Annual report pursuant to section 13 and 15(d)

Consolidated Statements of Cash Flow (Unaudited)

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Consolidated Statements of Cash Flow (Unaudited) (USD $)
12 Months Ended
Dec. 31, 2011
Dec. 31, 2010
Cash Flows from Operating Activities:    
Net income (loss) $ 495,266 $ (852,612)
Adjustments to reconcile net income (loss) to net cash used in operating activities:    
Depreciation, depletion and amortization 341,033 44,229
Accretion of discount on asset retirement obligations 14,064  
Common stock issued in exchange for services 1,235,973 573,889
Gain on extinguishment of debt (111,690) (121,869)
Gain on sale of oil and gas properties (2,479,934)  
Changes in operating assets and liabilities:    
Accounts receivable (183,979) 9,068
Prepaid expenses and other (122,199)  
Accounts payable (59,397) 110,552
Accrued costs and expenses (2,175) 23,619
Net cash used in operating activities (754,244) (213,124)
Cash Flows from Investing Activities:    
Capital expenditures for oil and gas properties (1,128,810)  
Purchase of furniture and equipment (2,860)  
Net cash used in investing activities (1,131,670)  
Cash Flows from Financing Activities:    
Proceeds from notes and advance payable 2,064,100 215,000
Principal payments on notes payable (5,306,481) (2,650)
Proceeds from sale of common stock 203,500  
Proceeds from sale of preferred stock 5,225,000  
Offering costs related to private placement of preferred stock (96,629)  
Net cash provided by financing activities 2,089,490 212,350
Net increase (decrease) in cash and equivalents 203,576 (774)
Cash and equivalents, beginning of year 15,990 16,764
Cash and equivalents, end of year 219,566 15,990
Supplemental Disclosure of Cash Flow Information:    
Cash paid for interest 319,246 10,848
Cash paid for income taxes 0 0
Supplemental Disclosure of Non-cash Investing and Financing Activities:    
Conversion of notes payable to 897,500 shares of common stock 1,335,000  
Note payable for acquisition of oil and gas properties 10,100,000  
Proceeds from sale of oil and gas property applied to note payable 5,101,047  
Pre-acquisition oil and gas sales applied to note payable 766,728  
Non-interest bearing payable for acquisition of oil and gas properties 576,791  
Asset retirement obligations incurred on acquisition of oil and gas properties $ 639,176