Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2014 | 12-May-14 | |
Document And Entity Information | ' | ' |
Entity Registrant Name | 'VICTORY ENERGY CORP | ' |
Entity Central Index Key | '0000700764 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 31-Mar-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity a Well-known Seasoned Issuer | 'No | ' |
Entity a Voluntary Filer | 'No | ' |
Entity's Reporting Status Current | 'Yes | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock Shares Outstanding | ' | 27,563,619 |
Document Fiscal Year Focus | '2014 | ' |
Document Fiscal Period Focus | 'Q1 | ' |
Trading Symbol | 'VYEY | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Current Assets | ' | ' |
Cash and cash equivalents | $198,510 | $20,858 |
Accounts receivable - less allowance for doubtful accounts of $200,000, and $200,000 for March 31, 2014 and December 31, 2013, respectively | 80,670 | 116,542 |
Accounts receivable - affiliate | 72,471 | 68,571 |
Prepaid expenses | 111,201 | 38,663 |
Total current assets | 462,852 | 244,634 |
Fixed Assets | ' | ' |
Furniture and equipment | 43,173 | 43,173 |
Accumulated depreciation | -13,117 | -11,597 |
Total furniture and fixtures, net | 30,056 | 31,576 |
Oil gas properties, net of impairment (successful efforts method) | 4,203,767 | 3,715,648 |
Accumulated depletion, depreciation and amortization | -1,594,347 | -1,517,836 |
Total oil and gas properties, net | 2,609,420 | 2,197,812 |
Other Assets | ' | ' |
Deferred debt financing costs | 118,501 | ' |
Total Assets | 3,220,829 | 2,474,022 |
Current Liabilities | ' | ' |
Accounts payable | 368,091 | 351,435 |
Accrued liabilities | 195,594 | 196,913 |
Accrued liabilities - related parties | 3,193 | 18,542 |
Liability for unauthorized preferred stock issued | 9,283 | 9,283 |
Total current liabilities | 576,161 | 576,173 |
Other Liabilities | ' | ' |
Asset retirement obligations | 56,921 | 51,954 |
Long term note payable | 868,000 | ' |
Total long term liabilities | 924,921 | 51,954 |
Total liabilities | 1,501,082 | 628,127 |
Stockholders' Equity | ' | ' |
Common stock, $0.001 par value, 47,500,000 shares authorized, 27,563,619 shares and 27,563,619 shares issued and outstanding for March 31, 2014 and December 31, 2013, respectively | 27,564 | 27,564 |
Additional paid in capital | 34,404,239 | 34,404,239 |
Accumulated deficit | -37,337,197 | -36,901,894 |
Total Victory Energy Corporation stockholders' deficit | -2,905,394 | -2,470,091 |
Non-controlling interest | 4,625,141 | 4,315,986 |
Total stockholders' equity | 1,719,747 | 1,845,895 |
Total Liabilities and Stockholders' Equity | $3,220,829 | $2,474,022 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Condensed Consolidated Balance Sheets Parenthetical | ' | ' |
Accounts receivable - less allowance for doubtful accounts | $200,000 | $200,000 |
Common Stock, par value | $0.00 | $0.00 |
Common Stock, shares authorized | 47,500,000 | 47,500,000 |
Common Stock, issued | 27,563,619 | 27,563,619 |
Common Stock, outstanding | 27,563,619 | 27,563,619 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Condensed Consolidated Statements Of Operations | ' | ' |
REVENUE | $194,983 | $93,768 |
COSTS AND EXPENSES | ' | ' |
Lease operating expenses | 61,669 | 23,590 |
Production taxes | 10,135 | 8,948 |
Dry hole costs | ' | 3,610 |
Exploration | 4,495 | 13,158 |
General and administrative | 481,915 | 478,796 |
Depletion, depreciation and amortization | 78,031 | 18,575 |
Total expenses | 636,245 | 546,677 |
LOSS FROM OPERATIONS | -441,262 | -452,909 |
OTHER INCOME AND (EXPENSE) | ' | ' |
Interest expense | -8,785 | -445 |
Management fee | 3,899 | ' |
Total other income and (expense) | -4,886 | -445 |
LOSS BEFORE TAX BENEFIT | -446,148 | -453,354 |
TAX BENEFIT | ' | ' |
NET LOSS | -446,148 | -453,354 |
Less: Net loss attributable to non-controlling interest | -10,845 | -38,976 |
NET LOSS ATTRIBUTABLE TO VICTORY ENERGY CORPORATION | ($435,303) | ($414,378) |
Weighted average shares, basic and diluted | 27,563,619 | 27,563,619 |
Net loss per share, basic and diluted | ($0.02) | ($0.02) |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (Unaudited) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
CASH FLOWS FROM OPERATING ACTIVITIES | ' | ' |
Net loss | ($446,148) | ($453,354) |
Adjustments to reconcile net loss to net cash used in operating activities | ' | ' |
Accretion of asset retirement obligation | 1,395 | 998 |
Amortization of debt financing costs | 3,968 | ' |
Depletion, depreciation, and amortization | 78,031 | 18,575 |
Stock based compensation | ' | 22,281 |
Warrants for services | ' | 9,000 |
Change in operating assets and liabilities | ' | ' |
Accounts receivable | 35,872 | 82,986 |
Accounts receivable – related parties | -3,900 | -33,750 |
Prepaid expense | -72,538 | -30,932 |
Accounts payable | 16,656 | 201,646 |
Accrued liabilities | -1,319 | -64,718 |
Accrued interest | ' | -25,639 |
Accrued liabilities–related parties | -15,349 | 21,645 |
Net cash used in operating activities | -403,332 | -251,262 |
CASH FLOWS FROM INVESTING ACTIVITIES | ' | ' |
Drilling and completion costs | -461,970 | -826,278 |
Farm out of leaseholds | ' | 160,000 |
Renewal of leaseholds | -22,577 | ' |
Net cash used in investing activities | -484,547 | -666,278 |
CASH FLOWS FROM FINANCING ACTIVITIES | ' | ' |
Non-controlling interest contributions | 320,000 | 784,000 |
Debt financing costs | -122,469 | ' |
Proceeds from issuance of note payable | 868,000 | ' |
Net cash provided by financing activities | 1,065,531 | 784,000 |
Net change in cash and cash equivalents | 177,652 | -133,540 |
Beginning cash and cash equivalents | 20,858 | 158,165 |
Ending cash and cash equivalents | 198,510 | 24,625 |
Supplement disclosures of non-cash information: | ' | ' |
Liability incurred for asset retirement obligation | $3,955 | $4,469 |
Organization_and_Summary_of_Si
Organization and Summary of Significant Accounting Policies | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Organization And Summary Of Significant Accounting Policies | ' | ||||||||
1. Organization and Summary of Significant Accounting Policies | ' | ||||||||
Victory is an independent, growth oriented oil and natural gas company engaged in the acquisition, exploration and production of oil and natural gas properties, through its partnership with Aurora Energy Partners, a Texas General Partnership (“Aurora”). Current operations are primarily located onshore in Texas and New Mexico. The Company was organized under the laws of the State of Nevada on January 7, 1982. The Company is authorized to issue 47,500,000 shares of $0.001 par value common stock, and has 27,563,619 shares of common stock outstanding as of March 31, 2014. Our corporate headquarters are located at 3355 Bee Caves Rd. Ste. 608, Austin, TX 78746. | |||||||||
A summary of significant accounting policies followed in the preparation of the accompanying condensed consolidated financial statements is set forth below. | |||||||||
Basis of Presentation and Consolidation: | |||||||||
Victory is the managing partner of Aurora, and holds a 50% partnership interest in Aurora. Aurora, the subsidiary, is consolidated with Victory for financial statement purposes, as the terms of the partnership agreement that governs the operations of Aurora, gives Victory effective control of the partnership. The condensed consolidated financial statements include the accounts of Victory and the accounts of Aurora. The Company’s management, in considering accounting policies pertaining to consolidation, has reviewed the relevant accounting literature. The Company follows that literature, in assessing whether the rights of the non-controlling interests should overcome the presumption of consolidation when a majority voting, or controlling interest in its investee “is a matter of judgment that depends on facts and circumstances.” In applying the circumstances and contractual provisions of the partnership agreement, management determined that the non-controlling rights do not, individually or in the aggregate, provide for the non-controlling interest to “effectively participate in significant decisions that would be expected to be made in the ordinary course of business.” The rights of the non-controlling interest are protective in nature. All intercompany balances have been eliminated in consolidation. | |||||||||
The accompanying condensed consolidated balance sheet as of December 31, 2013, which has been derived from audited consolidated financial statements, and the accompanying interim condensed consolidated financial statements as of March 31, 2014, for the three month period ended March 31, 2014 and 2013, have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the consolidated financial condition, results of operations and cash flows of Victory and Aurora (hereinafter collectively referred to as the "Company") as of and for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), have been included. | |||||||||
Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or for any other interim period during such year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2013 filed with the SEC on April 21, 2014. | |||||||||
Non-controlling Interests: | |||||||||
The Navitus Energy Group, a Texas General Partnership (“Navitus”) is a partner with Victory in Aurora. Victory and Aurora each own a 50% interest in Aurora. Victory is the Managing Partner and has contractual authority to manage the business affairs of Aurora. Navitus currently has four partners. They are James Capital Consulting, LLC ("JCC"), James Capital Energy, LLC ("JCE"), Rodinia Partners, LLC and Navitus Partners, LLC. Although Navitus has been in place since January 2008, its members and other elements have changed since that time. | |||||||||
The non-controlling interest in Aurora is held by Navitus. As of March 31, 2014, $4,625,141 was recorded as the equity of the non-controlling interest in our consolidated balance sheet representing the third-party investment in Aurora, with losses attributable to non-controlling interests of $10,845 and $38,976 for the three months ended March 31, 2014 and 2013, respectively. As of December 31, 2013, $4,315,986 was recorded as the equity of the non-controlling interest in our consolidated balance sheet representing the third-party investment in Aurora, with losses attributable to the non-controlling interests of $429,511 for the year ended December 31, 2013. | |||||||||
Use of Estimates: | |||||||||
The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires our 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used primarily when accounting for depreciation, depletion, and amortization (“DD&A”) expense, property costs, estimated future net cash flows from proved reserves, cost to abandon oil and natural gas properties, taxes, accruals of capitalized costs, operating costs and production revenue, capitalized general and administrative costs and interest, insurance recoveries, effectiveness and estimated fair value of derivative positions, the purchase price allocation on properties acquired, various common stock, warrants and option transactions, and contingencies. | |||||||||
Oil and Natural Gas Properties: | |||||||||
We follow the successful efforts method of accounting for oil and natural gas properties. Under this method, all costs associated with property acquisitions, successful exploratory wells, all development wells, including dry hole development wells, and asset retirement obligation assets are capitalized. Additionally, interest is capitalized while wells are being drilled and the underlying property is in development. Costs of exploratory wells are capitalized pending determination of whether each well has resulted in the discovery of proved reserves. Oil and natural gas mineral leasehold costs are capitalized as incurred. Items charged to expense generally include geological and geophysical costs, costs of unsuccessful exploratory wells, and oil and natural gas production costs. Capitalized costs of proved properties including associated salvage are depleted on a well-by-well or field-by-field (common reservoir) basis using the units-of-production method based upon proved producing oil and natural gas reserves. The depletion rate is the current period production as a percentage of the total proved producing reserves. The depletion rate is applied to the net book value of property costs to calculate the depletion expense. Proved reserves materially impact depletion expense. If the proved reserves decline, then the depletion rate (the rate at which we record depletion expense) increases, reducing net income. Dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs with gain or loss recognized upon sale. A gain (loss) is recognized to the extent the sales price exceeds or is less than original cost or the carrying value, net of impairment. Oil and natural gas properties are also reviewed for impairment at the end of each reporting period. Unproved property costs are excluded from depletable costs until the related properties are developed. See impairment discussed in “Long-lived assets and intangible assets” below. | |||||||||
We depreciate other property and equipment using the straight-line method based on estimated useful lives ranging from five to ten years. | |||||||||
The Company recognized no impairment expense for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
Long-lived Assets and Intangible Assets: | |||||||||
The Company accounts for intangible assets in accordance with ASC 360, “Property, Plant and Equipment”. Intangible assets that have defined lives are subject to amortization over the useful life of the assets. Intangible assets held having no contractual factors or other factors limiting the useful life of the asset are not subject to amortization but are reviewed at least annually for impairment or when indicators suggest that impairment may be needed. Intangible assets are subject to impairment review at least annually or when there is an indication that an asset has been impaired. | |||||||||
For unproved property costs, management reviews these investments for impairment on a property-by-property basis if a triggering event should occur that may suggest that impairment may be required. | |||||||||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated future undiscounted net cash flows, the Company will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. The fair value used to calculate the impairment for producing oil and natural gas field that produces from a common reservoir is the estimated future net cash flows discounted at 10%, which the Company believes approximates fair value. | |||||||||
Asset Retirement Obligations: | |||||||||
U.S. GAAP requires us to record our estimate of the fair value of liabilities related to future asset retirement obligations (“ARO”) in the period the obligation is incurred. Asset retirement obligations relate to the removal of facilities and tangible equipment at the end of an oil and natural gas property’s useful life. The application of this rule requires the use of management’s estimates with respect to future abandonment costs, inflation, market risk premiums, useful life and cost of capital. U.S. GAAP requires that our estimate of our asset retirement obligations does not give consideration to the value the related assets could have to other parties. | |||||||||
The following table is a reconciliation of the ARO liability for continuing operations for the three months ended March 31, 2014 and the twelve months ended December 31, 2013. | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Asset retirement obligation at beginning of period | $ | 51,954 | $ | 39,905 | |||||
Liabilities incurred | 3,955 | 8,930 | |||||||
Revisions to previous estimates | (383 | ) | - | ||||||
Accretion expense | 1,395 | 3,119 | |||||||
Asset retirement obligation at end of period | $ | 56,921 | $ | 51,954 | |||||
Cash and Cash Equivalents: | |||||||||
The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents. The Company had no cash equivalents at March 31, 2014 and December 31, 2013, respectively. | |||||||||
Earnings per Share: | |||||||||
Basic earnings per share are computed using the weighted average number of common shares outstanding. Diluted earnings per share reflect the potential dilutive effects of common stock equivalents such as options, warrants and convertible securities. Given the historical and projected future losses of the Company, all potentially dilutive common stock equivalents are considered anti-dilutive. | |||||||||
Income Taxes: | |||||||||
The Company accounts for income taxes in accordance with ASC 740 “Income Taxes” which requires an asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. Deferred tax assets include tax loss and credit carry forwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. | |||||||||
Stock Based Compensation: | |||||||||
The Company applies ASC 718, “Compensation-Stock Compensation” to account for its issuance of options and warrants to key partners, directors and officers. The standard requires all share-based payments, including employee stock options, warrants and restricted stock, be measured at the fair value of the award and expensed over the requisite service period (generally the vesting period). The fair value of options and warrants granted to key partners, directors and officers is estimated at the date of grant using the Black-Scholes option pricing model by using the historical volatility of the Company’s stock price. The calculation also takes into account the common stock fair market value at the grant date, the exercise price, the expected life of the common stock option or warrant, the dividend yield and the risk-free interest rate. | |||||||||
The Company from time to time may issue stock options, warrants and restricted stock to acquire goods or services from third parties. Restricted stock, options or warrants issued to third parties are recorded on the basis of their fair value, which is measured as of the date issued. The options or warrants are valued using the Black-Scholes option pricing model on the basis of the market price of the underlying equity instrument on the “valuation date,” which for options and warrants related to contracts that have substantial disincentives to non-performance, is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. | |||||||||
The Company recognized warrants granted to directors for services of $0 and $9,000 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
The Company recognized stock-based compensation expense from stock options granted to officers and employees of the company of $0 and $22,281 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
Going Concern: | |||||||||
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As presented in the condensed consolidated financial statements, the Company has incurred a net loss of $435,303 for the three months ended March 31, 2014. | |||||||||
The proceeds from the sale and conversion to stock of the Company’s 10% Senior Secured Convertible Debentures in 2012 and new contributions to the Aurora partnership by Navitus have allowed the Company to continue operations and invest in new oil and natural gas properties. Management anticipates that operating losses will continue in the near term until new wells are drilled, successfully completed and incremental production increases revenue. For the three months ended March 31, 2014, the Company has invested a net of $484,547 in leases, drilling and completion costs. | |||||||||
The Company remains in active discussions with Navitus and others related to longer term financing required for our capital expenditures planned for 2014. Without additional outside investment from the sale of equity securities and/or debt financing, our capital expenditures and overhead expenses must be reduced to a level commensurate with available cash flows. The Company, through Aurora as borrower, entered a $25 million credit facility with Texas Capital Bank, National Association on February 20, 2014. See Note 4 “Revolving Credit Agreement”. | |||||||||
The accompanying consolidated financial statements are prepared as if the Company will continue as a going concern. The consolidated financial statements do not contain adjustments, including adjustments to recorded assets and liabilities, which might be necessary if the Company were unable to continue as a going concern. | |||||||||
Navitus_Energy_Group_Funding_T
Navitus Energy Group Funding, Tracking and Accrual | 3 Months Ended |
Mar. 31, 2014 | |
Navitus Energy Group Funding Tracking And Accrual | ' |
2. Navitus Energy Group Funding, Tracking and Accrual | ' |
Under terms of the Second Amended Partnership Agreement of Aurora, Navitus earns a net profits interest respective to its 50% partnership interest. Any distributions of the net profits interest to partners are at the discretion of Victory, as managing partner, together with 100% of the partnership interests. The accumulated net deficits of Navitus, along with historical contributions, net of distributions, are reported as non-controlling interests in the equity section of the condensed consolidated financial statements. | |
10% Preferred Distributions | |
Under the terms of the Second Amended Aurora Partnership Agreement of Aurora, Navitus Partners, LLC, the fourth partner of the partnership, admitted under the Navitus Private Placement Memorandum (Navitus PPM), earns a preferred distribution of 10% based upon capital contributions to Aurora used by Victory to acquire or develop oil and gas prospects or related enterprises on behalf of Aurora. The preferred distribution is in addition to and does not reduce any net profits interest. Since August 23, 2012, preferred distributions rights total $354,544 ($25,639 attributable to 2012 and $241,784 attributable 2013, and $87,121 attributable to the three months ended March 31, 2014). Victory, as managing partner, may, in its sole discretion, choose to distribute all or a portion of the preferred returns, or, apply these funds to other partnership purposes. Navitus Partners, LLC, a partner in Navitus also receives warrants for Victory’s common stock, allocated as 50,000 warrants for every Unit purchased under the Navitus PPM (equivalent of 1 warrant for every $1.00 invested), exercisable under the terms of the Second Amended Partnership Agreement of Aurora and the Navitus PPM. Since August 23, 2012, $3,745,900 of capital contributions have resulted in issuance of 3,745,900 common stock warrants (1,089,900 in 2012 and 2,336,000 in 2013 and 320,000 for the three months ended March 31, 2014). |
Oil_and_natural_gas_properties
Oil and natural gas properties | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Oil And Natural Gas Properties | ' | ||||||||
3. Oil and natural gas properties | ' | ||||||||
Oil and natural gas properties are comprised of the following: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Total oil and natural gas properties, at cost | $ | 8,529,552 | $ | 8,041,433 | |||||
Less: accumulated impairment | (4,325,785 | ) | (4,325,785 | ) | |||||
Oil and natural gas properties, net impairment | 4,203.77 | 3,715,648 | |||||||
Less: accumulated depletion | (1,594,347 | ) | (1,517,836 | ) | |||||
Oil and natural gas properties, net | $ | 2,609,420 | $ | 2,197,812 | |||||
Depletion, depreciation, and amortization expense for the three months ended March 31, 2014 and 2013 was $78,031 and $18,575, respectively. | |||||||||
Revolving_Credit_Agreement
Revolving Credit Agreement | 3 Months Ended |
Mar. 31, 2014 | |
Revolving Credit Agreement | ' |
4. Revolving Credit Agreement | ' |
On February 20, 2014, Aurora, as borrower, entered a $25 million revolving credit facility (the “Credit Agreement”) with Texas Capital Bank (“the Lender”). Guarantors on the credit facility are Victory and Navitus, the two partners of Aurora. Pursuant to the Credit Agreement, the Lender agreed to extend credit to Aurora in the form of (a) one or more revolving credit loans (each such loan, a “Loan”) and (b) the issuance of standby letters of credit, of up to an aggregate principal amount at any one time not to exceed the lesser of (i) $25,000,000 or (ii) the borrowing base in effect from time to time (the “Commitment”). The initial borrowing base on February 20, 2014 was set at $1,450,000. The borrowing base is determined by the Lender, in its sole discretion, based on customary lending practices, review of the oil and gas properties included in the borrowing base, financial review of Aurora, the Company and Navitus and such other factors as may be deemed relevant. The borrowing base is redetermined (i) on or about March 31 of each year based on the previous December 31 reserve report prepared by an independent reserve engineer, and (ii) on or about August 31 of each year based on the previous June 30 reserve report prepared by Aurora’s internal reserve engineers or an independent reserve engineer and certified by an officer of Aurora. The Credit Agreement will mature on February 20, 2017. Amounts borrowed under the Credit Agreement will bear interest at rates equal to the lesser of (i) the maximum rate of interest which may be charged or received by the Lender in accordance with applicable Texas law and (ii) the interest rate per annum publicly announced from time to time by the Lender as the prime rate in effect at its principal office plus the applicable margin. The applicable margin is, (i) with respect to Loans, one percent (1.00%) per annum, (ii) with respect to letter of credit fees, two percent (2.00%) per annum and (iii) with respect to commitment fees, one-half of one percent (0.50%) per annum. Loans made under the Credit Agreement are secured by (i) a first priority lien in the oil and gas properties of Aurora, the Company and Navitus, and (ii) a first priority security interest in substantially all of the assets of Aurora and its subsidiaries, if any, as well as in 100% of the partnership interests in Aurora held by the Company and Navitus. Loans made under the Credit Agreement to Aurora are fully guaranteed by the Company and Navitus. | |
The Credit Agreement contains various affirmative and negative covenants. These covenants, among other things, limit additional indebtedness, additional liens and transactions with affiliates. Among the covenants contained in the Credit Agreement are financial covenants that Aurora will maintain a minimum EBITDAX to Cash Interest Ratio of 3.5: 1.0 and a minimum Current Ratio of not less than 1.0: 1.0. The Current Ratio is defined under the covenants to include, as a current asset, the revolving credit availability. As of March 31, 2014, the unused borrowing base was $582,000. If an event of default exists under the Credit Agreement, the Lender will be able to accelerate the maturity of the borrowings and exercise other rights and remedies. During the first quarter ended March 31, 2014, Aurora drew $868,000 on the $1.45 million initial borrowing base, with a balance outstanding of $868,000 owed as of the quarter’s end. Interest expense on this debt through March 31, 2014 is $4,816. As of March 31, 2014, Aurora was in compliance with all of its financial covenants under its revolving credit facility. |
Related_Party_Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2014 | |
Related Party Transactions | ' |
5. Related Party Transactions | ' |
The Company has an accounts receivable from Navitus of $72,471 and $68,571 for the three months ended March 31, 2014 and the year ended December 31, 2013, respectively. The Company uses the legal services of one of its members of its Board of Directors in the ordinary course of the Company’s business. Accrued liabilities to related parties as of March 31, 2014 and the year ended December 31, 2013 were $3,193 and $18,542, respectively. |
Stockholders_Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2014 | |
Stockholders Equity | ' |
6. Stockholders' Equity | ' |
Common stock | |
The Company estimates the fair value of employee stock options and warrants granted using the Black-Scholes Option Pricing Model. Key assumptions used to estimate the fair value of warrants and stock options include the exercise price of the award, the fair value of the Company’s common stock on the date of grant, the expected warrant or option term, the risk free interest rate at the date of grant, the expected volatility and the expected annual dividend yield on the Company’s common stock. | |
During the three months ended March 31, 2014, and in consideration of capital contributions by Aurora of $320,000 pursuant to the Company’s capital contribution agreement with Aurora, the Company issued 320,000 warrants to Navitus with an exercise price ranging from $0.14 - $0.35. The warrants vest immediately and the Company has valued the warrants using the Black Scholes Option Pricing Model, at $77,300. |
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2014 | |
Commitments And Contingencies | ' |
7. Commitments and Contingencies | ' |
Contingencies | |
Liabilities and other contingencies are recognized upon determination of an exposure, which when analyzed indicates that it is both probable that an asset has been impaired or that a liability has been incurred and that the amount of such loss is reasonably estimable. | |
Volatility of Oil and Natural Gas Prices | |
Our revenues, future rate of growth, results of operations, financial condition and ability to borrow funds or obtain additional capital, as well as the carrying value of our properties, are substantially dependent upon prevailing prices of oil and natural gas. | |
Legal Proceedings | |
Cause No. 08-04-07047-CV; Oz Gas Corporation v. Remuda Operating Company, et al. v. Victory Energy Corporation.; In the 112th District Court of Crockett County, Texas. | |
Plaintiff Oz Gas Corporation sued Victory and other parties for bad faith trespass, among other claims, regarding the drilling of two wells on lands that Oz (“OZ”) claims title to. Victory has a 50% interest in one of the named wells involved in this lawsuit (that being well 155-2 on the Adams Baggett Ranch in Crockett County, Texas). The lawsuit was originally filed against other parties in April 2008, and Victory intervened in the case on November 18, 2009 to protect its interest in the 155-2 well. | |
The case was tried on February 8th and 9th, 2012. The Court found in favor of Oz and rendered a trespass finding against Victory and the other defendants. This case has been appealed to the 8th Court of Appeals in El Paso, Texas, and has been fully briefed and submitted. Victory has no monetary liability beyond those funds that were held in the registry of the Court on the date of judgment. | |
Cause No. CV-47,230; James Capital Energy, LLC and Victory Energy Corporation v. Jim Dial, et al.; In the 142nd District Court of Midland County, Texas. | |
This lawsuit was filed in the 142nd District Court of Midland County, Texas on January 19, 2010 by James Capital Energy, LLC and Victory against numerous parties for fraud, fraudulent inducement, and negligent misrepresentation, breach of contract, breach of fiduciary duty, trespass, conversion and a few other related causes of action. This lawsuit stems from an investment made by Victory for the purchase of six wells on the Adams Baggett Ranch. | |
On December 9, 2010, Victory was granted an interlocutory Default Judgment against Defendants Jim Dial, 1st Texas Natural Gas Company, Inc., Universal Energy Resources, Inc., Grifco International, Inc., and Precision Drilling & Exploration, Inc. The total judgment amounted to approximately $17.2 million. Recently Victory has added additional parties to this lawsuit. Discovery is ongoing in this case and no trial date has been set at this time. | |
Victory believes that it will be victorious against all the remaining Defendants in this case. | |
On October 20, 2011 Defendant Remuda filed a Motion to Consolidate and a Counterclaim against Victory. Remuda is seeking to consolidate this case with two other cases in which Remuda is the named Defendant. An objection to this motion was filed and the cases have not been consolidated. Additionally, we do not believe that the counterclaim made by Remuda has any legal merit. | |
Cause No. 10-09-07213; Perry Howell, et al. v. Charles Gary Garlitz, et al.; In the 112th District Court of Crockett County, Texas. | |
The above referenced lawsuit was filed in the 112th District Court of Crockett County, Texas on September 6, 2010. This lawsuit alleges that Cambrian Management, Ltd. and Victory trespassed on lands owned by the plaintiffs named in the lawsuit in the drilling of the Adams-Baggett 115-8 well in Crockett County, Texas. | |
Discovery is ongoing in this case and Victory believes that the claims have no merit and that it will prevail. | |
Cause No. D-1-GN-13-00044; Aurora Energy Partners and Victory Energy Corporation v. Crooked Oaks; In the 261st District Court of Travis County, Texas. | |
The Company has yet to collect an installment balance of $200,000 for the sale of its Jones County, Texas oil and gas interests in May of 2012. The Company has provided for it as an allowance for doubtful accounts, and has not included it in the net accounts receivable balance of the Company’s condensed consolidated financial statements. |
Subsequent_Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2014 | |
Subsequent Events | ' |
8. Subsequent Events | ' |
On May 8, 2014, the Company announced that it has agreed to purchase a 10% non-operated working interest in certain oil and gas properties located in the Permian Basin, known as "The Fairway Prospect", from a wholly-owned subsidiary of Target Energy Limited for a total cash consideration of approximately $6.0 million. The sale is subject to the prior approval of the holders of Target's 2014 Convertible Notes, the completion of due diligence and the entry into a Sale & Purchase Agreement to the satisfaction of both parties. The deal is expected to close on or before June 5, 2014, with an effective date of May 1, 2014. Target will remain as the largest interest-holder in the “Fairway Prospect”, retaining a 50% working interest in all leases other than Wagga Wagga, in which it will retain a 35% working interest. |
Organization_and_Summary_of_Si1
Organization and Summary of Significant Accounting Policies (Policies) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Organization And Summary Of Significant Accounting Policies Policies | ' | ||||||||
Basis of Presentation and Consolidation | ' | ||||||||
Victory is the managing partner of Aurora, and holds a 50% partnership interest in Aurora. Aurora, the subsidiary, is consolidated with Victory for financial statement purposes, as the terms of the partnership agreement that governs the operations of Aurora, gives Victory effective control of the partnership. The condensed consolidated financial statements include the accounts of Victory and the accounts of Aurora. The Company’s management, in considering accounting policies pertaining to consolidation, has reviewed the relevant accounting literature. The Company follows that literature, in assessing whether the rights of the non-controlling interests should overcome the presumption of consolidation when a majority voting, or controlling interest in its investee “is a matter of judgment that depends on facts and circumstances.” In applying the circumstances and contractual provisions of the partnership agreement, management determined that the non-controlling rights do not, individually or in the aggregate, provide for the non-controlling interest to “effectively participate in significant decisions that would be expected to be made in the ordinary course of business.” The rights of the non-controlling interest are protective in nature. All intercompany balances have been eliminated in consolidation. | |||||||||
The accompanying condensed consolidated balance sheet as of December 31, 2013, which has been derived from audited consolidated financial statements, and the accompanying interim condensed consolidated financial statements as of March 31, 2014, for the three month period ended March 31, 2014 and 2013, have been prepared by management pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") for interim financial reporting. These interim condensed consolidated financial statements are unaudited and, in the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the consolidated financial condition, results of operations and cash flows of Victory and Aurora (hereinafter collectively referred to as the "Company") as of and for the periods presented in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), have been included. | |||||||||
Operating results for the three months ended March 31, 2014 are not necessarily indicative of the results that may be expected for the year ending December 31, 2014 or for any other interim period during such year. Certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with GAAP have been omitted in accordance with the rules and regulations of the SEC. The accompanying consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto contained in the Company's Annual Report on Form 10-K/A for the fiscal year ended December 31, 2013 filed with the SEC on April 21, 2014. | |||||||||
Non-controlling Interests | ' | ||||||||
The Navitus Energy Group, a Texas General Partnership (“Navitus”) is a partner with Victory in Aurora. Victory and Aurora each own a 50% interest in Aurora. Victory is the Managing Partner and has contractual authority to manage the business affairs of Aurora. Navitus currently has four partners. They are James Capital Consulting, LLC ("JCC"), James Capital Energy, LLC ("JCE"), Rodinia Partners, LLC and Navitus Partners, LLC. Although Navitus has been in place since January 2008, its members and other elements have changed since that time. | |||||||||
The non-controlling interest in Aurora is held by Navitus. As of March 31, 2014, $4,625,141 was recorded as the equity of the non-controlling interest in our consolidated balance sheet representing the third-party investment in Aurora, with losses attributable to non-controlling interests of $10,845 and $38,976 for the three months ended March 31, 2014 and 2013, respectively. As of December 31, 2013, $4,315,986 was recorded as the equity of the non-controlling interest in our consolidated balance sheet representing the third-party investment in Aurora, with losses attributable to the non-controlling interests of $429,511 for the year ended December 31, 2013. | |||||||||
Use of Estimates | ' | ||||||||
The preparation of our condensed consolidated financial statements in conformity with U.S. GAAP requires our 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 consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates are used primarily when accounting for depreciation, depletion, and amortization (“DD&A”) expense, property costs, estimated future net cash flows from proved reserves, cost to abandon oil and natural gas properties, taxes, accruals of capitalized costs, operating costs and production revenue, capitalized general and administrative costs and interest, insurance recoveries, effectiveness and estimated fair value of derivative positions, the purchase price allocation on properties acquired, various common stock, warrants and option transactions, and contingencies. | |||||||||
Oil and Natural Gas Properties | ' | ||||||||
We follow the successful efforts method of accounting for oil and natural gas properties. Under this method, all costs associated with property acquisitions, successful exploratory wells, all development wells, including dry hole development wells, and asset retirement obligation assets are capitalized. Additionally, interest is capitalized while wells are being drilled and the underlying property is in development. Costs of exploratory wells are capitalized pending determination of whether each well has resulted in the discovery of proved reserves. Oil and natural gas mineral leasehold costs are capitalized as incurred. Items charged to expense generally include geological and geophysical costs, costs of unsuccessful exploratory wells, and oil and natural gas production costs. Capitalized costs of proved properties including associated salvage are depleted on a well-by-well or field-by-field (common reservoir) basis using the units-of-production method based upon proved producing oil and natural gas reserves. The depletion rate is the current period production as a percentage of the total proved producing reserves. The depletion rate is applied to the net book value of property costs to calculate the depletion expense. Proved reserves materially impact depletion expense. If the proved reserves decline, then the depletion rate (the rate at which we record depletion expense) increases, reducing net income. Dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs with gain or loss recognized upon sale. A gain (loss) is recognized to the extent the sales price exceeds or is less than original cost or the carrying value, net of impairment. Oil and natural gas properties are also reviewed for impairment at the end of each reporting period. Unproved property costs are excluded from depletable costs until the related properties are developed. See impairment discussed in “Long-lived assets and intangible assets” below. | |||||||||
We depreciate other property and equipment using the straight-line method based on estimated useful lives ranging from five to ten years. | |||||||||
The Company recognized no impairment expense for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
Long-lived Assets and Intangible Assets | ' | ||||||||
The Company accounts for intangible assets in accordance with ASC 360, “Property, Plant and Equipment”. Intangible assets that have defined lives are subject to amortization over the useful life of the assets. Intangible assets held having no contractual factors or other factors limiting the useful life of the asset are not subject to amortization but are reviewed at least annually for impairment or when indicators suggest that impairment may be needed. Intangible assets are subject to impairment review at least annually or when there is an indication that an asset has been impaired. | |||||||||
For unproved property costs, management reviews these investments for impairment on a property-by-property basis if a triggering event should occur that may suggest that impairment may be required. | |||||||||
The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If the carrying amount of the asset, including any intangible assets associated with that asset, exceeds its estimated future undiscounted net cash flows, the Company will recognize an impairment loss equal to the difference between its carrying amount and its estimated fair value. The fair value used to calculate the impairment for producing oil and natural gas field that produces from a common reservoir is the estimated future net cash flows discounted at 10%, which the Company believes approximates fair value. | |||||||||
Asset Retirement Obligations | ' | ||||||||
U.S. GAAP requires us to record our estimate of the fair value of liabilities related to future asset retirement obligations (“ARO”) in the period the obligation is incurred. Asset retirement obligations relate to the removal of facilities and tangible equipment at the end of an oil and natural gas property’s useful life. The application of this rule requires the use of management’s estimates with respect to future abandonment costs, inflation, market risk premiums, useful life and cost of capital. U.S. GAAP requires that our estimate of our asset retirement obligations does not give consideration to the value the related assets could have to other parties. | |||||||||
The following table is a reconciliation of the ARO liability for continuing operations for the three months ended March 31, 2014 and the twelve months ended December 31, 2013. | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Asset retirement obligation at beginning of period | $ | 51,954 | $ | 39,905 | |||||
Liabilities incurred | 3,955 | 8,930 | |||||||
Revisions to previous estimates | (383 | ) | - | ||||||
Accretion expense | 1,395 | 3,119 | |||||||
Asset retirement obligation at end of period | $ | 56,921 | $ | 51,954 | |||||
Cash and Cash Equivalents | ' | ||||||||
The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents. The Company had no cash equivalents at March 31, 2014 and December 31, 2013, respectively. | |||||||||
Earnings per share | ' | ||||||||
Basic earnings per share are computed using the weighted average number of common shares outstanding. Diluted earnings per share reflect the potential dilutive effects of common stock equivalents such as options, warrants and convertible securities. Given the historical and projected future losses of the Company, all potentially dilutive common stock equivalents are considered anti-dilutive. | |||||||||
Income Taxes | ' | ||||||||
The Company accounts for income taxes in accordance with ASC 740 “Income Taxes” which requires an asset and liability approach for financial accounting and reporting of income taxes. Deferred income taxes reflect the impact of temporary differences between the amount of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. Deferred tax assets include tax loss and credit carry forwards and are reduced by a valuation allowance if, based on available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. | |||||||||
Stock-Based Compensation | ' | ||||||||
The Company applies ASC 718, “Compensation-Stock Compensation” to account for its issuance of options and warrants to key partners, directors and officers. The standard requires all share-based payments, including employee stock options, warrants and restricted stock, be measured at the fair value of the award and expensed over the requisite service period (generally the vesting period). The fair value of options and warrants granted to key partners, directors and officers is estimated at the date of grant using the Black-Scholes option pricing model by using the historical volatility of the Company’s stock price. The calculation also takes into account the common stock fair market value at the grant date, the exercise price, the expected life of the common stock option or warrant, the dividend yield and the risk-free interest rate. | |||||||||
The Company from time to time may issue stock options, warrants and restricted stock to acquire goods or services from third parties. Restricted stock, options or warrants issued to third parties are recorded on the basis of their fair value, which is measured as of the date issued. The options or warrants are valued using the Black-Scholes option pricing model on the basis of the market price of the underlying equity instrument on the “valuation date,” which for options and warrants related to contracts that have substantial disincentives to non-performance, is the date of the contract, and for all other contracts is the vesting date. Expense related to the options and warrants is recognized on a straight-line basis over the shorter of the period over which services are to be received or the vesting period. | |||||||||
The Company recognized warrants granted to directors for services of $0 and $9,000 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
The Company recognized stock-based compensation expense from stock options granted to officers and employees of the company of $0 and $22,281 for the three months ended March 31, 2014 and 2013, respectively. | |||||||||
Going Concern | ' | ||||||||
The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. As presented in the condensed consolidated financial statements, the Company has incurred a net loss of $435,303 for the three months ended March 31, 2014. | |||||||||
The proceeds from the sale and conversion to stock of the Company’s 10% Senior Secured Convertible Debentures in 2012 and new contributions to the Aurora partnership by Navitus have allowed the Company to continue operations and invest in new oil and natural gas properties. Management anticipates that operating losses will continue in the near term until new wells are drilled, successfully completed and incremental production increases revenue. For the three months ended March 31, 2014, the Company has invested a net of $484,547 in leases, drilling and completion costs. | |||||||||
The Company remains in active discussions with Navitus and others related to longer term financing required for our capital expenditures planned for 2014. Without additional outside investment from the sale of equity securities and/or debt financing, our capital expenditures and overhead expenses must be reduced to a level commensurate with available cash flows. The Company, through Aurora as borrower, entered a $25 million credit facility with Texas Capital Bank, National Association on February 20, 2014. See Note 4 “Revolving Credit Agreement”. | |||||||||
The accompanying consolidated financial statements are prepared as if the Company will continue as a going concern. The consolidated financial statements do not contain adjustments, including adjustments to recorded assets and liabilities, which might be necessary if the Company were unable to continue as a going concern. | |||||||||
Organization_and_Summary_of_Si2
Organization and Summary of Significant Accounting Policies (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Organization And Summary Of Significant Accounting Policies Tables | ' | ||||||||
Asset Retirement Obligations | ' | ||||||||
The following table is a reconciliation of the ARO liability for continuing operations for the three months ended March 31, 2014 and the twelve months ended December 31, 2013. | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Asset retirement obligation at beginning of period | $ | 51,954 | $ | 39,905 | |||||
Liabilities incurred | 3,955 | 8,930 | |||||||
Revisions to previous estimates | (383 | ) | - | ||||||
Accretion expense | 1,395 | 3,119 | |||||||
Asset retirement obligation at end of period | $ | 56,921 | $ | 51,954 | |||||
Oil_and_natural_gas_properties1
Oil and natural gas properties (Tables) | 3 Months Ended | ||||||||
Mar. 31, 2014 | |||||||||
Oil And Natural Gas Properties Tables | ' | ||||||||
Components of Oil and Natural Gas Properties | ' | ||||||||
Oil and natural gas properties are comprised of the following: | |||||||||
31-Mar-14 | 31-Dec-13 | ||||||||
Total oil and natural gas properties, at cost | $ | 8,529,552 | $ | 8,041,433 | |||||
Less: accumulated impairment | (4,325,785 | ) | (4,325,785 | ) | |||||
Oil and natural gas properties, net impairment | 4,203.77 | 3,715,648 | |||||||
Less: accumulated depletion | (1,594,347 | ) | (1,517,836 | ) | |||||
Oil and natural gas properties, net | $ | 2,609,420 | $ | 2,197,812 |
Organization_and_Summary_of_Si3
Organization and Summary of Significant Accounting Policies (Details) (USD $) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2014 | Dec. 31, 2013 | |
Organization And Summary Of Significant Accounting Policies Details | ' | ' |
Asset retirement obligation at beginning of period | $51,954 | $39,905 |
Liabilities incurred | 3,955 | 8,930 |
Revisions to previous estimates | -383 | ' |
Accretion expense | 1,395 | 3,119 |
Asset retirement obligation at end of period | $56,921 | $51,954 |
Organization_and_Summary_of_Si4
Organization and Summary of Significant Accounting Policies (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | Dec. 31, 2013 | |
Non-controlling interest | $4,625,141 | ' | $4,315,986 |
Net loss attributable to non-controlling interest | 10,845 | 38,976 | 429,511 |
Stock Based Compensation | ' | 22,281 | ' |
Payment to acquire land and drilling of wells | 484,547 | ' | ' |
Common Stock, par value | $0.00 | ' | $0.00 |
Common Stock, shares authorized | 47,500,000 | ' | 47,500,000 |
Common Stock, outstanding | 27,563,619 | ' | 27,563,619 |
Net loss | -435,303 | -414,378 | ' |
Officer [Member} | ' | ' | ' |
Stock Based Compensation | 0 | 22,281 | ' |
Directors [Member} | ' | ' | ' |
Warrant granted | $0 | $9,000 | ' |
Navitus_Energy_Group_Funding_T1
Navitus Energy Group Funding, Tracking and Accrual (Details Narrative) (USD $) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Navitus Energy Group Funding Tracking And Accrual Details Narrative | ' | ' | ' |
Accrued preferred distributions | $87,121 | $241,784 | $25,639 |
Common stock warrant issued under Navitus PPM | 320,000 | 2,336,000 | 1,089,900 |
Oil_and_natural_gas_properties2
Oil and natural gas properties (Details) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Oil And Natural Gas Properties Details | ' | ' |
Total oil and natural gas properties, at cost | $8,529,552 | $8,041,433 |
Less: accumulated impairment | -4,325,785 | -4,325,785 |
Oil and natural gas properties, net of impairment | 4,203,767 | 3,715,648 |
Less: accumulated depletion | -1,594,347 | -1,517,836 |
Oil and natural gas properties, net | $2,609,420 | $2,197,812 |
Oil_and_natural_gas_properties3
Oil and natural gas properties (Details Narrative) (USD $) | 3 Months Ended | |
Mar. 31, 2014 | Mar. 31, 2013 | |
Oil And Natural Gas Properties Details Narrative | ' | ' |
Depletion, depreciation, and accretion expense | $78,031 | $18,575 |
Revolving_Credit_Agreement_Det
Revolving Credit Agreement (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Revolving Credit Agreement Details Narrative | ' |
Unused borrowing base | $582,000 |
Outstanding Borrowing | 868,000 |
Interest expense | $4,816 |
Related_Party_Transactions_Det
Related Party Transactions (Details Narrative) (USD $) | Mar. 31, 2014 | Dec. 31, 2013 |
Related Party Transactions Details Narrative | ' | ' |
Accounts receivables from related parties | $72,471 | $68,571 |
Accrued liabilities - related parties | $3,193 | $18,542 |
Shareholders_Equity_Details_Na
Shareholders' Equity (Details Narrative) (USD $) | 3 Months Ended |
Mar. 31, 2014 | |
Aurora [Member] | ' |
Value of warrants using the Black Scholes Option Pricing Model | $77,300 |
Warrants issued | 320,000 |
Warrant exercise price | $0.14 |
Navitus [Member] | ' |
Warrants issued | 320,000 |
Warrant exercise price | $0.35 |