements of Operations, Changes in Shareholders’ (Deficit), and Cash Flows for the three months ended March 31, 2019 and 2018, contained herein, reflect all adjustments, consisting solely of normal recurring items, which are necessary for the fair presentation of the Company’s financial position, results of operations and cash flows on a basis consistent with that of the Company’s prior audited consolidated financial statements. However, the results of operations for the interim periods may not be indicative of results to be expected for the full fiscal year. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018. Unless otherwise noted, there have been no material changes to the footnotes in the financial statements from the audited financial statements contained in the Company’s Form 10-K. Principles of Consolidation The consolidated financial statements include the accounts and balances of the Company and its wholly-owned subsidiary, CFW Resources, LLC, a Colorado limited liability company. The Company’s undivided interests in joint operating ventures are proportionately consolidated. Use of Estimates The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, as well as the disclosure of contingent assets and liabilities. Estimated quantities of crude oil, natural gas and natural gas liquids are the most significant of the Company’s estimates. All reserve data used in the preparation of these condensed consolidated financial statements are based on estimates. Reservoir engineering is a subjective process of estimating underground accumulations of crude oil, natural gas and natural gas liquids. There are numerous uncertainties inherent in estimating quantities of proved, probable and possible reserves. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. As a result, reserve estimates may be different from the quantities of crude oil, natural gas and natural gas liquids that are ultimately recovered. Loss Per Share Basic and diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The Company excluded potentially dilutive securities as the effect of their inclusion would be anti-dilutive. Revenue Recognition Oil sales Under the Company’s oil sales contracts, the Company sells oil production at the point of delivery and collects an agreed upon index price, net of pricing differentials. The Company recognizes revenue when control transfers to the purchaser at the point of delivery at the net price received. Payment is generally received from the customer in the month following delivery. Natural gas and natural gas liquids Under the Company’s natural gas sales processing contracts, the Company delivers commingled natural gas and natural gas liquids (NGLs) to a midstream processing entity. The midstream processing entity gathers and processes the various hydrocarbons and remits proceeds to the Company for the resulting sale. Under these processing agreements, the Company recognizes revenue when control transfers to the purchaser at the point of delivery. Payment is generally received from the customer one to two months following delivery. Revenue is recognized net of gathering and processing fees. Disaggregation of Revenue. Operating revenues 2019 2018 Crude oil sales $ 4,178,946 $ 1,425,233 Natural gas sales 617,138 394,411 NGL sales 175,446 249,288 Total Operating Revenues $ 4,971,530 $ 2,068,932 Related Party Transactions The Company engages in a number of transactions with Providence Energy Operators, LLC (“PEO”) and its affiliates. PEO is the beneficial owner of 11.6% of our outstanding common stock. We have a participation agreement that grants PEO the option to acquire up to a 50% interest and participate in any oil and gas development on acreage we obtain within an area of mutual interest (AMI) near our Southern Core area. To date, PEO has exercised its option under the participation agreement or otherwise participated or agreed to participate in all acreage acquisitions and drilling operations. As discussed elsewhere in this report, an affiliate of PEO is a major participant in our principal lender group through the Secured Credit Facility. The Board of Directors is required to approve all significant related party transactions. Recently Adopted Accounting Pronouncements: In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2016-02, Leases (Topic 842), followed by other related ASUs that provided targeted improvements and additional practical expedient options (collectively “ASC 842”). ASC 842 requires lessees to recognize right-of-use (“ROU”) assets and lease payment liabilities on the balance sheet for leases representing the Company’s right to use the underlying assets over the lease term. Each lease that is recognized on the balance sheet will be classified as either finance or operating, with such classification affecting the pattern and classification of expense recognition in the statements of operations and presentation within the statements of cash flows. The Company adopted ASC 842 on January 1, 2019 using the modified retrospective method. The Company elected as part of its adoption to also use the optional transition methodology whereby previously reported periods continue to be reported in accordance with historical accounting guidance for leases that were in effect for those prior periods. Policy elections and practical expedients that the Company has implemented as part of adopting ASC 842 include (a) excluding from the balance sheet leases with terms that are less than or equal to one year, (b) for all existing asset classes that contain both lease and non-lease components, combining these components together and accounting for them as a single lease component, (c) the package of practical expedients, which among other things, allows the Company to avoid reassessing contracts that commenced prior to adoption that were properly evaluated under legacy GAAP, and (d) excluding land easements, which were not accounted for under the previous leasing guidance, that existed or expired before adoption of ASC 842. The scope of ASC 842 does not apply to leases used in the exploration or use of minerals, oil, and natural gas. The Company's adoption of ASC 842 resulted in an increase in other assets, accounts payable and accrued liabilities, and other liabilities line items on the accompanying condensed consolidated balance sheets as a result of the additional ROU assets and related lease liabilities. Upon adoption on January 1, 2019, the Company recognized approximately $0.2 million in ROU assets and liabilities for its operating leases. There was no cumulative effect to accumulated deficit upon the adoption of this guidance. See Note 12 for the new disclosures required by ASC 842.

GOING CONCERN

GOING CONCERN	3 Months Ended
	Mar. 31, 2019
GOING CONCERN
GOING CONCERN	In the Report of the Independent Registered Public Accounting Firm as of and for the year ended December 31, 2018, the auditor included an explanatory paragraph concerning the Company’s ability to continue as a going concern. Pursuant to Accounting Standards Update (“ASU”) 2014-15, “Presentation of Financial Statements – Going Concern,” the Company has assessed its ability to continue as a going concern for a period of one year from the date of the issuance of these financial statements. Substantial doubt about an entity’s ability to continue as a going concern exists when relevant conditions and events, considered in the aggregate, indicate that it is probable that the entity may be unable to meet its obligations as they become due within one year from the financial statement issuance date. The uncertainty regarding the Company’s ability to continue as a going concern is based on its substantial near-term liabilities, continuing net losses and negative working capital, among other things which existed as of March 31, 2019. At March 31, 2019, the Company had a cash balance of approximately $2.3 million, other current assets of approximately $7.4 million and current liabilities of $46 million, resulting in negative working capital of $36.3 million. The Company had a net loss, including non-cash charges, of $5.6 million for the three months ended March 31, 2019. At March 31, 2019 the Company was in default on the outstanding principal balances of $9.4 million under both issues of convertible notes. The Company is also in default under the terms of the Secured Credit Facility (Note 6) and as a result, $14.3 million of outstanding principal is due. Some accounts payable obligations to vendors are past the due date and some of those vendors have filed liens or indicated an intent to file liens on certain of the Company’s assets and/or commenced legal action to foreclose those liens. The Company has been unable to access the debt or equity markets to obtain any additional funding during 2019. Management has evaluated these conditions and determined that increased revenues from the Company’s operated properties may allow the Company to meet its obligations. However, to continue to execute its business plan, and meet its debt obligations, additional working capital will be required. As part of the analysis, the Company considered selective participation in certain operated drilling programs based on availability of working capital and the timing of production-related cash flows. There is uncertainty that management’s plans, if executed, will allow the Company to meet all of its obligations. As a result, there is substantial doubt about the Company’s ability to continue as a going concern for one year after the date the condensed consolidated financial statements are issued. The Company’s consolidated financial statements do not include any adjustments related to the realization of the carrying value of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS	3 Months Ended
	Mar. 31, 2019
Fair Value Disclosures [Abstract]
FAIR VALUE MEASUREMENTS	ASC Topic 820, “Fair Value Measurements and Disclosures”, establishes a hierarchy for inputs used in measuring fair value for financial assets and liabilities that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions of what market participants would use in pricing the asset or liability based on the best information available in the circumstances. The hierarchy is broken down into three levels based on the reliability of the inputs as follows: ● Level 1: Quoted prices available in active markets for identical assets or liabilities; ● Level 2: Quoted prices in active markets for similar assets and liabilities that are observable for the asset or liability; ● Level 3: Unobservable pricing inputs that are generally less observable from objective sources, such as discounted cash or valuation models. The financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels. As disclosed in Note 6, the Secured Credit Facility contained embedded elements that required identification and quantification of fair value. The estimated fair values as of February 1, 2018, the closing date of the facility, are presented in Note 6. As of March 31, 2019, the estimated fair values are presented in the following table: March 31, 2019 Registration rights penalty derivative liability $ 93,024 Share purchase option derivative liability 72,064 Total $ 165,088 The following table presents a roll-forward of the fair value of the derivative liabilities associated with the Company’s Secured Credit Facility, categorized as Level 3: Three Months Ended March 31, 2019 Year Ended December 31, 2018 Beginning balance $ 241,800 $ — Additions — 1,670,017 Total (gains) or losses (realized / unrealized) Included in operations (76,712 ) (1,428,217 ) Included in other comprehensive income — — Ending Balance $ 165,088 $ 241,800 Estimated Fair Value of Financial Assets and Liabilities Not Measured at Fair Value The Company’s financial instruments consist primarily of cash, accounts receivable, accounts payable, and credit facility borrowings. The carrying values of cash, accounts receivable and accounts payable are representative of their fair values due to their short-term maturities. The carrying amount of the Company’s Secured Credit Facility approximates fair value as it bears interest at variable rates over the term of the loan.

CRUDE OIL AND NATURAL GAS PROPE

CRUDE OIL AND NATURAL GAS PROPERTIES	3 Months Ended
	Mar. 31, 2019
Oil and Gas Property [Abstract]
CRUDE OIL AND NATURAL GAS PROPERTIES	The Company’s oil and gas properties are located entirely within the State of Colorado in the United States. The net capitalized costs related to the Company’s crude oil and natural gas activities were as follows: March 31, December 31, 2019 2018 Proved oil and gas properties $ 41,975,719 $ 41,017,944 Unproved oil and gas properties (1) 1,530,114 2,055,752 Wells in progress (2) 222,587 1,194,114 Total capitalized costs 43,728,420 44,267,810 Accumulated DDA and impairment (3) (15,524,353 ) (14,395,458 ) Net capitalized costs $ 28,204,067 $ 29,872,352 (1) Unproved oil and gas properties represent unevaluated costs the Company excludes from the amortization base until proved reserves are established or impairment is determined. (2) Costs from wells in progress are excluded from the amortization base until production commences. (3) Includes the accumulated expenses for depletion, depreciation, and amortization (DDA) plus accumulated expenses for impairment. On February 27, 2019, the Company completed the sale of certain assets. Based upon the preliminary settlement statement, the $16.5 million sale price for the assets yielded net proceeds of approximately $15.3 million, after adjustments for title defects, inventory, reconciliation of other amounts payable and receivable from the buyer, and transaction costs of the sale. Final settlement of the transaction is scheduled for May 28, 2019. All of the net proceeds from the sale were remitted to the Secured Lenders as required by the Secured Lenders, and have been applied to reduce amounts allegedly owed by the Company under the Secured Credit Facility. Additional information about the use of proceeds from the sale can be found in Note 6. The assets were classified as Held for Sale as of December 31, 2018 and included as current assets in the financial statements. During the period from January 1, 2019 to February 27, 2019, the assets sold generated revenues of $1.1 million and operating expenses of $0.3 million, resulting in net operating income for those properties of $0.8 million. The terms of the transaction provide that 2019 revenues and expenses accrue to the benefit of the buyer, and accordingly, the Company recorded an adjustment of $0.8 million to the purchase price and the corresponding loss on sale of properties during the period ended March 31, 2019.

DEBT

DEBT	3 Months Ended
	Mar. 31, 2019
Debt Disclosure [Abstract]
DEBT	10% Convertible Notes On January 30, 2017, the Company completed the private placement of units consisting of convertible promissory notes (“Convertible Notes”) with an aggregate face value of $10.0 million and common stock purchase warrants. The Convertible Notes are unsecured, bear interest at 10% per year and were due and payable on December 31, 2018. At the option of the holders of the Convertible Notes, the principal amount and any accrued but unpaid interest are convertible into shares of the Company’s common stock at a conversion price of $1.50 per share. As of December 31, 2018, the 10% Convertible Notes had an outstanding principal balance of $4.6 million. The 10% Convertible Notes were not paid on their due date of December 31, 2018. The Company’s failure to retire the 10% Convertible Notes was an event of default. The Company has continued to accrue and pay interest at the rate of 10%, in the approximate amount of $0.1 million each calendar quarter. As of March 31, 2019, the principal balance of $4.6 million remains outstanding, and the 10% Convertible Notes remain in default. Series B Convertible Notes In September and October 2017, the Company sold Series B Convertible Notes in the principal amount of $4.7 million. The Series B Convertible Notes are unsecured, bear interest at 15% per year, and were due and payable on December 31, 2018. At the option of the holders, the principal amount of the Series B Convertible Notes and any accrued but unpaid interest are convertible into shares of the Company’s common stock at a conversion price of $1.50 per share. As of December 31, 2018, the Series B Convertible Notes had an outstanding principal balance of $4.7 million. The Series B Convertible Notes were not paid on their due date of December 31, 2018. The Company’s failure to retire the Series B Convertible Notes was an event of default. The Company has continued to accrue and pay interest at the rate of 15%, in the approximate amount of $0.2 million each calendar quarter. As of March 31, 2019, the principal balance of $4.7 million remains outstanding, and the Series B Convertible Notes remain in default. The Company has commenced negotiations with holders of the 10% Convertible Notes and the Series B Convertible Notes regarding resolution of the default conditions. At this time, it is not possible to predict the eventual outcome of those negotiations. Secured Credit Facility On February 1, 2018, the Company closed on a $25.0 million Secured Credit Facility with Providence Wattenberg, LP and 5NR Wattenberg, LLC (“Secured Lenders”). The Secured Credit Facility incorporated certain provisions of a Letter Agreement entered into by the Company on December 21, 2017 under which the Company borrowed $5.0 million from the Secured Lenders. The closing on February 1, 2018 represented additional borrowings of $20.0 million. As of March 31, 2019, the Company was in default under certain provisions of the Secured Credit Facility. The default conditions included the non-payment of the 10% Convertible Notes and the Series B Convertible Notes on December 31, 2018, and non-payment of the underwriting fee payable to PEO on February 1, 2019. Other defaults related to non-payment of certain accounts payable and accrued liabilities within a 90-day allowable time period, liens filed in Adams County, Colorado against certain of the Company’s assets, among other conditions. On March 26, 2019, the Secured Lenders required that the Company pay to them the net proceeds from the Company’s sale of non-operated assets and subsequently applied the net proceeds of $15.3 from sale to the outstanding accrued interest, penalties and principal, resulting in a remaining principal balance of $14.3 million. On April 2, 2019, the Secured Lenders delivered their formal Notice of Default under the terms of the Secured Credit Facility to confirm their previous communications. The following table reflects the net amounts recorded as debt at March 31, 2019 and December 31, 2018: 10% Convertible Secured Convertible Notes Credit Notes Series B Facility December 31, 2018 Principal Balance $ 4,633,200 $ 4,724,900 $ 25,000,000 December 31, 2018, Total, net $ 4,633,200 $ 4,724,900 $ 20,182,264 Principal Borrowings - - - Repayments - - 10,700,564 Conversions - - - Beginning Balance - Unamortized Debt Issuance Costs - Original Issuer Discount - - 2,598,187 Additions - - - Accretion - - (2,598,187) Ending - Unamortized Debt Issuance Costs - Original Issuer Discount - - - Beginning Balance - Unamortized Debt Issuance Costs - Beneficial Conversion Feature - - 1,323,403 Additions - - - Accretion - - (1,323,403) Ending - Unamortized Debt Issuance Costs - Beneficial Conversion Feature - - - Beginning Balance - Unamortized Debt Issuance Costs - Warrant Discount - - 896,146 Additions - - - Accretion - - (896,146) Ending - Unamortized Debt Issuance Costs - Warrant Discount - - - March 31, 2019, Principal Balance $ 4,633,200 $ 4,724,900 $ 14,299,436 March 31, 2019, Total, net $ 4,633,200 $ 4,724,900 $ 14,299,436

ASSET RETIREMENT OBLIGATION

ASSET RETIREMENT OBLIGATION	3 Months Ended
	Mar. 31, 2019
Asset Retirement Obligation Disclosure [Abstract]
ASSET RETIREMENT OBLIGATION	The Company records an estimated liability to recognize the anticipated costs of its obligation to properly plug and abandon oil and gas wells at the end of their productive life. No new obligations were incurred during the three months ended March 31, 2019. The following table summarizes the changes in asset retirement obligations associated with the Company’s oil and gas properties: Three months ended Year ended March 31, December 31, 2019 2018 Asset retirement obligation, beginning of period $ 2,089,947 $ 1,123,444 Liabilities settled (91,914 ) (192,996 ) Liabilities incurred — 58,511 Revisions in estimated liabilities — 983,352 Accretion 61,784 117,636 Asset retirement obligation, end of period $ 2,059,817 $ 2,089,947 Current liability $ 809,580 $ 843,796 Long-term liability $ 1,250,237 $ 1,246,151

ACCOUNTS PAYABLE AND ACCRUED LI

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	3 Months Ended
	Mar. 31, 2019
Payables and Accruals [Abstract]
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES	Accounts payable and accrued liability balances were comprised of the following: March 31, December 31, 2019 2018 Trade payables and accrued liabilities $ 4,934,543 $ 2,093,428 Accrued interest payable 293,014 — Liabilities incurred in connection with development of crude oil and natural gas properties 11,669,371 22,291,989 Total $ 16,896,928 $ 24,385,417

SHAREHOLDERS' EQUITY

SHAREHOLDERS' EQUITY	3 Months Ended
	Mar. 31, 2019
Equity [Abstract]
SHAREHOLDERS' EQUITY	Common Stock Activity for the three months ended March 31, 2019 included the following: On March 15, 2019, at a special meeting, the shareholders approved an amendment to the Company’s Articles of Incorporation (“Amendment”) to increase the authorized common stock from 100,000,000 shares to 200,000,000 shares. The Amendment was effective on March 20, 2019 upon filing the Amendment with the Colorado Secretary of State. Activity for the three months ended March 31, 2018 included the following: On February 23, 2018 the Company issued 70,000 shares of common stock at $1.00 per share in lieu of cash compensation. On March 12, 2018 the Company issued 135,963 shares of common stock in connection with the conversion of 10% convertible notes payable in the principal amount of $200,000 plus accrued interest. The shares were issued at the contractual rate of $1.50 per share. Warrants The table below summarizes warrants outstanding as of March 31, 2019: Shares Underlying Exercise Price Outstanding Warrants Per Share Expiration Date Underwriter warrants 255,600 $ 1.25 11/12/2020 Investor warrants 6,666,600 $ 3.00 12/31/2019 Placement agent warrants 666,600 $ 1.50 12/31/2021 Secured Credit Facility Warrants 1,500,000 $ 0.01 2/1/2020 Total 9,088,800 There was no activity for the three months ended March 31, 2019. Activity for the three months ended March 31, 2018 included the following: On February 1, 2018, in connection with the closing of the Secured Credit Facility, the Company issued 1,500,000 common stock purchase warrants. The warrants are exercisable at $0.01 per share and expire on February 1, 2020. (Notes 6 and 11).

STOCK-BASED COMPENSATION

STOCK-BASED COMPENSATION	3 Months Ended
	Mar. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
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”). The Plan terminates 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. The Company’s shareholders approved the Plan at the Company’s annual meeting of shareholders on September 8, 2016. No additional shares were granted under the Plan for the three months ended March 31, 2019. During the three months ended March 31, 2018, the Company issued 325,000 options to purchase shares of the Company’s common stock, which options are exercisable at $1.03 per share. The options were issued to employees and an officer of the Company. A summary of options outstanding under the Plan for at March 31, 2019 is as follows: Weighted Remaining Average Contractual Number of Exercise Term Shares Price (Years) Outstanding, December 31, 2018 5,037,000 $ 0.79 3.87 Exercisable, December 31, 2018 4,621,000 $ 0.75 3.86 Granted — — — Exercised — — — Forfeited — — — Outstanding, March 31, 2019 5,037,000 $ 0.79 3.62 Exercisable, March 31, 2019 4,946,000 $ 0.77 3.64 During the three months ended March 31, 2019 and 2018 the Company recorded stock-based compensation of $0.1 million and $0.2 million, respectively, related to options issued under the Plan. Unvested stock-based compensation related to the options at March 31, 2019 and December 31, 2018 amounted to $nil and $0.1 million, respectively.

RELATED PARTY TRANSACTIONS

RELATED PARTY TRANSACTIONS	3 Months Ended
	Mar. 31, 2019
Related Party Transactions [Abstract]
RELATED PARTY TRANSACTIONS	Providence Energy Operators (“PEO”) and Affiliates As of March 31, 2019, PEO beneficially owned approximately 11.6% of the Company’s outstanding common stock. The table below summarizes related party balances with PEO and its affiliates as of: March 31, 2019 December 31, 2018 Liabilities Revenue distribution payable and accrued liabilities $ (1,556,592 ) $ (2,133,622 ) Secured Credit Facility (14,299,436 ) (25,000,00 ) Loan commitment fee – Secured Credit Facility — (1,250,000 ) Default penalty interest – Secured Credit Facility — (312,500 ) Make-whole premium – Secured Credit Facility — (3,347,874 ) Break-up fee payable, participation agreement (580,881 ) (580,881 ) Assets Accounts receivable – joint interest billing $ 1,101,501 $ 1,158,213 Secured Credit Facility Interest expense of $4.8 million was recognized related to the Secured Credit Facility and the accretion of debt discounts during the year three months ended March 31, 2019. As a result of defaults under the Secured Credit Facility, the Company accrued additional penalty interest and the make-whole premium. On March 26, 2019, Secured Lenders notified the Company that they were applying the net proceeds from the February 27, 2019 non-operated property sale (Note 5) against the make-whole premium, accrued default interest, other outstanding liabilities and the outstanding principal balance of the Secured Credit Facility (Note 6). The table below presents the application of the proceeds: Principal Balance $ 25,000,000 Total Sale Proceeds Received 15,538,766 Less Accrued broker fees (250,000) Expenses (17,702) Available cash 15,271,064 Underwriting fee (1,250,000) January 2019 default interest (105,706) February 2019 interest (452,865) March 1, 2019 - March 26, 2019 interest (377,768) Make-whole premium (2,384,161) Allocated to Principal 10,700,564 Remaining Principal Balance $ 14,299,436 Operations At March 31, 2019, the Company has recorded $1.1 million in Accounts receivable – joint interest billing – related party Included in the balance sheet caption Accounts payable and accrued liabilities - related party In addition, the caption includes the break-up fee payable, participation agreement of $0.6 million related to the contractual penalty for the Company’s election not to participate in a leasehold acquisition under a participation agreement with PEO. 10% Convertible Notes As of March 31, 2019 and December 31, 2018, the principal balance of the 10% Convertible Notes held by officers and directors amounted to $0.1 million and $0.1 million respectively. Interest expense for the three months ended March 31, 2019 and 2018 amounted to $2,000 and $2,000 respectively. Series B Convertible Notes As of March 31, 2019 and December 31, 2018, the principal balance of the Series B Convertible Notes held by officers and directors amounted to $0.6 million and $0.6 million respectively. Interest expense for the three months ended March 31, 2019 and 2018 amounted to $21,375 and $21,375 respectively.

LEASES

LEASES	3 Months Ended
	Mar. 31, 2019
Leases [Abstract]
LEASES	Operating Lease The Company evaluates contractual arrangements at inception to determine if individual agreements are a lease or contain an identifiable lease component as defined by ASC 842. The Company currently has one contract that meets the definition of a long-term lease. The Company leases its office facilities under a four-year non-cancelable operating lease agreement expiring in March 2021. Annual payments approximate $0.1 million. Operating lease costs for the three months ended March 31, 2019 were less than $0.1 million.

SUBSEQUENT EVENTS

SUBSEQUENT EVENTS	3 Months Ended
	Mar. 31, 2019
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	On April 29, 2019, Providence Wattenberg, LP, as administrative agent and Lender, and 5NR Wattenberg, LLC, as Lender, caused to be recorded with the clerk and recorder for Adams County, Colorado a Notice of Election and Demand for foreclosure of the Deed of Trust granted by us to the Lenders to secure repayment of the Secured Credit Facility. On May 2, 2019, 1888 Industrial Services, LLC, a Delaware limited liability company, filed a civil action in the District Court of Adams County, Colorado against us and other defendants seeking a declaratory judgment and other relief in connection with an oil and gas lien filed against our interest in the Shook wells and related oil and gas leases. On May 7, 2019, Liberty Oilfield Services LLC, a Delaware limited liability company, filed claims in the District Court of Adams County, Colorado to foreclose its lien filed against our Shook wells and related oil and gas leases.

BASIS OF PRESENTATION AND SUM_2

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Policies)	3 Months Ended
	Mar. 31, 2019
Accounting Policies [Abstract]
Basis of Presentation	The interim condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and note disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures included are adequate to make the information presented not misleading. In management’s opinion, the Condensed Consolidated Balance Sheet as of December 31, 2018, which has been derived from the audited financial statements, and the unaudited Condensed Consolidated Balance Sheet as of March 31, 2019, the unaudited Condensed Consolidated Statements of Operations, Changes in Shareholders’ (Deficit), and Cash Flows for the three months ended March 31, 2019 and 2018, contained herein, reflect all adjustments, consisting solely of normal recurring items, which are necessary for the fair presentation of the Company’s financial position, results of operations and cash flows on a basis consistent with that of the Company’s prior audited consolidated financial statements. However, the results of operations for the interim periods may not be indicative of results to be expected for the full fiscal year. Therefore, these condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the year ended December 31, 2018. Unless otherwise noted, there have been no material changes to the footnotes in the financial statements from the audited financial statements contained in the Company’s Form 10-K.
Principles of Consolidation	The consolidated financial statements include the accounts and balances of the Company and its wholly-owned subsidiary, CFW Resources, LLC, a Colorado limited liability company. The Company’s undivided interests in joint operating ventures are proportionately consolidated.
Use of Estimates	The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, as well as the disclosure of contingent assets and liabilities. Estimated quantities of crude oil, natural gas and natural gas liquids are the most significant of the Company’s estimates. All reserve data used in the preparation of these condensed consolidated financial statements are based on estimates. Reservoir engineering is a subjective process of estimating underground accumulations of crude oil, natural gas and natural gas liquids. There are numerous uncertainties inherent in estimating quantities of proved, probable and possible reserves. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. As a result, reserve estimates may be different from the quantities of crude oil, natural gas and natural gas liquids that are ultimately recovered.
Loss Per Share	Basic and diluted loss per share is computed by dividing net loss by the weighted average number of common shares outstanding during the period. The Company excluded potentially dilutive securities as the effect of their inclusion would be anti-dilutive.
Revenue Recognition	Oil sales Under the Company’s oil sales contracts, the Company sells oil production at the point of delivery and collects an agreed upon index price, net of pricing differentials. The Company recognizes revenue when control transfers to the purchaser at the point of delivery at the net price received. Payment is generally received from the customer in the month following delivery. Natural gas and natural gas liquids Under the Company’s natural gas sales processing contracts, the Company delivers commingled natural gas and natural gas liquids (NGLs) to a midstream processing entity. The midstream processing entity gathers and processes the various hydrocarbons and remits proceeds to the Company for the resulting sale. Under these processing agreements, the Company recognizes revenue when control transfers to the purchaser at the point of delivery. Payment is generally received from the customer one to two months following delivery. Revenue is recognized net of gathering and processing fees. Disaggregation of Revenue. Operating revenues 2019 2018 Crude oil sales $ 4,178,946 $ 1,425,233 Natural gas sales 617,138 394,411 NGL sales 175,446 249,288 Total Operating Revenues $ 4,971,530 $ 2,068,932
Related Party Transactions	The Company engages in a number of transactions with Providence Energy Operators, LLC (“PEO”) and its affiliates. PEO is the beneficial owner of 11.6% of our outstanding common stock. We have a participation agreement that grants PEO the option to acquire up to a 50% interest and participate in any oil and gas development on acreage we obtain within an area of mutual interest (AMI) near our Southern Core area. To date, PEO has exercised its option under the participation agreement or otherwise participated or agreed to participate in all acreage acquisitions and drilling operations. As discussed elsewhere in this report, an affiliate of PEO is a major participant in our principal lender group through the Secured Credit Facility. The Board of Directors is required to approve all significant related party transactions.
Recently Issued Accounting Pronouncements	In February 2016, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update ("ASU") No. 2016-02, Leases (Topic 842), followed by other related ASUs that provided targeted improvements and additional practical expedient options (collectively “ASC 842”). ASC 842 requires lessees to recognize right-of-use (“ROU”) assets and lease payment liabilities on the balance sheet for leases representing the Company’s right to use the underlying assets over the lease term. Each lease that is recognized on the balance sheet will be classified as either finance or operating, with such classification affecting the pattern and classification of expense recognition in the statements of operations and presentation within the statements of cash flows. The Company adopted ASC 842 on January 1, 2019 using the modified retrospective method. The Company elected as part of its adoption to also use the optional transition methodology whereby previously reported periods continue to be reported in accordance with historical accounting guidance for leases that were in effect for those prior periods. Policy elections and practical expedients that the Company has implemented as part of adopting ASC 842 include (a) excluding from the balance sheet leases with terms that are less than or equal to one year, (b) for all existing asset classes that contain both lease and non-lease components, combining these components together and accounting for them as a single lease component, (c) the package of practical expedients, which among other things, allows the Company to avoid reassessing contracts that commenced prior to adoption that were properly evaluated under legacy GAAP, and (d) excluding land easements, which were not accounted for under the previous leasing guidance, that existed or expired before adoption of ASC 842. The scope of ASC 842 does not apply to leases used in the exploration or use of minerals, oil, and natural gas. The Company's adoption of ASC 842 resulted in an increase in other assets, accounts payable and accrued liabilities, and other liabilities line items on the accompanying condensed consolidated balance sheets as a result of the additional ROU assets and related lease liabilities. Upon adoption on January 1, 2019, the Company recognized approximately $0.2 million in ROU assets and liabilities for its operating leases. There was no cumulative effect to accumulated deficit upon the adoption of this guidance. See Note 12 for the new disclosures required by ASC 842.

BASIS OF PRESENTATION AND SUM_3

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Tables)	3 Months Ended
	Mar. 31, 2019
Accounting Policies [Abstract]
Disaggregation of revenue	Operating revenues 2019 2018 Crude oil sales $ 4,178,946 $ 1,425,233 Natural gas sales 617,138 394,411 NGL sales 175,446 249,288 Total Operating Revenues $ 4,971,530 $ 2,068,932

FAIR VALUE MEASUREMENTS (Tables

FAIR VALUE MEASUREMENTS (Tables)	3 Months Ended
	Mar. 31, 2019
Fair Value Disclosures [Abstract]
Fair value measurements	March 31, 2019 Registration rights penalty derivative liability $ 93,024 Share purchase option derivative liability 72,064 Total $ 165,088
Schedule of roll-forward of the fair value of the derivative liabilities associated with Company's Secured Credit Facility, categorized as Level 3	Three Months Ended March 31, 2019 Year Ended December 31, 2018 Beginning balance $ 241,800 $ — Additions — 1,670,017 Total (gains) or losses (realized / unrealized) Included in operations (76,712 ) (1,428,217 ) Included in other comprehensive income — — Ending Balance $ 165,088 $ 241,800

CRUDE OIL AND NATURAL GAS PRO_2

CRUDE OIL AND NATURAL GAS PROPERTIES (Tables)	3 Months Ended
	Mar. 31, 2019
Oil and Gas Property [Abstract]
Schedule of net capitalized costs	March 31, December 31, 2019 2018 Proved oil and gas properties $ 41,975,719 $ 41,017,944 Unproved oil and gas properties (1) 1,530,114 2,055,752 Wells in progress (2) 222,587 1,194,114 Total capitalized costs 43,728,420 44,267,810 Accumulated DDA and impairment (3) (15,524,353 ) (14,395,458 ) Net capitalized costs $ 28,204,067 $ 29,872,352

DEBT (Tables)

DEBT (Tables)	3 Months Ended
	Mar. 31, 2019
Summary of net amounts of debt	10% Convertible Secured Convertible Notes Credit Notes Series B Facility December 31, 2018 Principal Balance $ 4,633,200 $ 4,724,900 $ 25,000,000 December 31, 2018, Total, net $ 4,633,200 $ 4,724,900 $ 20,182,264 Principal Borrowings - - - Repayments - - 10,700,564 Conversions - - - Beginning Balance - Unamortized Debt Issuance Costs - Original Issuer Discount - - 2,598,187 Additions - - - Accretion - - (2,598,187) Ending - Unamortized Debt Issuance Costs - Original Issuer Discount - - - Beginning Balance - Unamortized Debt Issuance Costs - Beneficial Conversion Feature - - 1,323,403 Additions - - - Accretion - - (1,323,403) Ending - Unamortized Debt Issuance Costs - Beneficial Conversion Feature - - - Beginning Balance - Unamortized Debt Issuance Costs - Warrant Discount - - 896,146 Additions - - - Accretion - - (896,146) Ending - Unamortized Debt Issuance Costs - Warrant Discount - - - March 31, 2019, Principal Balance $ 4,633,200 $ 4,724,900 $ 14,299,436 March 31, 2019, Total, net $ 4,633,200 $ 4,724,900 $ 14,299,436

ASSET RETIREMENT OBLIGATION (Ta

ASSET RETIREMENT OBLIGATION (Tables)	3 Months Ended
	Mar. 31, 2019
Asset Retirement Obligation Disclosure [Abstract]
Reconciliation of the Asset Retirement Obligation	The following table summarizes the changes in asset retirement obligations associated with the Company’s oil and gas properties: Three months ended Year ended March 31, December 31, 2019 2018 Asset retirement obligation, beginning of period $ 2,089,947 $ 1,123,444 Liabilities settled (91,914 ) (192,996 ) Liabilities incurred — 58,511 Revisions in estimated liabilities — 983,352 Accretion 61,784 117,636 Asset retirement obligation, end of period $ 2,059,817 $ 2,089,947 Current liability $ 809,580 $ 843,796 Long-term liability $ 1,250,237 $ 1,246,151

ACCOUNTS PAYABLE AND ACCRUED _2

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Tables)	3 Months Ended
	Mar. 31, 2019
Payables and Accruals [Abstract]
Components of Accounts Payable and Accrued Liabilities	March 31, December 31, 2019 2018 Trade payables and accrued liabilities $ 4,934,543 $ 2,093,428 Accrued interest payable 293,014 — Liabilities incurred in connection with development of crude oil and natural gas properties 11,669,371 22,291,989 Total $ 16,896,928 $ 24,385,417

SHAREHOLDERS' EQUITY (Tables)

SHAREHOLDERS' EQUITY (Tables)	3 Months Ended
	Mar. 31, 2019
Equity [Abstract]
Summary of Warrants Outstanding	Shares Underlying Outstanding Warrants Exercise Price Per Share Expiration Date Underwriter warrants 255,600 $ 1.25 11/12/2020 Investor warrants 6,666,600 $ 3.00 12/31/2019 Placement agent warrants 666,600 $ 1.50 12/31/2021 Secured Credit Facility warrants 1,500,000 $ 0.01 2/1/2020 Total 9,088,800

STOCK BASED COMPENSATION (Table

STOCK BASED COMPENSATION (Tables)	3 Months Ended
	Mar. 31, 2019
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Summary of Stock Option Activity	Weighted Remaining Average Contractual Number of Exercise Term Shares Price (Years) Outstanding, December 31, 2018 5,037,000 $ 0.79 3.87 Exercisable, December 31, 2018 4,621,000 $ 0.75 3.86 Granted — — — Exercised — — — Forfeited — — — Outstanding, March 31, 2019 5,037,000 $ 0.79 3.62 Exercisable, March 31, 2019 4,946,000 $ 0.77 3.64

RELATED PARTY TRANSACTIONS (Tab

RELATED PARTY TRANSACTIONS (Tables)	3 Months Ended
	Mar. 31, 2019
Related Party Transactions Tables Abstract
Related party balances	March 31, 2019 December 31, 2018 Liabilities Revenue distribution payable and accrued liabilities $ (1,556,592 ) $ (2,133,622 ) Secured Credit Facility (14,299,436 ) (25,000,00 ) Loan commitment fee – Secured Credit Facility — (1,250,000 ) Default penalty interest – Secured Credit Facility — (312,500 ) Make-whole premium – Secured Credit Facility — (3,347,874 ) Break-up fee payable, participation agreement (580,881 ) (580,881 ) Assets Accounts receivable – joint interest billing $ 1,101,501 $ 1,158,213
Use of Proceeds	Principal Balance $ 25,000,000 Total Sale Proceeds Received 15,538,766 Less Accrued broker fees (250,000) Expenses (17,702) Available cash 15,271,064 Underwriting fee (1,250,000) January 2019 default interest (105,706) February 2019 interest (452,865) March 1, 2019 - March 26, 2019 interest (377,768) Make-whole premium (2,384,161) Allocated to Principal 10,700,564 Remaining Principal Balance $ 14,299,436

BASIS OF PRESENTATION AND SUM_4

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND BASIS OF PRESENTATION (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Revenues	$ 4,971,530	$ 2,068,932
Crude Oil [Member]
Revenues	4,178,946	1,425,233
Natural Gas Excluding Natural Gas Liquids [Member]
Revenues	617,138	394,411
Natural Gas Liquids [Member]
Revenues	$ 175,446	$ 249,288

GOING CONCERN (Details Narrativ

GOING CONCERN (Details Narrative) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
GOING CONCERN
Net (loss)	$ (5,604,040)	$ (1,487,743)	$ (17,307,747)

FAIR VALUE MEASUREMENTS (Detail

FAIR VALUE MEASUREMENTS (Details)	Mar. 31, 2019USD ($)
Fair Value Measurements
Registration rights penalty derivative liability	$ 93,024
Share purchase option derivative liability	72,064
Total	$ 165,088

FAIR VALUE MEASUREMENTS (Deta_2

FAIR VALUE MEASUREMENTS (Details 1) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Fair Value Disclosures [Abstract]
Beginning balance	$ 241,800	$ 0
Additions	0	1,670,017
Included in operations	(76,712)	(1,428,217)
Included in other comprehensive income	0	0
Ending Balance	$ 165,088	$ 241,800

CRUDE OIL AND NATURAL GAS PRO_3

CRUDE OIL AND NATURAL GAS PROPERTIES (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Oil and Gas Property [Abstract]
Proved oil and gas properties	$ 41,975,719	$ 41,017,944
Unproved oil and gas properties	1,530,114	2,055,752
Wells in progress	222,587	1,194,114
Total capitalized costs	43,728,420	44,267,810
Accumulated depletion, depreciation and amortization	(15,524,353)	(14,395,458)
Net capitalized costs	$ 28,204,067	$ 29,872,352

DEBT (Details)

DEBT (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Payment of origination fee	$ 0	$ (1,250,000)
Payment of accrued interest costs	$ 0	$ (1,086,808)

DEBT (Details 2)

DEBT (Details 2) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Additions	$ 0	$ 1,250,000
Accretion	4,817,734	$ 1,497,192
Convertible Notes Series A [Member]
Balance at beginning of period	4,633,200
Borrowings	0
Repayments	0
Conversions	0
Beginning Balance - Unamortized Debt Issuance Costs	0
Additions	0
Accretion	0
Ending - Unamortized Debt Issuance Costs	0
Balance at end of period	4,633,200
Convertible Notes Series B [Member]
Balance at beginning of period	4,724,900
Beginning Balance - Unamortized Debt Issuance Costs	0
Ending - Unamortized Debt Issuance Costs	0
Balance at end of period	4,724,900
Secured Credit Facility [Member]
Balance at beginning of period	25,000,000
Borrowings	0
Repayments	10,700,564
Conversions	0
Beginning Balance - Unamortized Debt Issuance Costs	2,598,187
Additions	0
Accretion	(2,598,187)
Ending - Unamortized Debt Issuance Costs	0
Balance at end of period	14,299,436
Secured Credit Facility [Member] | Warrant [Member]
Beginning Balance - Unamortized Debt Issuance Costs	896,146
Additions	0
Accretion	(896,146)
Ending - Unamortized Debt Issuance Costs	0
Secured Credit Facility [Member] | Original Issuer Discount [Member]
Beginning Balance - Unamortized Debt Issuance Costs	2,598,187
Additions	0
Accretion	(2,598,187)
Ending - Unamortized Debt Issuance Costs	0
Secured Credit Facility [Member] | Beneficial Conversion Feature [Member]
Beginning Balance - Unamortized Debt Issuance Costs	1,323,403
Additions	0
Accretion	(1,323,403)
Ending - Unamortized Debt Issuance Costs	$ 0

ASSET RETIREMENT OBLIGATION (De

ASSET RETIREMENT OBLIGATION (Details) - USD ($)	3 Months Ended		12 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Activity of asset retirement obligation
Asset retirement obligation, beginning of period	$ 2,089,947	$ 1,123,444	$ 1,123,444
Liabilities settled	(91,914)		(192,666)
Liabilities incurred	0		58,511
Revisions in estimated liabilities	0		983,352
Accretion	61,784	$ 28,356	117,636
Asset retirement obligation, end of period	2,059,817		2,089,947
Current liability	809,580		843,796
Long-term liability	$ 1,250,237		$ 1,246,151

ACCOUNTS PAYABLE AND ACCRUED _3

ACCOUNTS PAYABLE AND ACCRUED LIABILITIES (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Payables and Accruals [Abstract]
Trade accounts payable and accrued liabilities	$ 4,934,543	$ 2,093,428
Accrued interest payable	293,014	0
Liabilities incurred in connection with acquisition of crude oil and natural gas properties	11,669,371	22,291,989
Total	$ 16,896,928	$ 24,385,417

SHAREHOLDERS' EQUITY (Details)

SHAREHOLDERS' EQUITY (Details)	Mar. 31, 2019$ / sharesshares
Warrants
Shares underlying outstanding warrants	9,088,800
Underwriter Warrants [Member]
Warrants
Shares underlying outstanding warrants	255,600
Warrants exercise price | $ / shares	$ 1.25
Investor Warrants [Member]
Warrants
Shares underlying outstanding warrants	6,666,600
Warrants exercise price | $ / shares	$ 3
Placement Agent Warrants [Member]
Warrants
Shares underlying outstanding warrants	666,600
Warrants exercise price | $ / shares	$ 1.50
Secured Credit Facility Warrants [Member]
Warrants
Shares underlying outstanding warrants	1,500,000
Warrants exercise price | $ / shares	$ 0.01

STOCK-BASED COMPENSATION (Detai

STOCK-BASED COMPENSATION (Details)	3 Months Ended
	Mar. 31, 2019$ / sharesshares
Number of Shares
Outstanding Options, Beginning of period | shares	5,037,000
Options Granted | shares	0
Options Exercised | shares	0
Options Forfeited | shares	0
Outstanding Options, End of period | shares	5,037,000
Options Exercisable | shares	4,946,000
Weighted Average Exercise Price
Outstanding, Beginning, Weighted-Average Exercise Price | $ / shares	$ 0.79
Granted | $ / shares	0
Exercised | $ / shares	0
Forfeited | $ / shares	0
Outstanding, Ending, Weighted-Average Exercise Price | $ / shares	0.79
Exercisable | $ / shares	$ 0.77
Remaining Contractual Term (Years)
Outstanding, Beginning	3 years 10 months 13 days
Outstanding, Ending	3 years 7 months 13 days
Exercisable	3 years 7 months 20 days

STOCK-BASED COMPENSATION (Det_2

STOCK-BASED COMPENSATION (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation expense	$ 100,000	$ 200,000
Unvested share based compensation	$ 0		$ 100,000

RELATED PARTY TRANSACTIONS (Det

RELATED PARTY TRANSACTIONS (Details) - USD ($)	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Trade payables and accrued liabilities
Related party transactions	$ (1,556,592)	$ (2,133,622)
Senior Secured Credit Facility
Related party transactions	(14,299,436)	(2,500,000)
Loan commitment fee - Senior Secured Credit Facility
Related party transactions	0	(1,250,000)
Default penalty interest - Senior Secured Credit Facility
Related party transactions	0	(312,500)
Make-whole premium – Secured Credit Facility
Related party transactions	0	(3,347,874)
Break-up fee payable, participation agreement
Related party transactions	(580,881)	(580,881)
Accounts receivable
Related party transactions	$ 1,101,501	$ 1,158,213

RELATED PARTY TRANSACTIONS (D_2

RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($)	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Accrued interest	$ 293,014	$ 0
Interest expense, related party	4,800,000
Accounts payable and accrued liabilities - related party	2,137,473	7,624,877
Accounts receivable - joint interest billing - related party	$ 1,101,501	$ 1,158,213