Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Apr. 12, 2017 | Jun. 30, 2016 | |
Document and Entity Information: | |||
Entity Registrant Name | ALPHA ENERGY INC | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Trading Symbol | alpha | ||
Amendment Flag | false | ||
Entity Central Index Key | 855,787 | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Common Stock, Shares Outstanding | 17,016,428 | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | No | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Entity Public Float | $ 0 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets | ||
Cash | $ 453 | $ 116 |
Prepaid expenses | 0 | 2,750 |
Total current assets | 453 | 2,866 |
Oil and gas lease, unproved, full cost | 2,924 | 35,432 |
Oil and gas lease, proved, full cost | 8,326 | 0 |
Total assets | 11,703 | 38,298 |
Current liabilities | ||
Accounts payable | 17,571 | 11,336 |
Notes payable, related party | 17,855 | 775 |
Total current liabilities | 35,426 | 12,111 |
Asset retirement obligation | 567 | 0 |
Total liabilities | 35,993 | 12,111 |
Stockholders' equity (deficit) | ||
Preferred stock, $0.0001 par value; 10,000,000 shares authorized; none issued or outstanding | 0 | 0 |
Common stock, $0.0001 par value; 65,000,000 shares authorized; 17,016,428 and 16,866,428 issued and outstanding at December 31, 2016 and 2015, respectively | 1,702 | 1,687 |
Additional paid in capital | 92,278 | 81,043 |
Accumulated deficit | (118,270) | (56,543) |
Total stockholders' equity (deficit) | (24,290) | 26,187 |
Total liabilities and stockholders' equity (deficit) | $ 11,703 | $ 38,298 |
BALANCE SHEETS PARENTHETICALS
BALANCE SHEETS PARENTHETICALS - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Parentheticals | ||
Preferred Stock, par value | $ 0.0001 | $ 0.0001 |
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 | $ 0.0001 | $ 0.0001 |
Common Stock, shares authorized | 65,000,000 | 65,000,000 |
Common Stock, shares issued | 17,016,428 | 16,866,428 |
Common Stock, shares outstanding | 17,016,428 | 16,866,428 |
STATEMENTS OF OPERATIONS
STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Revenue | ||
Revenues | $ 0 | $ 0 |
Operating expenses | ||
Professional services | 22,075 | 11,665 |
General and administrative | 2,882 | 2,864 |
Impairment loss | 35,432 | 0 |
Loss from operations | (60,389) | (14,529) |
Other expense | ||
Interest expense | (1,338) | (571) |
Total other expense | (1,338) | (571) |
Provision for income taxes | 0 | 0 |
Net loss | $ (61,727) | $ (15,100) |
Net loss per common share, basic and diluted | $ 0 | $ 0 |
Weighted average common shares outstanding, basic and diluted | 16,870,117 | 16,817,568 |
STATEMENT OF CHANGES IN STOCKHO
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY - USD ($) | Preferred Stock Shares | Preferred Stock Amount | Common Stock Shares | Common Stock Amount | Additional Paid in Capital | Accumulated Deficit | Total |
Balance, at Dec. 31, 2014 | 0 | 0 | 16,714,000 | 1,672 | 69,626 | (41,443) | 29,855 |
Common stock issued for oil and gas lease | 152,428 | 15 | 11,417 | 11,432 | |||
Net loss. | $ (15,100) | $ (15,100) | |||||
Balance ; at Dec. 31, 2015 | 16,866,428 | 1,687 | 81,043 | (56,543) | 26,187 | ||
Common stock issued for oil and gas lease. | 150,000 | 15 | 11,235 | 11,250 | |||
Net loss: | $ (61,727) | $ (61,727) | |||||
Balance. at Dec. 31, 2016 | 17,016,428 | 1,702 | 92,278 | (118,270) | (24,290) |
STATEMENTS OF CASH FLOWS
STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities | ||
Net loss | $ (61,727) | $ (15,100) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Impairment loss | 35,432 | 0 |
Asset retirement obligation expense | 567 | 0 |
Changes in operating assets and liabilities: | ||
Prepaid expenses | 2,750 | 205 |
Accounts payable | 8,435 | 11,221 |
Net cash used in operating activities | (14,543) | (3,674) |
Cash flows from financing activities | ||
Proceeds from related party loans | 14,880 | 500 |
Net cash provided by financing activities | 14,880 | 500 |
Net change in cash | 337 | (3,174) |
Cash, beginning of period | 116 | 3,290 |
Cash, end of period | 453 | 116 |
Supplemental cash flow information | ||
Cash paid for interest | 0 | 0 |
Cash paid for income taxes | 0 | 0 |
Supplemental disclosure of non-cash investing activities | ||
Issuance of common stock for oil and gas lease | 11,250 | 11,432 |
Payment of expenses by related party on behalf of the Company | $ 2,200 | $ 0 |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A summary of significant accounting policies of Alpha Energy, Inc. (the Company) is presented to assist in understanding the Companys financial statements. The accounting policies presented in these footnotes conform to accounting principles generally accepted in the United States of America and have been consistently applied in the preparation of the accompanying financial statements. These financial statements and notes are representations of the Companys management who are responsible for their integrity and objectivity. Organization, Nature of Business and Trade Name The Company was incorporated in the State of Colorado on September 26, 2013 for the purpose of acquiring and executing on oil and gas leases. The Company has realized limited revenues from its planned business activities. Basis of Presentation and Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Companys system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents. Revenue and Cost Recognition The Company has been in the developmental stage since inception and has no operations outside of those organizational in nature to date. The Company has not yet recognized revenues from its planned business activities. Fair Value of Financial Instruments The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Inputs that are generally unobservable and typically reflect managements estimate of assumptions that market participants would use in pricing the asset or liability. The Companys valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. Oil and natural gas properties We account for our oil and natural gas producing activities using the full cost method of accounting as prescribed by the United States Securities and Exchange Commission (SEC). Under this method, subject to a limitation based on estimated value, all costs incurred in the acquisition, exploration, and development of proved oil and natural gas properties, including internal costs directly associated with acquisition, exploration, and development activities, the costs of abandoned properties, dry holes, geophysical costs, and annual lease rentals are capitalized within a cost center. Costs of production and general and administrative corporate costs unrelated to acquisition, exploration, and development activities are expensed as incurred. Costs associated with unevaluated properties are capitalized as oil and natural gas properties but are excluded from the amortization base during the evaluation period. When we determine whether the property has proved recoverable reserves or not, or if there is an impairment, the costs are transferred into the amortization base and thereby become subject to amortization. We assess all items classified as unevaluated property on at least an annual basis for inclusion in the amortization base. We assess properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate that there would be impairment, or if proved reserves are assigned to a property, the cumulative costs incurred to date for such property are transferred to the amortizable base and are then subject to amortization. Capitalized costs included in the amortization base, including estimated asset retirement costs, plus the estimated future expenditures to be incurred in developing proved reserves, net of estimated salvage values. Sales or other dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs, with no gain or loss recorded unless the ratio of cost to proved reserves would significantly change. During the year ended December 31, 2016, the Company issued 150,000 shares of common stock in exchange for an unproved lease of $2,924 and a proved lease of $8,326. Concentrations of Risk The Company has interested in three separate oil and gas leases, all of which are located in the state of Colorado. Environmental and regulatory factors within the state beyond the control of the Company may limit the Companys future production of all its leases. The Company has a single buyer for the gas produces from one of its leases. The loss of this buyer would have a material adverse impact on our business. Impairment The net book value of all capitalized oil and natural gas properties within a cost center, less related deferred income taxes, is subject to a full cost ceiling limitation which is calculated quarterly. Under the ceiling limitation, costs may not exceed an aggregate of the present value of future net revenues attributable to proved oil and natural gas reserves discounted at 10 percent using current prices, plus the lower of cost or market value of unproved properties included in the amortization base, plus the cost of unevaluated properties, less any associated tax effects. Any excess of the net book value, less related deferred tax benefits, over the ceiling is written off as expense. Impairment expense recorded in one period may not be reversed in a subsequent period even though higher oil and gas prices may have increased the ceiling applicable to the subsequent period. During the year ended December 31, 2016, the Company evaluated the future production of its leases through the termination of each lease. Through its analysis, the Company determined the present value of future production was less than the carrying value of the leases on the balance sheet. The Company recorded an impairment loss of $35,432 and $0 during the years ended December 31, 2016 and 2015. Asset retirement obligation We record the fair value of an asset retirement cost, and corresponding liability as part of the cost of the related long-lived asset and the cost is subsequently allocated to expense using a systematic and rational method. We record an asset retirement obligation to reflect our legal obligations related to future plugging and abandonment of our oil and natural gas wells and gathering systems. We estimate the expected cash flow associated with the obligation and discount the amount using a credit-adjusted, risk-free interest rate. At least annually, we reassess the obligation to determine whether a change in the estimated obligation is necessary. We evaluate whether there are indicators that suggest the estimated cash flows underlying the obligation have materially changed. Should those indicators suggest the estimated obligation may have materially changed on an interim basis (quarterly), we will update our assessment accordingly. Additional retirement obligations increase the liability associated with new oil and natural gas wells and gathering systems as these obligations are incurred. Capital Stock The Company has authorized sixty five million (65,000,000) shares of common stock with $0.0001 par value and ten million (10,000,000) shares of preferred stock with $0.0001 par value. There were 17,016,428 and 16,866,428 shares of common stock and no shares of preferred stock issued and outstanding at December 31, 2016 and 2015, respectively. Income Taxes The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. Recently Issued Accounting Pronouncements Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Companys present or future financial statements. |
GOING CONCERN
GOING CONCERN | 12 Months Ended |
Dec. 31, 2016 | |
GOING CONCERN | |
GOING CONCERN | NOTE 2 GOING CONCERN The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company does not have significant cash or other current assets, nor does it have an established source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern. Under the going concern assumption, an entity is ordinarily viewed as continuing in business for the foreseeable future with neither the intention nor the necessity of liquidation, ceasing trading, or seeking protection from creditors pursuant to laws or regulations. Accordingly, assets and liabilities are recorded on the basis that the entity will be able to realize its assets and discharge its liabilities in the normal course of business. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plan described in the Business paragraph and eventually attain profitable operations. The accompanying financial statements do not include any adjustments that may be necessary if the Company is unable to continue as a going concern. During the next year, the Companys foreseeable cash requirements will relate to continual development of the operations of its business, maintaining its good standing and making the requisite filings with the Securities and Exchange Commission, and the payment of expenses associated with research and development. The Company may experience a cash shortfall and be required to raise additional capital. Historically, it has mostly relied upon internally generated funds and funds from the sale of shares of stock to finance its operations and growth. Management may raise additional capital through future public or private offerings of the Companys stock or through loans from private investors, although there can be no assurance that it will be able to obtain such financing. The Companys failure to do so could have a material and adverse effect upon it and its shareholders. |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes: | |
Income Tax Disclosure | NOTE 3 INCOME TAXES We did not provide any current or deferred U.S. federal income tax provision or benefit for any of the periods presented because we have experienced operating losses since inception. When it is more likely than not that a tax asset cannot be realized through future income the Company must allow for this future tax benefit. We provided a full valuation allowance on the net deferred tax asset, consisting of net operating loss carry forwards, because management has determined that it is more likely than not that we will not earn income sufficient to realize the deferred tax assets during the carry forward period. The Company has not taken a tax position that, if challenged, would have a material effect on the financial statements for the year ended December 2016 applicable under FASB ASC 740. We did not recognize any adjustment to the liability for uncertain tax position and therefore did not record any adjustment to the beginning balance of accumulated deficit on the balance sheet. All tax returns for the Company remain open for IRS inspection. The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows: Income tax provision at the federal statutory rate 35.00% Income tax provision at the state statutory rate 4.63% Effect on operating losses (39.63%) - Changes in the net deferred tax assets consist of the following: 2016 2015 Net operating loss carry forward $ 70,040 $ 43,745 Valuation allowance (70,040) (43,745) Net deferred tax asset $ - $ - A reconciliation of income taxes computed at the statutory rate is as follows: 2016 2015 Tax at statutory rate (39.63%) $ 27,757 $ 17,336 Increase in valuation allowance (27,757) (17,336) Net deferred tax asset $ - $ - The net federal operating loss carry forward will expire in 2033. This carry forward may be limited upon the consummation of a business combination under IRC Section 381. |
STOCK
STOCK | 12 Months Ended |
Dec. 31, 2016 | |
Equity: | |
Stockholders' Equity Note Disclosure | NOTE 4 - STOCK The Company is authorized to issue up to 10,000,000 shares of $0.0001 par value preferred stock and 65,000,000 shares of $0.0001 par value common stock. During the year ended December 31, 2015, the Company issued a total of 152,428 common shares in exchange for an oil and gas lease valued at $11,432. During the year ended December 31, 2016, the Company issued a total of 150,000 common shares in exchange for an oil and gas lease valued at $11,250. There were no shares of preferred stock issued or outstanding at December 31, 2016 or 2015. There were 17,016,428 and 16,866,428 shares of common stock issued and outstanding at December 31, 2016 and 2015, respectively. On April 10, 2015, the Company effected a 2:1 forward common stock split. There were 8,357,000 common shares issued and outstanding immediately prior to the forward split and 16,714,000 immediately after. These financial statements have been adjusted retroactively to present the effects of the split. |
STOCK WARRANTS
STOCK WARRANTS | 12 Months Ended |
Dec. 31, 2016 | |
Compensation Related Costs, Retirement Benefits: | |
Compensation and Employee Benefit Plans | NOTE 5 STOCK WARRANTS During the year ended December 31, 2014, the Company issued warrants in connection with common stock issued for cash. The following table summarizes all stock warrant activity for the years ended December 31, 2015 and December 31, 2016: Weighted- Average Exercise Price Shares Per Share Outstanding, December 31, 2014 500,000 $ 0.125 Granted - - Exercised - - Forfeited - - Expired - - Outstanding, December 31, 2015 500,000 $ 0.125 Granted - - Exercised - - Forfeited - - Expired (260,000) 0.125 Outstanding, December 31, 2016 240,000 $ 0.125 The weighted average remaining contractual life of options outstanding as of December 31, 2016 and 2015, was approximately 0.20 and 1.05, respectively. The exercise price of these options was $0.125 and the intrinsic value of the options as of December 31, 2016 and 2015 is $0.00, respectively. |
RELATED PARTY TRANSATIONS
RELATED PARTY TRANSATIONS | 12 Months Ended |
Dec. 31, 2016 | |
RELATED PARTY TRANSATIONS: | |
RELATED PARTY TRANSATIONS | NOTE 6 - RELATED PARTY TRANSACTIONS The Company neither owns nor leases any real or personal property. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts. Fred Ziegler, who is the spouse of our President, Karen Ziegler, is an unpaid consultant for the Company. Although uncompensated and not having direct ownership of stock, he has the ability to exercise significant influence over the Company given the personal relationship with one of our officers. On April 20, 2016, the Company entered into an agreement with Arrow Consulting to extend the term of an existing lease that was to originally expire on September 30, 2016 for a period of three years for total consideration of $10. The lease will expire on September 30, 2019 unless otherwise extended. The Company received advances from related parties totaling $17,080 and $500 during the years ended December 31, 2016 and 2015. The advances from related parties are not convertible, bear no interest and are due on demand. There was $17,855 and $775 due to related parties as of December 31, 2016 and 2015, respectively. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 12 Months Ended |
Dec. 31, 2016 | |
SUBSEQUENT EVENTS: | |
SUBSEQUENT EVENTS | NOTE 7 SUBSEQUENT EVENTS On February 1, 2017, the Company executed a promissory note for $56,216. The note bears simple interest at a rate of 3.75%, is not convertible to equity of the Company and is due on February 1, 2018. During the month of February 2017, the Company made total repayments to Arrow Consulting, a related party, of $13,000 on notes payable related party. |
SUMMARY OF SIGNIFICANT ACCOUN14
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Dec. 31, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Organization, Nature of Business and Trade Name | Organization, Nature of Business and Trade Name The Company was incorporated in the State of Colorado on September 26, 2013 for the purpose of acquiring and executing on oil and gas leases. The Company has realized limited revenues from its planned business activities. |
Basis of Presentation and Use of Estimates | Basis of Presentation and Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reported period. Actual results could differ from those estimates. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud. The Companys system of internal accounting control is designed to assure, among other items, that (1) recorded transactions are valid; (2) all valid transactions are recorded and (3) transactions are recorded in the period in a timely manner to produce financial statements which present fairly the financial condition, results of operations and cash flows of the company for the respective periods being presented. |
Cash and Cash Equivalents | Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all short-term debt securities purchased with maturity of three months or less to be cash equivalents. |
Revenue and Cost Recognition | Revenue and Cost Recognition The Company has been in the developmental stage since inception and has no operations outside of those organizational in nature to date. The Company has not yet recognized revenues from its planned business activities. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities, which are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use in pricing the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 Quoted prices in active markets for identical assets or liabilities. Level 2 Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 Inputs that are generally unobservable and typically reflect managements estimate of assumptions that market participants would use in pricing the asset or liability. The Companys valuation techniques used to measure the fair value of money market funds and certain marketable equity securities were derived from quoted prices in active markets for identical assets or liabilities. The valuation techniques used to measure the fair value of all other financial instruments, all of which have counterparties with high credit ratings, were valued based on quoted market prices or model driven valuations using significant inputs derived from or corroborated by observable market data. In accordance with the fair value accounting requirements, companies may choose to measure eligible financial instruments and certain other items at fair value. The Company has not elected the fair value option for any eligible financial instruments. |
Oil and natural gas properties | Oil and natural gas properties We account for our oil and natural gas producing activities using the full cost method of accounting as prescribed by the United States Securities and Exchange Commission (SEC). Under this method, subject to a limitation based on estimated value, all costs incurred in the acquisition, exploration, and development of proved oil and natural gas properties, including internal costs directly associated with acquisition, exploration, and development activities, the costs of abandoned properties, dry holes, geophysical costs, and annual lease rentals are capitalized within a cost center. Costs of production and general and administrative corporate costs unrelated to acquisition, exploration, and development activities are expensed as incurred. Costs associated with unevaluated properties are capitalized as oil and natural gas properties but are excluded from the amortization base during the evaluation period. When we determine whether the property has proved recoverable reserves or not, or if there is an impairment, the costs are transferred into the amortization base and thereby become subject to amortization. We assess all items classified as unevaluated property on at least an annual basis for inclusion in the amortization base. We assess properties on an individual basis or as a group if properties are individually insignificant. The assessment includes consideration of the following factors, among others: intent to drill; remaining lease term; geological and geophysical evaluations; drilling results and activity; the assignment of proved reserves; and the economic viability of development if proved reserves are assigned. During any period in which these factors indicate that there would be impairment, or if proved reserves are assigned to a property, the cumulative costs incurred to date for such property are transferred to the amortizable base and are then subject to amortization. Capitalized costs included in the amortization base, including estimated asset retirement costs, plus the estimated future expenditures to be incurred in developing proved reserves, net of estimated salvage values. Sales or other dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs, with no gain or loss recorded unless the ratio of cost to proved reserves would significantly change. During the year ended December 31, 2016, the Company issued 150,000 shares of common stock in exchange for an unproved lease of $2,924 and a proved lease of $8,326. |
Concentrations of Risk | Concentrations of Risk The Company has interested in three separate oil and gas leases, all of which are located in the state of Colorado. Environmental and regulatory factors within the state beyond the control of the Company may limit the Company's future production of all its leases. The Company has a single buyer for the gas produces from one of its leases. The loss of this buyer would have a material adverse impact on our business. |
Impairment | Impairment The net book value of all capitalized oil and natural gas properties within a cost center, less related deferred income taxes, is subject to a full cost ceiling limitation which is calculated quarterly. Under the ceiling limitation, costs may not exceed an aggregate of the present value of future net revenues attributable to proved oil and natural gas reserves discounted at 10 percent using current prices, plus the lower of cost or market value of unproved properties included in the amortization base, plus the cost of unevaluated properties, less any associated tax effects. Any excess of the net book value, less related deferred tax benefits, over the ceiling is written off as expense. Impairment expense recorded in one period may not be reversed in a subsequent period even though higher oil and gas prices may have increased the ceiling applicable to the subsequent period. During the year ended December 31, 2016, the Company evaluated the future production of its leases through the termination of each lease. Through its analysis, the Company determined the present value of future production was less than the carrying value of the leases on the balance sheet. The Company recorded an impairment loss of $35,432 and $0 during the years ended December 31, 2016 and 2015. |
Asset retirement obligation | Asset retirement obligation We record the fair value of an asset retirement cost, and corresponding liability as part of the cost of the related long-lived asset and the cost is subsequently allocated to expense using a systematic and rational method. We record an asset retirement obligation to reflect our legal obligations related to future plugging and abandonment of our oil and natural gas wells and gathering systems. We estimate the expected cash flow associated with the obligation and discount the amount using a credit-adjusted, risk-free interest rate. At least annually, we reassess the obligation to determine whether a change in the estimated obligation is necessary. We evaluate whether there are indicators that suggest the estimated cash flows underlying the obligation have materially changed. Should those indicators suggest the estimated obligation may have materially changed on an interim basis (quarterly), we will update our assessment accordingly. Additional retirement obligations increase the liability associated with new oil and natural gas wells and gathering systems as these obligations are incurred. |
Capital Stock | Capital Stock The Company has authorized sixty five million (65,000,000) shares of common stock with $0.0001 par value and ten million (10,000,000) shares of preferred stock with $0.0001 par value. There were 17,016,428 and 16,866,428 shares of common stock and no shares of preferred stock issued and outstanding at December 31, 2016 and 2015, respectively. |
Income Taxes | Income Taxes The Company recognizes the tax effects of transactions in the year in which such transactions enter into the determination of net income, regardless of when reported for tax purposes. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Companys present or future financial statements. |
Schedule of income taxes differ
Schedule of income taxes differs from the amount computed by applying the statutory federal income tax rate (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of income taxes differs from the amount computed by applying the statutory federal income tax rate | |
Schedule of income taxes differs from the amount computed by applying the statutory federal income tax rate | The provision for income taxes differs from the amount computed by applying the statutory federal income tax rate to income before provision for income taxes. The sources and tax effects of the differences for the periods presented are as follows: Income tax provision at the federal statutory rate 35.00% Income tax provision at the state statutory rate 4.63% Effect on operating losses (39.63%) - Changes in the net deferred tax assets consist of the following: 2016 2015 Net operating loss carry forward $ 70,040 $ 43,745 Valuation allowance (70,040) (43,745) Net deferred tax asset $ - $ - A reconciliation of income taxes computed at the statutory rate is as follows: 2016 2015 Tax at statutory rate (39.63%) $ 27,757 $ 17,336 Increase in valuation allowance (27,757) (17,336) Net deferred tax asset $ - $ - |
Schedule of Stock Warrants (Tab
Schedule of Stock Warrants (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Schedule of Stock Warrants | |
Schedule of summarizes all stock warrant activity | The following table summarizes all stock warrant activity for the years ended December 31, 2015 and December 31, 2016: Weighted- Average Exercise Price Shares Per Share Outstanding, December 31, 2014 500,000 $ 0.125 Granted - - Exercised - - Forfeited - - Expired - - Outstanding, December 31, 2015 500,000 $ 0.125 Granted - - Exercised - - Forfeited - - Expired (260,000) 0.125 Outstanding, December 31, 2016 240,000 $ 0.125 |
SIGNIFICANT ACCOUNTING POLICIES
SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Oil and natural gas properties details | ||
Company issued shares of common stock in exchange for an unproved lease | 150,000 | |
An unproved lease amount | $ 2,924 | |
Proved lease amount | 8,326 | |
Impairment details | ||
The Company recorded an impairment loss | $ 35,432 | $ 0 |
Capital Stock (Details)
Capital Stock (Details) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 |
Capital Stock Details | ||
Authorized shares of common stock | 65,000,000 | 65,000,000 |
Shares of common stock par value | $ 0.0001 | $ 0.0001 |
Shares of preferred stock | 10,000,000 | 10,000,000 |
Shares of preferred stock par value | $ 0.0001 | $ 0.0001 |
Shares of preferred stock issued and outstanding | 17,016,428 | 16,866,428 |
THE PROVISION FOR INCOME TAXES
THE PROVISION FOR INCOME TAXES (DETAILS) | 12 Months Ended |
Dec. 31, 2016 | |
THE PROVISION FOR INCOME TAXES DETAILS | |
Income tax provision at the federal statutory rate | 35.00% |
Income tax provision at the state statutory rate | 4.63% |
Effect on operating loss carry forward | (39.63%) |
Total Provision for income taxes | 0.00% |
CHANGES IN THE NET DEFERRED TAX
CHANGES IN THE NET DEFERRED TAX ASSETS (DETAILS) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
CHANGES IN THE NET DEFERRED TAX ASSETS DETAILS | ||
Net operating loss carry forward | $ 70,040 | $ 43,745 |
Valuation allowance | (70,040) | (43,745) |
Net deferred tax asset | $ 0 | $ 0 |
A RECONCILIATION OF INCOME TAXE
A RECONCILIATION OF INCOME TAXES COMPUTED AT THE STATUTORY RATE (DETAILS) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
A RECONCILIATION OF INCOME TAXES COMPUTED AT THE STATUTORY RATE Details | ||
Tax at statutory rate (39.63%) | $ 27,757 | $ 17,336 |
Increase in valuation allowance | (27,757) | (17,336) |
Net deferred tax asset | $ 0 | $ 0 |
STOCK (DETAILS)
STOCK (DETAILS) | 12 Months Ended | |
Dec. 31, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)shares | |
STOCK DETAILS | ||
Company is authorized to issue shares of preferred stock | 10,000,000 | |
Company is authorized to issue shares of preferred stock par value | $ / shares | $ 0.0001 | |
Company is authorized to issue shares of common stock | 65,000,000 | |
Company is authorized to issue shares of common stock par value | $ / shares | $ 0.0001 | |
Common shares for the acquisition of an oil and gas lease | 150,000 | 152,428 |
Common shares for the acquisition of an oil and gas lease valued at | $ | $ 11,250 | $ 11,432 |
Shares of preferred stock issued and outstanding | 17,016,428 | 16,866,428 |
Company effected a 2 forward common stock split for | 1 | 2 |
Common shares issued and outstanding prior to forward split | 8,357,000 | |
Common shares issued and outstanding after to forward split | 16,714,000 |
RELATED PARTY TRANSACTIONS (DET
RELATED PARTY TRANSACTIONS (DETAILS) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
RELATED PARTY TRANSACTIONS DETAILS | ||
Company received advances from related parties totaling | $ 17,080 | $ 500 |
DUE TO RELATED PARTIES (DETAILS
DUE TO RELATED PARTIES (DETAILS) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
DUE TO RELATED PARTIES DETAILS | ||
Due to related parties | $ 17,855 | $ 775 |
STOCK WARRANTS (DETAILS)
STOCK WARRANTS (DETAILS) - $ / shares | Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 |
STOCK WARRANTS DETAILS | |||
Shares Outstanding | 240,000 | 500,000 | 500,000 |
Shares Granted | 0 | ||
Shares Exercised | 0 | ||
Shares Forfeited | 0 | ||
Shares Expired | (260,000) | ||
Weighted-Average Exercise Price Per Share Outstanding | $ 0.125 | $ 0.125 | $ 0.125 |
Weighted-Average Exercise Price Per Share Granted | 0 | ||
Weighted-Average Exercise Price Per Share Exercised | 0 | ||
Weighted-Average Exercise Price Per Share Forfeited | $ 0 | ||
Weighted-Average Exercise Price Per Share Expired | $ 0.125 |
OUSTANDING AND EXERCISABLE OPTI
OUSTANDING AND EXERCISABLE OPTIONS (DETAILS) | Dec. 31, 2016USD ($)$ / shares | Dec. 31, 2015USD ($) |
OUSTANDING AND EXERCISABLE OPTIONS DETAILS | ||
Weighted average remaining contractual life of options outstanding in years | 0.20 | 1.05 |
Exercise price of these options | $ / shares | $ 0.125 | |
Intrinsic value of the options | $ | $ 0 | $ 0 |
SUBSEQUENT EVENTS (DETAILS)
SUBSEQUENT EVENTS (DETAILS) | Feb. 01, 2017USD ($) |
SUBSEQUENT EVENTS DETAILS | |
Company executed a promissory note | $ 56,216 |
The note bears simple interest at a rate of | 3.75% |
Company made total repayments to Arrow Consulting, a related party on notes payable related party | $ 13,000 |