U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

☒      Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Quarterly Period Ended March 31,June 30, 2015

☐    Transition  Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition Period from __________ to _________

Commission file number: 001-32624

FieldPoint Petroleum Corporation
(Exact name of small business issuer as specified in its charter)
 
Colorado84-0811034
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)

609 Castle Ridge Road, Suite 335
   Austin, Texas  78746
609 Castle Ridge Road, Suite 335
Austin, Texas  78746
(Address of Principal Executive Offices)   (Zip Code)
 
(512) 579-3560
(512) 579-3560
(Issuer's Telephone Number, Including Area Code)

(former name, address and fiscal year, if changed since last report)
 
(former name, address and fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No☒No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See definition of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act (check one):

Large accelerated filer ☐Accelerated filer ☐
  
Non-accelerated filer ☐ (Do not check if a smaller reporting company)Smaller reporting company ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes ☐ No☒
 
As of May 11,August 10, 2015, the number of shares outstanding of the Registrant's $.01 par value common stock was 8,135,385.8,880,101.
 
PART I – FINANCIAL INFORMATION

Item 1.Financial Statements

FieldPoint Petroleum Corporation

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 
March 31,
2015
  
December 31,
2014
  
June 30,
2015
  
December 31, 2014
 
ASSETSASSETS 
    
CURRENT ASSETS:        
Cash and cash equivalents $1,436,762  $978,145  $1,115,989  $978,145 
Certificates of deposit  -   30,815   -   30,815 
Accounts receivable:                
Oil and natural gas sales  518,305   589,643   644,326   589,643 
Joint interest billings, less allowance for doubtful accounts of approximately $174,000 each period  
289,988
   
309,417
   
282,392
   
309,417
 
Unrealized gain on commodity derivatives  24,000   - 
Prepaid income taxes  352,522   350,486   354,113   350,486 
Deferred income tax asset—current  89,000   98,000   91,000   98,000 
Prepaid expenses and other current assets  78,777   74,032   86,832   74,032 
Total current assets  2,765,354   2,430,538   2,598,652   2,430,538 
                
PROPERTY AND EQUIPMENT:                
Oil and natural gas properties (successful efforts method)  40,954,310   40,873,612   41,033,974   40,873,612 
Other equipment  108,460   108,460   108,460   108,460 
Less accumulated depletion and depreciation  (21,021,781)  (20,514,981)  (21,465,581)  (20,514,981)
Net property and equipment  20,040,989   20,467,091   19,676,853   20,467,091 
                
Total assets $22,806,343  $22,897,629  $22,275,505  $22,897,629 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES AND STOCKHOLDERS’ EQUITY
  
                
CURRENT LIABILITIES:                
Short-term debt$ 7,240,000$-
Accounts payable and accrued expenses $945,946  $546,731   670,585   546,731 
Oil and gas revenues payable  456,049   315,954   448,945   315,954 
Total current liabilities  1,401,995   862,685   8,359,530   862,685 
                
LONG-TERM DEBT  7,240,000   7,240,000   -   7,240,000 
DEFERRED INCOME TAXES  1,824,000   2,064,000   1,718,000   2,064,000 
ASSET RETIREMENT OBLIGATION  1,792,409   1,763,043   1,815,292   1,763,043 
Total liabilities  12,258,404   11,929,728   11,892,822   11,929,728 
                
STOCKHOLDERS’ EQUITY:                
Common stock, $.01 par value, 75,000,000 shares authorized; 9,062,385 and 9,052,385 shares issued, respectively, and 8,135,385 and 8,125,385 outstanding, respectively  
90,623
   
90,523
   
90,623
   
90,523
 
Additional paid-in capital  12,146,179   12,116,487   12,242,095   12,116,487 
Retained earnings  278,029   727,783   16,857   727,783 
Treasury stock, 927,000 shares, each period, at cost  (1,966,892)  (1,966,892)  (1,966,892)  (1,966,892)
Total stockholders’ equity  10,547,939   10,967,901   10,382,683   10,967,901 
Total liabilities and stockholders’ equity $22,806,343  $22,897,629  $22,275,505  $22,897,629 
 
See accompanying notes to these unaudited condensed consolidated financial statements.
 
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FieldPoint Petroleum Corporation

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 
Three Months Ended
March 31,
  
Three Months Ended
June 30,
  
Six Months Ended
June 30,
 
 2015  2014  2015  2014  2015  2014 
REVENUE:            
Oil and natural gas sales $1,090,357  $2,904,215  $1,147,129  $2,367,540  $2,237,486  $5,271,755 
Well operational and pumping fees  1,262   8,950   1,262   17,664   2,524   26,614 
Disposal fees  25,347   -   30,286   13,105   55,633   13,105 
Total revenue  1,116,966   2,913,165   1,178,677   2,398,309   2,295,643   5,311,474 
                        
COSTS AND EXPENSES:                        
Production expense  819,393   979,468   721,370   985,810   1,540,763   1,965,278 
Depletion and depreciation  506,800   825,500   443,800   623,500   950,600   1,449,000 
Exploration expense  15,497   -   -   -   15,497   - 
Accretion of discount on asset retirement obligations  26,000   26,000   
27,000
   
25,000
   
53,000
   
51,000
 
General and administrative  373,327   495,552   283,307   355,982   656,634   851,534 
Total costs and expenses  1,741,017   2,326,520   1,475,477   1,990,292   3,216,494   4,316,812 
                        
OPERATING INCOME (LOSS)  (624,051)  586,645   (296,800)  408,017   (920,851)  994,662 
                        
OTHER INCOME (EXPENSE):                        
Interest income  122   323   104   348   226   671 
Interest expense  (63,445)  (68,452)  (64,434)  (62,784)  (127,879)  (131,236)
Unrealized loss on commodity derivatives  -   (46,209)
Realized gain (loss) on commodity derivative  25,234   (882)  25,234   (882)
Unrealized gain (loss) on commodity derivatives  
24,000
   
6,209
   
24,000
   (40,000)
Warrant modification expense(66,124)-(66,124)-
Miscellaneous  6,620   629   9,258   9,099   15,878   9,728 
Total other expense  (56,703)  (113,709)  (71,962)  (48,010)  (128,665)  (161,719)
                        
INCOME (LOSS) BEFORE INCOME TAXES  (680,754)  472,936   (368,762)  360,007   (1,049,516)  832,943 
                        
INCOME TAX EXPENSE – CURRENT  -   (64,000)  (410)  (12,000)  (410)  (76,000)
INCOME TAX BENEFIT (EXPENSE) – DEFERRED  231,000   (101,000)  108,000   (121,000)  339,000   (222,000)
TOTAL INCOME TAX PROVISION  231,000   (165,000)  107,590   (133,000)  338,590   (298,000)
                        
NET INCOME (LOSS) $(449,754) $307,936  $(261,172) $227,007  $(710,926) $534,943 
                        
EARNINGS PER SHARE:        
EARNINGS (LOSS) PER SHARE:                
BASIC $(0.06) $0.04  $(0.03) $0.03  $(0.09) $0.07 
DILUTED $(0.06) $0.03  $(0.03) $0.02  $(0.09) $0.06 
                        
WEIGHTED AVERAGE SHARES OUTSTANDING:                        
BASIC  8,135,274   8,066,336   8,135,385   8,070,386   8,135,330   8,068,373 
DILUTED  8,135,274   8,953,701   8,135,385   10,042,271   8,135,330   9,551,477 
 
See accompanying notes to these unaudited condensed consolidated financial statements.statements
 
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FieldPoint Petroleum Corporation

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 
For the Three Months Ended
March 31,
  
For the Six Months Ended
June 30,
 
 2015  2014  2015  2014 
        
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net income (loss) $(449,754) $307,936  $(710,926) $534,943 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:                
Unrealized loss on commodity derivatives  -   46,209 
Unrealized (gain) loss on commodity derivatives  (24,000)  40,000 
Depletion and depreciation  506,800   825,500   950,600   1,449,000 
Exploration expense  15,497   -   15,497   - 
Accretion of discount on asset retirement obligations  26,000   26,000   53,000   51,000 
Deferred income tax expense (benefit)  (231,000)  101,000   (339,000)  222,000 
Stock compensation expense  29,792   -   59,584   - 
Warrant modification expense66,124-
Changes in current assets and liabilities:                
Accounts receivable  90,767   (453,016)  (27,658)  (174,416)
Income taxes receivable  (2,036)  50,641   (3,627)  91,283 
Prepaid expenses and other assets  (4,745)  (592,047)  (12,800)  (79,214)
Accounts payable and accrued expenses  380,119   76,305   56,522   592,937 
Oil and gas revenues payable  140,095   (46,395)  132,991   114,529 
Other  30,815   -   30,815   - 
Net cash provided by operating activities  532,350   342,133   247,122   2,842,062 
                
CASH FLOWS FROM INVESTING ACTIVITIES:                
Additions to oil and natural gas properties and other equipment  (73,733)  (1,609,716)  (109,278)  (2,938,140)
Net cash used in investing activities  (73,733)  (1,609,716)  (109,278)  (2,938,140)
                
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from long term debt  -   500,000   -   500,000 
Common stock issued from the exercise of warrants  -   22,259 
Net cash provided by financing activities  -   500,000   -   522,259 
                
NET CHANGE IN CASH AND CASH EQUIVALENTS  458,617   (767,583)  137,844   426,181 
                
CASH AND CASH EQUIVALENTS, beginning of the period
  978,145   2,648,487   978,145   2,648,487 
                
CASH AND CASH EQUIVALENTS, end of the period
 $1,436,762  $1,880,904  $1,115,989  $3,074,668 
                
SUPPLEMENTAL INFORMATION:                
Cash paid during the period for interest $62,444  $64,237  $127,862  $190,847 
Cash paid during the period for income taxes $2,036  $17,752  $4,841  $33,622 
Change in accrued capital expenditures $22,462  $-  $67,332  $1,499,545 

See accompanying notes to these unaudited condensed consolidated financial statements.statements
 
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FieldPoint Petroleum Corporation

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 
1.Nature of Business, Organization and Basis of Preparation and Presentation

FieldPoint Petroleum Corporation (the “Company”, “FieldPoint”, “our”, or “we”) is incorporated under the laws of the state of Colorado.  The Company is engaged in the acquisition, operation and development of oil and natural gas properties, which are located in Louisiana, New Mexico, Oklahoma, Texas, and Wyoming.

The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission.  Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted.  However, in the opinion of management, all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented have been made.  These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Form 10-K filing for the year ended December 31, 2014.

2.Liquidity
As of June 30, 2015, the Company has a working capital deficit of approximately $5,761,000 because we had to reclass our line of credit as a current liability. The line of credit provides for certain financial covenants and ratios measured quarterly which include a current ratio, leverage ratio, and interest coverage ratio requirements.  The Company is out of compliance with our current ratio and our leverage ratio as of June 30, 2015. We are in the process of requesting an amended lending agreement or waiver from Citibank although there can be no assurances that it will be granted.  Unless and until such amendment or waiver is granted, Citibank could require us to pay off the note and we would need to secure alternative financing in the debt or equity market which, may or may not be available. Citibank is in a first lien position on all of our properties. We are current on all interest payments but expect our current borrowing base of $11,000,000 to be lowered. We have a positive net operating cash flow despite a net loss for the six months ended June 30, 2015.
3.Recently Issued Accounting Pronouncements

In February 2015, the FASB issued ASU 2015-02, "Amendments to the Consolidation Analysis," which makes changes to both the variable interest model and the voting model, affecting all reporting entities involved with limited partnerships or similar entities, particularly industries such as the oil and gas, transportation and real estate sectors. In addition to reducing the number of consolidation models from four to two, the guidance simplifies and improves current guidance by placing more emphasis on risk of loss when determining a controlling financial interest and reducing the frequency of the application of related-party guidance when determining a controlling financial interest in a variable interest entity. The requirements of the guidance are effective for annual reporting periods beginning after December 15, 2015, including interim periods within that reporting period, with early adoption permitted. The adoption of ASU 2015-02 is currently not expected to have a material effect on our consolidated financial statements.

In April 2015, the FASB issued ASU 2015-03, "Simplifying the Presentation of Debt Issuance Costs", which requires debt issuance costs to be presented in the balance sheet as a direct deduction from the associated debt liability, consistent with the presentation of a debt discount. The guidance is effective on a retrospective basis for annual periods beginning after December 15, 2015, including interim periods within that reporting period, with early adoption permitted. The adoption of the updated standard is currently not expected to have a material effect on our consolidated financial statements and related disclosures.
3.
Oil and Natural Gas Properties

In January 2014, the Company drilled and completed a successful development well in Lee County, Texas. The net cost to the Company was approximately $1,000,000. No wells were drilled or completed during the three months ended March 31, 2015.
See accompanying notes to these unaudited condensed consolidated financial statements.statements
 
5
4.Oil and Natural Gas Properties
No wells were drilled or completed during the three or six months ended June 30, 2015.

5.Earnings Per Share

Basic earnings per share are computed based on the weighted average number of shares of common stock outstanding during the period.  Diluted earnings per share take common stock equivalents (such as options and warrants) into consideration using the treasury stock method.  The Company had 7,911,726 and 7,960,7757,955,210 warrants outstanding with an exercise price of $4.00 at March 31,June 30, 2015 and 2014, respectively.  The dilutive effect of the warrants for the three and six months ended March 31,June 30, 2015 and 2014 is presented below.

 
For the Three Months Ended
March 31,
  
For the Three Months Ended
June 30,
  
For the Six Months Ended
June 30,
 
 2015  2014  2015  2014  2015  2014 
            
Net income (loss) $(449,754) $307,936  $(261,172) $227,007  $(710,926) $534,943 
                        
Weighted average common stock outstanding  8,135,274   8,066,336   8,135,385   8,070,386   8,135,330   8,068,373 
Weighted average dilutive effect of stock warrants  -   887,365   -   1,971,885   -   1,483,104 
Dilutive weighted average shares  8,135,274   8,953,701   8,135,385   10,042,271   8,135,330   9,551,477 
                        
Earnings (loss) per share:                        
Basic $(0.06) $0.04  $(0.03) $0.03  $(0.09) $0.07 
Diluted $(0.06) $0.03  $(0.03) $0.02  $(0.09) $0.06 

5.6.
Income Taxes
 
For the three and six months ending March 31,June 30, 2015, and 2014, the tax provision is approximately 34%29% and 35%32%, respectively, of book income before tax. The rate for the three months ended March 31,June 30, 2015, differed slightly from the statutory federal and state rates due primarily to permanent differences in book and taxable income related to stock compensationthe warrant modification expense. The rate for the threesix months ended March 31, 2014,June 30, 2015, differed slightly from the statutory federal and state rates due primarily to permanent differences in book and taxable income related to the domestic production activities deduction.warrant modification expense and stock compensation expense. For the three and six months ending June 30, 2014, the tax provision is approximately 37% and 36%, respectively, of book income before tax and approximate the statutory federal and state rates.
 
6
6.7.Related Party Transactions

The Company leased office space from the estate of its former president through January 2014 for $2,500 a month. Beginning February 1, 2014, the Company no longer rents office space from the estate.

During the threesix month period ended March 31,June 30, 2014, the Company paid a relative of a Board member $28,000 for petroleum engineering services. There were no comparable payments during the three and six month periodperiods ended March 31,June 30, 2015.

7.8.
Long-Term Debt

The Company has a line of credit with a bank with a borrowing base of $11,000,000 at March 31, 2015, and December 31, 2014.  The agreementthat requires monthly interest-only payments until maturity on October 18, 2016. The line of credit provides for certain financial covenants and ratios measured quarterly which include a current ratio, leverage ratio, and interest coverage ratio requirements.  The Company was inis out of compliance with financial covenantsour current ratio and our leverage ratio as of March 31,June 30, 2015. We are in the process of requesting an amended lending agreement or waiver from Citibank although there can be no assurances that it will be granted.  Unless and until such amendment or waiver is granted, Citibank could require us to pay off the note and we would need to secure alternative financing in the debt or equity market which, may or may not be available. Citibank is in a first lien position on all of our properties. We are current on all interest payments but expect our current borrowing base of $11,000,000 to be lowered by the bank.
 

6
8.9.Stockholders’ Equity

There were 7,911,726 warrants with an exercise price of $4.00 outstanding at March 31,June 30, 2015. There washave been no warrant activity forwarrants issued or exercised during the period. The weighted average excise price was $4.00.six months ended June 30, 2015. The weighted average expected life was 3.25 years at December 31, 2014, and was 3.002.75 years at March 31,June 30, 2015.

On June 24, 2015, the Board of Directors announced that it had approved a temporary reduction to the exercise price of its publicly traded warrants to $1.00 per share. This is a temporary modification for a period of 33 days commencing at the opening of trading on July 6, 2015, and ending at the close of trading on August 7, 2015. During this period, 734,716 warrants were exercised at a price of $1.00 per share for total proceeds of $734,716. Of this, $452,131 has been received by the Company and the remaining $282,585 is still being processed. Any and all warrants remaining unexercised after August 7, 2015, remain in full force and effect for the duration of their term with the initial exercise price of $4.00 per share.
The fair value of the change in exercise price of the warrants of approximately $66,000 was reported as other expense and increased additional paid in capital during the three and six months ended June 30, 2015. The fair value of the temporary modification of the exercise price was calculated by multiplying the number of warrants actually exercised during the temporary modification period by the change in the value of the warrants immediately before and immediately after the announcement of the reduction in exercise price.
As a signing bonus to his “at will” employment agreement, Phillip Roberson as President and CFO, is entitled to receive a total of 50,000 shares of common stock, of which 10,000 shares were immediately vested. An additional 10,000 shares were received and vested January 1, 2015, and again on July 1, 2015. Ten thousand shares will be received and vested at each of the six month anniversary dates of the commencement date until all are received and vested. The fair value of this stock grant was $275,000 of which $29,792 and $59,584 was recognized as non-cash stock compensation expense during the three and six months ended March 31, 2015.June 30, 2015, respectively. The remaining future expense related to this stock grant is $75,625$45,833 and is expected to be recognized over the weighted average expected life of less than one year.

9.Commodity Derivatives
7

No commodity positions were outstanding at March 31, 2015, or December 31, 2014.

10.Subsequent EventsCommodity Derivatives

On May 13, 2015, the companywe entered into a costless collar hedging agreement with Citibank for 200 barrels ofthe following commodity positions to hedge our oil per day that runs for a term of six monthsproduction price risk, effective from June 1, 2015, to December 31, 2015. No commodity positions were outstanding at December 31, 2014. These positions were outstanding at June 30, 2015:

Period Volume (Barrels)  $/Barrel 
  Daily  Total  Floor  Ceiling 
NYMEX –WTI Collars June 1 – December 2015  200   36,800  $55.00  $70.00 

The following table summarizes the fair value of our open commodity derivatives as of June 30, 2015 with a floorand December 31, 2014:

       Fair Value 
 Balance Sheet June 30,  December 31, 
 Location 2015  2014 
Derivatives not designated as hedging instruments     
 
Commodity derivativesCurrent Assets $24,000  $- 
The following table summarizes the change in fair value of $55 per barrelour commodity derivatives:

     Fair Value 
Income Statement
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
Location2015 2014 2015 2014 
Derivatives not designated as hedging instruments     
      
Unrealized gain (loss) on commodity derivatives
Other Income (Expense)
 $24,000  $6,209  $24,000  $(40,000)
Realized gain (loss) on commodity derivatives  $25,234  $(882) $25,234  $(882)

Unrealized gains and a ceilinglosses, at fair value, are included on our consolidated balance sheets as current or non-current assets or liabilities based on the anticipated timing of $70 per barrel.cash settlements under the related contracts.  Changes in the fair value of our commodity derivative contracts are recorded in earnings as they occur and included in other income (expense) on our consolidated statements of operations.  We estimate the fair values of collar contracts based on the present value of the difference in exchange-quoted forward price curves and contractual settlement prices multiplied by notional quantities.  We internally valued the option contracts using industry-standard option pricing models and observable market inputs.  We use our internal valuations to determine the fair values of the contracts that are reflected on our consolidated balance sheets.  Realized gains and losses are also included in other income (expense) on our consolidated statements of operations.
 
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We are exposed to credit losses in the event of non-performance by the counterparties on our commodity derivatives positions and have considered the exposure in our internal valuations.  However, we do not anticipate non-performance by the counterparties over the term of the commodity derivatives positions. To estimate the fair value of our commodity derivatives positions, we use market data or assumptions that market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique.  These inputs can be readily observable, market corroborated or generally unobservable.  We primarily apply the market approach for recurring fair value measurements and attempt to use the best available information.  We determine the fair value based upon the hierarchy that prioritizes the inputs used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and lowest priority to unobservable inputs (Level 3 measurement).  The three levels of fair value hierarchy are as follows:

·Level 1 – Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. At June 30, 2015, we had no Level 1 measurements.

·Level 2 – Pricing inputs are other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date.  Level 2 includes those financial instruments that are valued using models or other valuation methodologies.  These models are primarily industry-standard models that consider various assumptions, including quoted forward prices for commodities, time value, volatility factors and current market and contractual prices for the underlying instruments, as well as other relevant economic measures.  Our derivatives, which consist of commodity collars, are valued using commodity market data which is derived by combining raw inputs and quantitative models and processes to generate forward curves.  Where observable inputs are available, directly or indirectly, for substantially the full term of the asset or liability, the instrument is categorized in Level 2.  At June 30, 2015, all of our commodity derivatives were valued using Level 2 measurements.

·Level 3 – Pricing inputs include significant inputs that are generally less observable from objective sources.  These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.  At June 30, 2015, we had no Level 3 measurements.
9
PART I
Item 2.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 2.  MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the Company’s Condensed Consolidated Financial Statements, and respective notes thereto, included elsewhere herein.  The information below should not be construed to imply that the results discussed herein will necessarily continue into the future or that any conclusion reached herein will necessarily be indicative of actual operating results in the future.  Such discussion represents only the best present assessment of the management of FieldPoint Petroleum Corporation.

General

FieldPoint Petroleum Corporation derives its revenues from its operating activities including sales of oil and natural gas and operating oil and natural gas properties.  The Company's capital for investment in producing oil and natural gas properties has been provided by cash flow from operating activities and from bank financing. The Company categorizes its operating expenses into the categories of production expenses and other expenses.

The Company completed drilling the Ranger 8A-1H well in the Taylor Serbin field in Texas.Texas in 2014. Production began February 1, 2014. The Company completed drilling the Ranger 11A-1H well in the Taylor Serbin field in Texas.Texas in 2014. Production began May 20, 2014.

In July 2014, the Company completed the Ranger 8A-2H and the Ranger 8A3-3H in Lee County, Texas. The Company has a 25% working interest and 18.75% net revenue interest in each well.  The net cost to drill and complete the wells was approximately $850,000 per well. The wells were successfully completed and are in production.

The Company has temporarily suspended drilling and exploration activities due to low commodity prices and has no plans at this time to drill a fourth well in the East Lusk field in New Mexico or continue development of the Taylor Serbin field.  Furthermore, we plan to limit any remedial work that does not increase production and reduce general and administrative costs as much as possible until commodity pricing improves. As we are out of compliance with our revolving line of credit and may have our borrowing base decreased, we do not expect to reinstate our drilling programs until commodity prices and our cash flow improve.

Results of Operations

Comparison of three months ended March 31,June 30, 2015, to the three months ended March 31,June 30, 2014

  Quarter Ended March 31, 
  2015  2014 
Revenue:    
Oil sales $993,998  $2,605,280 
Natural gas sales  96,359   298,935 
Total oil and natural gas sales $1,090,357  $2,904,215 
         
Sales volumes:        
Oil (Bbls)  21,694   28,009 
Natural gas (Mcf)  34,333   44,483 
Total (BOE)  27,417   35,423 
         
Average sales prices:        
Oil ($/Bbl) $45.82  $93.02 
Natural gas ($/Mcf)  2.81   6.72 
Total ($/BOE) $39.77  $81.99 
 
Costs and expenses ($/BOE)
    
Lease operating expense (lifting costs) $29.89  $27.65 
Depletion and depreciation  18.48   23.30 
Exploration expense  0.56   - 
Accretion of discount on asset retirement obligations  0.95   0.74 
General and administrative  13.62   13.99 
Total $63.50  $65.68 
  Quarter Ended June 30, 
  2015  2014 
Revenue:    
Oil sales $1,064,687  $2,184,142 
Natural gas sales  82,442   183,398 
Total oil and natural gas sales $1,147,129  $2,367,540 
         
Sales volumes:        
Oil (Bbls)  20,074   23,551 
Natural gas (Mcf)  28,549   43,151 
Total (BOE)  24,832   30,743 
Average sales prices:        
Oil ($/Bbl) $53.04  $92.74 
Natural gas ($/Mcf)  2.89   4.25 
Total ($/BOE) $46.20  $77.01 
         
Costs and expenses ($/BOE)
        
Lease operating expense (lifting costs) $29.05  $32.07 
Depletion and depreciation  17.87   20.28 
Exploration expense  -   - 
Accretion of discount on asset retirement obligations  1.09   0.81 
General and administrative  11.41   11.58 
Total $59.42  $64.74 
 
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Oil and natural gas sales revenues decreased 62%52% or $1,813,858$1,220,411 to $1,090,357$1,147,129 for the three-month period ended March 31,June 30, 2015, from the comparable 2014 period.  Average oil sales prices decreased 51%43% to $45.82$53.04 for the three-month period ended March 31,June 30, 2015, compared to $93.02$92.74 for the period ended March 31,June 30, 2014.  Average natural gas sales prices decreased to $2.81$2.89 for the three-month period ended March 31,June 30, 2015, compared to $6.72$4.25 for the period ended March 31,June 30, 2014.  Decreased oil and natural gas production accounted for a decrease in revenue of approximately $656,000.$384,000. Lower commodity prices for oil and natural gas account for a decrease in revenue of approximately $1,158,000.$836,000. We have temporarily suspended drilling and exploration activity due to low commodity prices and expect our volumes to decline in the coming quarters until drilling and exploration activities are re-established.

Lease operating expenses decreased 16%27% or $160,075$264,440 to $819,393$721,370 for the three month period ended March 31,June 30, 2015, from the comparable 2014 period.  This was primarily due to decreased production volumes.a decrease in non-critical workover activity.  Lifting costs per BOE increased $2.24decreased $3.02 to $29.89$29.05 for the 2015 period compared to $27.65$32.07 for the three months ended March 31,June 30, 2014, due mainly to remedial work that did not increase production but was necessary to keep our older leasesless workover activity and general decrease in compliance with statecosts and federal laws.lease operating expenses. We anticipate lease operating expenses to remain stable over the following quarters due to a cessation of new well activity as a result of low commodity pricing.

Depletion and depreciation decreased 39%29% or $318,700$179,700 to $506,800$443,800 for the three month period ended March 31,June 30, 2015, versus $825,500$623,500 in the 2014 comparable period.  This was primarily due to lower production volumes during the three months ended March 31,June 30, 2015.

General and administrative overhead cost decreased 25%20% or $122,225$72,675 to $373,327$283,307 for the three-month period ended March 31,June 30, 2015, from the three-month period ended March 31,June 30, 2014. This was primarily attributable to a decrease in Boardboard fees, consulting and professional services. At this time, the Company anticipates general and administrative expenses to remain stable or decrease slightly in the coming quarters.

Other expenses, net for the quarter ended March 31,June 30, 2015, were $56,703$71,962 compared to other expense, net of $113,709$48,010 for the quarter ended March 31,June 30, 2014.  The net increase in other expense was primarily due to the warrant modification expense of $66,124 offset by a realized gain on commodity derivatives of $25,234 and an unrealized gain on commodity derivatives of $24,000 in the three months ended June 30, 2015.
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Results of Operations

Comparison of Six Months Ended June 30, 2015 to the Six Months Ended June 30, 2014

  Six Months Ended June 30, 
  2015  2014 
Revenues:    
Oil sales $2,058,684  $4,789,422 
Natural gas sales  178,802   482,333 
Total $2,237,486  $5,271,755 
         
Sales volumes:        
Oil (Bbls)  41,768   51,560 
Natural gas (Mcf)  62,882   87,634 
Total (BOE)  52,248   66,166 
         
Average sales prices        
Oil ($/Bbl) $49.29  $92.89 
Natural gas ($/Mcf)  2.84   5.50 
Total ($/BOE) $42.82  $79.68 
Costs and expenses ($/BOE)        
Lease operating expense $29.49  $29.70 
Depletion and depreciation  18.19   21.90 
Exploration expense  0.30   - 
Accretion of discount on asset retirement obligations  1.01   0.77 
General and administrative  12.57   12.87 
Total $61.56  $65.24 

Oil and natural gas sales revenues decreased 58% or $3,034,269 to $2,237,486 for the six month period ended June 30, 2015, from $5,271,755 for the comparable 2014 period. An overall decrease in oil and natural gas production accounted for a decrease in revenue of approximately $1,046,000 while a decrease in oil and natural gas commodity prices decreased revenue by approximately $1,988,000. Sales volumes decreased 21% on a BOE basis primarily due to production depletion which was not replaced due to a cessation of drilling activity. Average oil sales prices decreased $43.60 to $49.29 for the six month period ended June 30, 2015, compared to $92.89 for the six month period ended June 30, 2014.  Average natural gas sales prices decreased 48% to $2.84 for the six month period ended June 30, 2015, compared to $5.50 for the six month period ended June 30, 2014.  We anticipate volumes to decrease in the coming quarters primarily due to suspension of drilling and exploration activity due to low commodity prices and expect our volumes to decline in the coming quarters until drilling and exploration activities are re-established.

Lease operating expenses decreased 22% or $424,515 to $1,540,763 for the six month period ended June 30, 2015, from the comparable 2014 period.  This was primarily due to a $46,209general decrease in workover and remedial activity and generally lower costs and lease operating expenses.   Lifting costs per BOE decreased 1%, from $29.70 to $29.49 for the 2015 period.  We anticipate lease operating expenses to remain stable over the following quarters due to a continued decrease of workover and remedial activity.
Depletion and depreciation expense decreased 34% to $950,600, compared to $1,449,000 for the comparable 2014 period.  This was primarily due to a decrease in production.

General and administrative overhead cost decreased 23% or $194,900 to $656,634 for the six month period ended June 30, 2015, from the six month period ended June 30, 2014.  This was attributable primarily to a decrease in salary expenses, board fees, and professional services.  In the coming quarters we anticipate general and administrative expenses to remain stable or decrease slightly.
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Other expense, net for the six months ended June 30, 2015, amounted to $128,665 compared to other expense, net of $161,719 for the comparable 2014 period.  A realized gain of $25,234 and an unrealized lossgain of $24,000 on commodity derivatives inwas reported during the threesix month period ended June 30, 2015. Warrant modification expense of $66,124 was reported during the six months period ended March 31, 2014.June 30, 2015. An unrealized loss $40,000 on commodity derivatives was reported during the 2014 period.

Liquidity and Capital Resources

Cash flow provided by operating activities was $532,350$247,122 for the threesix month period ended March 31,June 30, 2015, as compared to $342,133$2,842,062 of cash flow provided by operating activities in the comparable 2014 period.  The increasedecrease in cash flows from operating activities was primarily due to lower net income and depletion, a deferred tax benefit and changes in accounts payable, accounts receivable and prepaid expenses offset by lower net income, depletion, and deferred tax benefit.payable.

Cash flow used in investing activities was $73,733$109,278 for the threesix month period ended March 31,June 30, 2015, and $1,609,716$2,938,140 in the comparable 2014 period due to fewer additions to oil and natural gas properties and equipment in the current period.
9

No cash flow was provided by financing activities for the threesix month period ended March 31,June 30, 2015. Cash flow provided by financing activities for the threesix month period ended March 31,June 30, 2014 wasincluded $500,000 from the draw on our line of credit.credit plus $22,259 from the exercise of 5,565 of our outstanding publicly traded common stock purchase warrants at an exercise price of $4.00 per share.

We may continue to access capital through draws from our lineare out of credit which has a borrowing base of $11,000,000 at March 31, 2015.  The next redetermination date is September 30, 2015. However, we are required to maintain certain minimum leverage ratios to be in compliance with our bank covenantscurrent ratio and our leverage ratio required by our line of credit.  If we violated anycredit as of these covenantsJune 30, 2015. We are in the process of requesting an amended lending agreement or waiver from Citibank although there can be no assurances that it will be granted.  Unless and until such amendment or waiver is granted, Citibank could require us to pay off the note and we would need to request Citibank to amend our lending agreement, or secure alternative financing in the debt or equity markets,market which, may or may not be available. BasedCitibank is in a first lien position on industry outlookall of our properties. We are current on all interest payments but expect our current borrowing base of $11,000,000 to be lowered by the lender. We have a positive net operating cash flow for the remainderyear despite an earnings loss.
Subsequent Events

Under the temporary reduction to the exercise price of 2015, prices for oilits publicly traded warrants as described in “Note 9 – Stockholder’s Equity”, 734,716 warrants were exercised at a price of $1.00 per share between July 6 and gas may continueAugust 7, 2015. The Company has received $432,151 of the total proceeds of $734,716 as of August 12, 2015. The uncollected balance of $282,585 is still being processed but is expected to be lower than the comparable period in 2014 and at our current run rate we may break a borrowing covenant in the next quarter.received shortly.
 
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PART I
Item 3.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We periodically enter into certain commodity price risk management transactions to manage our exposure to oil and natural gas price volatility.  These transactions may take the form of futures contracts, swaps or options.  All data relating to our derivative positions is presented in accordance with authoritative guidance.  Accordingly, unrealized gains and losses related to the change in fair value of derivative contracts that qualify and are designated as cash flow hedges are recorded as other comprehensive income or loss and such amounts are reclassified to oil and natural gas sales revenues as the associated production occurs.  Derivative contracts that do not qualify for hedge accounting treatment are recorded as derivative assets and liabilities at fair value in the consolidated balance sheet, and the associated unrealized gains and losses are recorded as current expense or income in the consolidated statement of operations.  While such derivative contracts do not qualify for hedge accounting, management believes these contracts can be utilized as an effective component of commodity price risk management activities.  On May 13, 2015, we entered into a commodity derivative position effective June 1, 2015. The collars have a floor of $55.00 per barrel and a ceiling of $70.00 for 200 barrels of oil per day from June 1, 2015, to December 31, 2015. We had a realized gain of $25,234 and a net unrealized gain of $24,000 on commodity derivative transactions during the six month period ending June 30, 2015. On March 27, 2014, we entered into a commodity derivative position effective April 1, 2014. The collars had a floor of $87.50 and a ceiling of $105.00 for 200 barrels of oil per day from April 1, 2014, to September 30, 2014. We had a realized loss of $882 and a net unrealized loss of $46,209$40,000 on commodity derivative transactions during the threesix month period ending March 31,June 30, 2014. There were no commodity positions open at March 31, 2015.

PART I
Item 4.CONTROLS AND PROCEDURES

a)Disclosure Controls and Procedures

Our Principal Executive Officer, Roger D. Bryant, and our Principal Financial Officer, Phillip H. Roberson, have established and are currently maintaining disclosure controls and procedures for the Company.  The disclosure controls and procedures have been designed to provide reasonable assurance that the information required to be disclosed by the Company in reports that it files under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed by the Company is accumulated and communicated to the Company's management as appropriate to allow timely decisions regarding required disclosure.

The Principal Executive Officer and the Principal Financial Officer conducted a review and evaluation of the effectiveness of the Company’s disclosure controls and procedures and have concluded, based on their evaluation as of the end of the period covered by this Report, that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC and to ensure that information required to be disclosed by the Company is accumulated and communicated to management, including our principal executive officer and our principal financial officer, to allow timely decisions regarding required disclosure and we refer you to Exchange Act Rule 13a-15(e).

b)Changes in Internal Control over Financial Reporting

There have been no changes to the Company’s system of internal controls over financial reporting during the quarter ended March 31,June 30, 2015, that have materially affected, or are reasonably likely to materially affect, the Company’s system of controls over financial reporting.  As part of a continuing effort to improve the Company’s business processes, management is evaluating its internal controls and may update certain controls to accommodate any modifications to its business processes or accounting procedures.
 
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c)Limitations of Any Internal Control Design

Our principal executive and financial officers do not expect that our disclosure controls or internal controls will prevent all error and all fraud.  Although our disclosure controls and procedures were designed to provide reasonable assurance of achieving their objectives and our principal executive and financial officers have determined that our disclosure controls and procedures are effective at doing so, a control system, no matter how well conceived and operated, can provide only reasonable, not absolute assurance that the objectives of the system are met.  Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs.  Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected.  These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake.  Additionally, controls can be circumvented if there exists in an individual a desire to do so.  There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
 
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PART II

OTHER INFORMATION

Item 1.  Legal Proceedings

None.

Item 1A.  Risk Factors

None.

Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3.  Default Upon Senior Securities

None.

Item 4.  Mine Safety Disclosures

None.

Item 5.  Other Information

None.

Item 6.  Exhibits

Exhibits 
 
31.1
Certifications of Chief Executive Officer
31.2
Certifications of Chief Financial Officer
32.1
Certification of Chief Executive Officer Pursuant to U.S.C. Section 1350
32.2
Certification of Chief Financial Officer Pursuant to U.S.C. Section 1350
101.INSXBRL Instance Document
101.SCHXBRL Schema Document
101.CALXBRL Calculation Linkbase Document
101.LABXBRL Label Linkbase Document
101.PREXBRL Presentation Linkbase Document
101.DEFXBRL Definition Linkbase Document
 
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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date:
MayAugust 14, 2015
By:   
/s/ Roger D. Bryant
 Roger D. Bryant, Principal Executive Officer

Date:
MayAugust 14, 2015
By:
/s/ Phillip H. Roberson
 Phillip H. Roberson, Principal Financial Officer
 
 
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