General form of registration statement for all companies including face-amount certificate companies

Advances payable - related parties / Related Party Operator Agreement

v2.3.0.11
Advances payable - related parties / Related Party Operator Agreement
3 Months Ended 12 Months Ended
Mar. 31, 2012
Dec. 31, 2011
Advances payable - related parties / Related Party Operator Agreement [Abstract]    
Advances payable related parties / Related Party Operator Agreement

9. Related Party Operator Agreement

In connection with the acquisition agreement entered into in the third quarter of 2011, the Company executed an operating agreement whereby DNR that provides for services to operate all of the properties acquired by the Company for a monthly fee of $23,000. The operating agreement expired on March 31, 2012 and renews on a month to month basis. Based on operator costs for the properties prior to the Company’s acquisition, approximately $8,000 per month is included in lease operating expenses and $15,000 per month is included in related party consulting fees in the accompanying unaudited consolidated statements of operations.

5. Advances payable – related parties

The officers and directors of the Company have advanced funds to pay for the filing and other necessary costs of the Company. The following are the advances from the officers and directors:

As of December 31, 2010 and 2011, the Company owed the related parties are unsecured, due on demand, and working capital advances:

 

                 
    2010     2011  

Advances – Donald Prosser (2)

  $ 220,000     $ 20,000  

Advances – Donald Prosser (3)

    4,290       4,100  

Advances – Donald Prosser (1)

    215,000       —    

Advances – Charles Gamber (3)

    4,966       —    

Advances – William Stewart (3)

    20,219       20,219  

Advances – William Stewart (2)

    75,000       25,000  

Advances – Charles Davis (2)

    125,000       —    

Advances – Charles Davis (2)

    40,000       40,000  
   

 

 

   

 

 

 

Balances

  $ 704,475     $ 109,319  
   

 

 

   

 

 

 

 

(1) Donald W. Prosser pledged 215,000 shares of his Common stock to unrelated individuals in exchange for a loan to the Company of $215,000 due in May 2011. The advance was used as working capital.
(2) $460,000 at December 31, 2010 and $85,000 at December 31, 2011 of the advances bear interest at 9.6% per annum.
(3) $29,475 at December 31, 2010 and $24,319 at December 31, 2011 of the advances bear interest at 8.0% per annum.

The Company has related party payables of accrued interest to the officers and directors above of $ 37,121 at December 31, 2011. In addition, the Company owes an entity owned by Charles Davis, DNR Oil & Gas, Inc. The balance owed to DNR Oil & Gas, Inc. as of December 31, 2011 for expenses of $151,748 was included in accounts payable and production to the operator of $416,835 and $576,791 for the oil in tanks at April 1, 2011, also included in accounts payable $250,000 additional consideration is due to DNR for the acquisition. The Company accrued $90,000 for director fees for the second, third, and fourth quarters 2011.