Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Dec. 31, 2015 | Jan. 21, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | PETROGAS COMPANY | |
Entity Central Index Key | 1,609,258 | |
Trading Symbol | aren | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 132,550,000 | |
Document Type | 10-Q | |
Document Period End Date | Dec. 31, 2015 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
BALANCE SHEET (Unaudited)
BALANCE SHEET (Unaudited) - USD ($) | Dec. 31, 2015 | Mar. 31, 2015 |
Current assets | ||
Cash and cash equivalents | $ 37 | $ 5,971 |
Other current assets | 27,582 | |
Total current assets | 27,619 | 5,971 |
Oil and gas, on the basis of full cost accounting | ||
Proved properties | 219,376 | |
Overriding Royalty Interests | 45,328 | |
Unproved Property | 6,035 | |
Total assets | 298,358 | 5,971 |
Current liabilities | ||
Accounts payable | 9,253 | $ 400 |
Other liabilities | $ 10,100 | |
Other AP | ||
Accrued interest | $ 1,225 | $ 5,600 |
Total current liabilities | 20,578 | 6,000 |
Long-Term liabilities | ||
Asset retirement obligations | 9,075 | |
Related Party Note Payable | 54,020 | |
Total liabilities | $ 83,673 | $ 6,000 |
Commitments and contingencies | ||
Stockholders' (deficit) equity | ||
Common stock, par value $0.001; 300,000,000 shares authorized 132,550,000 and 130,550,000 shares issued and outstanding as of December 31, 2015 and September 30, 2015, respectively | $ 15,510 | $ 8,360 |
Additional paid in capital | 855,872 | 21,159 |
Retained deficit | (656,696) | (29,548) |
Total stockholders' (deficit) equity | 214,686 | (29) |
Total liabilities and stockholders' (deficit) equity | $ 298,359 | $ 5,971 |
BALANCE SHEET (Unaudited) (Pare
BALANCE SHEET (Unaudited) (Parentheticals) - $ / shares | Dec. 31, 2015 | Mar. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 300,000,000 | 300,000,000 |
Common stock, shares issued | 132,550,000 | 130,550,000 |
Common stock, shares outstanding | 132,550,000 | 130,550,000 |
STATEMENT OF OPERATIONS
STATEMENT OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Income Statement [Abstract] | ||||
Revenues | ||||
Operating expenses | ||||
Lease operating expense | $ 4,042 | $ 48,656 | ||
Accretion expense | 18 | 107 | ||
Total operating expense | 4,060 | 48,763 | ||
General and administrative expenses | 28,590 | $ 1,565 | 124,499 | $ 22,826 |
Total other expense | 3,279 | 498,725 | ||
Net loss | $ (35,929) | $ (1,565) | $ (671,987) | $ (22,826) |
Net loss per share - basic and diluted (in dollars per share) | ||||
Weighted average shares outstanding - basic and diluted (in shares) | 131,550,000 | 8,346,087 | 129,365,478 | 6,908,945 |
STATEMENT OF CASH FLOWS (Unaudi
STATEMENT OF CASH FLOWS (Unaudited) - USD ($) | 9 Months Ended | |
Dec. 31, 2015 | Dec. 31, 2014 | |
Cash flows from operating activities | ||
Net loss | $ (671,987) | $ (22,826) |
Adjustments to reconcile net loss to net cash from operating activities: | ||
Loss on disposal of asset | 3,278 | |
Asset retirement obligation accretion | 107 | |
Impairment of oil and gas leases | 448,500 | |
Loss on acquisition of royalty interest on unproven property | 46,238 | |
Share based compensation | 30,600 | |
Change in operating assets and liabilities: | ||
Accounts payable | 8,854 | 100 |
Other liabilities | 5,117 | |
Prepaid expenses | (13,078) | |
Materials and supplies | 8,753 | |
Other Liabilities | 708 | |
Net cash from operating activities | (132,910) | (22,726) |
Cash flow from investing activities | ||
Improvements to proven oil and gas assets | (77,044) | |
Cash flows from financing activities | ||
Proceeds from sale of common stock | 150,000 | 23,519 |
Loan payable | 54,020 | 6,250 |
Net cash from financing activities | 204,020 | 29,769 |
Net change in cash and cash equivalents | (5,934) | 7,043 |
Cash and cash equivalents Beginning of period | 5,971 | 178 |
Cash and cash equivalents End of period | $ 37 | 7,221 |
Non-Cash investing and financing activities: | ||
Issuance of common stock for acquisition of oil and gas | 160,000 | |
Issuance of common stock for acquisition of overriding royalties and unproved property | 97,500 | |
Issuance of common stock for unproven oil and gas property | 448,500 | |
Issuance of common stock for employee compensation | 30,600 | |
Asset retirement obligation incurred | $ 9,075 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 9 Months Ended |
Dec. 31, 2015 | |
Basis Of Presentation [Abstract] | |
BASIS OF PRESENTATION | NOTE 1 – BASIS OF PRESENTATION These financial statements of PetroGas Company, formerly America Resources Exploration, Inc. (“the Company"), have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). In the opinion of management, these financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. Certain information, accounting policies and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to Securities and Exchange Commission (SEC) rules and regulations. These financial statements should be read along with the Company’s unaudited financial statements as of June 30, 2015. |
SUMMARY OF SIGNIFCANT ACCOUNTIN
SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES | 9 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES | NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES As of December 31,2015, the Company’s significant accounting policies were consistent with those discussed in the unaudited financial statements as of September 30, 2015. Basis of Consolidation - These consolidated financial statements include the accounts of the Company and its 94% owned subsidiary, Seabourn Oil Company, LLC. All intercompany balances and transactions have been eliminated in consolidation. Oil and Gas Properties The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves. The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful. All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the "cost ceiling") equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the unweighted arithmetic average of the first day of the month price for each month within the 12 month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period. Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that impairments of oil and gas properties could occur. In addition, it is reasonably possible that impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves. Revenue Recognition Asset Retirement Obligations Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. Capitalized Interest On May 27, 2015, the Company incorporated a limited liability corporation in the State of Texas called Seabourn Oil Company, LLC (“Seabourn LLC”) for the purpose of acquiring certain oil and gas leases. On May 27, 2015 Seabourn completed the acquisition of the leases from Nelaco Operating Company, Inc., a company controlled by Mr. Joe Seabourn, a member of our board of directors. Under the terms of the assignment and bill of sale, Seabourn LLC acquired a 100% working interest and an 80% net revenue interest in a total of 960 acres located in two tracts in Callahan County, Texas. Under the terms of the agreements Mr. Seabourn retains a 6% ownership interest in Seabourn LLC. The Company capitalized this property at a nominal value of $100 in respect of the transaction due to the fact that Mr. Seabourn was unable to provide historical cost for the acquired lease land. On June 10, 2015, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Zheng Xiangwu (“Zheng”), a resident of Guang Dong Province, China, and the Company’s controlling shareholder ( see Note 5 ), whereby the Company issued 4 million shares of its common stock in exchange for rights to certain oil and gas leases located in Frio and Atascosa Counties, Texas, consisting of a total of 714 total acres of land, two (2) working wells and a total of seven (7) wells (the “Leases”). The 4 million shares were valued at Zheng’s historical cost totalling $160,000. The transaction closed on June 12, 2015. On June 11, 2015 the Company entered into various assignment agreements for the acquisition of multiple oil and gas leases and ORR’s as set out in the table below. On July 6 and July 9, 2015 respectively the Company concluded Asset Purchase Agreements with respect to the aforementioned assignments whereunder the Company issued a total of 650,000 shares of its common stock to Mr. Zheng. The Company valued the transaction at the market price of the shares as at the date of issue, or $0.15 per share for a total value of $97,500. The Company capitalized the historical cost of the acquired assets totaling $51,263 and recorded a loss on acquisition of $46,237. Assignment Date Name of The Property Type of Property Location June 11 th , 2015 Ellis County Overriding Royalty Int. Oklahoma June 11 th , 2015 Hemphill County Overriding Royalty Int Texas June 11 th , 2015 Madison County Wellbore Interest Texas June 11 th , 2015 Shelby County Wellbore Interest Texas June 11 th , 2015 Emergy County Lease Purchase Utah On August 13, 2015 the Company entered into an Asset Purchase Agreement with Inceptus Resources, LLC whereunder the Company acquired a 78% net revenue interest in 200 acres located in Callahan County, Texas, and a 78% net revenue interest in 522 acres also located in Callahan County, Texas. In respect of the acquired leases the Company issued a total of 500,000 shares of common stock on the closing date, August 19, 2015 which shares were valued at market price on the date of the transaction, totaling $448,500, which amount was capitalized. As at September 30, 2015 the Company evaluated the capitalized value of the leases and determined to impair the amount in full due to the fact that the Company had no historical cost basis for the leases, and no immediate development plans for the lease land. A total of $448,500 has been expensed as Impairment loss on oil and gas lease in the current quarter. During the period the Company completed various workovers and other improvements to certain of its existing wellbores, which amounts totaling $ 77,044 were capitalized under Proved Properties. |
ASSET RETIREMENT OBLIGATIONS
ASSET RETIREMENT OBLIGATIONS | 9 Months Ended |
Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
ASSET RETIREMENT OBLIGATIONS | NOTE 3 – ASSET RETIREMENT OBLIGATIONS The Company has asset retirement obligations for any wells that are permanently removed from service. The primary obligations involve the removal and disposal of surface equipment, plugging and abandoning the wells and site restoration. For the purpose of determining the fair value of ARO incurred during the three-month period ended December 31, 2015, the Company used the following assumptions. Inflation Rate 3% Estimated asset life 20 years Credit adjusted risk free interest rate 18% The following table shows the change in the Company’s ARO during the three-month period ended December 31, 2015: Asset retirement obligations at December 31, 2015 $8,986 Asset retirement obligations incurred - Accretion expense 18 Asset retirement obligations at December 31, 2015 $8,968 Depletion Recording of depletion is going to begin when the company will be on the production stage. Depreciation Recording of depreciation is going to begin when the company will be on the production stage. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
NOTES PAYABLE | NOTE 4 - NOTES PAYABLE The Company entered into promissory note on August 10, 2015 with Rise Fast Limited in the face amount of $60,000 with the interest on the outstanding principal amount at the rate of five percent (5%) per annum, compounded quarterly; provided however if an event of Default occurs the interest rate will increase to a rate of eight percent (8%) per annum, compounded quarterly, so long as the Event if Default continues. The Company entered into promissory note on September 1, 2015 with Rise Fast Limited in the face amount of $50,000 with the interest on the outstanding principal amount at the rate of five percent (5%) per annum, compounded quarterly; provided however if an event of Default occurs the interest rate will increase to a rate of eight percent (8%) per annum, compounded quarterly, so long as the Event if Default continues. The Company reimbursed an amount of $55,980 on the promissory notes due to Rise Fast Limited. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 5 – INCOME TAXES The Company estimates its annual effective income tax rate in recording its quarterly provision for income taxes in the various jurisdictions in which the Company operates. Statutory tax rate changes and other significant or unusual items are recognized as discrete items in the quarter in which they occur. The Company recorded no income tax expense for the three-month period ended December 31, 2015 because the Company estimates it will record no income tax expense for the fiscal year ended March 31, 2016. The Company recorded no income tax expense for the fiscal year ended March 31, 2015. The Company has a valuation allowance that fully offsets net deferred tax assets. |
COMMON STOCK
COMMON STOCK | 9 Months Ended |
Dec. 31, 2015 | |
Stockholders' Equity Note [Abstract] | |
COMMON STOCK | NOTE 6 – COMMON STOCK On April 16, 2015, the Company filed a Certificate of Amendment with the Nevada Secretary of State whereby it amended its Articles of Incorporation by increasing the Company's authorized number of shares of common stock from 75 million to 300 million and increasing all of its issued and outstanding shares of common stock at a ratio of fifteen (15) shares for every one (1) share held. All share amounts in these financial statements have been adjusted to reflect this stock split. On June 12, 2015, Company issued 4,000,000 shares of common stock related to the acquisition of oil and gas property to ( see Note 2 On June 12, 2015, the Company accepted a Subscription Agreement for the sale of up to 2.55 million shares of its common stock from the Company’s majority shareholder, Rise Fast. No underwriters were utilized in connection with this sale of securities. The Subscription Agreement provides that the shares shall be sold as follows: (i) upon execution thereof, the purchaser irrevocably agrees to purchase 1million at $0.15 per share; (ii) within sixty (60) days of the date of the Subscription Agreement, the purchaser has the right to purchase an additional 750,000 shares at the price of $0.20 per share; and (iii) within one hundred twenty (120) days of the date of the Subscription Agreement, the purchaser has the right to purchase an additional 800,000 shares at the price of $0.20 per share. On July 23, 2015, the Company approved the issuance of 1,000,000 shares of common stock for cash proceeds of $150,000. The shares were issued subsequent to the period covered by this report. Between July 6 and July 9, 2015 the Company issued a further 650,000 shares of common stock to Mr. Zheng Xiangwu related to the acquisition of certain lease land and ORR’s. ( see Note 2 On August 19, 2015 the Company issued a total of 500,000 shares to Hans Johnson, owner of Inceptus Resources LLC in respect of the acquisition of certain lease lands. ( see Note 2 On November 2, 2015, the Company issued 1,000,000 shares of common stock to Mr. Joe Seabourn as part of an employee compensation agreement. As at December 31,2015 the Company had a total of 132,550,000 shares issued and outstanding. |
LOANS PAYABLE - RELATED PARTY
LOANS PAYABLE - RELATED PARTY | 9 Months Ended |
Dec. 31, 2015 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE - RELATED PARTY | NOTE 7 – LOANS PAYABLE – RELATED PARTY On August 10, 2015 the Company received loan proceeds of $60,000 from the Company’s majority shareholder, Rise Fast which amount bears interest at a rate of 5% per annum and is due and payable on December 31, 2017. On September 1, 2015 the Company received a further $50,000 in loan proceeds from Rise Fast which amount bears interest at 5% per annum and is due and payable on December 31, 2017. As at September 30, 2015 the Company accrued interest expenses of $708 with respect to a total of $110,000 in principal outstanding. |
RELATED PARTY DISCLOSURE
RELATED PARTY DISCLOSURE | 9 Months Ended |
Dec. 31, 2015 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 8 On April 3, 2015, the Company accepted the resignations of Dmitri Kapsumun as the sole officer of the Company and as a member of the Company's board of directors. Concurrently the Company appointed Mr. Huang Yu as sole officer and director. On June 12, 2015 the Company appointed Joe Seabourn and Robert Wiener to the Company’s Board of Directors. On June 12, 2015, Company issued 4,000,000 shares of common stock related to the acquisition of oil and gas property to ( see Note 2 ) Zheng Xiangwu. Mr. Zheng is the owner of Rise Fast Limited, a Hong Kong corporation (“Rise Fast”), which is the majority shareholder of the Company. Rise Fast owns 91,000,000 shares of the Company’s common stock representing 68.94% of the Company’s issued and outstanding common stock. On June 12, 2015, the Company accepted a Subscription Agreement for the sale of up to 2.55 million shares of its common stock from the Company’s majority shareholder, Rise Fast, of which Rise Fast has purchased a total of 1,000,000 shares ( see Note 6). On June 24, 2015 the Company approved a consulting contract with Mr. Joe Seabourn, a member of the Company’s Board of Directors, for a monthly fee of $3,000, payable on the first of each month, commencing July 1, 2015. During the period ended September 30, 2015 Mr. Seabourn was paid $9,000 under the terms of the contract. Between July 6 and July 9, 2015 the Company issued a further 650,000 shares of common stock to Mr. Zheng Xiangwu related to the acquisition of certain lease land and ORR’s. ( see Note 2 ). On August 19, 2015 the Company issued a total of 500,000 shares to Hans Johnson, owner of Inceptus Resources LLC in respect of the acquisition of certain lease lands. ( see Note 2 ). On September 26, 2015 Mr. Huang Yu, a member of the Company’s Board of Directors was appointed Chief Financial Officer. Effective October 1, 2015 the Company entered into an amendment to the consulting agreement with Mr. Joe Seabourn, member of the Company’s Board of Directors. Under the terms of the Amendment, Mr. Seabourn shall cease charging a monthly fee for services and accepted 1,000,000 shares of the Company’s common stock as consideration for services between October 2015 and June 30, 2016. |
OTHER EVENTS
OTHER EVENTS | 9 Months Ended |
Dec. 31, 2015 | |
Other Events [Abstract] | |
OTHER EVENTS | NOTE 9 The Company evaluated subsequent events and concluded that no other events have occurred that would require recognition or disclosure in the financial statements. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Dec. 31, 2015 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 10 On January 20, 2016, the Company filed Articles of Merger with the Nevada SOS whereby it entered into a statutory merger with its wholly-owned subsidiary, PetroGas Company pursuant to Nevada Revised Statutes 92A.200 et. seq. The effect of such merger is that the Company was the surviving entity and changed its name to “America Resources Exploration Inc.” On January 20, 2016, PetroGas Company filed a Certificate of Amendment with the Nevada Secretary of State (the “Nevada SOS”) whereby decreasing all of its issued and outstanding shares of common stock at a ratio of one (1) share for every one hundred (100) shares held. The Company’s Board of Directors approved this amendment on January 13, 2016 and shareholders holding 68.65% of the Company’s issued and outstanding shares approved this amendment via a written consent executed on January 14, 2016. On February 1, 2016, the Company filed an Issuer Company-Related Action Notification Form with FINRA requesting that the aforementioned forward split and name change be affected in the market. The Company also requested that its ticker symbol be changed to “PTCO”. Such notification form is being reviewed by FINRA. |
SUMMARY OF SIGNIFCANT ACCOUNT16
SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Dec. 31, 2015 | |
Accounting Policies [Abstract] | |
Basis of Consolidation | Basis of Consolidation - These consolidated financial statements include the accounts of the Company and its 94% owned subsidiary, Seabourn Oil Company, LLC. All intercompany balances and transactions have been eliminated in consolidation. |
Oil and Gas Properties | Oil and Gas Properties The capitalized costs of oil and gas properties, excluding unevaluated and unproved properties, are amortized as depreciation, depletion and amortization expense using the units-of-production method based on estimated proved recoverable oil and gas reserves. The costs associated with unevaluated and unproved properties, initially excluded from the amortization base, relate to unproved leasehold acreage, wells and production facilities in progress and wells pending determination of the existence of proved reserves, together with capitalized interest costs for these projects. Unproved leasehold costs are transferred to the amortization base with the costs of drilling the related well once a determination of the existence of proved reserves has been made or upon impairment of a lease. Costs associated with wells in progress and completed wells that have yet to be evaluated are transferred to the amortization base once a determination is made whether or not proved reserves can be assigned to the property. Costs of dry wells are transferred to the amortization base immediately upon determination that the well is unsuccessful. All items classified as unproved property are assessed on a quarterly basis for possible impairment or reduction in value. Properties are assessed on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of various factors, including, but not limited to, the following: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; assignment of proved reserves; and economic viability of development if proved reserves are assigned. During any period in which these factors indicate an impairment, the cumulative drilling costs incurred to date for such property and all or a portion of the associated leasehold costs are transferred to the full cost pool and become subject to amortization. Under full cost accounting rules for each cost center, capitalized costs of evaluated oil and gas properties, including asset retirement costs, less accumulated amortization and related deferred income taxes, may not exceed an amount (the "cost ceiling") equal to the sum of (a) the present value of future net cash flows from estimated production of proved oil and gas reserves, based on current prices and operating conditions, discounted at ten percent (10%), plus (b) the cost of properties not being amortized, plus (c) the lower of cost or estimated fair value of any unproved properties included in the costs being amortized, less (d) any income tax effects related to differences between the book and tax basis of the properties involved. If capitalized costs exceed this limit, the excess is charged to operations. For purposes of the ceiling test calculation, current prices are defined as the unweighted arithmetic average of the first day of the month price for each month within the 12 month period prior to the end of the reporting period. Prices are adjusted for basis or location differentials. Unless sales contracts specify otherwise, prices are held constant for the productive life of each well. Similarly, current costs are assumed to remain constant over the entire calculation period. Given the volatility of oil and gas prices, it is reasonably possible that the estimate of discounted future net cash flows from proved oil and gas reserves could change in the near term. If oil and gas prices decline in the future, even if only for a short period of time, it is possible that impairments of oil and gas properties could occur. In addition, it is reasonably possible that impairments could occur if costs are incurred in excess of any increases in the present value of future net cash flows from proved oil and gas reserves, or if properties are sold for proceeds less than the discounted present value of the related proved oil and gas reserves. |
Revenue Recognition | Revenue Recognition |
Asset Retirement Obligations | Asset Retirement Obligations Inherent in the fair value calculation of an ARO are numerous assumptions and judgments including the ultimate settlement amounts, inflation factors, credit adjusted discount rates, timing of settlement, and changes in the legal, regulatory, environmental and political environments. To the extent future revisions to these assumptions impact the fair value of the existing ARO liability, a corresponding adjustment is made to the oil and gas property balance. Settlements greater than or less than amounts accrued as ARO are recorded as a gain or loss upon settlement. |
Capitalized Interest | Capitalized Interest On May 27, 2015, the Company incorporated a limited liability corporation in the State of Texas called Seabourn Oil Company, LLC (“Seabourn LLC”) for the purpose of acquiring certain oil and gas leases. On May 27, 2015 Seabourn completed the acquisition of the leases from Nelaco Operating Company, Inc., a company controlled by Mr. Joe Seabourn, a member of our board of directors. Under the terms of the assignment and bill of sale, Seabourn LLC acquired a 100% working interest and an 80% net revenue interest in a total of 960 acres located in two tracts in Callahan County, Texas. Under the terms of the agreements Mr. Seabourn retains a 6% ownership interest in Seabourn LLC. The Company capitalized this property at a nominal value of $100 in respect of the transaction due to the fact that Mr. Seabourn was unable to provide historical cost for the acquired lease land. On June 10, 2015, the Company entered into an Asset Purchase Agreement (the “Asset Purchase Agreement”) with Zheng Xiangwu (“Zheng”), a resident of Guang Dong Province, China, and the Company’s controlling shareholder ( see Note 5 ), whereby the Company issued 4 million shares of its common stock in exchange for rights to certain oil and gas leases located in Frio and Atascosa Counties, Texas, consisting of a total of 714 total acres of land, two (2) working wells and a total of seven (7) wells (the “Leases”). The 4 million shares were valued at Zheng’s historical cost totalling $160,000. The transaction closed on June 12, 2015. On June 11, 2015 the Company entered into various assignment agreements for the acquisition of multiple oil and gas leases and ORR’s as set out in the table below. On July 6 and July 9, 2015 respectively the Company concluded Asset Purchase Agreements with respect to the aforementioned assignments whereunder the Company issued a total of 650,000 shares of its common stock to Mr. Zheng. The Company valued the transaction at the market price of the shares as at the date of issue, or $0.15 per share for a total value of $97,500. The Company capitalized the historical cost of the acquired assets totaling $51,263 and recorded a loss on acquisition of $46,237. Assignment Date Name of The Property Type of Property Location June 11 th , 2015 Ellis County Overriding Royalty Int. Oklahoma June 11 th , 2015 Hemphill County Overriding Royalty Int Texas June 11 th , 2015 Madison County Wellbore Interest Texas June 11 th , 2015 Shelby County Wellbore Interest Texas June 11 th , 2015 Emergy County Lease Purchase Utah On August 13, 2015 the Company entered into an Asset Purchase Agreement with Inceptus Resources, LLC whereunder the Company acquired a 78% net revenue interest in 200 acres located in Callahan County, Texas, and a 78% net revenue interest in 522 acres also located in Callahan County, Texas. In respect of the acquired leases the Company issued a total of 500,000 shares of common stock on the closing date, August 19, 2015 which shares were valued at market price on the date of the transaction, totaling $448,500, which amount was capitalized. As at September 30, 2015 the Company evaluated the capitalized value of the leases and determined to impair the amount in full due to the fact that the Company had no historical cost basis for the leases, and no immediate development plans for the lease land. A total of $448,500 has been expensed as Impairment loss on oil and gas lease in the current quarter. During the period the Company completed various workovers and other improvements to certain of its existing wellbores, which amounts totaling $ 77,044 were capitalized under Proved Properties. |
ASSET RETIREMENT OBLIGATIONS (T
ASSET RETIREMENT OBLIGATIONS (Tables) | 9 Months Ended |
Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Schedule of fair value of ARO | 3% Estimated asset life 20 years Credit adjusted risk free interest rate 18% |
Schedule of change in ARO | Asset retirement obligations at December 31, 2015 $8,986 Asset retirement obligations incurred - Accretion expense 18 Asset retirement obligations at December 31, 2015 $8,968 |
SUMMARY OF SIGNIFCANT ACCOUNT18
SUMMARY OF SIGNIFCANT ACCOUNTING POLICIES (Detail Textuals) | Jul. 09, 2015USD ($)$ / sharesshares | Jun. 10, 2015USD ($)aWellshares | Aug. 19, 2015USD ($)shares | Dec. 31, 2015USD ($) | Aug. 13, 2015a | May. 27, 2015USD ($)a |
Business Acquisition [Line Items] | ||||||
Impairment loss on oil and gas leases | $ 448,500 | |||||
Amount capitalized under proved properties | $ 77,044 | |||||
Mr. Zheng Xiangwu | ||||||
Business Acquisition [Line Items] | ||||||
Capitalized nominal value of property | $ 51,263 | |||||
Number of shares issued | shares | 650,000 | |||||
Value of shares issued | $ 97,500 | |||||
Shares issued, price per share | $ / shares | $ 0.15 | |||||
Loss on acquisition | $ 46,237 | |||||
Seabourn Oil Company, LLC ("Seabourn LLC") | ||||||
Business Acquisition [Line Items] | ||||||
Ownership percent in Seabourn Oil Company, LLC | 94.00% | |||||
Nelaco Operating Company, Inc. | Seabourn Oil Company, LLC ("Seabourn LLC") | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of working interest acquired | 100.00% | |||||
Percentage of net revenue interest | 80.00% | |||||
Total acres of land | a | 960 | |||||
Percentage of ownership interest held | 6.00% | |||||
Capitalized nominal value of property | $ 100 | |||||
Asset Purchase Agreement | Mr. Zheng Xiangwu | ||||||
Business Acquisition [Line Items] | ||||||
Total acres of land | a | 714 | |||||
Number of shares issued | shares | 4,000,000 | |||||
Number of working wells | Well | 2 | |||||
Total number of wells | Well | 7 | |||||
Value of shares issued | $ 160,000 | |||||
Asset Purchase Agreement | Inceptus Resources, LLC | ||||||
Business Acquisition [Line Items] | ||||||
Percentage of net revenue interest | 78.00% | |||||
Total acres of land | a | 200 | |||||
Number of shares issued | shares | 500,000 | |||||
Value of shares issued | $ 448,500 | |||||
Net revenue interest percent acquired in another area | 78.00% | |||||
Area of land specified for net revenue interest | a | 522 |
ASSET RETIREMENT OBLIGATIONS (D
ASSET RETIREMENT OBLIGATIONS (Details) | 3 Months Ended |
Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | |
Inflation Rate | 3.00% |
Estimated asset life | 20 years |
Credit adjusted risk free interest rate | 18.00% |
ASSET RETIREMENT OBLIGATIONS 20
ASSET RETIREMENT OBLIGATIONS (Details 1) - USD ($) | 3 Months Ended | 9 Months Ended |
Dec. 31, 2015 | Dec. 31, 2015 | |
Asset Retirement Obligation Disclosure [Abstract] | ||
Asset retirement obligations at December 31, 2015 | $ 8,986 | |
Asset retirement obligations incurred | ||
Accretion expense | $ 18 | $ 107 |
Asset retirement obligations at December 31, 2015 | $ 8,968 | $ 8,968 |
NOTES PAYABLE (Detail Textuals)
NOTES PAYABLE (Detail Textuals) - Rise Fast - Promissory note - USD ($) | Sep. 01, 2015 | Aug. 10, 2015 | Dec. 31, 2015 |
Debt Instrument [Line Items] | |||
Notes payable, face amount | $ 50,000 | $ 60,000 | |
Interest rate on loan | 5.00% | 5.00% | |
Debt default increase interest rate | 8.00% | 8.00% | |
Notes payable reimbursed amount | $ 55,980 |
COMMON STOCK (Detail Textuals)
COMMON STOCK (Detail Textuals) | Nov. 02, 2015USD ($) | Jul. 09, 2015shares | Jun. 12, 2015$ / sharesshares | Aug. 19, 2015shares | Jul. 23, 2015USD ($)shares | Dec. 31, 2015USD ($)shares | Dec. 31, 2014USD ($) | Mar. 31, 2015shares |
Stockholders Equity Note [Line Items] | ||||||||
Prior amendment on common stock share authorized | 75,000,000 | |||||||
Common stock, shares authorized | 300,000,000 | 300,000,000 | ||||||
Common shares, stock split, conversion ratio | 15 | |||||||
Proceeds from sale of common stock | $ | $ 150,000 | $ 23,519 | ||||||
Common stock, shares issued | 132,550,000 | 130,550,000 | ||||||
Common stock, shares outstanding | 132,550,000 | 130,550,000 | ||||||
Subscription Agreement | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Sale of stock description of transaction | The Subscription Agreement provides that the shares shall be sold as follows: (i) upon execution thereof, the purchaser irrevocably agrees to purchase 1million at $0.15 per share; (ii) within sixty (60) days of the date of the Subscription Agreement, the purchaser has the right to purchase an additional 750,000 shares at the price of $0.20 per share; and (iii) within one hundred twenty (120) days of the date of the Subscription Agreement, the purchaser has the right to purchase an additional 800,000 shares at the price of $0.20 per share. | |||||||
Shares issued for cash | 1,000,000 | |||||||
Proceeds from sale of common stock | $ | $ 150,000 | |||||||
Subscription Agreement | Upon execution thereof | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Sale of stock | 1,000,000 | |||||||
Sale of stock, price per share | $ / shares | $ 0.15 | |||||||
Subscription Agreement | Within sixty (60) days | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Sale of stock | 750,000 | |||||||
Sale of stock, price per share | $ / shares | $ 0.20 | |||||||
Subscription Agreement | Within one hundred twenty (120) days | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Sale of stock | 800,000 | |||||||
Sale of stock, price per share | $ / shares | $ 0.20 | |||||||
Mr. Zheng | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Number of shares issued | 650,000 | |||||||
Mr. Zheng | Rise Fast | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Number of shares issued | 4,000,000 | |||||||
Number of common shares held | 91,000,000 | |||||||
Ownership percentage of issued and outstanding common stock | 68.94% | |||||||
Mr. Zheng | Subscription Agreement | Rise Fast | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Sale of stock | 1,000,000 | |||||||
Mr. Zheng | Subscription Agreement | Maximum | Rise Fast | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Sale of stock | 2,550,000 | |||||||
Inceptus Resources, LLC | Hans Johnson | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Number of shares issued | 500,000 | |||||||
Mr. Joe Seabourn | ||||||||
Stockholders Equity Note [Line Items] | ||||||||
Number of common shares issued part of employee compensation agreement | $ | $ 1,000,000 |
LOANS PAYABLE - RELATED PARTY (
LOANS PAYABLE - RELATED PARTY (Detail Textuals) - USD ($) | Sep. 01, 2015 | Aug. 10, 2015 | Dec. 31, 2015 | Sep. 30, 2015 |
Debt Instrument [Line Items] | ||||
Loan proceeds | $ 60,000 | |||
Accrued interest expenses | $ 708 | |||
Amount of principle outstanding | $ 54,020 | $ 110,000 | ||
Rise Fast | ||||
Debt Instrument [Line Items] | ||||
Loan proceeds | $ 50,000 | $ 60,000 |
RELATED PARTY DISCLOSURE (Detai
RELATED PARTY DISCLOSURE (Detail Textuals) - USD ($) | Oct. 01, 2015 | Jul. 09, 2015 | Jun. 12, 2015 | Aug. 19, 2015 | Jun. 24, 2015 | Sep. 30, 2015 |
Mr. Joe Seabourn | Consulting contract | ||||||
Related Party Transaction [Line Items] | ||||||
Monthly fees for consulting contract | $ 3,000 | |||||
Consulting contract fees paid | $ 9,000 | |||||
Mr. Joe Seabourn | Amended Consulting Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Common stock issued as consideration for services | 1,000,000 | |||||
Inceptus Resources, LLC | Hans Johnson | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shares issued | 500,000 | |||||
Mr. Zheng | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shares issued | 650,000 | |||||
Mr. Zheng | Rise Fast | ||||||
Related Party Transaction [Line Items] | ||||||
Number of shares issued | 4,000,000 | |||||
Ownership percentage of issued and outstanding common stock | 68.94% | |||||
Number of common shares held | 91,000,000 | |||||
Mr. Zheng | Rise Fast | Subscription Agreement | ||||||
Related Party Transaction [Line Items] | ||||||
Sale of stock | 1,000,000 | |||||
Mr. Zheng | Rise Fast | Subscription Agreement | Maximum | ||||||
Related Party Transaction [Line Items] | ||||||
Sale of stock | 2,550,000 |
SUBSEQUENT EVENTS (Detail Textu
SUBSEQUENT EVENTS (Detail Textuals) - Subsequent Event | 1 Months Ended | |
Jan. 20, 2016 | Jan. 13, 2016 | |
Subsequent Event [Line Items] | ||
Decreasing ratio of issued and outstanding shares of common stock | one (1) share for every one hundred (100) | |
Shareholders holding percent of issued and outstanding shares | 68.65% |