Quarterly report pursuant to Section 13 or 15(d)

CONSOLIDATED BALANCE SHEETS

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CONSOLIDATED BALANCE SHEETS (USD $)
Sep. 30, 2014
Dec. 31, 2013
Current Assets:    
Cash and equivalents $ 2,920 $ 476,323
Receivable from DNR Oil & Gas, Inc.:    
Oil and gas sales, net of production costs 383,746 230,029
Other 108,574 2,368
Prepaid expenses and other 45,391 38,177
Total Current Assets 540,631 746,897
Oil and gas properties, at cost, successful efforts method:    
Proved properties 10,041,921 9,555,897
Unevaluated properties 314,336 314,336
Natural gas gathering system 442,195 442,195
Furniture and equipment 22,522 22,522
Total property and equipment 10,820,974 10,334,950
Less accumulated depreciation, depletion and amortization (2,580,398) (2,094,337)
Net Property and Equipment 8,240,576 8,240,613
TOTAL ASSETS 8,781,207 8,987,510
Payable to DNR Oil & Gas, Inc.:    
Operator fees and other 36,000 36,000
Unrelated parties 100,874 17,806
Notes and advances payable - current portion:    
Directors and affiliates 296,033 717,833
Unrelated parties 933,105 325,000
Accrued interest expense 20,507 52,242
Accrued consulting - related party 8,750  
Director fees payable in common stock 10,900 450
Current portion of asset retirement obligations 154,398 159,782
Other accrued costs and expenses 98,125 57,210
Total Current Liabilities 1,658,692 1,366,323
Long-Term Liabilities:    
Contingent acquisition costs payable to DNR Oil & Gas, Inc. 250,000 250,000
Notes and advances payable, net of current portion:    
DNR Oil & Gas, Inc. 792,151 792,151
Directors and affiliates 102,714 246,639
Unrelated parties 31,000 425,000
Asset retirement obligations, net of current portion 541,267 522,421
Total Long-Term Liabilities 1,717,132 2,236,211
Total Liabilities 3,375,824 3,602,534
Commitments and Contingencies     
Stockholders' Equity:    
Common stock, no par value; authorized 499,000,000 shares, issued and outstanding 13,608,459 in 2013 and 12,408,459 in 2014 21,260,387 21,488,387
Accumulated deficit (15,855,004) (16,198,862)
Total Stockholders' Equity 5,405,383 5,384,976
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY 8,781,207 8,987,510
Preferred Stock Series A1
   
Stockholders' Equity:    
Convertible Class A preferred stock; $10,000 face value per share, authorized 1,000,000 shares:   95,451
Preferred Stock Series A2
   
Stockholders' Equity:    
Convertible Class A preferred stock; $10,000 face value per share, authorized 1,000,000 shares: