NOTE
1 – CONDENSED FINANCIAL STATEMENTS
The
accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations,
and cash flows at June 30, 2013, and for all periods presented herein, have been made.
Certain
information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles
generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed
financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s December
31, 2012 audited financial statements. The results of operations for the period ended June 30, 2013 and 2012 are not
necessarily indicative of the operating results for the full year.
NOTE
2 - GOING CONCERN
The
Company's financial statements are prepared using generally accepted accounting principles 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.
The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue
as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital
to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced
to cease operations.
In
order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plan
is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet
its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that
the Company will be successful in accomplishing any of its plans.
The
ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described
in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying
financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES
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 reporting period. Actual results could differ
from those estimates.
Recent
Accounting Pronouncements
The
Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have a material impact
on the Company’s financial position or statements.
NOTE
3 – SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Oil
and Gas Properties
The
Company uses the full cost method of accounting for oil and natural gas properties. Under this method, all acquisition, exploration
and development costs, including certain payroll, asset retirement costs, other internal costs, and interest incurred for the
purpose of finding oil and natural gas reserves, are capitalized. Internal costs that are capitalized are directly attributable
to acquisition, exploration and development activities and do not include costs related to production, general corporate overhead
or similar activities. Costs associated with production and general corporate activities are expensed in the period incurred.
Proceeds from the sale of oil and natural gas properties are applied to reduce the capitalized costs of oil and natural gas properties
unless the sale would significantly alter the relationship between capitalized costs and proved reserves, in which case a gain
or loss is recognized.
Capitalized
costs associated with impaired properties and capitalized costs related to properties having proved reserves, plus the estimated
future development costs, and asset retirement costs under Financial Accounting Standards Board (“FASB”) Accounting
Standards Codification (“ASC”) Topic 410 “Asset Retirement and Environmental Obligations” (FASB
ASC 410), are amortized using the unit-of-production method based on proved reserves. Capitalized costs of oil and natural gas
properties, net of accumulated amortization and deferred income taxes, are limited to the total of estimated future net cash flows
from proved oil and natural gas reserves, discounted at ten percent, plus the cost of unevaluated properties.
There
are many factors, including global events that may influence the production, processing, marketing and price of oil and natural
gas. A reduction in the valuation of oil and natural gas properties resulting from declining prices or production could adversely
impact depletion rates and capitalized cost limitations. Capitalized costs associated with properties that have not been evaluated
through drilling or seismic analysis, including exploration wells in progress, are excluded from the unit-of-production amortization.
Exclusions are adjusted annually based on drilling results and interpretative analysis.
Sales
of oil and natural gas properties are accounted for as adjustments to the net full cost pool with no gain or loss recognized,
unless the adjustment would significantly alter the relationship between capitalized costs and proved reserves. If it is determined
that the relationship is significantly altered, the corresponding gain or loss will be recognized in the statements of operations.
Costs
of oil and gas properties are depleted using the unit-of-production method. For the six months ended June 30, 2013, the Company
recognized $97,829 of depletion expense related to oil and gas production.
Ceiling
Test
Ceiling
Test
- In applying the full cost method and in accordance with ASC 932, the Company
performs an impairment test (ceiling test) at each reporting date, whereby the carrying value of property and equipment is compared
to the value of its proved reserves discounted at a ten 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.
The Company recorded $13,948 and
$-0- of impairment expense has been recorded in connection with the full cost ceiling test calculation for the six month periods
ending June 30, 2013 and 2012, respectively.
Revenue
Recognition
Revenues
from the sale of oil and natural gas are recognized
according to
the sales method, which is
when the product is delivered at a fixed or determinable price, title has
transferred, and collectability is reasonably assured. For oil sales, this occurs when the customer takes delivery of oil
from the operators’ storage tanks.
Asset
Retirement Obligations
The
Company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred and a corresponding
increase in the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and
the capitalized cost is depreciated over the useful life of the related asset. If the liability is settled for an amount other
than the recorded amount, a gain or loss is recognized.
NOTE
4 – OIL AND GAS PROPERTIES
On
February 9, 2012, the Company purchased a 30 percent gross working interest and a 26.25 percent net revenue interest in six unproved
oil and gas leases in Cowley County, Kansas for $140,400. The six leases combined contain approximately 1,025 acres. Subsequent
to purchase the company capitalized $11,934 in support equipment and $38,519 in development costs. During the six months ended
June 30, 2013 the Company capitalized an additional $49,634 in development costs related to these leases.
On
May 14, 2012 the Company purchased a 35 percent gross working interest and a 28 percent net revenue interest in 98 acres of unproved
oil and gas leases in Stafford County, Kansas for $12,569. Concurrent with this purchase, the Company paid $22,637 in additional
development costs, and $66,181 for support equipment, for an aggregate purchase price of $101,387. As of December 31, 2012, pursuant
to a ceiling test analysis, the Company recognized an impairment expense on these leases in the amount of $6,484.
On
May 14, 2012 the Company purchased a 13 percent gross working interest and a 10 percent net revenue interest in 70 acres of unproved
oil and gas leases in Butler County, Kansas for $17,208. Concurrent with this purchase, the Company paid $27,401 in additional
development costs, and $17,542 for support equipment, for an aggregate purchase price of $62,151. Subsequent to purchase the Company
capitalized $479 in support equipment. As of December 31, 2012, pursuant to a ceiling test analysis, the Company recognized an
impairment expense on these leases in the amount of $7,464. During the six months ended June 30, 2013 the Company capitalized
an additional $37,009 in development costs related to these leases.
On
February 5, 2013 the Company sold a 30 percent gross working interest and a 30 percent net revenue interest in six oil and gas
leases located in Pratt County, Kansas for $100,000. This amount is classified as other receivables on the Company’s balance
sheet at March 31, 2013. Pursuant to this transaction the Company transferred a 30 percent interest in all related support equipment
and asset retirement obligations.
During
the six months ended June, 2013 the Company incurred certain workover and other improvements to certain of its wells. The Company
paid $58,190 for these improvements, which have been added to the book value of the wells.
Through
June 30, 2013, the Company established an asset retirement obligation of $112,652 for the wells acquired by the Company, which
was capitalized to the value of the oil and gas properties. The wells have an estimated useful life of 25 years. Total accretion
expense on the asset retirement obligation was $30,481, leaving an ending net balance of $143,133 at June 30, 2013.
NOTE
5 – CONVERTIBLE NOTE PAYABLE
On
September 28, 2011 the Company borrowed $100,000 from an unrelated third party entity in the form of a convertible note. The note
bears interest at a rate of five percent per annum, with principal and interest due in full on September 24, 2012. The note is
convertible at any time, at the option of the note holder, into shares of the Company’s common stock, at ten percent below
the current market price on the date of conversion. For purposes of the note, “current market price” is defined as
the average of the lowest three daily closing prices per share for the five business days prior to the date of conversion.
Pursuant
to this conversion feature, the Company recognized a derivative liability in the amount of $93,976 on the note date. At December
31, 2011, the derivative liability was revalued at $103,581, and at December 31, 2012 the derivative liability was revalued at
$11,136. This led to the Company recording a gain on derivative liability of $92,445 for the period ended December 31, 2012. On
March 17, 2013 the derivative liability was revalued at $-0-, resulting in a gain on derivative liability of $11,136 for the six
months ended June 30, 2013.
On
March 17, 2013 the holder of the note elected to convert the entire face value of the note of $100,000, along with $9,644 in accrued
interest, into 219,903 shares of common stock at $0.50 per share.
NOTE
6 – STOCKHOLDERS’ EQUITY
On
March 21, 2012, the Company issued 833,333 shares of common stock at $0.60 per share for cash proceeds of $500,000 and 10,000
shares of common stock at $0.52 per share for services valued at $5,200.
On
April 1, 2012, the Company appointed a new member of its Board of Directors. The Company has agreed to pay the director $1,000
per month. In addition, the Company has also agreed to issue the new director 10,000 shares of $0.001 par value common stock at
$0.52 per share, for services valued at $5,200. The price per share of common stock issued for services was based on the trading
price of the Company’s common stock on the dates such services were performed.
During
the year ended December 31, 2012, the Company increased its authorized $0.001 par value common stock to 198,000,000 shares, and
authorized 2,000,000 preferred shares with 1-to-100 voting rights and conversion ratio from preferred to common shares.
During
the year ended December 31, 2012, the Company converted 80,940,000 shares of outstanding common stock into 809,400 shares of preferred
stock. During the same fiscal period, the Company cancelled 18,999,000 shares of common stock.
During
the six months ended June 30, 2013 the Company issued 219,903 shares of common stock upon the conversion of a $100,000 convertible
note payable (see Note 5) at $0.50 per share. The Company also issued 666,667 shares of common stock for cash at $0.60 per share,
resulting in total cash proceeds of $400,000. The Company issued an additional 25,000 shares of common stock in exchange for subscriptions
receivable totaling $15,000.
NOTE
7 – SUBSEQUENT EVENTS
In
accordance with ASC 855-10, the Company’s management has reviewed all material events and there are no additional material
subsequent events to report.
ITEM
2. MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
Forward-looking
statements
This
quarterly report on Form 10-Q contains “forward-looking statements” relating to the registrant which represent the
registrant’s current expectations or beliefs, including statements concerning registrant’s operations, performance,
financial condition and growth. For this purpose, any statement contained in this quarterly report on Form 10-Q that are
not statements of historical fact are forward-looking statements. Without limiting the generality of the foregoing, words such
as “may”, “anticipation”, “intend”, “could”, “estimate”, or “continue”
or the negative or other comparable terminology are intended to identify forward-looking statements. These statements by their
nature involve substantial risks and uncertainties, such as credit losses, dependence on management and key personnel and variability
of quarterly results, ability of registrant to continue its growth strategy and competition, certain of which are beyond the registrant’s
control. Should one or more of these risks or uncertainties materialize or should the underlying assumptions prove incorrect,
actual outcomes and results could differ materially from those indicated in the forward-looking statements.
The
following discussion and analysis should be read in conjunction with the information set forth in the Company’s audited
financial statements for the period ended December 31, 2012.
Overview
We
are in the business of precious minerals exploration and oil and gas exploration and production. The Company was incorporated
in the State of Nevada on June 22, 2009.
On
March 31st, 2011 Northumberland (NHUR) was a successful bidder at the Evenson Oil Production Auction in Wichita, Kansas. NHUR
acquired the Mason, Thompson, Keyes and Harrell leases inclusive of all production and improvements. The leases were purchased
at auction from Reh Oil & Gas LLC. The leases of 280 acres located in the Sawyer field in Pratt County Kansas and 120 acres
located in the Wildcat field, filed in Pratt County Kansas, were purchased for Two Hundred Sixty Thousand Dollars.
The
Company’s Articles of Incorporation are being amended to reflect a decrease in the number of common shares from Two Billion
(2,000,000,000) to One Hundred Ninety Eight Million (198,000,000) and the creation of a preferred stock in the amount of Two Million
(2,000,000) shares with voting and conversion rights of 1 for 100. The Amendment was adopted pursuant to written consent of stockholders
holding a majority of the voting power of the outstanding capital stock of the Company.
On
March 1, 2011, the Company purchased a 100 percent working interest on a 70 percent net revenue interest in certain oil and gas
leases and related well operating equipment in Pratt County, Kansas for $260,000. Of this total, $149,000 was allocated to oil
and gas leases, and the remaining $111,000 was allocated to the purchased well operating equipment. Subsequent to acquiring the
interests in these leases the Company has incurred $23,310 of exploration costs and $60,702 of development costs which have been
capitalized to the value of oil and gas properties.
On
June 11, 2011, the Company purchased a 30 percent working interest on an 24.45 percent net revenue interest in an unproved oil
and gas well located in Cowley County, KS. The Company paid $17,220 for the lease on 640 acres at $85 per acre. Subsequent to
acquiring the interest in these wells the Company incurred an additional $119,350 of exploration costs and $110,531 of development
costs on the property which have been capitalized to the value of oil and gas properties.
On
July 7, 2011, the Company purchased a 20 percent working interest on an 16.41 percent net revenue interest in a proved and producing
oil and gas well located in Cowley County, KS. The Company paid $45,000 to acquire the leases and incurred an additional $26,881
of development costs which were capitalized to the value of oil and gas properties under.
On
September 27, 2011, the Company purchased two leases and related well operating equipment located in Pratt County for $72,500.
Of this total, $22,500 was allocated to oil and gas leases, and the remaining $50,000 was allocated to the purchased well operating
equipment. The leases carry a 100 percent working interest of 70 percent net revenue interest. Subsequent to purchase the Company
capitalized $990 in exploration costs and $18,363 in development costs relating to these leases.
On
September 27, 2011 Northumberland Resources purchased at auction, two leases with the multiple acquisition of an additional
1040 acres of productive oil and gas leases. The two leases located in Pratt County, KS consist of six wells with a 100%
Working Interest of 82% Net Revenue Interest. These six wells leases are directly adjacent to our existing leases and will
integrate the 6 fields and maximize efficiency and production. Included in the purchase is a gas compression station which
will enhance flows from current operations. The purchase price of the Pratt County acquisition was Seventy-Two
Thousand Five hundred Dollars. Of this total, $22,500 was allocated to oil and gas leases, and the remaining $50,000 was
allocated to the purchased well operating equipment. The leases carry a 100 percent working interest of 70
percent net revenue interest. Subsequent to purchase the Company capitalized $990 in exploration costs and $17,533 in
development costs relating to these leases.
On
September 27, 2011, the Company also purchased a 23 percent interest in a net revenue interest ranging from 18.66 to 19.65 percent
in three leases in Barton and Stafford Counties, Kansas for $220,800. The three leases combined contain slightly
more than 564 net acres. In total there are seven active wells located in these leases. There
are four oil producing wells, two disposal wells and one injection well. Subsequent to purchase the Company capitalized $2,326
in development costs relating to these leases.
On
December 19, 2011, the company purchased a 15 percent interest in net revenue interests ranging from 12.675 percent to 13.125
percent in four leases in Cowley County, Kansas for $75,600. The four leases combined contain approximately 720 acres. The Company
has incurred no exploration or development costs with respect to these properties as of December 31, 2011.
On
February 9, 2012, the Company purchased a 30 percent gross working interest and a 26.25 percent net revenue interest in six unproved
oil and gas leases in Cowley County, Kansas for $140,400. The six leases combined contain approximately 1,025 acres.
On
May 14, 2012 the Company purchased a 35 percent gross working interest and a 28 percent net revenue interest in 98 acres of unproved
oil and gas leases in Stafford County, Kansas for $12,569. Concurrent with this purchase, the Company paid $19,174 in additional
development costs, and $66,181 for support equipment, for an aggregate purchase price of $97,924.
On
May 14, 2012 the Company purchased a 13 percent gross working interest and a 10 percent net revenue interest in 70 acres of unproved
oil and gas leases in Butler County, Kansas for $17,208. Concurrent with this purchase, the Company paid $27,261 in additional
development costs, and $17,542 for support equipment, for an aggregate purchase price of $62,011.
On
February 5, 2013 the Company sold a 30 percent gross working interest and a 30 percent net revenue interest in six oil and gas
leases located in Pratt County, Kansas for $100,000. This amount is classified as a note receivable at March 31, 2013. Pursuant
to this transaction the Company transferred a 30 percent interest in all related support equipment and asset retirement obligations.
At
February 3, 2013, the Company has established an asset retirement obligation of $124,982 for all oil and gas properties
purchased since inception, which has been capitalized to the value of the oil and gas properties. The wells have an estimated
useful life of 25 years. Accretion expense recorded on these obligations since inception totals $18,151, leaving a balance of
143,133 at June 30, 2013.
Management
did not renew four mineral claims, collectively named the “BARD 1-4 Property,” situated in the Paymaster Canyon area
of Esmeralda County in west-central Nevada. We do not have any current plans to acquire interests in additional mineral properties,
though we may consider such acquisitions in the future.
There
was no assurance that a commercially viable precious minerals deposit existed on the BARD 1-4 Property and further development
was abandoned.
Effective
April 1, 2012, Chris Knowles was elected as an additional director
of the Company, bringing the total number of directors to three. On January 1, 20013 Mr. Knowles resigned as Director of the Company.
On
January 7, 2013, Ryan Kerr was appointed to serve as a replacement director in the stead of Chris Knowles. Mr. Kerr resigned his
position as a director on August 9, 2013.
Ryan
Kerr, Director
Mr.
Kerr currently manages Inland Oil Corp., his family-owned business. Mr. Kerr has over 15 years experience in locating, producing,
completing and general operations in the oil and gas industry. Mr. Kerr has successfully drilled and completed hundreds of wells
throughout the Mid-continent region and is actively involved with development and operations of fields in this region. Mr. Kerr’s
extensive experience in oil and gas exploration and production is furthered as an exploration geologist where he has consulted
on several water-flood and infill drilling projects throughout Oklahoma, Kansas, North Dakota, Wyoming, New Mexico, Texas, and
California. Currently, Mr. Kerr has been heading drilling programs for several operators in Oklahoma, as well as design and implementation
of a Nitrogen gas flood in Wagoner County Oklahoma in the Stone Bluff Field. This project consisted of flooding 1,200+ - acres
with the producing interval from the Dutcher Sand zone at a depth of 1250’feet. Production since the start of the nitrogen
injection flood has been increased from the formation at a rate of 1 MMCF per day. Mr. Kerr resigned his position as a director
on August 9, 2013.
Plan
of Operation
Our
plan of operations is to further develop our recent oil and gas acquisitions in Kansas and carry out further exploration and acquisition
in the oil and gas sectors. NHUR has upgraded the facilities on its acquired Mason, Thompson, Keyes and Harrell Sanders, Asmussen
and Carver leases with the objective to improve current oil and gas production.
Results
of Operations for the Three Months Ended June 30, 2013 and 2012
Revenues
We
had revenues of $40,157 during the three months ended June 30, 2013, compared to $97,858 in revenues during the corresponding
period in 2012. Our revenues decreased from 2012 to 2013 due primarily to our selling off significant percentages of our producing
oil and gas leases.
Revenues were from oil and gas production occurring at previously purchased property sites.
Expenses
We
incurred operating expenses in the amount of $298,397 during the three months ended June 30, 2013, compared to $243,698 for the
corresponding period in 2012. The 2013 operating expenses consisted primarily of $28,956 in general and administrative expenses
such as office expenses, $76,475 in professional fees, $128,020 in lease operating expenses and $64,946 in depletion, depreciation,
amortization, and accretion expenses. This compares to lease operating costs of $100,299, professional fees of $69,174, and general
and administrative expenses of $23,561, and $50,664 in depletion, depreciation, amortization and accretion expense during the
corresponding period in 2012. We expect our operating costs to continue to increase in the next 12 months.
Net
Loss
We
incurred a net loss of $258,240 during the three months ended June 30, 2013, compared to a net loss of $146,650 during the
corresponding period in 2012. This translates to a loss per share of $0.00 and $0.00 for the three months ended June 30, 2013
and 2012, respectively.
Results
of Operations for the Six Months Ended June 30, 2013 and 2012
Revenues
We
had revenues of $79,475 during the six months ended June 30, 2013, compared to $280.150 in revenues during the corresponding period
in 2012. Our revenues decreased from 2012 to 2013 due primarily to our selling off significant percentages of our producing
oil and gas leases. Revenues were from oil and gas production occurring at previously purchased property sites.
Expenses
We
incurred operating expenses in the amount of $499,310 during the six months ended June 30, 2013, compared to $623,939 for the corresponding
period in 2012. The 2013 operating expenses consisted primarily of $43,387 in general and administrative expenses such as office
expenses, $145,207 in professional fees, $181,931 in lease operating expenses and $128,785 in depletion, depreciation, amortization,
and accretion expenses. This compares to lease operating costs of $173,836, professional fees of $149,178, and general and administrative
expenses of $45,450, and $255,475 in depletion, depreciation, amortization and accretion expense during the corresponding period
in 2012. We expect our operating costs to continue to increase in the next 12 months.
Net
Loss
We
incurred a net loss of $410,931 during the six months ended June 30, 2013, compared to a net loss of $357,250 during the
corresponding period in 2012. This translates to a loss per share of $0.01 and $0.00 for the six months ended June 30, 2013 and
2012, respectively.
LIQUIDITY
AND CAPITAL RESOURCES
Since
its inception, the Company has financed its cash requirements from the sale of common stock. Uses of funds have included activities
to establish our business, professional fees and other general and administrative expenses.
The
Company’s principal sources of liquidity as of June 30, 2013 consisted of $3,088 in cash.
We
believe the Company will have adequate resources to implement its strategic objectives in upcoming quarters. Due to our lack of
operating history and present inability to generate revenues, however, our auditors have stated their opinion that there currently
exists substantial doubt about our ability to continue as a going concern.
Material
Events and Uncertainties
Our
operating results are difficult to forecast. Our prospects should be evaluated in light of the risks, expenses and difficulties
commonly encountered by comparable exploration stage companies.
There
can be no assurance that we will successfully address such risks, expenses and difficulties.
On
March 1, 2011, the Company purchased a 100 percent working interest on a 70 percent net revenue interest in certain oil and gas
leases and related well operating equipment in Pratt County, Kansas for $260,000. Of this total, $149,000 was allocated to oil
and gas leases, and the remaining $111,000 was allocated to the purchased well operating equipment. Subsequent to acquiring the
interests in these leases the Company has incurred $23,310 of exploration costs and $60,702 of development costs which have been
capitalized to the value of oil and gas properties.
On
June 11, 2011, the Company purchased a 30 percent working interest on a 24.45 percent net revenue interest in an unproved oil
and gas well located in Cowley County, KS. The Company paid $17,220 for the lease on 640 acres at $85 per acre. Subsequent to
acquiring the interest in these wells the Company incurred an additional $119,350 of exploration costs and $110,531 of development
costs on the property which have been capitalized to the value of oil and gas properties.
On
July 7, 2011, the Company purchased a 20 percent working interest on a 16.41 percent net revenue interest in a proved and producing
oil and gas well located in Cowley County, KS. The Company paid $45,000 to acquire the leases and incurred an additional $26,881
of development costs which were capitalized to the value of oil and gas properties under.
On
September 27, 2011 we purchased at auction two leases with the multiple acquisition of an additional 1040 acres of productive
oil and gas leases. The two leases located in Pratt County, KS consist of six wells with a 100% Working Interest of 82% Net Revenue
Interest. These six wells leases are directly adjacent to our existing leases and will integrate the 6 fields and maximize efficiency
and production. Included in the purchase is a gas compression station which will enhance flows from current operations.
The
purchase price associated with the Pratt County acquisition was $72,500.
On
September 27, 2011, the Company also purchased a 23 percent interest in a net revenue interest ranging from 18.66 to 19.65 percent
in three leases in Barton and Stafford Counties, Kansas for $220,800. The three leases combined contain slightly more than 564
net acres. In total there are seven active wells located in these leases. There are four oil producing wells, two disposal wells
and one injection well. Subsequent to purchase the Company capitalized $2,326 in development costs relating to these leases.”
On
December 19, 2011, the company purchased a 15 percent interest in net revenue interests ranging from 12.675 percent to 13.125
percent in four leases in Cowley County, Kansas for $75,600. The four leases combined contain approximately 720 acres. Subsequent
to purchase the Company capitalized $65,741 in development costs relating to these leases.
On
February 9, 2012, the Company purchased a 30 percent gross working interest and a 26.25 percent net revenue interest in six unproved
oil and gas leases in Cowley County, Kansas for $140,400. The six leases combined contain approximately 1,025 acres. Subsequent
to purchase the company capitalized $1,488 in support equipment and $26,351 in development costs.
On
May 14, 2012 the Company purchased a 35 percent gross working interest and a 28 percent net revenue interest in 98 acres of unproved
oil and gas leases in Stafford County, Kansas for $12,569. Concurrent with this purchase, the Company paid $22,673 in additional
development costs, and $66,181 for support equipment, for an aggregate purchase price of $101,387. As of December 31, 2012, pursuant
to a ceiling test analysis, the Company recognized an impairment expense on these leases in the amount of $6,484.
On
May 14, 2012 the Company purchased a 13 percent gross working interest and a 10 percent net revenue interest in 70 acres of unproved
oil and gas leases in Butler County, Kansas for $17,208. Concurrent with this purchase, the Company paid $27,401 in additional
development costs, and $18,021 for support equipment, for an aggregate purchase price of $62,630. Subsequent to purchase the Company
capitalized $479 in support equipment. As of December 31, 2012, pursuant to a ceiling test analysis, the Company recognized an
impairment expense on these leases in the amount of $7,464.
On
February 5, 2013 the Company sold a 30 percent gross working interest and a 30 percent net revenue interest in six oil and gas
leases located in Pratt County, Kansas for $100,000. This amount is classified as a note receivable at March 31, 2013. Pursuant
to this transaction the Company transferred a 30 percent interest in all related support equipment and asset retirement obligations.
On
July 2, 2013 we plugged the Asmussen 16-2 and on July 13, 2013 drilled the Asmussen 16-3 well.