Document_and_Entity_Informatio
Document and Entity Information | 9 Months Ended | |
Sep. 30, 2014 | Nov. 18, 2014 | |
Document and Entity Information [Abstract] | ' | ' |
Entity Registrant Name | 'Eagle Ford Oil & Gas Corp | ' |
Entity Central Index Key | '0000847416 | ' |
Document Type | '10-Q | ' |
Document Period End Date | 30-Sep-14 | ' |
Amendment Flag | 'false | ' |
Current Fiscal Year End Date | '--12-31 | ' |
Entity Filer Category | 'Smaller Reporting Company | ' |
Entity Common Stock, Shares Outstanding | ' | 42,127,928 |
Document Fiscal Period Focus | 'Q3 | ' |
Document Fiscal Year Focus | '2014 | ' |
Entity a Well-known Seasoned Issuer | 'No | ' |
Entity a Voluntary Filer | 'No | ' |
Entity's Reporting Status Current | 'Yes | ' |
CONDENSED_CONSOLIDATED_BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
CURRENT ASSETS | ' | ' |
Cash and cash equivalents | $2,609 | $3,802 |
Accounts receivable - production | 16,582 | 19,084 |
Prepaid expenses and other current assets | 65,721 | 13,625 |
Total current assets | 84,912 | 36,511 |
Oil and gas properties, using full cost accounting | ' | ' |
Costs not subject to amortization | ' | 6,464,436 |
Pipeline transmission properties | 30,839 | 30,839 |
Less: accumulated depreciation and depletion | -16,250 | -12,498 |
Total property and equipment, net | 14,589 | 6,482,777 |
OTHER ASSETS | ' | ' |
Deposits | 125,000 | 150,000 |
TOTAL ASSETS | 224,501 | 6,669,288 |
CURRENT LIABILITIES | ' | ' |
Accounts payable - trade | 1,192,294 | 978,353 |
Accrued expenses | 2,963,592 | 2,202,895 |
Accrued interest to related parties | 243,381 | 225,190 |
Notes payable, current portion | 8,742,709 | 8,805,491 |
Notes payable to related parties, current portion | 981,155 | 897,500 |
Convertible debentures | 611,000 | 545,000 |
Derivative liability - notes, current portions | 44,848 | ' |
Derivative liability - warrants, current portions | ' | 93,044 |
Total current liabilities | 14,778,979 | 13,747,473 |
LONG-TERM LIABILITIES | ' | ' |
Asset retirement obligations | 24,802 | 24,802 |
Total long term liabilities | 24,802 | 24,802 |
TOTAL LIABILITIES | 14,803,781 | 13,772,275 |
SHAREHOLDERS' DEFICIT | ' | ' |
Preferred stock, undesignated, $0.001 par value, 10,000,000 shares authorized, none issued and outstanding | ' | ' |
Common stock, $0.001 par value, 75,000,000 shares authorized, 42,127,995 and 40,102,947 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively | 42,128 | 40,103 |
Additional paid-in-capital | 7,039,690 | 6,740,465 |
Accumulated deficit | -21,661,098 | -13,883,555 |
Total shareholders' deficit | -14,579,280 | -7,102,987 |
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT | $224,501 | $6,669,288 |
CONDENSED_CONSOLIDATED_BALANCE1
CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 |
Statement of Financial Position [Abstract] | ' | ' |
Preferred stock, par value | $0.00 | $0.00 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $0.00 | $0.00 |
Common stock, shares authorized | 75,000,000 | 75,000,000 |
Common stock, shares issued | 42,127,995 | 40,102,947 |
Common stock, shares outstanding | 42,127,995 | 40,102,947 |
CONDENSED_CONSOLIDATED_STATEME
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (USD $) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | |
Income Statement [Abstract] | ' | ' | ' | ' |
REVENUE | $1,158 | $889 | $2,874 | $3,811 |
OPERATING EXPENSES | ' | ' | ' | ' |
Lease operating expenses | 1,145 | 2,599 | 5,376 | 8,968 |
General and administrative expenses | 185,957 | 209,220 | 616,762 | 786,239 |
Depreciation, depletion and accretion | 1,250 | 1,250 | 3,752 | 3,748 |
Impairment of goodwill | 6,484,307 | ' | 6,484,307 | ' |
Total operating expenses | 6,672,695 | 213,069 | 7,110,197 | 798,955 |
Net operating loss | -6,671,537 | -212,180 | -7,107,323 | -795,144 |
OTHER INCOME (EXPENSES) | ' | ' | ' | ' |
Interest expense | -290,877 | -252,428 | -784,597 | -743,146 |
Gain on cancellation of accounts payable items | 27,456 | ' | 27,456 | ' |
Gain (loss) on change in fair value of notes derivative liability | 39,194 | ' | -6,123 | ' |
Gain on change in fair value of warrant derivative liability | ' | 30,036 | 93,044 | 48,897 |
Total other income (expenses) | -224,227 | -222,392 | -670,220 | -694,249 |
Net loss | ($6,895,764) | ($434,572) | ($7,777,543) | ($1,489,393) |
Loss per common share (basic and diluted) (in dollars per share) | ($0.16) | ($0.01) | ($0.19) | ($0.04) |
Weighted average common shares outstanding (basic and diluted) (in shares) | 42,074,870 | 39,447,852 | 41,586,348 | 39,121,548 |
CONDENSED_CONSOLIDATED_STATEME1
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT (Unaudited) (USD $) | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance beginning at Dec. 31, 2013 | $40,103 | $6,740,465 | ($13,883,555) | ($7,102,987) |
Balance beginning, shares at Dec. 31, 2013 | 40,102,947 | ' | ' | ' |
Common shares issued for cash | 1,919 | 278,081 | ' | ' |
Common shares issued for cash, shares | 1,918,798 | ' | ' | ' |
Net loss | ' | ' | -7,777,543 | -7,777,543 |
Balance ending at Sep. 30, 2014 | $42,128 | $7,039,690 | ($21,661,098) | ($14,579,280) |
Balance ending, shares at Sep. 30, 2014 | 42,127,995 | ' | ' | ' |
CONDENSED_CONSOLIDATED_STATEME2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (USD $) | 9 Months Ended | |
Sep. 30, 2014 | Sep. 30, 2013 | |
Cash flows from operating activities: | ' | ' |
Net loss | ($7,777,543) | ($1,489,393) |
Adjustments to reconcile net loss to net cash used in operating activities: | ' | ' |
Share-based compensation | ' | 108,000 |
Amortization of debt discount on convertible notes | 38,762 | ' |
Depreciation and depletion | 3,752 | 3,748 |
Unrealized gain on change in derivative value | -86,958 | -48,898 |
Amortization of original discount on notes | 3,218 | 1,283 |
Stock issued for expenses | 21,250 | ' |
Gain on extinguishment of liabilities | -27,456 | ' |
Write off of deposits | 25,000 | ' |
Impairment of oil and gas property | 6,484,307 | ' |
Changes in operating assets and liabilities: | ' | ' |
Accounts receivable - production | 2,502 | 5,158 |
Prepaid expenses and other current assets | -52,096 | -7,857 |
Accounts payable-trade | 241,527 | 197,723 |
Accrued expenses | 778,758 | 742,872 |
Net cash used in operating activities | -344,977 | -487,364 |
Cash flows from investing activities: | ' | ' |
Purchase of oil and gas properties | -19,871 | ' |
Net cash used in investing activities | -19,871 | ' |
Cash flows from financing activities: | ' | ' |
Proceeds from issuance of notes payable to related parties | 83,655 | ' |
Proceeds from issuance of short term debt | ' | 60,000 |
Proceeds from sale of common stock | 280,000 | 169,000 |
Net cash provided by financing activities | 363,655 | 229,000 |
Net decrease in cash and cash equivalents | -1,193 | -258,364 |
Cash and cash equivalents, at beginning of period | 3,802 | 259,138 |
Cash and cash equivalents, at end of period | 2,609 | 774 |
Non-cash investing and financial activities: | ' | ' |
Common shares issued to settle notes payable | ' | 30,000 |
Debt discount on convertible notes | 44,848 | ' |
Notes payable reclass to convertible debenture | $66,000 | ' |
ORGANIZATION
ORGANIZATION | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
ORGANIZATION | ' |
1. ORGANIZATION | |
Eagle Ford Oil & Gas Corp. (“Eagle Ford”, “ECCE”, “we”, “us” or the” Company”) is an independent oil and gas company organized in Nevada actively engaged in oil and gas development, exploration and production with properties and operational focus in the Texas and Louisiana-Gulf Coast Region. Eagle Ford’s strategy is to grow its asset base by purchasing or investing in oil and gas drilling projects in the Texas and Louisiana regions. | |
Eagle Ford continues to be a “smaller reporting company,” as defined under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). |
BASIS_OF_PRESENTATION_AND_SIGN
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | ' | ||||||||||||||||
2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES | |||||||||||||||||
The accompanying unaudited interim financial statements have been prepared by the Company in accordance with the instructions to Form 10-Q of the Securities and Exchange Commission. The financial information has not been audited and should not be relied upon to the same extent as audited financial statements. Certain information and footnote disclosures normally included in audited financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted. Accordingly, these unaudited interim financial statements should be read in conjunction with the Company’s financial statements and related notes contained in the Form 10-K for the year ended December 31, 2013. | |||||||||||||||||
In the opinion of management, the unaudited interim financial statements reflect all adjustments, including normal recurring adjustments, necessary for fair presentation of the interim periods presented. The results of operations for the nine months ended September 30, 2014 are not necessarily indicative of the results of operations to be expected for the full year. | |||||||||||||||||
The Company’s unaudited condensed consolidated financial statements include all accounts of Eagle Ford (ECCE) and its subsidiaries: Eagle Ford – East Pearsall, Sandstone LLC and Eagle Ford Operating. All significant inter-company balances and transactions have been eliminated in consolidation. | |||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||
Eagle Ford’s unaudited condensed consolidated financial statements are based on a number of significant estimates, including oil and gas reserve quantities which are the basis for the calculation of depreciation, depletion and impairment of oil and gas properties; timing and costs associated with its asset retirement obligations; estimates for the realization of goodwill; and estimates of the value of derivative financial instruments. | |||||||||||||||||
Reclassifications | |||||||||||||||||
Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented. | |||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
Eagle Ford considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. | |||||||||||||||||
Oil and Gas Properties, Full Cost Method | |||||||||||||||||
Eagle Ford uses the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells, including directly related overhead costs and related asset retirement costs, are capitalized. Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and gas property costs. Properties not subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. Eagle Ford assesses the realizability of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management’s intention with regard to future exploration and development of individually significant properties and the ability of Eagle Ford to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. | |||||||||||||||||
Costs of proved oil and gas properties, including future development costs, if any, are amortized using the units of production method over the estimated proved reserves. | |||||||||||||||||
In applying the full cost method, Eagle Ford performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the “estimated present value,” of its proved reserves discounted at a 10-percent interest rate of future net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment expense. The Company assessed the realizability of its oil and gas properties and determined that no impairment of its oil and gas properties was necessary as of September 30, 2014. | |||||||||||||||||
Depletion | |||||||||||||||||
Depletion is provided using the unit-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment (ceiling test) indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value. | |||||||||||||||||
In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expense. | |||||||||||||||||
Asset Retirement Obligations | |||||||||||||||||
The Company follows the provisions of the Accounting Standards Codification (“ASC”) 410 - Asset Retirement and Environmental Obligations. The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset and is subject to amortization. The Company’s asset retirement obligations relate to the abandonment of oil and gas producing facilities. The amounts recognized are based upon numerous estimates and assumptions, including future retirement costs, future recoverable quantities of oil and gas, future inflation rates and the credit-adjusted risk-free interest rate. | |||||||||||||||||
The following table describes changes in our asset retirement obligation during the nine months ended September 30, 2014 and the year ended December 31, 2013. | |||||||||||||||||
Nine months Ended | For the Year Ended | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||
ARO liability at beginning of period, current and noncurrent | $ | 24,802 | $ | 24,802 | |||||||||||||
Liabilities incurred from acquisitions | — | — | |||||||||||||||
Accretion | — | — | |||||||||||||||
ARO liability at end of period, current and noncurrent | $ | 24,802 | $ | 24,802 | |||||||||||||
Revenue and Cost Recognition | |||||||||||||||||
Eagle Ford uses the sales method of accounting for natural gas and oil revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes to which Eagle Ford is entitled based on our interest in the properties. Costs associated with production are expensed in the period incurred. | |||||||||||||||||
Loss per Share | |||||||||||||||||
Pursuant to FASB ASC Topic 260, Earnings per Share, basic net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common and common equivalent shares outstanding during the period. Common share equivalents included in the diluted computation represent shares issuable upon assumed exercise of stock options and warrants using the treasury stock and “if converted” method and conversion of preferred shares. For periods in which net losses are incurred, weighted average shares outstanding is the same for basic and diluted loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect. | |||||||||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | |||||||||||||||||
Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of Eagle Ford’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At September 30, 2014 and December 31, 2013, an allowance for doubtful accounts was not considered necessary as all accounts receivable were deemed collectible. | |||||||||||||||||
Concentration of Credit Risk | |||||||||||||||||
Financial instruments that potentially subject Eagle Ford to concentration of credit risk consist of cash and accounts receivable. At September 30, 2014, cash balances in interest-bearing accounts are zero. | |||||||||||||||||
Sales to a single customer comprised 100% of Eagle Ford’s total oil and gas revenues for each of the nine months ended for both September 30, 2014 and 2013. At September 30, 2014 and December 31, 2013, Eagle Ford’s accounts receivable from its primary customer was $16,582 and $19,084, respectively. Eagle Ford believes that, in the event that its primary customer is unable or unwilling to continue to purchase Eagle Ford’s production, there are a substantial number of alternative buyers for its production at comparable prices. | |||||||||||||||||
Property and Equipment, other than Oil and Gas Properties | |||||||||||||||||
Property and equipment are stated at cost. Additions of new equipment and major renewals and replacements of existing equipment are capitalized. Repairs and minor replacements are charged to operations as incurred. Cost and accumulated depreciation and amortization are removed from the accounts when assets are sold or retired, and the resulting gains or losses are included in operations. | |||||||||||||||||
Depreciation of property and equipment is provided using the straight-line method applied to the expected useful lives of the assets: | |||||||||||||||||
Estimated | |||||||||||||||||
useful lives | |||||||||||||||||
Pipeline transmission properties | 20 years | ||||||||||||||||
Machinery and equipment | 3 – 7 years | ||||||||||||||||
Office furniture, fixtures and equipment | 3 – 5 years | ||||||||||||||||
Income Taxes | |||||||||||||||||
The Company uses the liability method of accounting for income taxes. Under this method, it records deferred income taxes based on temporary differences between the financial reporting and tax bases of assets and liabilities and uses enacted tax rates and laws that the Company expects will be in effect when it recovers those assets or settles those liabilities, as the case may be, to measure those taxes. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. | |||||||||||||||||
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. As of September 30, 2014, the Company did not identify any uncertain tax positions. | |||||||||||||||||
The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the income tax expense (benefit) line item in the statement of operations. | |||||||||||||||||
Share-Based Compensation | |||||||||||||||||
The Company follows ASC 718 - Compensation - Stock Compensation under which the Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model and common shares based on the last quoted market price of the Company’s common stock on the date of the share grant. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As share-based compensation expense is recognized based on awards ultimately expected to vest, the Company reduces the expense for estimated forfeitures based on historical forfeiture rates, if available. Previously recognized compensation costs may be adjusted to reflect the actual forfeiture rate for the entire award at the end of the vesting period. Excess tax benefits, as defined in ASC 718, if any, are recognized as an addition to paid-in capital. | |||||||||||||||||
Financial instruments | |||||||||||||||||
The accounting standards regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. | |||||||||||||||||
The three levels are defined as follows: | |||||||||||||||||
• | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||||||||||||||||
• | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | ||||||||||||||||
• | Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement. | ||||||||||||||||
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company has determined that the warrants outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Stock. See Note 6 for discussion of the impact the derivative financial instruments had on the Company’s unaudited condensed consolidated financial statements and results of operations. | |||||||||||||||||
Significant Level 3 inputs used to calculate the fair value of the warrants and derivative notes include the stock price on the valuation date, expected volatility, risk-free interest rate and management’s assumptions regarding the likelihood of a repricing of these warrants pursuant to the anti-dilution provision. See Note 6 for further discussion. | |||||||||||||||||
The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2014. There were no transfers of financial assets between levels during the nine months ended September 30, 2014. | |||||||||||||||||
Carrying Value at | Fair Value Measurement at September 30, 2014 | ||||||||||||||||
30-Sep-14 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Derivative liability – Warrants | $ | — | $ | — | $ | — | $ | — | |||||||||
Derivative liability – Notes | $ | 44,848 | $ | — | $ | — | $ | 44,848 | |||||||||
The Company did not identify any other assets and liabilities that are required to be presented on the unaudited condensed consolidated balance sheet at fair value. | |||||||||||||||||
Contingencies | |||||||||||||||||
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. | |||||||||||||||||
If the assessment of a loss contingency indicates that it is probable that a loss has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. The Company expenses legal costs associated with contingencies as incurred. | |||||||||||||||||
Environmental Expenditures | |||||||||||||||||
The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. | |||||||||||||||||
Liabilities for expenditures of a non-capital nature are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component is fixed or reliably determinable. No such liabilities existed or were recorded at September 30, 2014 and December 31, 2013. | |||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
Eagle Ford does not expect the adoption of any recently issued accounting pronouncements will have a significant impact on its results of operations, financial position or cash flow. |
LIQUIDITY_AND_GOING_CONCERN
LIQUIDITY AND GOING CONCERN | 9 Months Ended |
Sep. 30, 2014 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' |
LIQUIDITY AND GOING CONCERN | ' |
3. LIQUIDITY AND GOING CONCERN | |
As shown in the accompanying unaudited condensed consolidated financial statements, for the nine months ended September 30, 2014, Eagle Ford incurred a net loss attributable to common shareholders of $7,777,543. During the nine months ended September 30, 2014, operating expenses included interest expenses and non cash expenses related to the derivative liability. At September 30, 2014 and December 31, 2013, the Company had a working capital deficit (current liabilities minus current assets) of $14,694,067 and $13,710,960, respectively, and held cash and cash equivalents of $2,609 and $3,802, respectively. These conditions raise substantial doubt as to our ability to continue as a going concern. | |
Management is working to improve its liquidity and its results from operations by raising additional capital and investing in the drilling of additional wells to improve future earnings and cash flow. Management is exploring various avenues to obtain such funding to develop our properties and pay existing debt including the issuance of new debt, issuance of securities, sales of properties and joint ventures. Management anticipates that additional financings and loans will be required to sustain operations in the future. ECCE is also actively looking for potential merger partners. There can be no assurance that the Company will be successful in raising the required capital. | |
The failure to raise sufficient capital through future debt or equity financings or otherwise may cause the Company to curtail operations, sell assets, or result in the failure of Eagle Ford’s business. The unaudited condensed consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. |
OIL_AND_GAS_PROPERTIES
OIL AND GAS PROPERTIES | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Extractive Industries [Abstract] | ' | ||||||||||||||||
OIL AND GAS PROPERTIES | ' | ||||||||||||||||
4. OIL AND GAS PROPERTIES | |||||||||||||||||
The following table sets forth the Company’s costs incurred in oil and gas property acquisition, exploration and development activities for the nine months ended September 30, 2014. All of the Company’s oil and gas properties are located in the United States. | |||||||||||||||||
Well Description | 31-Dec-13 | Additions | Impairment/ | 30-Sep-14 | |||||||||||||
Impairment | |||||||||||||||||
East Pearsall, Frio Co. TX | $ | 6,464,436 | $ | 19,871 | $ | 6,484,307 | $ | — | |||||||||
$ | 6,464,436 | $ | 19,871 | $ | 6,484,307 | $ | — | ||||||||||
EAST PEARSALL | |||||||||||||||||
On June 4, 2012, ECCE entered into an agreement though a special purpose entity named EFOGC – East Pearsall, L.L.C., a Texas limited liability company. ECCE owns 100% of the Class B Membership Interests in EFEP, while Medallion Oil Corp. (MOC) owns 100% of the Class A Membership Interest. EFEP completed the acquisition of 85% Working Interest in 3,683 acres in Frio County, Texas from Amac Energy, L.L.C. to drill and develop the Austin Chalk, Buda, Eagle Ford and Pearsall Shale The agreement with AMAC Energy was to purchase the 85% of the working interest on the East Pearsall lease. As part of the sales agreement, ECCE had to drill the one well on each of the three leases prior to 6 months of the expiration of the leases. Due to the fact that ECCE was unable to acquire drilling funds per the agreement prior to the agreed date, ECCE was required, as stated in the agreement, to reassign the leases back to AMAC Energy. As a result as stated in the settlement agreement, On July 8, 2014 the MOC-East Pearsall Board of Directors approved the release of all liens to AMAC and ECCE has been released from any obligation to AMAC Energy. As of September 30, 2014, an impairment charge of $6,464,436 was taken against this property. | |||||||||||||||||
MOC invested $7,000,000 into EFOGC – East Pearsall, LLC for the sole purpose of acquiring the AMAC leases, with MOC owning 100% of A series common stock and ECCE owning B series common stock as “designated operator”. Per the agreement with MOC, ECCE was required to acquire a minimum of $10,500,000 drilling capital by December 2012, however, ECCE was unsuccessful. MOC granted an extension for another six months, however ECCE was also unsuccessful in that attempt to raise funds as it was in all future periods. A part of the original agreement required that the East Pearsall, LLC return the original capital investment of $7,000,000 out of those funds, along with interest of 10% on that balance. As of September 30, 2014, the loan from MOC $1 million was outstanding against this property. | |||||||||||||||||
With the leases being reassigned to AMAC Energy and the subsequent agreement with MOC to close East Pearsall, LLC, the entity of EFOGC – East Pearsall is currently “winding down” and will be closed as an operating entity in the state of Texas. With this winding down, ECCE will no longer have any liability relative to EFOGC – East Pearsall and the East Pearsall leases. We anticipate completing this closure within a month of this report. | |||||||||||||||||
LIVE OAK COUNTY, TEXAS | |||||||||||||||||
In August 2010, ECCE purchased a farm-in of a 1% working interest in 2,400 acres and the drilling of two wells in the Eagle Ford Shale formation located in Live Oak County in South Texas for $250,000. The Dena Forehand #2H, the Kellam #2H and the Hammon 1H were drilled and completed and production began during late 2010 and early 2011 and classified as proved reserves. Subsequent production has proven to be well below expectations, and ECCE does not intend to pursue additional investments in this field. As of the date of this report, the wells in Live Oak County continue to have minimal gas production. | |||||||||||||||||
In October 2014, ECCE transferred ownership of these three wells to the convertible bond holders. The original loan agreement contained the stipulation that should the notes be in default, then the property would be transferred to those note holders. As of the date of filing, ECCE does not have ownership or control of these wells. | |||||||||||||||||
OHIO PIPELINE | |||||||||||||||||
In October 2008, ECCE acquired a gas pipeline (“Pipeline”) approximately 13 miles in length located in Jefferson and Harrison Counties, Ohio. The Pipeline was purchased from M- J Oil Company of Paris, Ohio, an unaffiliated third party, by issuing a mortgage note for $1,000,000. The mortgage note bears an 8% annual interest rate. The mortgage is secured by the Pipeline assets. The mortgage was due on March 31, 2010, at which time, the entire unpaid balance of principal and accrued interest was to have been paid. The pipeline services oil and gas properties owned by Samurai Corp, an affiliated company. | |||||||||||||||||
On February 27, 2009, ECCE entered into an agreement to buy oil and gas producing properties in Ohio, from Samurai Corp, an affiliated company owned by Sam Skipper, who was President of ECCE at that time. Upon further review, due to market conditions pertaining to the price of oil and gas, both Samurai and ECCE decided that the transaction was not in the best interest of shareholders of either company. Therefore, on April 13, 2009 the Board of Directors of both companies decided to terminate the transaction. | |||||||||||||||||
A review of the pipeline valuation was performed by management. This was necessary as the asset was not an income producing asset during 2010. A comparison of replacement cost, comparable market value and comparable earnings potential to other pipelines, showed that the expected realizable value of the asset at December 31, 2009 was $100,000. An impairment charge of $900,000 was recorded during the year ended December 31, 2009. | |||||||||||||||||
Due to the failure to complete the transfer of assets from Samurai to ECCE, the covenants of the Pipeline purchase were violated. On February 28, 2009 M-J Oil Company Inc, of Paris Ohio, obtained a judgment against ECCO Energy for non-compliance with covenants in the original mortgage relating to the purchase of the M-J Oil Company pipeline (“Pipeline”). We are in negotiations with the M-J Oil Company to remove the judgment and to adjust the mortgage terms, which required full payment on March 31, 2009. As of this date, we have not reached a satisfactory agreement with the lender. M-J Oil Company has taken legal action to pursue the judgment in the State of Texas, filing a lawsuit in the State of Texas in April, 2014. As of the filing date of this report, negotiations with MJ Oil are underway in order to remove the judgment and settle the obligation. | |||||||||||||||||
BAYOU CHOCTAW | |||||||||||||||||
On August 5, 2011, ECCE, entered into an agreement to purchase 1.5% Working Interest in the Bayou Choctaw Project located in Iberville Parish, Louisiana from GFX Energy, Inc. (GFX). Prior to December 31, 2011, ECCE decided to not further participate in the Bayou Choctaw development. ECCE and GFX decided to use the $100,000 deposited for Bayou Choctaw as a deposit on a future, undetermined endeavor relating to the exploration of oil and gas. ECCE remains in discussion about this investment with GFX Energy, Inc., and anticipates using this balance in a future, undetermined activity. | |||||||||||||||||
HARDIN COUNTY/MERIDIAN CAPITAL VENTURES | |||||||||||||||||
During the year ended December 31, 2013, the Company was in the process of making an offer on some property in Hardin County, TX. Meridian Capital Ventures intended to fund the acquisition. During the quarter, Vanguard Energy received a higher offer than ECCE was prepared to bid and the property was sold to another company. As of September 30, 2014 the agreement to fund the acquisition has been cancelled and the amounts payable to Meridian Capital Ventures has been voided. | |||||||||||||||||
Eagle Ford Oil & Gas Operating Company | |||||||||||||||||
During March, 2014, ECCE began the process of registering a new subsidiary, Eagle Ford Oil & Gas Operating Company. The new subsidiary will be responsible for any drilling and related production activities of the company. As of the date of this report, the subsidiary has no assets or liabilities. Further, the Company is in the process of closing this subsidiary. |
DEBT
DEBT | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||
DEBT | ' | ||||||||||||||||
5. DEBT | |||||||||||||||||
Notes Payable – Related Parties | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Promissory note to TDLOG – 8% interest; due September 30, 2014; unsecured (1) | $ | 817,500 | $ | 817,500 | |||||||||||||
Promissory note to Michael Munsey – 4% interest; due December 31, 2014: unsecured (2) | 20,155 | — | |||||||||||||||
Promissory note to TDLOG – 8% interest; due December 31, 2014; unsecured (1) | 63,500 | — | |||||||||||||||
Promissory note to TDLOG – 8% interest; due September 30, 2014; unsecured (1) Total: | 80,000 | 80,000 | |||||||||||||||
Notes Payable – Related Parties | $ | 981,155 | $ | 897,500 | |||||||||||||
-1 | TDLOG, LLC is controlled by Thomas E. Lipar, Chairman of the Board of Eagle Ford. Note due date was changed to September 30, 2014 from September 30, 2013. As of the filing date, the notes are in default. Additional loans totaling $63,500 were made during the three quarters ending September 30, 2014. These notes will be consolidated into one note during the quarter ending December 31, 2014. These new notes are to provide short term funding to ECCE. | ||||||||||||||||
-2 | Michael Munsey is Vice-President of Operations and Exploration of Eagle Ford. | ||||||||||||||||
Accrued interest expenses on the above notes to the related party as of September 30, 2014 and December 31, 2013 is $243,381 and $225,190, respectively. | |||||||||||||||||
Interest expenses to related party for the three months ended September 30, 2014 and 2013 is $19,363 and $17,950, respectively. | |||||||||||||||||
Interest expenses to related party for the nine months ended September 30, 2014 and 2013 is $55,634 and $53,850, respectively. | |||||||||||||||||
Notes Payable – Non-Related Parties | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Promissory note – 12% interest; due March 31, 2009; not secured (1) | $ | 328,578 | $ | 328,578 | |||||||||||||
Promissory note – 5% interest; due January 1, 2012; not secured (2). | 227,131 | 227,131 | |||||||||||||||
Pipeline mortgage – 8% interest; due September 30, 2009; secured by pipeline (3) | 1,000,000 | 1,000,000 | |||||||||||||||
Promissory notes – 6% interest; due April 1, 2011; not secured (2) | 112,000 | 112,000 | |||||||||||||||
Promissory notes – 5% interest; due October 15, 2010; not secured (4) | 50,000 | 50,000 | |||||||||||||||
Promissory note to a former Director – 8% interest; due July 1, 2010; unsecured. (5) | 25,000 | 25,000 | |||||||||||||||
Promissory note – Medallion Investment- 10% interest (6) | 7,000,000 | 7,000,000 | |||||||||||||||
Promissory note – 12% interest with $3,000 OID; due July 14, 2014 (7) | — | 33,000 | |||||||||||||||
Promissory note – 12% interest with $3,000 OID; due July 14, 2014 (7) | — | 33,000 | |||||||||||||||
Total notes payable | 8,742,709 | 8,808,709 | |||||||||||||||
Less: Unamortize debt discount portion | — | (3,218 | ) | ||||||||||||||
Total notes payable, net | 8,742,709 | 8,805,491 | |||||||||||||||
Less: current portion of notes payable | (8,742,709 | ) | (8,805,491 | ) | |||||||||||||
Total notes payable – long term | $ | — | $ | — | |||||||||||||
Accrued and unpaid interest for notes payable to non-related parties at September 30, 2014 and December 31, 2013 was $2,237,538 and $1,825,482 respectively, and is included in accrued expenses on the accompanying unaudited condensed consolidated balance sheets. | |||||||||||||||||
Interest expenses to non-related party for the nine months ended September 30, 2014 and 2013 is $637,675 and $628,339, respectively and Interest expenses to non-related party for the three months ended September 30, 2014 and 2013 is $212,937 and $206,399, respectively. | |||||||||||||||||
-1 | Pursuant to the Reverse Acquisition, the Company assumed these notes payable totaling $328,578. All principal and interest became due September 30, 2009 for 12% notes. This note has not been repaid and is in default. No demand has been made for payment. Eagle Ford is continuing to accrue interest on this note at the stated rate. | ||||||||||||||||
-2 | Pursuant to the Reverse Acquisition, the Company assumed two notes payable (i) $227,131 due on January 1, 2012 for 5% and (ii) $142,000 due on April 1, 2011 for 6% interest for drilling on the Wilson Field lease and for general corporate purposes. Neither of these notes has been repaid in cash and is in default. Eagle Ford is continuing to accrue interest on these notes at the stated rate. During the year ended December 31, 2013, the note holder agreed to convert $30,000 of note on issuance of 81,081 shares of common stock. On March 12, 2014, the note holder demanded payment on the outstanding portion of the note totaling $339,131 (see Note 8). The note holder has demanded payment, and we are currently in negotiations regarding a settlement. | ||||||||||||||||
-3 | The entire unpaid balance of principal and accrued interest was due on September 30, 2009. No payments have been made and this mortgage note is in default. There has been a judgment rendered against Eagle Ford in the amount of the mortgage (see Note 8). Eagle Ford is in discussions with the lender to restructure the mortgage. Eagle Ford is continuing to accrue interest on this note at the stated rate. In April, 2014, the note holder began the process to move the judgment to Texas courts. | ||||||||||||||||
-4 | Pursuant to the Reverse Acquisition, the Company assumed these notes payable totaling $50,000 from two different note holders for drilling on the Wilson Field lease and for general corporate purposes. Neither of these notes has been repaid in cash and is in default. One party has demanded payment on a $25,000 note. Eagle Ford is continuing to accrue interest on these notes at the stated rate (see Note 8). | ||||||||||||||||
-5 | Prior to the Reverse Acquisition, Eagle Ford borrowed $25,000 from a related party for general corporate purposes. The note is in default and due on demand. Eagle Ford continued to accrue interest on these notes at the stated rate. From July 20, 2011 this note holder is no longer a related party. | ||||||||||||||||
-6 | East Pearsall | ||||||||||||||||
On June 4, 2012, ECCE entered into an agreement though a special purpose entity named EFOGC – East Pearsall, L.L.C., a Texas limited liability company. ECCE owns 100% of the Class B Membership Interests in EFEP, while Medallion Oil Corp. (MOC) owns 100% of the Class A Membership Interest. EFEP completed the acquisition of 85% Working Interest in 3,683 acres in Frio County, Texas from Amac Energy, L.L.C. to drill and develop the Austin Chalk, Buda, Eagle Ford and Pearsall Shale The agreement with AMAC Energy was to purchase the 85% of the working interest on the East Pearsall lease. As part of the sales agreement, ECCE had to drill the one well on each of the three leases prior to 6 months of the expiration of the leases. Due to the fact that ECCE was unable to acquire drilling funds per the agreement prior to the agreed date, ECCE was required, as stated in the agreement, to reassign the leases back to AMAC Energy. As a result as stated in the settlement agreement, On July 8, 2014 the MOC-East Pearsall Board of Directors approved the release of all liens to AMAC and ECCE has been released from any obligation to AMAC Energy. As of September 30, 2013, an impairment charge of $6,464,436 was taken against this property. | |||||||||||||||||
MOC invested $7,000,000 into EFOGC – East Pearsall, LLC for the sole purpose of acquiring the AMAC leases, with MOC owning 100% of A series common stock and ECCE owning B series common stock as “designated operator”. Per the agreement with MOC, ECCE was required to acquire a minimum of $10,500,000 drilling capital by December 2012, however, ECCE was unsuccessful. MOC granted an extension for another six months, however ECCE was also unsuccessful in that attempt to raise funds as it was in all future periods. A part of the original agreement required that the East Pearsall, LLC return the original capital investment of $7,000,000 out of those funds, along with interest of 10% on that balance. | |||||||||||||||||
With the leases being reassigned to AMAC Energy and the subsequent agreement with MOC to close East Pearsall, LLC, the entity of EFOGC – East Pearsall is currently “winding down” and will be closed as an operating entity in the state of Texas. With this winding down, ECCE will no longer have any liability relative to EFOGC – East Pearsall and the East Pearsall leases. We anticipate completing this closure within a month of this report | |||||||||||||||||
(7) | As these notes has conversion features, please see the discussion in convertible notes (refer below for further details). These notes are in default as of the date of filing of this report. | ||||||||||||||||
Convertible Debentures and Notes Payable | |||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Convertible debentures (1) | $ | 545,000 | $ | 545,000 | |||||||||||||
Convertible notes payable (2) | 66,000 | — | |||||||||||||||
Total convertible debentures and notes payable | 611,000 | 545,000 | |||||||||||||||
Unamortized debt discount on convertible notes payable | — | — | |||||||||||||||
Total: Convertible debentures and notes payable – net | 611,000 | 545,000 | |||||||||||||||
Less: current portion of convertible debentures and notes payable | (611,000 | ) | (545,000 | ) | |||||||||||||
Total convertible debentures and notes payable – long term | $ | — | $ | — | |||||||||||||
-1 | On June 20, 2011, the Company assumed the liability for $545,000 of Secured Convertible Debentures as a result of the Reverse Acquisition. The Secured Convertible Debentures matured on July 26, 2011, and earned interest at a rate of 12%, payable quarterly in 3,000 shares of common stock for each debenture. The Company is in default. There have been no shares issued for the interest payable as of September 30, 2014, nor have the Debentures been repaid. The interest for these debentures is accrued at the 12% rate and is included in accrued expenses. The Debentures are secured by a 1.5% interest in three oil and gas producing wells that are in a 2,400 acre lease in Live Oak County, Texas. The Debentures are convertible at the holders’ option into Eagle Ford restricted common stock at a fixed conversion rate of $0.90 per common share. The Debentures may also be satisfied by transferring the lease to the investors. ECCE transferred the property to these note holders during October 2014. Accrued and unpaid interest was $271,755 and $224,705 at September 30, 2014 and December 31, 2013, respectively related to the convertible debentures. Interest expenses on convertible debenture for the three months ended September 30, 2014 and 2013 is $16,350 for each quarter. | ||||||||||||||||
In October, 2014, ECCE transferred ownership of these wells to the debt holders. The original agreement provided the option to transfer ownership should the notes be in default. | |||||||||||||||||
-2 | On July 18, 2013, ECCE issued two Notes Payable of $33,000 each, for a combined total of $66,000 to two individuals. The notes contained a $3,000 or $6,000 total original issue discount. The notes are due on July 14, 2014, and if they were repaid within ninety days from date of issue, then no interest would accrue. If they were paid after 90 days, then they accrued interest at a rate of twelve percent per annum, due on that date. The notes could be converted into common stock after 180 days, which occurred on January 14, 2014 The Conversion Price is the lesser of $0.39 per share or 60% of the lowest trade in the 25 trading days previous to the conversion. The Note accrues interest at a rate of 12% per annum and matured on July 13, 2014. The notes were not paid or converted and are now in default. | ||||||||||||||||
The Company identified embedded derivatives related to the Convertible Note entered into on January 13, 2014. These embedded derivatives included certain conversion features. The accounting treatment of derivative financial instruments requires that the Company record the fair value of the derivatives as of the inception date of the Convertible Promissory Note and to adjust the fair value as of each subsequent balance sheet date. At the inception of the Convertible Note, the Company determined a fair value of $38,762 of the embedded derivative. The fair value of the embedded derivative was determined using intrinsic value. | |||||||||||||||||
The initial fair value of the embedded debt derivative of $38,762 was allocated as a debt discount and derivatives liability. | |||||||||||||||||
The fair value of the described embedded derivative of $44,848 at September 30, 2014 was determined using the Black-Scholes Model with the following assumptions: | |||||||||||||||||
(1) risk free interest rate of | 0.28%; | ||||||||||||||||
(2) dividend yield of | 0%; | ||||||||||||||||
(3) volatility factor of | 183%; | ||||||||||||||||
(4) an expected life of the conversion feature of | 6 months, and | ||||||||||||||||
(5) estimated fair value of the company’s common stock of | $0.25 per share. | ||||||||||||||||
At September 30, 2014, the Company adjusted the recorded fair value of the derivative liability to market resulting in non-cash, non-operating loss of $39,144 and ($6,123) for the three and nine months ended September 30, 2014. | |||||||||||||||||
During the three and nine months ended September 30, 2014, the Company amortized $16,490 and $38,762 of debt discount to current period operations as financing expense. | |||||||||||||||||
Activity for the derivative liability- convertible note during the nine months ended September 30, 2014 was: | |||||||||||||||||
December 31, | Activity During | Decrease in | September 30, | ||||||||||||||
2013 | the Period | Fair Value | 2014 | ||||||||||||||
Derivative convertible notes | $ | — | $ | 44,848 | $ | — | $ | 44,848 | |||||||||
Total | $ | — | $ | 44,848 | $ | — | $ | 44,848 | |||||||||
DERIVATIVE_LIABILITY_WARRANTS
DERIVATIVE LIABILITY- WARRANTS | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||
DERIVATIVE LIABILITY- WARRANTS | ' | ||||||||||||||||
6. DERIVATIVE LIABILITY- WARRANTS | |||||||||||||||||
In connection with the Reverse Acquisition, the Company assumed 1,000,000 warrants which were issued by Eagle Ford prior to the Reverse Acquisition in connection with the conversion of Eagle Ford’s convertible preferred shares, which also occurred prior to the Reverse Acquisition. The Company determined that the warrants contained provisions that protect the holders from declines in the Company’s stock price that could result in modification of the exercise price under the warrant based on a variable that is not an input to the fair value of a “fixed-for-fixed” option as defined under ASC 815 – 40. As a result, these warrants were not indexed to the Company’s own stock. The fair value of these warrants was recognized as derivative warrant instruments and will be measured at fair value at each reporting period. As of June 20, 2011, the Company determined that, using a lattice model, the fair value of the warrants was $438,680, which had been reduced to $93,044 by December 31, 2013. As of September 30, 2014, the warrants expired and determined the fair value to be $-0-. The decrease in fair value has been recognized as an unrealized gain on the change in derivative value of $93,044 and $48,897 for the nine months ended September 30, 2014 and September 30, 2013, respectively and the decrease in fair value has been recognized as an unrealized gain on the change in derivative value of $0 and $30,036 for the three months ended September 30, 2014 and 2013, respectively. | |||||||||||||||||
Activity for the derivative warrant during the nine months ended September 30, 2014 was: | |||||||||||||||||
December 31, | Activity During | Decrease in | September 30, | ||||||||||||||
2013 | the Period | Fair Value | 2014 | ||||||||||||||
Derivative warrant instruments | $ | 93,044 | $ | — | $ | 93,044 | $ | — | |||||||||
Total | $ | 93,044 | $ | — | $ | 93,044 | $ | — |
SHAREHOLDERS_EQUITY
SHAREHOLDERS' EQUITY | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||
SHAREHOLDERS' EQUITY | ' | ||||||||||||
7. SHAREHOLDERS’ EQUITY | |||||||||||||
As of September 30, 2014 and December 31, 2013, there were 42,127,995 and 40,102,947 shares of common stock issued and outstanding, respectively. | |||||||||||||
Common stock sales | |||||||||||||
On January 14, 2014, ECCE sold 183,488 shares of common stock to several individuals for $0.1635 per share. | |||||||||||||
On March 12, 2014, ECCE sold 1,735,310 shares of common stock to several individual for $0.144 per share. | |||||||||||||
On August 15, 2014, ECCE issued 106,250 shares of restricted common stock to an employee as part of a compensation package for $0.20 per share. | |||||||||||||
All proceeds from stock sales were used for general corporate purposes. | |||||||||||||
Warrants | |||||||||||||
Warrant activity during the nine months ended September 30, 2014 is as follows: | |||||||||||||
Warrants | Weighted- | Aggregate | |||||||||||
Average | Intrinsic | ||||||||||||
Exercise | Value | ||||||||||||
Price | |||||||||||||
Outstanding at January 1, 2014 | 1,000,000 | $ | 0.5 | $ | — | ||||||||
Granted | — | — | — | ||||||||||
Exercised | — | — | — | ||||||||||
Expired | 1,000,000 | 0.5 | — | ||||||||||
Outstanding and exercisable at September 30, 2014 | — | $ | — | $ | — | ||||||||
The fair value of these warrants was recognized as derivative warrant instruments and had been measured at fair value at each reporting period. See Note 6. As of September 30, 2014, all warrants had expired with no value. |
COMMITMENTS_AND_CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2014 | |
Commitments and Contingencies Disclosure [Abstract] | ' |
COMMITMENTS AND CONTINGENCIES | ' |
8. COMMITMENTS AND CONTINGENCIES | |
Legal Proceedings | |
On February 28, 2009 M-J Oil Company Inc, of Paris Ohio, obtained a judgment of $1,000,000 against Eagle Ford (f/k/a ECCO Energy) for non-compliance with covenants in the original mortgage relating to the purchase of the M-J Oil Company pipeline (“Pipeline”). Eagle Ford is in negotiations with the M-J Oil Company to remove the judgment and to adjust the mortgage terms, which required full payment on March 31, 2009. As of the date of this filing, the Company has not reached a satisfactory agreement with the lender, although a settlement is being actively pursued. In April, 2014, M-J commenced legal action to move the judgment from Ohio to Texas courts. | |
Eagle Ford has not paid property taxes for 2007, 2008 or 2009 on the Wilson Field in Nueces County, Texas. Samurai Corp. agreed to assume the liabilities for property taxes for 2010 when it acquired the property. The County has initiated legal proceedings to collect those taxes by placing tax liens on the property. As of September 30, 2014, Eagle Ford owed $43,452 for these property taxes. ECCE is currently in negotiations to settle this liability. | |
On March 12, 2014, one of the note holders sent a letter asking for payment on four notes totaling $339,130. We are in discussion with this note holder about a settlement. | |
On March 17, 2014, a note holder sent a letter asking for payment on a $25,000 note. ECCE is in discussions with this note holder about a settlement. | |
Operating Leases | |
The rental contract at 1110 NASA Parkway for 1,379 sq. ft. commenced July 1, 2010 and terminated on August 31, 2014. On August 31, 2013, ECCE renewed the lease for the next year at a rate of $2,011 per month. On August 1, 2014 the lease expired. ECCE is currently negotiating the renewal and is on a month to month basis at the date of filing. |
SUBSEQUENT_EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2014 | |
Subsequent Events [Abstract] | ' |
SUBSEQUENT EVENTS | ' |
9. SUBSEQUENT EVENTS | |
In order to improve the Balance Sheet and make the company more appealing to new investment as well as conserving cash flow, on August 4, 2014 the Board of Directors initiated a thorough review of all debt and service contracts in order to control future expenses and to reduce those current obligations for payables, interest and other debt instruments. ECCE will be reviewing all such items and will attempt to settle them at a reduced amount. The Chairman of the Board, Thomas Lipar agreed to advance ECCE an as yet undetermined amount in order to satisfy immediate financial needs of the company. He also agreed to fund an undetermined amount to settle such AP and Notes Payable settlements. The funds to settle the open payable and notes payable will be determined on a case by case basis, and will be decide within 60 days of the filing. The Board reserves the right to end this endeavor at any time. | |
EAST PEARSALL | |
On June 4, 2012, ECCE entered into an agreement though a special purpose entity named EFOGC – East Pearsall, L.L.C., a Texas limited liability company. ECCE owns 100% of the Class B Membership Interests in EFEP, while Medallion Oil Corp. (MOC) owns 100% of the Class A Membership Interest. EFEP completed the acquisition of 85% Working Interest in 3,683 acres in Frio County, Texas from Amac Energy, L.L.C. to drill and develop the Austin Chalk, Buda, Eagle Ford and Pearsall Shale The agreement with AMAC Energy was to purchase the 85% of the working interest on the East Pearsall lease. As part of the sales agreement, ECCE had to drill the one well on each of the three leases prior to 6 months of the expiration of the leases. Due to the fact that ECCE was unable to acquire drilling funds per the agreement prior to the agreed date, ECCE was required, as stated in the agreement, to reassign the leases back to AMAC Energy. As a result as stated in the settlement agreement, On July 8, 2014 the MOC-East Pearsall Board of Directors approved the release of all liens to AMAC and ECCE has been released from any obligation to AMAC Energy. As of September 30, 2013, an impairment charge of $6,464,436 was taken against this property. | |
MOC invested $7,000,000 into EFOGC – East Pearsall, LLC for the sole purpose of acquiring the AMAC leases, with MOC owning 100% of A series common stock and ECCE owning B series common stock as “designated operator”. Per the agreement with MOC, ECCE was required to acquire a minimum of $10,500,000 drilling capital by December 2012, however, ECCE was unsuccessful. MOC granted an extension for another six months, however ECCE was also unsuccessful in that attempt to raise funds as it was in all future periods. A part of the original agreement required that the East Pearsall, LLC return the original capital investment of $7,000,000 out of those funds, along with interest of 10% on that balance. | |
With the leases being reassigned to AMAC Energy and the subsequent agreement with MOC to close East Pearsall, LLC, the entity of EFOGC – East Pearsall is currently “winding down” and will be closed as an operating entity in the state of Texas. With this winding down, ECCE will no longer have any liability relative to EFOGC – East Pearsall and the East Pearsall leases. We anticipate completing this closure within a month of this report. |
BASIS_OF_PRESENTATION_AND_SIGN1
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Use of Estimates | ' | ||||||||||||||||
Use of Estimates | |||||||||||||||||
The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | |||||||||||||||||
Eagle Ford’s unaudited condensed consolidated financial statements are based on a number of significant estimates, including oil and gas reserve quantities which are the basis for the calculation of depreciation, depletion and impairment of oil and gas properties; timing and costs associated with its asset retirement obligations; estimates for the realization of goodwill; and estimates of the value of derivative financial instruments. | |||||||||||||||||
Reclassifications | ' | ||||||||||||||||
Reclassifications | |||||||||||||||||
Certain reclassifications have been made to amounts in prior periods to conform to the current period presentation. All reclassifications have been applied consistently to the periods presented. | |||||||||||||||||
Cash and Cash Equivalents | ' | ||||||||||||||||
Cash and Cash Equivalents | |||||||||||||||||
Eagle Ford considers all highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents. | |||||||||||||||||
Oil and Gas Properties, Full Cost Method | ' | ||||||||||||||||
Oil and Gas Properties, Full Cost Method | |||||||||||||||||
Eagle Ford uses the full cost method of accounting for oil and gas producing activities. Costs to acquire mineral interests in oil and gas properties, to drill and equip exploratory wells used to find proved reserves, and to drill and equip development wells, including directly related overhead costs and related asset retirement costs, are capitalized. Under this method, all costs, including internal costs directly related to acquisition, exploration and development activities are capitalized as oil and gas property costs. Properties not subject to amortization consist of exploration and development costs which are evaluated on a property-by-property basis. Amortization of these unproved property costs begins when the properties become proved or their values become impaired. Eagle Ford assesses the realizability of unproved properties, if any, on at least an annual basis or when there has been an indication that impairment in value may have occurred. Impairment of unproved properties is assessed based on management’s intention with regard to future exploration and development of individually significant properties and the ability of Eagle Ford to obtain funds to finance such exploration and development. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is added to the capitalized costs to be amortized. | |||||||||||||||||
Costs of proved oil and gas properties, including future development costs, if any, are amortized using the units of production method over the estimated proved reserves. | |||||||||||||||||
In applying the full cost method, Eagle Ford performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared to the “estimated present value,” of its proved reserves discounted at a 10-percent interest rate of future net revenues, based on current economic and operating conditions, plus the cost of properties not being amortized, plus the lower of cost or fair market value of unproved properties included in costs being amortized, less the income tax effects related to book and tax basis differences of the properties. If capitalized costs exceed this limit, the excess is charged as an impairment expense. The Company assessed the realizability of its oil and gas properties and determined that no impairment of its oil and gas properties was necessary as of September 30, 2014. | |||||||||||||||||
Depletion | ' | ||||||||||||||||
Depletion | |||||||||||||||||
Depletion is provided using the unit-of-production method based upon estimates of proved oil and natural gas reserves with oil and natural gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment (ceiling test) indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value. | |||||||||||||||||
In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expense. | |||||||||||||||||
Asset Retirement Obligations | ' | ||||||||||||||||
Asset Retirement Obligations | |||||||||||||||||
The Company follows the provisions of the Accounting Standards Codification (“ASC”) 410 - Asset Retirement and Environmental Obligations. The fair value of an asset retirement obligation is recognized in the period in which it is incurred if a reasonable estimate of fair value can be made. The present value of the estimated asset retirement costs is capitalized as part of the carrying amount of the long-lived asset and is subject to amortization. The Company’s asset retirement obligations relate to the abandonment of oil and gas producing facilities. The amounts recognized are based upon numerous estimates and assumptions, including future retirement costs, future recoverable quantities of oil and gas, future inflation rates and the credit-adjusted risk-free interest rate. | |||||||||||||||||
The following table describes changes in our asset retirement obligation during the nine months ended September 30, 2014 and the year ended December 31, 2013. | |||||||||||||||||
Nine months Ended | For the Year Ended | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||
ARO liability at beginning of period, current and noncurrent | $ | 24,802 | $ | 24,802 | |||||||||||||
Liabilities incurred from acquisitions | — | — | |||||||||||||||
Accretion | — | — | |||||||||||||||
ARO liability at end of period, current and noncurrent | $ | 24,802 | $ | 24,802 | |||||||||||||
Revenue and Cost Recognition | ' | ||||||||||||||||
Revenue and Cost Recognition | |||||||||||||||||
Eagle Ford uses the sales method of accounting for natural gas and oil revenues. Under this method, revenues are recognized based on the actual volumes of gas and oil sold to purchasers. The volume sold may differ from the volumes to which Eagle Ford is entitled based on our interest in the properties. Costs associated with production are expensed in the period incurred. | |||||||||||||||||
Loss per Share | ' | ||||||||||||||||
Loss per Share | |||||||||||||||||
Pursuant to FASB ASC Topic 260, Earnings per Share, basic net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common and common equivalent shares outstanding during the period. Common share equivalents included in the diluted computation represent shares issuable upon assumed exercise of stock options and warrants using the treasury stock and “if converted” method and conversion of preferred shares. For periods in which net losses are incurred, weighted average shares outstanding is the same for basic and diluted loss per share calculations, as the inclusion of common share equivalents would have an anti-dilutive effect. | |||||||||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | ' | ||||||||||||||||
Accounts Receivable and Allowance for Doubtful Accounts | |||||||||||||||||
Accounts receivable are recorded at invoiced amount and generally do not bear interest. An allowance for doubtful accounts is established, as necessary, based on past experience and other factors which, in management’s judgment, deserve current recognition in estimating bad debts. Such factors include growth and composition of accounts receivable, the relationship of the allowance for doubtful accounts to accounts receivable and current economic conditions. The determination of the collectability of amounts due from customer accounts requires the Company to make judgments regarding future events and trends. Allowances for doubtful accounts are determined based on assessing the Company’s portfolio on an individual customer and on an overall basis. This process consists of a review of historical collection experience, current aging status of the customer accounts, and the financial condition of Eagle Ford’s customers. Based on a review of these factors, the Company establishes or adjusts the allowance for specific customers and the accounts receivable portfolio as a whole. At September 30, 2014 and December 31, 2013, an allowance for doubtful accounts was not considered necessary as all accounts receivable were deemed collectible. | |||||||||||||||||
Concentration of Credit Risk | ' | ||||||||||||||||
Concentration of Credit Risk | |||||||||||||||||
Financial instruments that potentially subject Eagle Ford to concentration of credit risk consist of cash and accounts receivable. At September 30, 2014, cash balances in interest-bearing accounts are zero. | |||||||||||||||||
Sales to a single customer comprised 100% of Eagle Ford’s total oil and gas revenues for each of the nine months ended for both September 30, 2014 and 2013. At September 30, 2014 and December 31, 2013, Eagle Ford’s accounts receivable from its primary customer was $16,582 and $19,084, respectively. Eagle Ford believes that, in the event that its primary customer is unable or unwilling to continue to purchase Eagle Ford’s production, there are a substantial number of alternative buyers for its production at comparable prices. | |||||||||||||||||
Property and Equipment, other than Oil and Gas Properties | ' | ||||||||||||||||
Property and Equipment, other than Oil and Gas Properties | |||||||||||||||||
Property and equipment are stated at cost. Additions of new equipment and major renewals and replacements of existing equipment are capitalized. Repairs and minor replacements are charged to operations as incurred. Cost and accumulated depreciation and amortization are removed from the accounts when assets are sold or retired, and the resulting gains or losses are included in operations. | |||||||||||||||||
Depreciation of property and equipment is provided using the straight-line method applied to the expected useful lives of the assets: | |||||||||||||||||
Estimated | |||||||||||||||||
useful lives | |||||||||||||||||
Pipeline transmission properties | 20 years | ||||||||||||||||
Machinery and equipment | 3 – 7 years | ||||||||||||||||
Office furniture, fixtures and equipment | 3 – 5 years | ||||||||||||||||
Income Taxes | ' | ||||||||||||||||
Income Taxes | |||||||||||||||||
The Company uses the liability method of accounting for income taxes. Under this method, it records deferred income taxes based on temporary differences between the financial reporting and tax bases of assets and liabilities and uses enacted tax rates and laws that the Company expects will be in effect when it recovers those assets or settles those liabilities, as the case may be, to measure those taxes. The Company reviews deferred tax assets for a valuation allowance based upon whether it is more likely than not that the deferred tax asset will be fully realized. | |||||||||||||||||
The Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. As of September 30, 2014, the Company did not identify any uncertain tax positions. | |||||||||||||||||
The Company’s policy is to include interest and penalties related to unrecognized tax benefits within the income tax expense (benefit) line item in the statement of operations. | |||||||||||||||||
Share-Based Compensation | ' | ||||||||||||||||
Share-Based Compensation | |||||||||||||||||
The Company follows ASC 718 - Compensation - Stock Compensation under which the Company estimates the fair value of each stock option award at the grant date by using the Black-Scholes option pricing model and common shares based on the last quoted market price of the Company’s common stock on the date of the share grant. The fair value determined represents the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange for the award. As share-based compensation expense is recognized based on awards ultimately expected to vest, the Company reduces the expense for estimated forfeitures based on historical forfeiture rates, if available. Previously recognized compensation costs may be adjusted to reflect the actual forfeiture rate for the entire award at the end of the vesting period. Excess tax benefits, as defined in ASC 718, if any, are recognized as an addition to paid-in capital. | |||||||||||||||||
Financial instruments | ' | ||||||||||||||||
Financial instruments | |||||||||||||||||
The accounting standards regarding fair value of financial instruments and related fair value measurements define fair value, establish a three-level valuation hierarchy for disclosures of fair value measurement and enhance disclosure requirements for fair value measures. | |||||||||||||||||
The three levels are defined as follows: | |||||||||||||||||
• | Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. | ||||||||||||||||
• | Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. | ||||||||||||||||
• | Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement. | ||||||||||||||||
Financial assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company has determined that the warrants outstanding as of the date of these financial statements include an exercise price “reset” adjustment that qualifies as derivative financial instruments under the provisions of ASC 815-40, Derivatives and Hedging – Contracts in an Entity’s Own Stock. See Note 6 for discussion of the impact the derivative financial instruments had on the Company’s unaudited condensed consolidated financial statements and results of operations. | |||||||||||||||||
Significant Level 3 inputs used to calculate the fair value of the warrants and derivative notes include the stock price on the valuation date, expected volatility, risk-free interest rate and management’s assumptions regarding the likelihood of a repricing of these warrants pursuant to the anti-dilution provision. See Note 6 for further discussion. | |||||||||||||||||
The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2014. There were no transfers of financial assets between levels during the nine months ended September 30, 2014. | |||||||||||||||||
Carrying Value at | Fair Value Measurement at September 30, 2014 | ||||||||||||||||
30-Sep-14 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Derivative liability – Warrants | $ | — | $ | — | $ | — | $ | — | |||||||||
Derivative liability – Notes | $ | 44,848 | $ | — | $ | — | $ | 44,848 | |||||||||
The Company did not identify any other assets and liabilities that are required to be presented on the unaudited condensed consolidated balance sheet at fair value. | |||||||||||||||||
Contingencies | ' | ||||||||||||||||
Contingencies | |||||||||||||||||
Certain conditions may exist as of the date the financial statements are issued, which may result in a loss to the Company, but which will only be resolved when one or more future events occur or fail to occur. The Company’s management and its legal counsel assess such contingent liabilities, and such assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings, the Company’s legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims, as well as the perceived merits of the amount of relief sought or expected to be sought therein. | |||||||||||||||||
If the assessment of a loss contingency indicates that it is probable that a loss has been incurred and the amount of the liability can be reasonably estimated, then the estimated liability is accrued in the Company’s financial statements. If the assessment indicates that a potentially material loss contingency is not probable, but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss, if determinable and material, would be disclosed. Loss contingencies considered remote are generally not disclosed unless they involve guarantees, in which case the nature of the guarantee would be disclosed. The Company expenses legal costs associated with contingencies as incurred. | |||||||||||||||||
Environmental Expenditures | ' | ||||||||||||||||
Environmental Expenditures | |||||||||||||||||
The Company is subject to extensive federal, state and local environmental laws and regulations. These laws regulate the discharge of materials into the environment and may require the Company to remove or mitigate the environmental effects of the disposal or release of petroleum or chemical substances at various sites. Environmental expenditures are expensed or capitalized depending on their future economic benefit. Expenditures that relate to an existing condition caused by past operations and that have no future economic benefits are expensed. | |||||||||||||||||
Liabilities for expenditures of a non-capital nature are recorded when environmental assessment and/or remediation is probable, and the costs can be reasonably estimated. Such liabilities are generally undiscounted unless the timing of cash payments for the liability or component is fixed or reliably determinable. No such liabilities existed or were recorded at September 30, 2014 and December 31, 2013. | |||||||||||||||||
Recent Accounting Pronouncements | ' | ||||||||||||||||
Recent Accounting Pronouncements | |||||||||||||||||
Eagle Ford does not expect the adoption of any recently issued accounting pronouncements will have a significant impact on its results of operations, financial position or cash flow. |
BASIS_OF_PRESENTATION_AND_SIGN2
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Accounting Policies [Abstract] | ' | ||||||||||||||||
Schedule of Asset Retirement Obligations | ' | ||||||||||||||||
The following table describes changes in our asset retirement obligation during the nine months ended September 30, 2014 and the year ended December 31, 2013. | |||||||||||||||||
Nine months Ended | For the Year Ended | ||||||||||||||||
30-Sep-14 | 31-Dec-13 | ||||||||||||||||
ARO liability at beginning of period, current and noncurrent | $ | 24,802 | $ | 24,802 | |||||||||||||
Liabilities incurred from acquisitions | — | — | |||||||||||||||
Accretion | — | — | |||||||||||||||
ARO liability at end of period, current and noncurrent | $ | 24,802 | $ | 24,802 | |||||||||||||
Schedule of Estimated Useful Lives for Depreciation | ' | ||||||||||||||||
Depreciation of property and equipment is provided using the straight-line method applied to the expected useful lives of the assets: | |||||||||||||||||
Estimated | |||||||||||||||||
useful lives | |||||||||||||||||
Pipeline transmission properties | 20 years | ||||||||||||||||
Machinery and equipment | 3 – 7 years | ||||||||||||||||
Office furniture, fixtures and equipment | 3 – 5 years | ||||||||||||||||
Schedule of fair value hierarchy financial assets and liabilities at fair value on a recurring basis | ' | ||||||||||||||||
The following table sets forth by level within the fair value hierarchy the Company’s financial assets and liabilities that were accounted for at fair value on a recurring basis as of September 30, 2014. There were no transfers of financial assets between levels during the nine months ended September 30, 2014. | |||||||||||||||||
Carrying Value at | Fair Value Measurement at September 30, 2014 | ||||||||||||||||
30-Sep-14 | Level 1 | Level 2 | Level 3 | ||||||||||||||
Derivative liability – Warrants | $ | — | $ | — | $ | — | $ | — | |||||||||
Derivative liability – Notes | $ | 44,848 | $ | — | $ | — | $ | 44,848 | |||||||||
OIL_AND_GAS_PROPERTIES_Tables
OIL AND GAS PROPERTIES (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Extractive Industries [Abstract] | ' | ||||||||||||||||
Schedule of Oil and Gas Properties | ' | ||||||||||||||||
The following table sets forth the Company’s costs incurred in oil and gas property acquisition, exploration and development activities for the nine months ended September 30, 2014. All of the Company’s oil and gas properties are located in the United States. | |||||||||||||||||
Well Description | 31-Dec-13 | Additions | Impairment/ | 30-Sep-14 | |||||||||||||
Impairment | |||||||||||||||||
East Pearsall, Frio Co. TX | $ | 6,464,436 | $ | 19,871 | $ | 6,484,307 | $ | — | |||||||||
$ | 6,464,436 | $ | 19,871 | $ | 6,484,307 | $ | — |
DEBT_Tables
DEBT (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Debt Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of related party notes payable | ' | ||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Promissory note to TDLOG – 8% interest; due September 30, 2014; unsecured (1) | $ | 817,500 | $ | 817,500 | |||||||||||||
Promissory note to Michael Munsey – 4% interest; due December 31, 2014: unsecured (2) | 20,155 | — | |||||||||||||||
Promissory note to TDLOG – 8% interest; due December 31, 2014; unsecured (1) | 63,500 | — | |||||||||||||||
Promissory note to TDLOG – 8% interest; due September 30, 2014; unsecured (1) Total: | 80,000 | 80,000 | |||||||||||||||
Notes Payable – Related Parties | $ | 981,155 | $ | 897,500 | |||||||||||||
-1 | TDLOG, LLC is controlled by Thomas E. Lipar, Chairman of the Board of Eagle Ford. Note due date was changed to September 30, 2014 from September 30, 2013. As of the filing date, the notes are in default. Additional loans totaling $63,500 were made during the three quarters ending September 30, 2014. These notes will be consolidated into one note during the quarter ending December 31, 2014. These new notes are to provide short term funding to ECCE. | ||||||||||||||||
-2 | Michael Munsey is Vice-President of Operations and Exploration of Eagle Ford. | ||||||||||||||||
Schedule of notes payable | ' | ||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Promissory note – 12% interest; due March 31, 2009; not secured (1) | $ | 328,578 | $ | 328,578 | |||||||||||||
Promissory note – 5% interest; due January 1, 2012; not secured (2). | 227,131 | 227,131 | |||||||||||||||
Pipeline mortgage – 8% interest; due September 30, 2009; secured by pipeline (3) | 1,000,000 | 1,000,000 | |||||||||||||||
Promissory notes – 6% interest; due April 1, 2011; not secured (2) | 112,000 | 112,000 | |||||||||||||||
Promissory notes – 5% interest; due October 15, 2010; not secured (4) | 50,000 | 50,000 | |||||||||||||||
Promissory note to a former Director – 8% interest; due July 1, 2010; unsecured. (5) | 25,000 | 25,000 | |||||||||||||||
Promissory note – Medallion Investment- 10% interest (6) | 7,000,000 | 7,000,000 | |||||||||||||||
Promissory note – 12% interest with $3,000 OID; due July 14, 2014 (7) | — | 33,000 | |||||||||||||||
Promissory note – 12% interest with $3,000 OID; due July 14, 2014 (7) | — | 33,000 | |||||||||||||||
Total notes payable | 8,742,709 | 8,808,709 | |||||||||||||||
Less: Unamortize debt discount portion | — | (3,218 | ) | ||||||||||||||
Total notes payable, net | 8,742,709 | 8,805,491 | |||||||||||||||
Less: current portion of notes payable | (8,742,709 | ) | (8,805,491 | ) | |||||||||||||
Total notes payable – long term | $ | — | $ | — | |||||||||||||
Accrued and unpaid interest for notes payable to non-related parties at September 30, 2014 and December 31, 2013 was $2,237,538 and $1,825,482 respectively, and is included in accrued expenses on the accompanying unaudited condensed consolidated balance sheets. | |||||||||||||||||
Interest expenses to non-related party for the nine months ended September 30, 2014 and 2013 is $637,675 and $628,339, respectively and Interest expenses to non-related party for the three months ended September 30, 2014 and 2013 is $212,937 and $206,399, respectively. | |||||||||||||||||
-1 | Pursuant to the Reverse Acquisition, the Company assumed these notes payable totaling $328,578. All principal and interest became due September 30, 2009 for 12% notes. This note has not been repaid and is in default. No demand has been made for payment. Eagle Ford is continuing to accrue interest on this note at the stated rate. | ||||||||||||||||
-2 | Pursuant to the Reverse Acquisition, the Company assumed two notes payable (i) $227,131 due on January 1, 2012 for 5% and (ii) $142,000 due on April 1, 2011 for 6% interest for drilling on the Wilson Field lease and for general corporate purposes. Neither of these notes has been repaid in cash and is in default. Eagle Ford is continuing to accrue interest on these notes at the stated rate. During the year ended December 31, 2013, the note holder agreed to convert $30,000 of note on issuance of 81,081 shares of common stock. On March 12, 2014, the note holder demanded payment on the outstanding portion of the note totaling $339,131 (see Note 8). The note holder has demanded payment, and we are currently in negotiations regarding a settlement. | ||||||||||||||||
-3 | The entire unpaid balance of principal and accrued interest was due on September 30, 2009. No payments have been made and this mortgage note is in default. There has been a judgment rendered against Eagle Ford in the amount of the mortgage (see Note 8). Eagle Ford is in discussions with the lender to restructure the mortgage. Eagle Ford is continuing to accrue interest on this note at the stated rate. In April, 2014, the note holder began the process to move the judgment to Texas courts. | ||||||||||||||||
-4 | Pursuant to the Reverse Acquisition, the Company assumed these notes payable totaling $50,000 from two different note holders for drilling on the Wilson Field lease and for general corporate purposes. Neither of these notes has been repaid in cash and is in default. One party has demanded payment on a $25,000 note. Eagle Ford is continuing to accrue interest on these notes at the stated rate (see Note 8). | ||||||||||||||||
-5 | Prior to the Reverse Acquisition, Eagle Ford borrowed $25,000 from a related party for general corporate purposes. The note is in default and due on demand. Eagle Ford continued to accrue interest on these notes at the stated rate. From July 20, 2011 this note holder is no longer a related party. | ||||||||||||||||
-6 | East Pearsall | ||||||||||||||||
On June 4, 2012, ECCE entered into an agreement though a special purpose entity named EFOGC – East Pearsall, L.L.C., a Texas limited liability company. ECCE owns 100% of the Class B Membership Interests in EFEP, while Medallion Oil Corp. (MOC) owns 100% of the Class A Membership Interest. EFEP completed the acquisition of 85% Working Interest in 3,683 acres in Frio County, Texas from Amac Energy, L.L.C. to drill and develop the Austin Chalk, Buda, Eagle Ford and Pearsall Shale The agreement with AMAC Energy was to purchase the 85% of the working interest on the East Pearsall lease. As part of the sales agreement, ECCE had to drill the one well on each of the three leases prior to 6 months of the expiration of the leases. Due to the fact that ECCE was unable to acquire drilling funds per the agreement prior to the agreed date, ECCE was required, as stated in the agreement, to reassign the leases back to AMAC Energy. As a result as stated in the settlement agreement, On July 8, 2014 the MOC-East Pearsall Board of Directors approved the release of all liens to AMAC and ECCE has been released from any obligation to AMAC Energy. As of September 30, 2013, an impairment charge of $6,464,436 was taken against this property. | |||||||||||||||||
MOC invested $7,000,000 into EFOGC – East Pearsall, LLC for the sole purpose of acquiring the AMAC leases, with MOC owning 100% of A series common stock and ECCE owning B series common stock as “designated operator”. Per the agreement with MOC, ECCE was required to acquire a minimum of $10,500,000 drilling capital by December 2012, however, ECCE was unsuccessful. MOC granted an extension for another six months, however ECCE was also unsuccessful in that attempt to raise funds as it was in all future periods. A part of the original agreement required that the East Pearsall, LLC return the original capital investment of $7,000,000 out of those funds, along with interest of 10% on that balance. | |||||||||||||||||
With the leases being reassigned to AMAC Energy and the subsequent agreement with MOC to close East Pearsall, LLC, the entity of EFOGC – East Pearsall is currently “winding down” and will be closed as an operating entity in the state of Texas. With this winding down, ECCE will no longer have any liability relative to EFOGC – East Pearsall and the East Pearsall leases. We anticipate completing this closure within a month of this report | |||||||||||||||||
(7) | As these notes has conversion features, please see the discussion in convertible notes (refer below for further details). These notes are in default as of the date of filing of this report. | ||||||||||||||||
Schedule of convertible debentures and notes payable | ' | ||||||||||||||||
September 30, | December 31, | ||||||||||||||||
2014 | 2013 | ||||||||||||||||
Convertible debentures (1) | $ | 545,000 | $ | 545,000 | |||||||||||||
Convertible notes payable (2) | 66,000 | — | |||||||||||||||
Total convertible debentures and notes payable | 611,000 | 545,000 | |||||||||||||||
Unamortized debt discount on convertible notes payable | — | — | |||||||||||||||
Total: Convertible debentures and notes payable – net | 611,000 | 545,000 | |||||||||||||||
Less: current portion of convertible debentures and notes payable | (611,000 | ) | (545,000 | ) | |||||||||||||
Total convertible debentures and notes payable – long term | $ | — | $ | — | |||||||||||||
-1 | On June 20, 2011, the Company assumed the liability for $545,000 of Secured Convertible Debentures as a result of the Reverse Acquisition. The Secured Convertible Debentures matured on July 26, 2011, and earned interest at a rate of 12%, payable quarterly in 3,000 shares of common stock for each debenture. The Company is in default. There have been no shares issued for the interest payable as of September 30, 2014, nor have the Debentures been repaid. The interest for these debentures is accrued at the 12% rate and is included in accrued expenses. The Debentures are secured by a 1.5% interest in three oil and gas producing wells that are in a 2,400 acre lease in Live Oak County, Texas. The Debentures are convertible at the holders’ option into Eagle Ford restricted common stock at a fixed conversion rate of $0.90 per common share. The Debentures may also be satisfied by transferring the lease to the investors. ECCE transferred the property to these note holders during October 2014. Accrued and unpaid interest was $271,755 and $224,705 at September 30, 2014 and December 31, 2013, respectively related to the convertible debentures. Interest expenses on convertible debenture for the three months ended September 30, 2014 and 2013 is $16,350 for each quarter. | ||||||||||||||||
In October, 2014, ECCE transferred ownership of these wells to the debt holders. The original agreement provided the option to transfer ownership should the notes be in default. | |||||||||||||||||
-2 | On July 18, 2013, ECCE issued two Notes Payable of $33,000 each, for a combined total of $66,000 to two individuals. The notes contained a $3,000 or $6,000 total original issue discount. The notes are due on July 14, 2014, and if they were repaid within ninety days from date of issue, then no interest would accrue. If they were paid after 90 days, then they accrued interest at a rate of twelve percent per annum, due on that date. The notes could be converted into common stock after 180 days, which occurred on January 14, 2014 The Conversion Price is the lesser of $0.39 per share or 60% of the lowest trade in the 25 trading days previous to the conversion. The Note accrues interest at a rate of 12% per annum and matured on July 13, 2014. The notes were not paid or converted and are now in default. | ||||||||||||||||
Schedule of fair value assumptions of embedded derivative | ' | ||||||||||||||||
The fair value of the described embedded derivative of $44,848 at September 30, 2014 was determined using the Black-Scholes Model with the following assumptions: | |||||||||||||||||
(1) risk free interest rate of | 0.28%; | ||||||||||||||||
(2) dividend yield of | 0%; | ||||||||||||||||
(3) volatility factor of | 183%; | ||||||||||||||||
(4) an expected life of the conversion feature of | 6 months, and | ||||||||||||||||
(5) estimated fair value of the company’s common stock of | $0.25 per share. | ||||||||||||||||
Schedule of activity of derivative liability | ' | ||||||||||||||||
Activity for the derivative liability- convertible note during the nine months ended September 30, 2014 was: | |||||||||||||||||
December 31, | Activity During | Decrease in | September 30, | ||||||||||||||
2013 | the Period | Fair Value | 2014 | ||||||||||||||
Derivative convertible notes | $ | — | $ | 44,848 | $ | — | $ | 44,848 | |||||||||
Total | $ | — | $ | 44,848 | $ | — | $ | 44,848 |
DERIVATIVE_LIABILITY_WARRANTS_
DERIVATIVE LIABILITY- WARRANTS (Tables) | 9 Months Ended | ||||||||||||||||
Sep. 30, 2014 | |||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ' | ||||||||||||||||
Schedule of activity of derivative warrant instruments | ' | ||||||||||||||||
Activity for the derivative warrant during the nine months ended September 30, 2014 was: | |||||||||||||||||
December 31, | Activity During | Decrease in | September 30, | ||||||||||||||
2013 | the Period | Fair Value | 2014 | ||||||||||||||
Derivative warrant instruments | $ | 93,044 | $ | — | $ | 93,044 | $ | — | |||||||||
Total | $ | 93,044 | $ | — | $ | 93,044 | $ | — |
SHAREHOLDERS_EQUITY_Tables
SHAREHOLDERS' EQUITY (Tables) | 9 Months Ended | ||||||||||||
Sep. 30, 2014 | |||||||||||||
Stockholders' Equity Note [Abstract] | ' | ||||||||||||
Schedule of warrant activity | ' | ||||||||||||
Warrant activity during the nine months ended September 30, 2014 is as follows: | |||||||||||||
Warrants | Weighted- | Aggregate | |||||||||||
Average | Intrinsic | ||||||||||||
Exercise | Value | ||||||||||||
Price | |||||||||||||
Outstanding at January 1, 2014 | 1,000,000 | $ | 0.5 | $ | — | ||||||||
Granted | — | — | — | ||||||||||
Exercised | — | — | — | ||||||||||
Expired | 1,000,000 | 0.5 | — | ||||||||||
Outstanding and exercisable at September 30, 2014 | — | $ | — | $ | — |
BASIS_OF_PRESENTATION_AND_SIGN3
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) (USD $) | 9 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | |
Oil and Gas Revenue [Member] | Oil and Gas Revenue [Member] | Accounts Receivable [Member] | Accounts Receivable [Member] | |||
Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | Customer Concentration Risk [Member] | |||
Discount rate of future net revenues | 10.00% | ' | ' | ' | ' | ' |
Concentration - percentage of sales | ' | ' | 100.00% | 100.00% | ' | ' |
Accounts receivable | $16,582 | $19,084 | ' | ' | $16,582 | $19,084 |
BASIS_OF_PRESENTATION_AND_SIGN4
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Accounting Policies [Abstract] | ' | ' | ' |
ARO liability at beginning of period, current and noncurrent | $24,802 | $24,802 | $24,802 |
ARO liability at end of period, current and noncurrent | $24,802 | $24,802 | $24,802 |
BASIS_OF_PRESENTATION_AND_SIGN5
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 1) | 9 Months Ended |
Sep. 30, 2014 | |
Pipeline transmission properties [Member] | ' |
Estimated Useful Life | '20 years |
Machinery and Equipment [Member] | Lower Range [Member] | ' |
Estimated Useful Life | '3 years |
Machinery and Equipment [Member] | Upper Range [Member] | ' |
Estimated Useful Life | '7 years |
Office Furniture, Fixtures and Equipment [Member] | Lower Range [Member] | ' |
Estimated Useful Life | '3 years |
Office Furniture, Fixtures and Equipment [Member] | Upper Range [Member] | ' |
Estimated Useful Life | '5 years |
BASIS_OF_PRESENTATION_AND_SIGN6
BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES (Details 2) (Notes [Member], USD $) | Sep. 30, 2014 |
Derivative liability | $44,848 |
Fair Value, Inputs, Level 3 [Member] | ' |
Derivative liability | $44,848 |
LIQUIDITY_AND_GOING_CONCERN_De
LIQUIDITY AND GOING CONCERN (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ' | ' | ' | ' | ' | ' |
Net loss | ($6,895,764) | ($434,572) | ($7,777,543) | ($1,489,393) | ' | ' |
Working Capital Deficit | 14,694,067 | ' | 14,694,067 | ' | 13,710,962 | ' |
Cash and cash equivalents | $2,609 | $774 | $2,609 | $774 | $3,802 | $259,138 |
OIL_AND_GAS_PROPERTIES_Details
OIL AND GAS PROPERTIES (Details Narrative) (USD $) | 9 Months Ended | 9 Months Ended | 0 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2014 | Dec. 31, 2013 | Sep. 30, 2014 | Dec. 31, 2013 | Jul. 08, 2014 | Sep. 30, 2014 | Jul. 18, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2009 | Sep. 30, 2014 | Sep. 30, 2014 | |
East Pearsall, Frio Co. TX [Member] | East Pearsall, Frio Co. TX [Member] | East Pearsall, Frio Co. TX [Member] | East Pearsall, Frio Co. TX [Member] | East Pearsall, Frio Co. TX [Member] | East Pearsall, Frio Co. TX [Member] | Live Oak County TX [Member] | Ohio Pipeline [Member] | Ohio Pipeline [Member] | Bayou Choctaw [Member] | |||
acre | Medallion Oil Company LTD (MOC) [Member] | Series A Common [Member] | Series A Common [Member] | Series B Common [Member] | acre | Pipeline Mortgage Due March 31, 2010 [Member] | ||||||
Medallion Oil Company LTD (MOC) [Member] | Medallion Oil Company LTD (MOC) [Member] | |||||||||||
Ownership percentage | ' | ' | ' | ' | ' | 100.00% | 100.00% | 100.00% | ' | ' | ' | ' |
Working Interest Percentage | ' | ' | 85.00% | ' | ' | ' | ' | ' | 1.00% | ' | ' | 1.50% |
Ownership of properties, Acres | ' | ' | 3,683 | ' | ' | ' | ' | ' | 2,400 | ' | ' | ' |
Impairment/Dispositions | $6,484,307 | ' | $6,484,307 | ' | ' | ' | ' | ' | ' | $900,000 | ' | ' |
Investments in oil and gas properties | ' | 6,464,436 | ' | 6,464,436 | 7,000,000 | ' | ' | ' | ' | 100,000 | ' | ' |
Drilling funds to be obtained | ' | ' | ' | ' | 10,500,000 | ' | ' | ' | ' | ' | ' | ' |
Interest percentage to be repaid | ' | ' | ' | ' | 10.00% | ' | ' | ' | ' | ' | ' | ' |
Purchase Price | ' | ' | ' | ' | ' | ' | ' | ' | 250,000 | ' | ' | 100,000 |
Notes Payable | $8,742,709 | $8,808,709 | ' | ' | ' | ' | ' | ' | ' | ' | $1,000,000 | ' |
Notes payable - interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 8.00% | ' |
OIL_AND_GAS_PROPERTIES_Details1
OIL AND GAS PROPERTIES (Details) (USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Balance, beginning of period | $6,464,436 |
Additions | 19,871 |
Impairment/Dispositions | 6,484,307 |
East Pearsall, Frio Co. TX [Member] | ' |
Balance, beginning of period | 6,464,436 |
Additions | 19,871 |
Impairment/Dispositions | $6,484,307 |
DEBT_Details_Narrative
DEBT (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | 12 Months Ended | 3 Months Ended | 3 Months Ended | 9 Months Ended | ||||||||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Jun. 20, 2011 | Sep. 30, 2014 | Sep. 30, 2014 | Jul. 18, 2013 | Sep. 30, 2014 | Sep. 30, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | |
Convertible debentures [Member] | Convertible debentures [Member] | Convertible debentures [Member] | Convertible debentures [Member] | Convertible notes payable [Member] | Convertible notes payable [Member] | Convertible notes payable [Member] | Convertible notes payable [Member] | Convertible notes payable [Member] | Management Related Parties [Member] | Management Related Parties [Member] | ||||||
acre | Lower Range [Member] | Upper Range [Member] | ||||||||||||||
Accrued Interest | $2,237,538 | ' | $2,237,538 | ' | $1,825,482 | $271,755 | ' | $224,705 | ' | ' | ' | ' | ' | ' | $243,381 | $225,190 |
Interest expense to related parties | 19,363 | 17,950 | 55,634 | 53,850 | ' | 16,350 | 16,350 | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Interest expense to nonrelated parties | 212,937 | 206,399 | 637,675 | 628,339 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common shares issued for exchange of debt | ' | ' | ' | ' | 30,000 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Common shares issued for exchange of debt, shares | ' | ' | ' | ' | 81,081 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Notes payable | 8,742,709 | ' | 8,742,709 | ' | 8,808,709 | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' |
Original issue discount | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 3,000 | 6,000 | ' | ' |
Convertible note conversion rate, percentage of lowest trade value | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 60.00% | ' | ' | ' | ' |
Convertible Notes - interest rate | ' | ' | ' | ' | ' | ' | ' | ' | 12.00% | ' | ' | ' | ' | ' | ' | ' |
Convertible Note - Shares for interest | ' | ' | ' | ' | ' | ' | ' | ' | 3,000 | ' | ' | ' | ' | ' | ' | ' |
Interest in oil and gas producing wells to secure debentures | ' | ' | ' | ' | ' | ' | ' | ' | 1.50% | ' | ' | ' | ' | ' | ' | ' |
Acreage securing debt | ' | ' | ' | ' | ' | ' | ' | ' | 2,400 | ' | ' | ' | ' | ' | ' | ' |
Convertible note conversion rate | ' | ' | ' | ' | ' | ' | ' | ' | $0.90 | ' | ' | $0.39 | ' | ' | ' | ' |
Embedded derivative, Fair value | ' | ' | ' | ' | ' | ' | ' | ' | ' | 44,848 | 44,848 | 38,762 | ' | ' | ' | ' |
Fair Value Assumptions, Risk free interest rate | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.28% | ' | ' | ' | ' | ' |
Fair Value Assumptions, Dividend yield | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 0.00% | ' | ' | ' | ' | ' |
Fair Value Assumptions, Volatility factor | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | 183.00% | ' | ' | ' | ' | ' |
Fair Value Assumptions, Expected life of the conversion feature | ' | ' | ' | ' | ' | ' | ' | ' | ' | ' | '6 months | ' | ' | ' | ' | ' |
Projected future offering price | ' | ' | ' | ' | ' | ' | ' | ' | ' | $0.25 | $0.25 | ' | ' | ' | ' | ' |
Loss on change in fair value of notes derivative liability | 39,194 | ' | -6,123 | ' | ' | ' | ' | ' | ' | 92,464 | -6,086 | ' | ' | ' | ' | ' |
Amortization of debt discount on convertible notes | ' | ' | $38,762 | ' | ' | ' | ' | ' | ' | $16,490 | $35,975 | ' | ' | ' | ' | ' |
DEBT_Details
DEBT (Details) (USD $) | 9 Months Ended | |||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Notes payable to related parties, current portion | $981,155 | $897,500 | ||
Chairman of the Board [Member] | TDLOG Promissory Note, Due September 30, 2014 [Member] | ' | ' | ||
Notes payable to related parties, current portion | 817,500 | [1] | 817,500 | [1] |
Notes payable - interest rate | 8.00% | [1] | 8.00% | [1] |
Notes payable due date | 30-Sep-14 | [1] | ' | |
Chairman of the Board [Member] | TDLOG Note 2, Due December 31, 2014 [Member] | ' | ' | ||
Notes payable to related parties, current portion | 63,500 | [1] | ' | |
Notes payable - interest rate | 8.00% | [1] | ' | |
Notes payable due date | 31-Dec-14 | [1] | ' | |
Chairman of the Board [Member] | TDLOG Note 3, Due September 30, 2014 [Member] | ' | ' | ||
Notes payable to related parties, current portion | 80,000 | [1] | 80,000 | [1] |
Notes payable - interest rate | 8.00% | [1] | 8.00% | [1] |
Notes payable due date | 30-Sep-14 | [1] | ' | |
Munsey [Member] | Promissory Note due December 31, 2014 [Member] | ' | ' | ||
Notes payable to related parties, current portion | $20,155 | [2] | ' | |
Notes payable - interest rate | 4.00% | [2] | ' | |
Notes payable due date | 31-Dec-14 | [2] | ' | |
[1] | TDLOG, LLC is controlled by Thomas E. Lipar, Chairman of the Board of Eagle Ford. Note due date was changed to September 30, 2014 from September 30, 2013. As of the filing date, the notes are in default. Additional loans totaling $63,500 were made during the three quarters ending September 30, 2014. These notes will be consolidated into one note during the quarter ending December 31, 2014. These new notes are to provide short term funding to ECCE. | |||
[2] | Michael Munsey is Vice-President of Operations and Exploration of Eagle Ford. |
DEBT_Details_1
DEBT (Details 1) (USD $) | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2014 | Dec. 31, 2013 | |||
Notes payable | $8,742,709 | $8,808,709 | ||
Less: Unamortized debt discount portion | ' | -3,218 | ||
Total notes payable, net | 8,742,709 | 8,805,491 | ||
Less: current portion of notes payable | -8,742,709 | -8,805,491 | ||
Promissory Note Due March 31, 2009 [Member] | ' | ' | ||
Maturity date | 31-Mar-09 | 31-Mar-09 | ||
Notes payable | 328,578 | [1] | 328,578 | [1] |
Notes payable - interest rate | 12.00% | [1] | 12.00% | [1] |
Promissory Note Due January 1, 2012 [Member] | ' | ' | ||
Maturity date | 1-Jan-12 | 1-Jan-12 | ||
Notes payable | 227,131 | [2] | 227,131 | [2] |
Notes payable - interest rate | 5.00% | [2] | 5.00% | [2] |
Face amount | 227,131 | ' | ||
Pipeline Mortgage Due September 30, 2009 [Member] | ' | ' | ||
Maturity date | 30-Sep-09 | 30-Sep-09 | ||
Notes payable | 1,000,000 | [3] | 1,000,000 | [3] |
Notes payable - interest rate | 8.00% | [3] | 8.00% | [3] |
Promissory Note Due April 1, 2011 [Member] | ' | ' | ||
Maturity date | 1-Apr-11 | 1-Apr-11 | ||
Notes payable | 112,000 | [2] | 112,000 | [2] |
Notes payable - interest rate | 6.00% | [2] | 6.00% | [2] |
Face amount | 142,000 | ' | ||
Promissory Note Due October 15, 2010 [Member] | ' | ' | ||
Maturity date | 15-Oct-10 | 15-Oct-10 | ||
Notes payable | 50,000 | [4] | 50,000 | [4] |
Notes payable - interest rate | 5.00% | [4] | 5.00% | [4] |
Promissory Note Due July 1, 2010 [Member] | ' | ' | ||
Maturity date | 1-Jul-10 | 1-Jul-10 | ||
Notes payable | 25,000 | [5] | 25,000 | [5] |
Notes payable - interest rate | 8.00% | [5] | 8.00% | [5] |
Promissory Note - Medallion Investment [Member] | ' | ' | ||
Notes payable | 7,000,000 | [6] | 7,000,000 | [6] |
Notes payable - interest rate | 10.00% | [6] | 10.00% | [6] |
Promissory Note Due July 14, 2014 [Member] | ' | ' | ||
Maturity date | 14-Jul-14 | 14-Jul-14 | ||
Notes payable | ' | 33,000 | [7] | |
Notes payable - interest rate | 12.00% | [7] | 12.00% | [7] |
Less: Unamortized debt discount portion | 3,000 | [7] | 3,000 | [7] |
Promissory Note Due July 14, 2014 [Member] | ' | ' | ||
Maturity date | 14-Jul-14 | 14-Jul-14 | ||
Notes payable | ' | 33,000 | [7] | |
Notes payable - interest rate | 12.00% | [7] | 12.00% | [7] |
Less: Unamortized debt discount portion | $3,000 | [7] | $3,000 | [7] |
[1] | Pursuant to the Reverse Acquisition, the Company assumed these notes payable totaling $328,578. All principal and interest became due September 30, 2009 for 12% notes. This note has not been repaid and is in default. No demand has been made for payment. Eagle Ford is continuing to accrue interest on this note at the stated rate. | |||
[2] | Pursuant to the Reverse Acquisition, the Company assumed two notes payable (i) $227,131 due on January 1, 2012 for 5% and (ii) $142,000 due on April 1, 2011 for 6% interest for drilling on the Wilson Field lease and for general corporate purposes. Neither of these notes has been repaid in cash and is in default. Eagle Ford is continuing to accrue interest on these notes at the stated rate. During the year ended December 31, 2013, the note holder agreed to convert $30,000 of note on issuance of 81,081 shares of common stock. On March 12, 2014, the note holder demanded payment on the outstanding portion of the note totaling $339,131 (see Note 8). The note holder has demanded payment, and we are currently in negotiations regarding a settlement. | |||
[3] | The entire unpaid balance of principal and accrued interest was due on September 30, 2009. No payments have been made and this mortgage note is in default. There has been a judgment rendered against Eagle Ford in the amount of the mortgage (see Note 8). Eagle Ford is in discussions with the lender to restructure the mortgage. Eagle Ford is continuing to accrue interest on this note at the stated rate. In April, 2014, the note holder began the process to move the judgment to Texas courts. | |||
[4] | Pursuant to the Reverse Acquisition, the Company assumed these notes payable totaling $50,000 from two different note holders for drilling on the Wilson Field lease and for general corporate purposes. Neither of these notes has been repaid in cash and is in default. One party has demanded payment on a $25,000 note. Eagle Ford is continuing to accrue interest on these notes at the stated rate (see Note 8). | |||
[5] | Prior to the Reverse Acquisition, Eagle Ford borrowed $25,000 from a related party for general corporate purposes. The note is in default and due on demand. Eagle Ford continued to accrue interest on these notes at the stated rate. From July 20, 2011 this note holder is no longer a related party. | |||
[6] | East Pearsall (See Schedule of notes payable for full text) | |||
[7] | As these notes has conversion features, please see the discussion in convertible notes (refer below for further details). These notes are in default as of the date of filing of this report. |
DEBT_Details_2
DEBT (Details 2) (USD $) | Sep. 30, 2014 | Dec. 31, 2013 | ||
Convertible debentures and notes payable | $611,000 | $545,000 | ||
Convertible debentures and notes payable - net | 611,000 | 545,000 | ||
Less: current portion of notes payable | -611,000 | -545,000 | ||
Convertible debentures [Member] | ' | ' | ||
Convertible debentures and notes payable | 545,000 | [1] | 545,000 | [1] |
Convertible notes payable [Member] | ' | ' | ||
Convertible debentures and notes payable | $66,000 | [2] | ' | |
[1] | On June 20, 2011, the Company assumed the liability for $545,000 of Secured Convertible Debentures as a result of the Reverse Acquisition. The Secured Convertible Debentures matured on July 26, 2011, and earned interest at a rate of 12%, payable quarterly in 3,000 shares of common stock for each debenture. The Company is in default. There have been no shares issued for the interest payable as of September 30, 2014, nor have the Debentures been repaid. The interest for these debentures is accrued at the 12% rate and is included in accrued expenses. The Debentures are secured by a 1.5% interest in three oil and gas producing wells that are in a 2,400 acre lease in Live Oak County, Texas. The Debentures are convertible at the holders' option into Eagle Ford restricted common stock at a fixed conversion rate of $0.90 per common share. The Debentures may also be satisfied by transferring the lease to the investors. ECCE transferred the property to these note holders during October 2014. Accrued and unpaid interest was $271,755 and $224,705 at September 30, 2014 and December 31, 2013, respectively related to the convertible debentures. Interest expenses on convertible debenture for the three months ended September 30, 2014 and 2013 is $16,350 for each quarter. In October, 2014, ECCE transferred ownership of these wells to the debt holders. The original agreement provided the option to transfer ownership should the notes be in default. | |||
[2] | On July 18, 2013, ECCE issued two Notes Payable of $33,000 each, for a combined total of $66,000 to two individuals. The notes contained a $3,000 or $6,000 total original issue discount. The notes are due on July 14, 2014, and if they were repaid within ninety days from date of issue, then no interest would accrue. If they were paid after 90 days, then they accrued interest at a rate of twelve percent per annum, due on that date. The notes could be converted into common stock after 180 days, which occurred on January 14, 2014 The Conversion Price is the lesser of $0.39 per share or 60% of the lowest trade in the 25 trading days previous to the conversion. The Note accrues interest at a rate of 12% per annum and matured on July 13, 2014. The notes were not paid or converted and are now in default. |
DEBT_Details_3
DEBT (Details 3) (Notes [Member], USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Notes [Member] | ' |
Derivative liability, beginning | ' |
Derivative liability activity in period | 44,848 |
Derivative liability, ending | $44,848 |
DERIVATIVE_LIABILITY_WARRANTS_1
DERIVATIVE LIABILITY - WARRANTS (Details Narrative) (USD $) | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2014 | Sep. 30, 2013 | Sep. 30, 2014 | Sep. 30, 2013 | Dec. 31, 2013 | Dec. 31, 2012 | |
Warrants Outstanding | ' | ' | ' | ' | ' | 1,000,000 |
Warrants [Member] | ' | ' | ' | ' | ' | ' |
Derivative liability - warrants | ' | ' | ' | ' | $93,044 | $438,680 |
Change in unrealized gain (loss) on fair value | $0 | $30,036 | $93,044 | $48,897 | ' | ' |
DERIVATIVE_LIABILITY_WARRANTS_2
DERIVATIVE LIABILITY - WARRANTS (Details) (Warrants [Member], USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Warrants [Member] | ' |
Derivative liability, beginning | $93,044 |
Decrease in Fair value | 93,044 |
Derivative liability, ending | ' |
SHAREHOLDERS_EQUITY_Details_Na
SHAREHOLDERS' EQUITY (Details Narrative) (USD $) | 0 Months Ended | 0 Months Ended | |||
Mar. 12, 2014 | Jan. 14, 2014 | Sep. 30, 2014 | Dec. 31, 2013 | Aug. 15, 2014 | |
Restricted Stock [Member] | |||||
Common stock, shares issued | ' | ' | 42,127,995 | 40,102,947 | ' |
Common stock, shares outstanding | ' | ' | 42,127,995 | 40,102,947 | ' |
Common shares issued for cash, shares | 1,735,310 | 183,488 | ' | ' | ' |
Price per share of stock sold | $0.14 | $0.16 | ' | ' | ' |
Restricted stock shares issued | ' | ' | ' | ' | 106,250 |
Share price | ' | ' | ' | ' | $0.20 |
SHAREHOLDERS_EQUITY_Details
SHAREHOLDERS' EQUITY (Details) (Warrants [Member], USD $) | 9 Months Ended |
Sep. 30, 2014 | |
Warrants [Member] | ' |
Number Warrants | ' |
Balance Beginning | 1,000,000 |
Expired | 1,000,000 |
Weighted Average Exercise Price | ' |
Balance Beginning | $0.50 |
Expired | $0.50 |
COMMITMENTS_AND_CONTINGENCIES_
COMMITMENTS AND CONTINGENCIES (Details Narrative) (USD $) | Sep. 30, 2014 | Mar. 17, 2014 | Mar. 12, 2014 | Aug. 31, 2013 |
sqft | ||||
Property Taxes Payable | $43,452 | ' | ' | ' |
Demand payment sought by note holder | ' | 25,000 | 339,130 | ' |
Number of feet under rental contract | 1,379 | ' | ' | ' |
Monthly Rent Expense | ' | ' | ' | 2,011 |
Unasserted Claim [Member] | ' | ' | ' | ' |
Esimate loss | $1,000,000 | ' | ' | ' |