Quarterly report pursuant to Section 13 or 15(d)

Oil and Gas Properties

v2.4.0.8
Oil and Gas Properties
9 Months Ended
Sep. 30, 2014
Oil and Gas Properties

3. Oil and Gas Properties

In December 2013, we sold one of our producing properties, which resulted in gross proceeds of approximately $1,004,000. This property was sold to an unrelated purchaser and pursuant to our amended purchase agreement entered into in September 2013, we were required to pay the related party sellers approximately $554,000 of the proceeds due to their contingent interest and, as a result our net proceeds were $450,000. After deducting the net book value of the property of $163,000, plus the asset retirement obligation assumed by the unrelated purchaser of $31,000, we recognized a gain of approximately $318,000. The Company retained a 1.57% overriding royalty interest in this property. This sale comprised approximately 1.1% of the Company’s barrels of oil equivalent (“BOE”) of oil and gas reserve quantities, and approximately 2.2% of the Company’s discounted future net revenues prior to the sale. The Company determined that this sale did not qualify for discontinued operations reporting.

The Company has participated as a working interest owner in five horizontal wells that have been and are in the process of being drilled in Campbell County and Converse County, Wyoming in the Turner and Shannon zone. The following is a description of the wells:

 

  1) The Thielen #1-21 is in Section 21 Township 43N. This well has been drilled to a total depth of approximately 15,350 including the lateral. The Company will have an approximate 1.06% working interest.

 

  2) The Thielen #2-21 is in Section 21 Township 43N. This well has been drilled to a total depth of approximately 15,330 feet including the lateral. The Company will have an approximate 1.06% working interest.

 

  3) The Starlight Federal 28H is located in Section 7, Township 43N. This well has been drilled to a total depth of approximately 15,310 including the lateral. The Company will have an approximate 0.7025% working interest.

 

  4) The Starlight Federal 30H is located in Section 7, Township 43N. This well is scheduled to be drilled in the fourth of quarter of 2014 and is planned to be drilled to a total depth of approximately 15,310 including the lateral. The Company will have an approximate 0.7025% working interest

 

  5) The Wibaux Gold Federal 4076-10-03-1SH is located in Section 10, Township 40. This well is in the process of being drilled and is expected to be completed to be drilled to a total depth of approximately 20,185 including the lateral. The Company will have an approximate 0.3488% working interest.

 

The Company has received the results on three of the wells and these results have been included in this filing. We do not have results on the other two wells other then the drilling is in process.