Yuma Energy (YUMAQ) 10-Q 13 Nov 17 2017 Q3 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - shares	9 Months Ended
	Sep. 30, 2017	Nov. 13, 2017
Document And Entity Information
Entity Registrant Name	Yuma Energy, Inc.
Entity Central Index Key	1,672,326
Document Type	10-Q
Document Period End Date	Sep. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		22,661,758
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2,017

CONSOLIDATED BALANCE SHEETS (Un

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
CURRENT ASSETS:
Cash and cash equivalents	$ 270,359	$ 3,625,686
Accounts receivable, net of allowance for doubtful accounts:
Trade	3,893,803	4,827,798
Officers and employees	48,575	68,014
Common stock subscription receivable	8,690,400	0
Other	1,186,320	1,757,337
Commodity derivative instruments	359,965	0
Prepayments	347,529	1,063,418
Other deferred charges	437,165	284,305
Total current assets	15,234,116	11,626,558
OIL AND GAS PROPERTIES (full cost method):
Proved properties	490,280,184	488,723,905
Unproved properties - not subject to amortization	5,584,644	3,656,989
Subtotal	495,864,828	492,380,894
Less: accumulated depreciation, depletion and amortization	(418,916,482)	(410,440,433)
Net oil and gas properties	76,948,346	81,940,461
OTHER PROPERTY AND EQUIPMENT:
Land, buildings and improvements	1,600,000	1,600,000
Other property and equipment	2,845,459	7,136,530
Total	4,445,459	8,736,530
Less: accumulated depreciation and amortization	(1,369,302)	(5,349,145)
Net other property and equipment	3,076,157	3,387,385
OTHER ASSETS AND DEFERRED CHARGES:
Commodity derivative instruments	415,091	0
Deposits	467,592	467,306
Other noncurrent assets	333,587	517,201
Total other assets and deferred charges	1,216,270	984,507
TOTAL ASSETS	96,474,889	97,938,911
CURRENT LIABILITIES:
Current maturities of debt	0	599,341
Accounts payable, principally trade	12,922,251	11,009,631
Commodity derivative instruments	0	1,340,451
Asset retirement obligations	359,659	376,735
Other accrued liabilities	1,875,211	2,572,680
Total current liabilities	15,157,121	15,898,838
LONG-TERM DEBT	31,450,000	39,500,000
OTHER NONCURRENT LIABILITIES:
Asset retirement obligations	9,717,448	9,819,648
Commodity derivative instruments	0	1,215,551
Deferred rent	286,907	0
Employee stock awards	93,669	0
Total other noncurrent liabilities	10,098,024	11,035,199
EQUITY:
Series D convertible preferred stock ($0.001 par value, 7,000,000 authorized, 1,871,373 issued as of September 30, 2017 and 1,776,718 issued as of December 31, 2016, $11.07 per share liquidation preference)	1,872	1,777
Common stock ($0.001 par value, 100 million shares authorized, 12,559,608 outstanding as of September 30, 2017 and 12,201,884 outstanding as of December 31, 2016)	$ 12,560	$ 12,202
Common stock subscribed (9,600,000 shares, funds received October 3, 2017)	9,600	0
Additional paid-in capital	$ 54,035,879	$ 43,877,563
Treasury stock at cost (12,433 shares as of September 30, 2017 and -0- shares as of December 31, 2016)	(24,432)	0
Accumulated earnings (deficit)	(14,265,735)	(12,386,668)
Total equity	39,769,744	31,504,874
TOTAL LIABILITIES AND EQUITY	$ 96,474,889	$ 97,938,911

CONSOLIDATED BALANCE SHEETS (U3

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - $ / shares	Sep. 30, 2017	Dec. 31, 2016
Statement of Financial Position [Abstract]
Preferred Stock, Par Value	$ .001	$ .001
Preferred Stock, Authorized	7,000,000	7,000,000
Preferred Stock, Issued	1,871,373	1,776,718
Common Stock, Par Value	$ .001	$ 0.001
Common stock, Authorized	100,000,000	100,000,000
Common Stock, Outstanding	12,559,608	12,201,884
Treasury stock	12,433	0

CONSOLIDATED STATEMENTS OF OPER

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
REVENUES:
Sales of natural gas and crude oil	$ 5,816,883	$ 3,048,249	$ 19,516,011	$ 8,579,137
EXPENSES:
Lease operating and production costs	2,509,352	1,233,626	8,229,740	3,311,402
General and administrative - stock-based compensation	414,660	380,460	851,492	1,664,855
General and administrative - other	1,622,528	1,717,627	5,705,159	8,153,874
Depreciation, depletion and amortization	2,761,668	1,524,877	8,666,052	5,357,207
Asset retirement obligation accretion expense	138,867	51,885	418,890	158,960
Impairment of oil and gas properties	0	12,735	0	17,560,918
Bad debt expense	(38,706)	16,602	34,807	32,352
Total expenses	7,408,369	4,937,812	23,906,140	36,239,568
LOSS FROM OPERATIONS	(1,591,486)	(1,889,563)	(4,390,129)	(27,660,431)
OTHER INCOME (EXPENSE):
Net gains (losses) from commodity derivatives	(1,260,280)	128,177	4,434,583	(161,161)
Interest expense	(429,313)	(81,168)	(1,407,689)	(195,006)
Gain (loss) on other property and equipment	0	0	484,768	0
Other, net	14,043	1,157	56,110	14,622
Total other income (expense)	(1,675,550)	48,166	3,567,772	(341,545)
INCOME (LOSS) BEFORE INCOME TAXES	(3,267,036)	(1,841,397)	(822,357)	(28,001,976)
Income tax expense	2,539	33,635	8,489	6,866
NET INCOME (LOSS)	(3,269,575)	(1,875,032)	(830,846)	(28,008,842)
PREFERRED STOCK:
Dividends paid in kind	359,311	335,199	1,048,221	981,347
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS	$ (3,628,886)	$ (2,210,231)	$ (1,879,067)	$ (28,990,189)
INCOME (LOSS) PER COMMON SHARE:
Basic	$ (0.29)	$ (0.30)	$ (0.15)	$ (3.89)
Diluted	$ (0.29)	$ (0.30)	$ (0.15)	$ (3.89)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING:
Basic	12,483,724	7,444,542	12,311,087	7,446,986
Diluted	12,483,724	7,444,542	12,311,087	7,446,986

CONSOLIDATED STATEMENTS OF CHAN

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Unaudited) - 9 months ended Sep. 30, 2017 - USD ($)	PREFERRED STOCK	COMMON STOCK	COMMON STOCK SUBSCRIBED	PAID-IN-CAPITAL	TREASURY STOCK	ACCUMULATED DEFICIT	Total
Beginning Balance, Amount at Dec. 31, 2016	$ 1,777	$ 12,202		$ 43,877,563	$ 0	$ (12,386,668)	$ 31,504,874
Beginning Balance, Shares at Dec. 31, 2016	1,776,718	12,201,884
Net income						(830,846)	(830,846)
Payment of Series D dividends in kind, Amount	$ 95			1,048,126		(1,048,221)	0
Payment of Series D dividends in kind, Shares	94,655
Public offering net proceeds, Amount			$ 9,600	8,394,486			8,404,086
Public offering net proceeds, Shares			9,600,000
Stock awards vested, Amount		$ 31		(31)
Stock awards vested, Shares		30,446
Amortization of stock-based compensation				716,062			716,062
Treasury stock - surrendered to settle employee tax liabilities					(24,432)		(24,432)
Restricted stock awards issued, Amount		$ 329		(329)
Restricted stock awards issued, Shares		329,491
Restricted stock awards forfeited, Amount		$ (2)		2
Restricted stock awards forfeited, Shares		(2,213)
Ending Balance, Amount at Sep. 30, 2017	$ 1,872	$ 12,560	$ 9,600	$ 54,035,879	$ (24,432)	$ (14,265,735)	$ 39,769,744
Ending Balance, Shares at Sep. 30, 2017	1,871,373	12,559,608	9,600,000

CONSOLIDATED STATEMENTS OF CASH

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016
Reconciliation of net loss to net cash provided by (used in) operating activities
Net income (loss)	$ (830,846)	$ (28,008,842)
Depreciation, depletion and amortization of property and equipment	8,666,052	5,357,207
Impairment of oil and gas properties	0	17,560,918
Amortization of debt issuance costs	277,293	0
Net deferred income tax expense	0	6,866
Deferred rent liability, net	163,962	0
Stock-based compensation expense	851,492	1,664,855
Settlement of asset retirement obligations	(430,415)	(17,890)
Accretion of asset retirement obligation	418,890	158,960
Bad debt expense	34,807	32,352
Net (gains) losses from commodity derivatives	(4,434,583)	161,161
Gain on sales of fixed assets	(556,141)	0
Loss on write-off of abandoned facilities	71,373	0
Gain on write-off of liabilities net of assets	(34,835)	0
Changes in current operating assets and liabilities:
Decrease in accounts receivable	736,959	2,988,184
(Increase) decrease in prepaids, deposits and other assets	715,603	656,948
(Decrease) increase in accounts payable and other current and non-current liabilities	(1,177,583)	(1,488,521)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	4,472,028	(927,802)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures on property and equipment	(5,964,781)	(9,878,724)
Proceeds from sale of oil and gas properties	5,400,563	0
Proceeds from sale of other fixed assets	645,791	0
Derivative settlements	1,103,525	1,319,517
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES	1,185,098	(8,559,207)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from borrowings	0	9,000,000
Net repayments on the senior credit facility	(8,050,000)	0
Repayments of borrowings - insurance financing	(599,341)	0
Debt issuance costs	(323,593)	0
Costs for common stock offering	(15,087)	0
Treasury stock repurchases	(24,432)	(408,323)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES	(9,012,453)	8,591,677
NET DECREASE IN CASH AND CASH EQUIVALENTS	(3,355,327)	(895,332)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD	3,625,686	4,064,094
CASH AND CASH EQUIVALENTS AT END OF PERIOD	270,359	3,168,762
Supplemental disclosure of cash flow information:
Interest payments (net of interest capitalized)	1,021,249	193,985
Income tax refund	20,699	0
Supplemental disclosure of significant non-cash activity:
(Increase) decrease in capital expenditures financed by accounts payable	(3,291,386)	498,140
Common stock subscription receivable (net of $909,600 offering costs at closing)	8,690,400	0
Other accrued offering expenses	$ 271,227	$ 0

1. ORGANIZATION AND BASIS OF PR

1. ORGANIZATION AND BASIS OF PRESENTATION	9 Months Ended
	Sep. 30, 2017
Accounting Policies [Abstract]
1. ORGANIZATION AND BASIS OF PRESENTATION	Organization Yuma Energy, Inc., a Delaware corporation (“Yuma” and collectively with its subsidiaries, the “Company”), is an independent Houston-based exploration and production company focused on acquiring, developing and exploring for conventional and unconventional oil and natural gas resources. Historically, the Company’s operations have focused on onshore properties located in central and southern Louisiana and southeastern Texas where it has a long history of drilling, developing and producing both oil and natural gas assets. More recently, the Company has begun acquiring acreage in Yoakum County, Texas, with plans to explore and develop oil and natural gas assets in the Permian Basin. Finally, the Company has operated positions in Kern County, California, and non-operated positions in the East Texas Woodbine and the Bakken Shale in North Dakota. On October 26, 2016, Yuma Energy, Inc., a California corporation (“Yuma California”), merged (the “Reincorporation Merger”) with and into Yuma. Pursuant to the Reincorporation Merger, Yuma California was reincorporated in Delaware as Yuma. Immediately thereafter, a wholly owned subsidiary of Yuma merged (the “Davis Merger”) with and into privately-held Davis Petroleum Acquisition Corp., a Delaware corporation (“Davis”). As a result of the Davis Merger, Davis became a wholly owned subsidiary of Yuma. Prior to the Reincorporation Merger, each share of Yuma California’s existing 9.25% Series A Cumulative Redeemable Preferred Stock (the “Yuma California Series A Preferred Stock”) was converted into 35 shares of common stock of Yuma California (“Yuma California Common Stock”). As a result of the closing of the Reincorporation Merger, each share of Yuma California Common Stock was converted into one-twentieth of one share (the “Reverse Stock Split”) of common stock of Yuma (the “common stock”). As a result of the Reverse Stock Split, Yuma issued an aggregate of approximately 4.75 million shares of its common stock. As a result of the Davis Merger, Yuma issued approximately 7.45 million shares of its common stock to the former stockholders of Davis’ common stock. Yuma also issued approximately 1.75 million shares of Series D Convertible Preferred Stock of Yuma (the “Series D Preferred Stock”) to existing Davis preferred stockholders. Upon completion of the Reincorporation Merger and the Davis Merger, there was an aggregate of approximately 12.2 million shares of common stock outstanding and 1.75 million shares of Series D Preferred Stock outstanding. At the closing of the Davis Merger, Davis appointed a majority of the board of directors of Yuma. Four out of the five members of Yuma’s board of directors prior to the closing of the Davis Merger continued to serve on the board of directors of Yuma, with one of those four directors having been appointed by Davis. Three additional directors were appointed by Davis. The Davis Merger was accounted for as a “reverse acquisition” and a recapitalization since the former common stockholders of Davis have control over the combined company through their post-merger 61.1% ownership of the common stock and majority representation on Yuma’s board of directors. The Davis Merger was accounted for as a business combination in accordance with ASC 805 Business Combinations (“ASC 805”). ASC 805, among other things, requires assets acquired and liabilities assumed to be measured at their acquisition date fair value. Although Yuma was the legal acquirer, Davis was the accounting acquirer. The historical financial statements are therefore those of Davis. Hence, the financial statements included in this report reflect (i) the historical results of Davis prior to the Davis Merger; (ii) the combined results of the Company following the Davis Merger; (iii) the acquired assets and liabilities of Davis at their historical cost; and (iv) the fair value of Yuma’s assets and liabilities as of the closing of the Davis Merger. Basis of Presentation The accompanying unaudited consolidated financial statements of the Company and its wholly owned subsidiaries have been prepared in accordance with Article 8-03 of Regulation S-X for interim financial statements required to be filed with the Securities and Exchange Commission (“SEC”). The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for the fair presentation of the Company’s Consolidated Balance Sheet as of September 30, 2017; the Consolidated Statements of Operations for the three and nine months ended September 30, 2017 and 2016; the Consolidated Statement of Changes in Equity for the nine months ended September 30, 2017; and the Consolidated Statements of Cash Flows for the nine months ended September 30, 2017 and 2016. The Company’s Consolidated Balance Sheet at December 31, 2016 is derived from the audited consolidated financial statements of the Company at that date. The preparation of financial statements in conformity with the generally accepted accounting principles of the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. For further information, see Note 2 in the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Interim period results are not necessarily indicative of results of operations or cash flows for the full year and accordingly, certain information normally included in financial statements and the accompanying notes prepared in accordance with GAAP has been condensed or omitted. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. The Company has evaluated events or transactions through the date of issuance of these unaudited consolidated financial statements. When required for comparability, reclassifications are made to the prior period financial statements to conform to the current year presentation. Reclassifications include moving COPAS overhead recoveries from lease operating expenses to general and administrative expenses, moving certain other revenue to offset lease operating expense, moving commodity derivative gains (losses) from expenses to other income (expense), moving regulatory interest from general and administrative to interest expense, and moving gain (loss) on other property and equipment from operating expenses to other income (expense).

2. CHANGES IN ACCOUNTING PRINCI

2. CHANGES IN ACCOUNTING PRINCIPLES	9 Months Ended
	Sep. 30, 2017
Changes In Accounting Principles
2. CHANGES IN ACCOUNTING PRINCIPLES	Not Yet Adopted In May 2017, the Financial Accounting Standards Board (“FASB”) issued ASU 2017-09, “Compensation – Stock Compensation (Topic 718): Scope of Modification Accounting.” The purpose of this update is to provide clarity as to which modifications of awards require modification accounting under Topic 718, whereas previously issued guidance frequently resulted in varying interpretations and a diversity of practice. An entity should employ modification accounting unless the following are met: (1) the fair value of the award is the same immediately before and after the award is modified; (2) the vesting conditions are the same under both the modified award and the original award; and (3) the classification of the modified award is the same as the original award, either equity or liability. Regardless of whether modification accounting is utilized, award disclosure requirements under Topic 718 remain unchanged. ASU 2017-09 will be effective for annual or any interim periods beginning after December 15, 2017. The Company does not believe adoption of ASU 2017-09 will have a material impact on its financial statements. In August 2017, the FASB issued ASU 2017-12, “Derivatives and Hedging (Topic 815)”, which makes significant changes to the current hedge accounting rules. The new guidance impacts the designation of hedging relationships; measurement of hedging relationships; presentation of the effects of hedging relationships; assessment of hedge effectiveness; and disclosures. The guidance is effective for annual periods beginning after December 15, 2018, including interim periods within those annual periods. The Company has elected not to apply hedge accounting in accordance with current GAAP, and therefore does not believe the adoption of ASU 2017-12 will have a material impact on its consolidated financial statements and related disclosures. In August 2016, the FASB issued ASU 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” which provides clarification on how certain cash receipts and cash payments are presented and classified on the statement of cash flows. This ASU is effective for annual and interim periods beginning after December 15, 2017 and is required to be adopted using a retrospective approach if practicable, with early adoption permitted. The Company does not expect the adoption of this ASU to have a material impact on its Consolidated Statements of Cash Flows. In February 2016, the FASB issued ASU 2016-02, “Leases,” a new lease standard requiring lessees to recognize lease assets and lease liabilities for most leases classified as operating leases under previous GAAP. The guidance is effective for fiscal years beginning after December 15, 2018 with early adoption permitted. The Company will be required to use a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company is currently evaluating the impact, if any, of adopting this standard on its consolidated financial statements. In January 2016, the FASB issued ASU 2016-01, “Recognition and Measurement of Financial Assets and Financial Liabilities,” which changes certain guidance related to the recognition, measurement, presentation and disclosure of financial instruments. This update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is not permitted for the majority of the update, but is permitted for two of its provisions. The Company is evaluating the new guidance, but does not believe that it will materially impact the Company’s consolidated financial statement presentation. In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” In March, April, and May of 2016, the FASB issued rules clarifying several aspects of the new revenue recognition standard. The new guidance is effective for fiscal years and interim periods beginning after December 15, 2017. This guidance outlines a new, single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. This new revenue recognition model provides a five-step analysis in determining when and how revenue is recognized. The new model will require revenue recognition to depict the transfer of promised goods or services to customers in an amount that reflects the consideration a company expects to receive in exchange for those goods and services. The new standard also requires more detailed disclosures related to the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The Company will not early adopt the standard although early adoption is permitted. The Company is currently evaluating whether to apply the retrospective approach or modified retrospective approach with the cumulative effect recognized as of the date of initial application. The Company is currently evaluating the impact the standard is expected to have on its consolidated financial statements by evaluating current revenue streams and evaluating contracts under the revised standards. Based upon the Company’s preliminary analysis, the Company does not expect the adoption of this ASU to have a material impact on its consolidated financial statements. Recently adopted The FASB issued ASU 2017-01, “Business Combinations (Topic 805): Clarifying the Definition of a Business,” which assists in determining whether a transaction should be accounted for as an acquisition or disposal of assets or as a business. This ASU provides a screen that when substantially all of the fair value of the gross assets acquired, or disposed of, are concentrated in a single identifiable asset, or a group of similar identifiable assets, the set will not be considered a business. If the screen is not met, a set must include an input and a substantive process that together significantly contribute to the ability to create an output to be considered a business. This ASU is effective for annual and interim periods beginning in 2018 and is required to be adopted using a prospective approach, with early adoption permitted for transactions not previously reported in issued financial statements. The Company adopted this ASU on January 1, 2017, and expects that the adoption of this ASU could have a material impact on future consolidated financial statements as future oil and gas asset acquisitions may not be considered businesses. The FASB issued ASU 2016-09, “Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting,” The FASB issued ASU 2014-15, “Presentation of Financial Instruments – Going Concern,” which requires management of an entity to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the entity’s ability to continue as a going concern within one year after the date that the financial statements are issued or available to be issued. This update is effective for annual periods ending after December 15, 2016. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

3. ASSET IMPAIRMENTS

3. ASSET IMPAIRMENTS	9 Months Ended
	Sep. 30, 2017
Asset Impairments
3. ASSET IMPAIRMENTS	The Company’s oil and natural gas properties are accounted for using the full cost method of accounting, under which all productive and nonproductive costs directly associated with property acquisition, exploration and development activities are capitalized. These capitalized costs (net of accumulated DD&A and deferred income taxes) of proved oil and natural gas properties are subject to a full cost ceiling limitation. The ceiling limits these costs to an amount equal to the present value, discounted at 10%, of estimated future net cash flows from estimated proved reserves less estimated future operating and development costs, abandonment costs (net of salvage value) and estimated related future income taxes. In accordance with SEC rules, prices used are the 12 month average prices, calculated 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, unless prices are defined by contractual arrangements. Prices are adjusted for “basis” or location differentials. Prices are held constant over the life of the reserves. The Company’s third quarter of 2017 full cost ceiling calculation was prepared by the Company using (i) $49.81 per barrel for oil, and (ii) $3.00 per MMBTU for natural gas as of September 30, 2017. If unamortized costs capitalized within the cost pool exceed the ceiling, the excess is charged to expense and separately disclosed during the period in which the excess occurs. Amounts thus required to be written off are not reinstated for any subsequent increase in the cost center ceiling. During the three month periods ended September 30, 2017 and 2016, the Company recorded full cost ceiling impairments after income taxes of $-0- and $12,735, respectively. During the nine month periods ended September 30, 2017 and 2016, the Company recorded full cost ceiling impairments after income taxes of $-0- and $17.6 million, respectively.

4. ASSET RETIREMENT OBLIGATIONS

4. ASSET RETIREMENT OBLIGATIONS	9 Months Ended
	Sep. 30, 2017
Asset Retirement Obligation Disclosure [Abstract]
4. ASSET RETIREMENT OBLIGATIONS	The Company has asset retirement obligations (“AROs”) associated with the future plugging and abandonment of oil and natural gas properties and related facilities. The accretion of the ARO is included in the Consolidated Statements of Operations. Revisions to the liability typically occur due to changes in the estimated abandonment costs, well economic lives and the discount rate. The following table summarizes the Company’s ARO transactions recorded during the nine months ended September 30, 2017 in accordance with the provisions of FASB ASC Topic 410, “Asset Retirement and Environmental Obligations” : Nine Months Ended September 30, 2017 Asset retirement obligations at December 31, 2016 $ 10,196,383 Liabilities incurred - Liabilities settled (873,728 ) Liabilities sold (418,527 ) Accretion expense 418,890 Revisions in estimated cash flows 754,089 Asset retirement obligations at September 30, 2017 $ 10,077,107 Based on expected timing of settlements, $359,659 of the ARO is classified as current at September 30, 2017.

5. FAIR VALUE MEASUREMENTS

5. FAIR VALUE MEASUREMENTS	9 Months Ended
	Sep. 30, 2017
Fair Value Disclosures [Abstract]
5. FAIR VALUE MEASUREMENTS	Certain financial instruments are reported at fair value on the Company’s Consolidated Balance Sheets. Under fair value measurement accounting guidance, fair value is defined as the amount that would be received from the sale of an asset or paid for the transfer of a liability in an orderly transaction between market participants, i.e., an exit price. To estimate an exit price, a three-level hierarchy is used. The fair value hierarchy prioritizes the inputs, which refer broadly to assumptions market participants would use in pricing an asset or a liability, into three levels. The Company uses a market valuation approach based on available inputs and the following methods and assumptions to measure the fair values of its assets and liabilities, which may or may not be observable in the market. Fair Value of Financial Instruments (other than Commodity Derivative Instruments, see below) – Derivatives Fair value measurements at September 30, 2017 Significant Quoted prices other Significant in active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total Assets (liabilities): Commodity derivatives – oil $ - $ 894,423 $ - $ 894,423 Commodity derivatives – gas - (119,367 ) - (119,367 ) Total assets $ - $ 775,056 $ - $ 775,056 Fair value measurements at December 31, 2016 Significant Quoted prices other Significant in active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total Liabilities: Commodity derivatives – oil $ - $ 956,997 $ - $ 956,997 Commodity derivatives – gas - 1,599,005 - 1,599,005 Total liabilities $ - $ 2,556,002 $ - $ 2,556,002 Derivative instruments listed above include swaps and three-way collars (see Note 6 – Commodity Derivative Instruments). Debt Asset Retirement Obligations

6. COMMODITY DERIVATIVE INSTRUM

6. COMMODITY DERIVATIVE INSTRUMENTS	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
6. COMMODITY DERIVATIVE INSTRUMENTS	Objective and Strategies for Using Commodity Derivative Instruments Futures contracts and commodity price swap agreements are used to fix the price of expected future oil and natural gas sales at major industry trading locations such as Henry Hub, Louisiana for natural gas and Cushing, Oklahoma for oil. Basis swaps are used to fix or float the price differential between product prices at one market location versus another. Options are used to establish a floor price, a ceiling price, or a floor and ceiling price (collar) for expected future oil and natural gas sales. A three-way collar is a combination of three options: a sold call, a purchased put, and a sold put. The sold call establishes the maximum price that the Company will receive for the contracted commodity volumes. The purchased put establishes the minimum price that the Company will receive for the contracted volumes unless the market price for the commodity falls below the sold put strike price, at which point the minimum price equals the reference price (e.g., NYMEX) plus the excess of the purchased put strike price over the sold put strike price. While these instruments mitigate the cash flow risk of future reductions in commodity prices, they may also curtail benefits from future increases in commodity prices. The Company does not apply hedge accounting to any of its derivative instruments. As a result, gains and losses associated with derivative instruments are recognized currently in earnings. Counterparty Credit Risk Commodity derivative instruments open as of September 30, 2017 are provided below. Natural gas prices are New York Mercantile Exchange (“NYMEX”) Henry Hub prices, and crude oil prices are NYMEX West Texas Intermediate (“WTI”). 2017 2018 2019 Settlement Settlement Settlement NATURAL GAS (MMBtu): Swaps Volume 517,916 1,725,133 373,906 Price $ 3.13 $ 3.00 $ 3.00 3-way collars Volume 41,712 - - Ceiling sold price (call) $ 3.39 - - Floor purchased price (put) $ 3.03 - - Floor sold price (short put) $ 2.47 - - CRUDE OIL (Bbls): Swaps Volume 31,927 195,152 156,320 Price $ 52.24 $ 53.17 $ 53.77 3-way collars Volume 26,637 - - Ceiling sold price (call) $ 77.00 - - Floor purchased price (put) $ 60.00 - - Floor sold price (short put) $ 45.00 - - Derivatives for each commodity are netted on the Consolidated Balance Sheets. The following table presents the fair value and balance sheet location of each classification of commodity derivative contracts on a gross basis without regard to same-counterparty netting: Fair value as of September 30, 2017 December 31, 2016 Asset commodity derivatives: Current assets $ 514,385 $ 734,464 Noncurrent assets 504,109 54,380 1,018,494 788,844 Liability commodity derivatives: Current liabilities (154,420 ) (2,074,915 ) Noncurrent liabilities (89,018 ) (1,269,931 ) (243,438 ) (3,344,846 ) Total commodity derivative instruments $ 775,056 $ (2,556,002 ) Net gains (losses) from commodity derivatives on the Consolidated Statements of Operations are comprised of the following: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Derivative settlements $ 552,850 $ 259,617 $ 1,103,525 $ 1,319,517 Mark to market on commodity derivatives (1,813,130 ) (131,440 ) 3,331,058 (1,480,678 ) Net gains (losses) from commodity derivatives $ (1,260,280 ) $ 128,177 $ 4,434,583 $ (161,161 )

7. PREFERRED STOCK

7. PREFERRED STOCK	9 Months Ended
	Sep. 30, 2017
Preferred stock [Abstract]
7. PREFERRED STOCK	The Company issued an aggregate of 1,754,179 shares of Series D Preferred Stock as part of the completion of the Davis Merger to former holders of Series A Preferred Stock, which is convertible into shares of the Company’s common stock. Each share of Series D Preferred Stock is convertible into a number of shares of common stock determined by dividing the original issue price, which was $11.0741176, by the conversion price, which was $11.0741176 as of September 30, 2017. The conversion price is subject to adjustment for stock splits, stock dividends, reclassification, and certain issuances of common stock for less than the conversion price. As of September 30, 2017, the Series D Preferred Stock had a liquidation preference of approximately $20.7 million and a conversion rate of $11.0741176 per share. The conversion price of the Series D Preferred Stock was adjusted as a result of our common stock offering that closed in October 2017. See Note 15 – Subsequent Events. The Series D Preferred Stock provides for cumulative dividends of 7.0% per annum, payable in-kind. The Company issued 32,446 and 94,655 shares of Series D Preferred Stock as in-kind dividends for the three and nine months ended September 30, 2017, respectively. The Company does not have any dividends in arrears at September 30, 2017.

8. STOCK-BASED COMPENSATION

8. STOCK-BASED COMPENSATION	9 Months Ended
	Sep. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
8. STOCK-BASED COMPENSATION	2014 Long-Term Incentive Plan On October 26, 2016, Yuma assumed the Yuma California 2014 Long-Term Incentive Plan (the “2014 Plan”), which was approved by the shareholders of Yuma California. The shareholders of Yuma California originally approved the 2014 Plan at the special meeting of shareholders on September 10, 2014 and the subsequent amendment to the 2014 Plan at the special meeting of shareholders on October 26, 2016. Under the 2014 Plan, Yuma may grant stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), stock appreciation rights (“SARs”), performance units, performance bonuses, stock awards and other incentive awards to employees of Yuma and its subsidiaries and affiliates. Yuma may also grant nonqualified stock options, RSAs, RSUs, SARs, performance units, stock awards and other incentive awards to any persons rendering consulting or advisory services and non-employee directors of Yuma and its subsidiaries, subject to the conditions set forth in the 2014 Plan. Generally, all classes of the Company’s employees are eligible to participate in the 2014 Plan. The 2014 Plan provides that a maximum of 2,495,000 shares of common stock may be issued in conjunction with awards granted under the 2014 Plan. As of the closing of the Reincorporation Merger, there were awards for approximately 179,165 shares of common stock outstanding. Awards that are forfeited under the 2014 Plan will again be eligible for issuance as though the forfeited awards had never been issued. Similarly, awards settled in cash will not be counted against the shares authorized for issuance upon exercise of awards under the 2014 Plan. The 2014 Plan provides that a maximum of 1,000,000 shares of common stock may be issued in conjunction with incentive stock options granted under the 2014 Plan. The 2014 Plan also limits the aggregate number of shares of common stock that may be issued in conjunction with stock options and/or SARs to any eligible employee in any calendar year to 1,500,000 shares. The 2014 Plan also limits the aggregate number of shares of common stock that may be issued in conjunction with the grant of RSAs, RSUs, performance unit awards, stock awards and other incentive awards to any eligible employee in any calendar year to 700,000 shares. At September 30, 2017, 943,349 shares of the 2,495,000 shares of common stock originally authorized under active share-based compensation plans remained available for future issuance. Yuma generally issues new shares to satisfy awards under employee share-based payment plans. The number of shares available is reduced by awards granted. The Company accounts for stock-based compensation in accordance with FASB ASC Topic 718, “Compensation – Stock Compensation”. RSAs, SARs and Stock Options granted to officers and employees generally vest in one-third increments over a three-year period, or with three year cliff vesting, and are contingent on the recipient’s continued employment. RSAs granted to directors generally vest in quarterly increments over a one-year period. Equity Based Awards – Liability Based Awards – Total share-based compensation expenses recognized for the three months ended September 30, 2017 and 2016 were $414,660 (none capitalized) and $380,460 (none capitalized), respectively. For the nine months ended September 30, 2017 and 2016, total share-based compensation expenses recognized were $851,492 (none capitalized) and $1,664,855 (net of capitalized amount of $1,715,810), respectively.

9. EARNINGS PER COMMON SHARE

9. EARNINGS PER COMMON SHARE	9 Months Ended
	Sep. 30, 2017
INCOME (LOSS) PER COMMON SHARE:
9. EARNINGS PER COMMON SHARE	Earnings per common share – Basic is calculated by dividing net income (loss) attributable to common shareholders by the weighted average number of shares of common stock outstanding during the period. Earnings per common share – Diluted assumes the conversion of all potentially dilutive securities, and is calculated by dividing net income (loss) attributable to common shareholders by the sum of the weighted average number of shares of common stock outstanding plus potentially dilutive securities. Earnings per common share – Diluted considers the impact of potentially dilutive securities except in periods where their inclusion would have an anti-dilutive effect. Equity, including the average number of shares of common stock and per share amounts, has been retroactively restated to reflect the Davis Merger. A reconciliation of earnings per common share is as follows: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net income (loss) attributable to common stockholders $ (3,628,886 ) $ (2,210,231 ) $ (1,879,067 ) $ (28,990,189 ) Weighted average common shares outstanding Basic 12,483,724 7,444,542 12,311,087 7,446,986 Add potentially dilutive securities: Unvested restricted stock awards - - - - Stock appreciation rights - - - - Stock options - - - - Series A preferred stock - - - - Series D preferred stock - - - - Diluted weighted average common shares outstanding 12,483,724 7,444,542 12,311,087 7,446,986 Net income (loss) per common share: Basic $ (0.29 ) $ (0.30 ) $ (0.15 ) $ (3.89 ) Diluted $ (0.29 ) $ (0.30 ) $ (0.15 ) $ (3.89 )

10. DEBT AND INTEREST EXPENSE

10. DEBT AND INTEREST EXPENSE	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
10. DEBT AND INTEREST EXPENSE	Long-term debt consisted of the following: September 30, December 31, 2017 2016 Senior credit facility $ 31,450,000 $ 39,500,000 Installment loan due 7/15/17 originating from the financing of insurance premiums at 4.38% interest rate - 599,341 Total debt 31,450,000 40,099,341 Less: current maturities - (599,341 ) Total long-term debt $ 31,450,000 $ 39,500,000 Senior Credit Facility In connection with the closing of the Davis Merger on October 26, 2016, Yuma and three of its subsidiaries, as the co-borrowers, entered into a credit agreement providing for a $75.0 million three-year senior secured revolving credit facility (the “Credit Agreement”) with SocGen, as administrative agent, SG Americas Securities, LLC (“SG Americas”), as lead arranger and bookrunner, and the Lenders signatory thereto (collectively with SocGen, the “Lender”). The borrowing base of the credit facility was reaffirmed on September 8, 2017 at $40.5 million. The borrowing base is generally subject to redetermination on April 1st and October 1st of each year, as well as special redeterminations described in the Credit Agreement. The amounts borrowed under the Credit Agreement bear annual interest rates at either (a) the London Interbank Offered Rate (“LIBOR”) plus 3.00% to 4.00% or (b) the prime lending rate of SocGen plus 2.00% to 3.00%, depending on the amount borrowed under the credit facility and whether the loan is drawn in U.S. dollars or Euro dollars. The interest rate for the credit facility at September 30, 2017 was 4.99% for LIBOR-based debt and 7.0% for prime-based debt. Principal amounts outstanding under the credit facility are due and payable in full at maturity on October 26, 2019. All of the obligations under the Credit Agreement, and the guarantees of those obligations, are secured by substantially all of the Company’s assets. Additional payments due under the Credit Agreement include paying a commitment fee to the Lender in respect of the unutilized commitments thereunder. The commitment rate is 0.50% per year of the unutilized portion of the borrowing base in effect from time to time. The Company is also required to pay customary letter of credit fees. The Credit Agreement contains a number of covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability to incur additional indebtedness, create liens on assets, make investments, enter into sale and leaseback transactions, pay dividends and distributions or repurchase its capital stock, engage in mergers or consolidations, sell certain assets, sell or discount any notes receivable or accounts receivable, and engage in certain transactions with affiliates. In addition, the Credit Agreement requires the Company to maintain the following financial covenants: a current ratio of not less than 1.0 to 1.0 on the last day of each quarter, a ratio of total debt to earnings before interest, taxes, depreciation, depletion, amortization and exploration expenses (“EBITDAX”) ratio of not greater than 3.5 to 1.0 for the four fiscal quarters ending on the last day of the fiscal quarter immediately preceding such date of determination, and a ratio of EBITDAX to interest expense of not less than 2.75 to 1.0 for the four fiscal quarters ending on the last day of the fiscal quarter immediately preceding such date of determination, and cash and cash equivalent investments together with borrowing availability under the Credit Agreement of at least $4.0 million. The Credit Agreement contains customary affirmative covenants and defines events of default for credit facilities of this type, including failure to pay principal or interest, breach of covenants, breach of representations and warranties, insolvency, judgment default, and a change of control. Upon the occurrence and continuance of an event of default, the Lender has the right to accelerate repayment of the loans and exercise its remedies with respect to the collateral. As of September 30, 2017 and December 31, 2016, the Company was in compliance with the covenants under the Credit Agreement.

11. STOCKHOLDERS' EQUITY

11. STOCKHOLDERS' EQUITY	9 Months Ended
	Sep. 30, 2017
EQUITY:
11. STOCKHOLDERS' EQUITY	Yuma is authorized to issue up to 100,000,000 shares of common stock, $0.001 par value per share, and 20,000,000 shares of preferred stock, $0.001 par value per share. The holders of common stock are entitled to one vote for each share of common stock, except as otherwise required by law. The Company has designated 7,000,000 shares of preferred stock as Series D Preferred Stock. The Company assumed the 2014 Plan upon the completion of the Reincorporation Merger as described in Note 8 – Stock-Based Compensation, which describes outstanding stock options, RSAs and SARs granted under the 2014 Plan. Common Stock Offering On September 28, 2017, the Company entered into an underwriting agreement with Northland Securities, Inc., as representative of the underwriters (the “Underwriters”) for a public offering of 9,600,000 shares of common stock (excluding the 1,440,000 shares that may be purchased pursuant to the underwriter’s overallotment option), at a public offering price of $1.00 per share. The Company received net proceeds from this offering of $8.4 million, after deducting underwriters’ fees and offering expenses of $1.2 million. The Company recorded a subscription receivable of $8,690,400 on September 30, 2017 in connection with the Company’s entry into a firm underwriting agreement, and accrued $271,227 of additional offering costs. The Company received the $8,690,400 on October 3, 2017 in connection with the closing of the offering. See Note 15 – Subsequent Events.

12. INCOME TAXES

12. INCOME TAXES	9 Months Ended
	Sep. 30, 2017
Income Tax Disclosure [Abstract]
12. INCOME TAXES	The Company’s effective tax rate for the three months ended September 30, 2017 and 2016 was (0.08%) and (1.83%), respectively. The difference between the statutory federal income taxes calculated using a U.S. Federal statutory corporate income tax rate of 35% and the Company’s effective tax rate of (0.08%) for the three months ended September 30, 2017 is primarily related to the valuation allowance on the deferred tax assets and state income taxes. The difference between the statutory federal income taxes calculated using a U.S. Federal statutory corporate income tax rate of 35% and the Company’s effective tax rate of (1.83%) for the three months ended September 30, 2016 is primarily related to the full valuation allowance against its Federal and Louisiana net deferred tax assets. The Company’s effective tax rate for the nine months ended September 30, 2017 and 2016 was (1.03%) and (0.02%), respectively. The difference between the statutory federal income taxes calculated using a U.S. Federal statutory corporate income tax rate of 35% and the Company’s effective tax rate of (1.03%) for the nine months ended September 30, 2017 is primarily related to the valuation allowance on the deferred tax assets. The difference between the statutory federal income taxes calculated using a U.S. Federal statutory corporate income tax rate of 35% and the Company’s effective tax rate of (0.02%) for the nine months ended September 30, 2016 is primarily related to the full valuation allowance against its Federal and Louisiana net deferred tax assets. As of September 30, 2017, the Company had federal and state net operating loss carryforwards of approximately $133.6 million which expire between 2022 and 2037. Of this amount, approximately $61.3 million is subject to limitation under Section 382 of the Internal Revenue Code of 1986, as amended, which could result in some amounts expiring prior to being utilized. Realization of a deferred tax asset is dependent, in part, on generating sufficient taxable income prior to expiration of the loss carryforwards. The Company provides for deferred income taxes on the difference between the tax basis of an asset or liability and its carrying amount in the financial statements in accordance FASB ASC Topic 740, “Income Taxes”. This difference will result in taxable income or deductions in future years when the reported amount of the asset or liability is recovered or settled, respectively. In recording deferred tax assets, the Company considers whether it is more likely than not that some portion or all of the deferred income tax asset will be realized. The ultimate realization of deferred income tax assets, if any, is dependent upon the generation of future taxable income during the periods in which those deferred income tax assets would be deductible. Based on the available evidence, the Company has recorded a full valuation allowance against its net deferred tax assets.

13. OIL AND GAS ASSET SALES

13. OIL AND GAS ASSET SALES	9 Months Ended
	Sep. 30, 2017
Oil And Gas Asset Sales
13. OIL AND GAS ASSET SALES	On May 22, 2017 and effective as of January 1, 2017, the Company sold certain oil and natural gas properties for $5.5 million located in Brazos County, Texas known as the El Halcón property. The Company’s El Halcón property consisted of an average working interest of approximately 8.5% (1,557 net acres) producing approximately 140 Boe/d net from 50 Eagle Ford wells and one Austin Chalk well.

14. COMMITMENTS AND CONTINGENCI

14. COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2017
Commitments and Contingencies Disclosure [Abstract]
14. COMMITMENTS AND CONTINGENCIES	Joint Development Agreement On March 27, 2017, the Company entered into a Joint Development Agreement (“JDA”) with two privately held companies, both unaffiliated entities, covering an area of approximately 52 square miles (33,280 acres) in the Permian Basin of Yoakum County, Texas. In connection with the JDA, the Company acquired an 87.5% working interest in approximately 2,841 acres (2,486 net acres) as of September 30, 2017. As the operator of the property covered by the JDA, the Company is committed to spend an additional $1.5 million by March 2020. The Company intends to acquire additional leasehold acreage and begin drilling its first joint venture well in fourth quarter of 2017. Throughput Commitment Agreement On August 1, 2014, Crimson Energy Partners IV, LLC (“Crimson”), as operator of the Company’s Chalktown properties, in which the Company has a working interest, entered into a throughput commitment (the “Commitment”) with ETC Texas Pipeline, Ltd. effective April 1, 2015 for a five year throughput commitment. In connection with the Commitment, the operator and the Company failed to reach the volume commitments in year two, and the Company anticipates that a shortfall will exist through the expiration of the five year term, which expires in March 2020. Accordingly, the Company is accruing the expected volume commitment shortfall amounts based on production to lease operating expense (“LOE”) on a monthly basis. On a net basis, the Company anticipates accruing approximately $30,000 in LOE per month, which represents the maximum amounts that could be owed based upon the Commitment. Lease Agreement On July 26, 2017, the Company entered into a tenth amendment to its office lease whereby the term of the lease was extended to August 31, 2023. The lease amendment covers a period of 68 calendar months and goes into effect on January 1, 2018. In addition, the lease amendment included seven months of abated rent and additional rent expense associated with operating expenses from June 1, 2017 through February 1, 2018, as well as other incentives, including abated parking cost and tenant lease improvement allowances. The base rent amount (which begins on January 1, 2018) starts at $258,060 per annum and escalates to $288,420 per annum during the final 19 months of the lease extension. In addition to the base rent amount, the Company will also be responsible for additional rent expense associated with the operating cost of the building as well as parking charges once the abatement period ends. The Company accounts for the lease as an operating lease under GAAP. Certain Legal Proceedings From time to time, the Company is party to various legal proceedings arising in the ordinary course of business. While the outcome of lawsuits cannot be predicted with certainty, the Company is not currently a party to any proceeding that it believes, if determined in a manner adverse to the Company, could have a potential material adverse effect on its financial condition, results of operations, or cash flows, including the following actions: Yuma Energy, Inc. v. Cardno PPI Technology Services, LLC Arbitration On May 20, 2015, counsel for Cardno PPI Technology Services, LLC (“Cardno PPI”) sent a notice of the filing of liens totaling $304,209 on the Company’s Crosby 14 No. 1 Well and Crosby 14 SWD No. 1 Well in Vernon Parish, Louisiana. The Company disputed the validity of the liens and of the underlying invoices, and notified Cardno PPI that applicable credits had not been applied. The Company invoked mediation on August 11, 2015 on the issues of the validity of the liens, the amount due pursuant to terms of the parties’ Master Service Agreement (“MSA”), and PPI Cardno’s breaches of the MSA. Mediation was held on April 12, 2016; no settlement was reached. On May 12, 2016, Cardno filed a lawsuit in Louisiana state court to enforce the liens; the Court entered an Order Staying Proceeding on June 13, 2016, ordering that the lawsuit “be stayed pending mediation/arbitration between the parties.” On June 17, 2016, the Company served a Notice of Arbitration on Cardno PPI, stating claims for breach of the MSA billing and warranty provisions. On July 15, 2016, Cardno PPI served a Counterclaim for $304,209 plus attorneys’ fees. The parties have selected an arbitrator, and the arbitration hearing is presently set for January 9, 2018. Management intends to pursue the Company’s claims and to defend the counterclaim vigorously. The Parish of St. Bernard v. Atlantic Richfield Co., et al On October 13, 2016, two subsidiaries of the Company, Exploration and Yuma Petroleum Company (“YPC”), were named as defendants, among several other defendants, in an action by the Parish of St. Bernard in the Thirty-Fourth Judicial District of Louisiana. The petition alleges violations of the State and Local Coastal Resources Management Act of 1978, as amended, in the St. Bernard Parish. The Company has notified its insurance carrier of the lawsuit. Management intends to defend the plaintiffs’ claims vigorously. At this point in the legal process, no evaluation of the likelihood of an unfavorable outcome or associated economic loss can be made; therefore no liability has been recorded on the Company’s consolidated financial statements. The case has been removed to federal district court for the Eastern District of Louisiana. A motion to remand has been filed and the Court officially remanded the case on July 6, 2017. Exceptions for the Company and the other defendants have been filed; however, the hearing for such exceptions has been continued from the original date of October 6, 2017 to November 22, 2017. Davis - Cameron Parish vs. BEPCO LP, et al & Davis - Cameron Parish vs. Alpine Exploration Companies, Inc., et al. The Parish of Cameron, Louisiana, filed a series of lawsuits against approximately 190 oil and gas companies alleging that the defendants, including Davis, have failed to clear, revegetate, detoxify, and restore the mineral and production sites and other areas affected by their operations and activities within certain coastal zone areas to their original condition as required by Louisiana law, and that such defendants are liable to Cameron Parish for damages under certain Louisiana coastal zone laws for such failures; however, the amount of such damages has not been specified. Two of these lawsuits, originally filed February 4, 2016 in the 38th Judicial District Court for the Parish of Cameron, State of Louisiana, name Davis as defendant, along with more than 30 other oil and gas companies. Both cases have been removed to federal district court for the Western District of Louisiana. The Company denies these claims and intends to vigorously defend them. Motions to remand have been filed but have not yet been ruled upon. Louisiana, et al. Escheat Tax Audits The States of Louisiana, Texas, Minnesota, North Dakota and Wyoming have notified the Company that they will examine the Company’s books and records to determine compliance with each of the examining state’s escheat laws. The review is being conducted by Discovery Audit Services, LLC. The Company has engaged Ryan, LLC to represent it in this matter. The exposure related to the audits is not currently determinable. Louisiana Severance Tax Audit The State of Louisiana, Department of Revenue, notified Exploration that it was auditing Exploration’s calculation of its severance tax relating to Exploration’s production from November 2012 through March 2016. The audit relates to the Department of Revenue’s recent interpretation of long-standing oil purchase contracts to include a disallowable “transportation deduction,” and thus to assert that the severance tax paid on crude oil sold during the contract term was not properly calculated. The Department of Revenue sent a proposed assessment in which they sought to impose $476,954 in additional state severance tax plus associated penalties and interest. Exploration engaged legal counsel to protest the proposed assessment and request a hearing. Exploration then entered a Joint Defense Group of operators challenging similar audit results. Since the Joint Defense Group is challenging the same legal theory, the Board of Tax Appeals proposed to hear a motion brought by one of the taxpayers that would address the rule for all through a test case. Exploration’s case has been stayed pending adjudication of the test case. The hearing for the test case was held on November 7, 2017, and the Company is currently waiting on a decision from the Board of Tax Appeals. Louisiana Department of Wildlife and Fisheries The Company received notice from the Louisiana Department of Wildlife and Fisheries (“LDWF”) in July 2017 stating that Exploration has open Coastal Use Permits (“CUPs”) located within the Louisiana Public Oyster Seed Grounds dating back from as early as November 1993 and through a period ending in November 2012. The majority of the claims relate to permits that were filed from 2000 to 2005. Pursuant to the conditions of each CUP, LDWF is alleging that damages were caused to the oyster seed grounds and that compensation of an aggregate amount of approximately $500,000 is owed by the Company. The Company is currently evaluating the merits of the claim and is reviewing the LDWF analysis. Miami Corporation – South Pecan Lake Field Area P&A The Company, along with several other E&P companies in the chain of title, received letters from representatives of Miami Corporation demanding the performance of well P&A, facility removal and restoration obligations for wells in the South Pecan Lake Field Area, Cameron Parish, Louisiana. The Company is currently evaluating the merits of the claim.

15. SUBSEQUENT EVENTS

15. SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2017
Subsequent Events [Abstract]
15. SUBSEQUENT EVENTS	The Company is not aware of any subsequent events which would require recognition or disclosure in its consolidated financial statements, except as noted below or disclosed in the Company’s filings with the SEC. On October 3, 2017, the Company closed its common stock offering of 9,600,000 shares of common stock. On October 31, 2017, the Underwriters exercised their overallotment option and purchased 500,000 shares of common stock at the public offering price of $1.00 per share. The Company received net proceeds of approximately $462,000 after deducting underwriters’ fees and expenses. On October 3, 2017, at the closing of the Company’s common stock offering, the Company issued 9,600,000 shares of common stock and at the closing of the overallotment option on October 31, 2017, the Company issued 500,000 shares of its common stock, resulting in an adjustment to the conversion price of the Series D preferred stock from $11.0741176 per share to $6.5838109 per share, resulting in the issuance of approximately 3,147,693 shares of common stock if all of the outstanding shares of Series D preferred stock were to be converted.

4. ASSET RETIREMENT OBLIGATIO22

4. ASSET RETIREMENT OBLIGATIONS (Tables)	9 Months Ended
	Sep. 30, 2017
Asset Retirement Obligation Disclosure [Abstract]
Asset Retirement Obligations	Nine Months Ended September 30, 2017 Asset retirement obligations at December 31, 2016 $ 10,196,383 Liabilities incurred - Liabilities settled (873,728 ) Liabilities sold (418,527 ) Accretion expense 418,890 Revisions in estimated cash flows 754,089 Asset retirement obligations at September 30, 2017 $ 10,077,107

5. FAIR VALUE MEASUREMENTS (Tab

5. FAIR VALUE MEASUREMENTS (Tables)	9 Months Ended
	Sep. 30, 2017
Fair Value Disclosures [Abstract]
Fair value measurements by hierarchy	Fair value measurements at September 30, 2017 Significant Quoted prices other Significant in active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total Assets (liabilities): Commodity derivatives – oil $ - $ 894,423 $ - $ 894,423 Commodity derivatives – gas - (119,367 ) - (119,367 ) Total assets $ - $ 775,056 $ - $ 775,056 Fair value measurements at December 31, 2016 Significant Quoted prices other Significant in active observable unobservable markets inputs inputs (Level 1) (Level 2) (Level 3) Total Liabilities: Commodity derivatives – oil $ - $ 956,997 $ - $ 956,997 Commodity derivatives – gas - 1,599,005 - 1,599,005 Total liabilities $ - $ 2,556,002 $ - $ 2,556,002

6. COMMODITY DERIVATIVE INSTR24

6. COMMODITY DERIVATIVE INSTRUMENTS (Tables)	9 Months Ended
	Sep. 30, 2017
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Commodity derivative instruments	2017 2018 2019 Settlement Settlement Settlement NATURAL GAS (MMBtu): Swaps Volume 517,916 1,725,133 373,906 Price $ 3.13 $ 3.00 $ 3.00 3-way collars Volume 41,712 - - Ceiling sold price (call) $ 3.39 - - Floor purchased price (put) $ 3.03 - - Floor sold price (short put) $ 2.47 - - CRUDE OIL (Bbls): Swaps Volume 31,927 195,152 156,320 Price $ 52.24 $ 53.17 $ 53.77 3-way collars Volume 26,637 - - Ceiling sold price (call) $ 77.00 - - Floor purchased price (put) $ 60.00 - - Floor sold price (short put) $ 45.00 - -
Schedule of derivative assets and liablities	Fair value as of September 30, 2017 December 31, 2016 Asset commodity derivatives: Current assets $ 514,385 $ 734,464 Noncurrent assets 504,109 54,380 1,018,494 788,844 Liability commodity derivatives: Current liabilities (154,420 ) (2,074,915 ) Noncurrent liabilities (89,018 ) (1,269,931 ) (243,438 ) (3,344,846 ) Total commodity derivative instruments $ 775,056 $ (2,556,002 )
Gains (losses) from commodity derivatives	Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Derivative settlements $ 552,850 $ 259,617 $ 1,103,525 $ 1,319,517 Mark to market on commodity derivatives (1,813,130 ) (131,440 ) 3,331,058 (1,480,678 ) Net gains (losses) from commodity derivatives $ (1,260,280 ) $ 128,177 $ 4,434,583 $ (161,161 )

9. EARNINGS (LOSS) PER COMMON S

9. EARNINGS (LOSS) PER COMMON SHARE (Tables)	9 Months Ended
	Sep. 30, 2017
INCOME (LOSS) PER COMMON SHARE:
Potentially dilutive securities	Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Net income (loss) attributable to common stockholders $ (3,628,886 ) $ (2,210,231 ) $ (1,879,067 ) $ (28,990,189 ) Weighted average common shares outstanding Basic 12,483,724 7,444,542 12,311,087 7,446,986 Add potentially dilutive securities: Unvested restricted stock awards - - - - Stock appreciation rights - - - - Stock options - - - - Series A preferred stock - - - - Series D preferred stock - - - - Diluted weighted average common shares outstanding 12,483,724 7,444,542 12,311,087 7,446,986 Net income (loss) per common share: Basic $ (0.29 ) $ (0.30 ) $ (0.15 ) $ (3.89 ) Diluted $ (0.29 ) $ (0.30 ) $ (0.15 ) $ (3.89 )

10. DEBT AND INTEREST EXPENSE (

10. DEBT AND INTEREST EXPENSE (Tables)	9 Months Ended
	Sep. 30, 2017
Debt Disclosure [Abstract]
Debt	September 30, December 31, 2017 2016 Senior credit facility $ 31,450,000 $ 39,500,000 Installment loan due 7/15/17 originating from the financing of insurance premiums at 4.38% interest rate - 599,341 Total debt 31,450,000 40,099,341 Less: current maturities - (599,341 ) Total long-term debt $ 31,450,000 $ 39,500,000

3. ASSET IMPAIRMENTS (Details N

3. ASSET IMPAIRMENTS (Details Narrative) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Asset Impairments Details Narrative
Oil and gas impairment	$ 0	$ 12,735	$ 0	$ 17,560,918

4. ASSET RETIREMENT OBLIGATIO28

4. ASSET RETIREMENT OBLIGATIONS (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
Asset Retirement Obligation Disclosure [Abstract]
Beginning of year balance			$ 10,196,383
Liabilities incurred during year			0
Liabilities settled during year			(873,728)
Liabilities sold during year			(418,527)
Accretion expense	$ 138,867	$ 51,885	418,890	$ 158,960
Revisions in estimated cash flows			754,089
End of year balance	$ 10,077,107		$ 10,077,107

5. FAIR VALUE MEASUREMENTS (Det

5. FAIR VALUE MEASUREMENTS (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Total assets	$ 775,056
Total Liabilities		$ 2,556,002
Commodity derivatives - oil
Derivative Assets	894,423
Derivative liability		956,997
Commodity derivatives - gas
Derivative Assets	(119,367)
Derivative liability		1,599,005
Quoted prices in active markets (Level 1)
Total assets	0
Total Liabilities		0
Quoted prices in active markets (Level 1) | Commodity derivatives - oil
Derivative Assets	0
Derivative liability		0
Quoted prices in active markets (Level 1) | Commodity derivatives - gas
Derivative Assets	0
Derivative liability		0
Significant other observable inputs (Level 2)
Total assets	775,056
Total Liabilities		2,556,002
Significant other observable inputs (Level 2) | Commodity derivatives - oil
Derivative Assets	894,423
Derivative liability		956,997
Significant other observable inputs (Level 2) | Commodity derivatives - gas
Derivative Assets	(119,367)
Derivative liability		1,599,005
Significant unobservable inputs (Level 3)
Total assets	0
Total Liabilities		0
Significant unobservable inputs (Level 3) | Commodity derivatives - oil
Derivative Assets	0
Derivative liability		0
Significant unobservable inputs (Level 3) | Commodity derivatives - gas
Derivative Assets	$ 0
Derivative liability		$ 0

6. COMMODITY DERIVATIVE INSTR30

6. COMMODITY DERIVATIVE INSTRUMENTS (Details)	Dec. 31, 2019bblMMBbls$ / MMBTU$ / bbl	Dec. 31, 2018bblMMBbls$ / MMBTU$ / bbl	Dec. 31, 2017bblMMBbls$ / MMBTU$ / bbl
Swaps
Natural Gas (MMBtu):
Volume	373,906	1,725,133	517,916
Price(NYMEX)	3	3	3.13
Crude Oil:
Volume | bbl	156,320	195,152	31,927
Floor Purchased Price (put) | $ / bbl	53.77	53.17	52.24
3-Way Collars
Natural Gas (MMBtu):
Volume | MMBbls	0	0	41,712
Ceiling sold price (call)	0	0	3.39
Floor purchased price (put)	0	0	3.03
Floor sold price (short put)	0	0	2.47
Crude Oil:
Volume | bbl	0	0	26,637
Ceiling sold price (call) | $ / bbl	0	0	77
Floor purchased price (put) | $ / bbl	0	0	60
Floor sold price (short put) | $ / bbl	0	0	45

6. COMMODITY DERIVATIVE INSTR31

6. COMMODITY DERIVATIVE INSTRUMENTS (Details 1) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Asset commodity derivatives:
Current assets	$ 514,385	$ 734,464
Noncurrent assets	504,109	54,380
Total	1,018,494	788,844
Liability commodity derivatives:
Current liabilities	(154,420)	(2,074,915)
Noncurrent liabilities	(89,018)	(1,269,931)
Total	(243,438)	(3,344,846)
Total commodity derivative instruments	$ 775,056	$ (2,556,002)

6. COMMODITY DERIVATIVE INSTR32

6. COMMODITY DERIVATIVE INSTRUMENTS (Details 2) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
C. Commodity Derivative Instruments Details 1
Derivative settlements	$ 552,850	$ 259,617	$ 1,103,525	$ 1,319,517
Mark to market on commodity derivatives	(1,813,130)	(131,440)	3,331,058	(1,480,678)
Net gains (losses) from commodity derivatives	$ (1,260,280)	$ 128,177	$ 4,434,583	$ (161,161)

9. EARNINGS PER COMMON SHARE (D

9. EARNINGS PER COMMON SHARE (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2017	Sep. 30, 2016	Sep. 30, 2017	Sep. 30, 2016
INCOME (LOSS) PER COMMON SHARE:
Net income (loss) attributable to common stockholders	$ (3,628,886)	$ (2,210,231)	$ (1,879,067)	$ (28,990,189)
Net income (loss) per common share:
Basic	$ (0.29)	$ (0.30)	$ (0.15)	$ (3.89)
Diluted	$ (0.29)	$ (0.30)	$ (0.15)	$ (3.89)
Weighted average common shares outstanding
Basic	12,483,724	7,444,542	12,311,087	7,446,986
Add potentially dilutive securities
Unvested restricted stock awards	0	0	0	0
Stock appreciation rights	0	0	0	0
Stock options	0	0	0	0
Series A preferred stock	0	0	0	0
Series D preferred stock	0	0	0	0
Diluted weighted average common shares outstanding	12,483,724	7,444,542	12,311,087	7,446,986

10. DEBT AND INTEREST EXPENSE34

10. DEBT AND INTEREST EXPENSE (Details) - USD ($)	Sep. 30, 2017	Dec. 31, 2016
Total Debt	$ 31,450,000	$ 40,099,341
Less: current maturities	0	(599,341)
Total long-term debt	31,450,000	39,500,000
Senior Credit Facility [Member]
Total Debt	31,450,000	39,500,000
Installment loan due July 15, 2017 [Member]
Total Debt	$ 0	$ 599,341