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 ☐

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, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and "emerging growth company" in Rule 12b-2 of the Exchange Act. (Check one):

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided ~~pursuant~~pursuance to Section 13(a) of the Exchange Act. ☐

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, 2017, the number of shares outstanding of the Registrant's $.01 par value common stock was ~~10,669,229.~~10,674,229.

Item 1. Financial Statements

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, 2016.

Our condensed consolidated financial statements for the ~~three~~six months ended ~~March 31,~~June 30, 2017 and 2016, were prepared assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. Continued low oil and natural gas prices during 2016 and 2017 have had a significant adverse impact on our business, and as a result of our financial condition, substantial doubt exists that we will be able to continue as a going concern.

As of ~~March 31,~~June 30, 2017, and December 31, 2016, the Company has a working capital deficit of approximately ~~$6,761,000~~$4,732,000 and $6,629,000, respectively, primarily due to the classification of 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 all three ratios as of ~~March 31,~~June 30, 2017, and we do not expect to regain compliance in 2017. A Forbearance Agreement was executed in October 2016 as discussed below.

Citibank is in a first lien position on all our properties. We are current on all interest payments but Citibank lowered our borrowing base from $11,000,000 to $5,500,000 on December 1, 2015. AsDuring the three months ended June 30, 2017, the Company sold non-producing and non-economic assets in Lea County, New Mexico, and used $2,115,000 of ~~March 31, 2017,~~the proceeds to pay toward the principal balance of our line of credit to cure our borrowing base deficiency. Our loan balance is ~~$6,478,333 and our borrowing base deficiency is $978,333.~~$4,363,333 as of June 30, 2017.

In October 2016, we executed a sixth amendment to the original loan agreement, which provides for Citibank’s forbearance from exercising remedies relating to the current defaults including the principal payment deficiencies. The Forbearance Agreement runs through January 1, 2018, and requires that we make a $500,000 loan principal pay down by September 30, 2017, and adhere to other requirements including weekly cash balance reports, quarterly operating reports, monthly accounts payable reports and that we pay all associated legal expenses. Furthermore, under the agreement Citibank may sweep any excess cash balances exceeding a net amount of $800,000 less equity offering proceeds, which will be applied towards the outstanding principal balance. The Company paid $2,115,000 toward the principal balance in June 2017.

To mitigate our current financial situation, we are taking the following steps. We are actively meeting with investors for possible equity investments, including business combinations. We filed a new shelf registration statement on Form S-3 that was effective August 15, 2016, to permit the future sale of equity securities, including a limited at the market (ATM) capital raise. The shelf registration statement will be effective for a period of three years from its effective date; provided, however, if the Company’s common stock is delisted from the NYSE ~~MKT~~American (formerly NYSE MKT) due to its non-compliance with continued listing requirements (see disclosures below), the Company will no longer be eligible to use Form S-3 and will be required to withdraw its shelf registration statement. We are investigating other sources of capital.

On August 12, 2016, the Company entered into a binding Stock and Mineral Purchase Agreement (the “SMPA”) with HFT Enterprises, LLC (the “Buyer”), to provide liquidity to the Company. The Buyer purchased newly-issued shares of common stock of the Company equal to 19.9% of the total number of issued and outstanding shares of the Company, as measured on the date of the Agreement, for a price of $0.45 per share (the shares to be purchased, the “Shares”). In November 2016, the Buyer purchased for gross proceeds of $398,053 paid in consideration of 884,564 shares of unregistered common stock. In December 2016, the Buyer purchased for gross proceeds of $199,027 paid in consideration of 442,282 shares of unregistered common stock. The remaining 442,282 shares of the second tranche were purchased in January 2017 for gross proceeds of $199,027 paid in consideration of 442,282 shares of unregistered common stock. Euro Pacific Capital, Inc. acted as the placement agent and garnered a fee of 5%.

The SMPA also granted to the Buyer, a related party after the purchase of the stock discussed above, the right to purchase an undivided 100% working interest on or before December 31, 2016, in the Company’s Elkhorn and JC Kinney leases in the Big Muddy Oil Field in Converse County, Wyoming for a purchase price of $430,000. The SMPA was amended on January 9, 2017, to add the right to the Buyer to purchase an undivided 100% of working interest in the mineral lease covering the Quinoco Sulimar Field in Chaves County, New Mexico, in lieu of the Wyoming property, for a purchase price to be determined. Additionally, it extended the purchase date of either property to on or before April 1, 2017. The Board of Directors voted March 24, 2017, to extend the agreement for the Quinoco Sulimar Field only to June 30, 2017. The agreement has been verbally extended to August 31, 2017. As a condition of the purchase, all proceeds from the sale of the working interest must be used to pay down the Company’s indebtedness owed to Citibank. Other conditions include the requirement that Citibank will have agreed to extend the maturity date on the Company’s current indebtedness owed until December 31, 2017, which was accomplished in the Forbearance Agreement discussed above. Also, the Buyer has been granted the right to nominate one member of the Board of Directors.

On May 11, 2016, the Company received notification from the NYSE ~~MKT~~American (formerly NYSE MKT) that it was noncompliant with the NYSE ~~MKT~~American (formerly NYSE MKT) continued listing standards; specifically, Section 1003(a)(i) of the Company Guide related to financial impairment. The Company’s stockholders’ equity is below the $2.0 million threshold required for listed companies that have reported losses from continuing operations in two of its three most recently completed fiscal years. The Company submitted a plan to regain compliance; whereupon NYSE Regulation reviewed the plan and determined to accept it, as supplemented, and granted a plan period through November 13, 2017, to regain compliance, the targeted completion date. NYSE Regulation staff will review the Company periodically for compliance with the initiatives outlined in the plan.

Additionally, on April 28, 2017, the Company received notification from the NYSE ~~MKT~~American (formerly NYSE MKT) that it was noncompliant with the NYSE ~~MKT~~American (formerly NYSE MKT) continued listing standards; specifically, Section 1003(a)(ii) of the Company Guide. The Company’s stockholders’ equity has been below the $2.0 million threshold required for listed companies that have reported losses from continuing operations in two of its three most recently completed fiscal years (Section 1003(a)(i)) and is now below the $4.0 million threshold required for listed companies that have reported losses from continuing operations in three of its four most recent fiscal years (Section 1003(a)(ii)). The Company ~~is now required~~was given the opportunity to and submitted a supplement to the ~~plan no later than May 30, 2017~~Plan to address how it intends to regain compliance with Section 1003(a)(ii). IfThe Plan period to regain compliance with all of the ~~supplemented plan is accepted,~~continued listing standards by November 13, 2017, remain the same. The Company ~~may be able to continue its listing but~~ will be subject to periodic reviews by the Exchange. If ~~the supplemented plan is not accepted or if it is accepted but~~ the Company is not in compliance with the continued listing standards by November 13, 2017, or if the Company does not make progress consistent with the Plan, the Exchange will initiate delisting procedures as appropriate. If our initiatives to regain compliance are not successful and the Company is delisted from the NYSE ~~MKT,~~American (formerly NYSE MKT), it could have a significant adverse impact on our ability to raise additional capital.

Our warrants listed on the NYSE ~~MKT~~American (formerly NYSE MKT) as FPP WS expire March 23, 2018. If the warrants trade at sub-penny before that date, the NYSE will immediately suspend and move to delist the warrants.

Our ability to continue as a “going concern” is dependent on many factors, including, among other things, our ability to comply with the covenants in our existing debt agreements, our ability to cure any defaults that occur under our debt agreements or to obtain waivers or forbearances with respect to any such defaults, and our ability to pay, retire, amend, replace or refinance our indebtedness as defaults occur or as interest and principal payments come due. Our ability to continue as a going concern is also dependent on raising additional capital to fund our operations and ultimately on generating future profitable operations. While we are actively involved in seeking new sources of working capital, there can be no assurance that we will be able to raise sufficient additional capital or to have positive cash flow from operations to address all of our cash flow needs. Additional capital could be on terms that are highly dilutive to our shareholders. If we are not able to find alternative sources of cash or generate positive cash flow from operations, our business and shareholders may be materially and adversely affected.

In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers”. Under this new standard, revenue is recognized at the time goods or services are transferred to a customer for the amount of consideration the entity expects to be entitled in exchange for the specific goods or services. Additional disclosures will be required to describe the nature, amount, timing, and uncertainty of revenue and cash flows from contracts with customers. The Company currently follows the sales method of accounting for oil, NGL and natural gas production, which is generally consistent with the revenue recognition provision of the new standard. However, we are currently evaluating the impact, if any, that this standard will have on our consolidated financial statements. Our evaluation process includes (i) review of revenue contracts and transactions and (ii) assessing the impact this guidance will have on our processes and internal controls. This evaluation will continue throughout 2017, and we are currently planning to adopt this new standard January 1, 2018.

In February 2016, the FASB issued Update No. 2016-02, ~~– Leases~~“Leases”, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This authoritative guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company is currently evaluating the provisions of this guidance and assessing its impact in relation to the Company's leases.

In November 2016, the FASB issued Accounting Standards Update No. 2016-18, “Statement of Cash Flows: Restricted Cash”, to require amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for the annual period ending after December 15, 2017, and interim periods within those fiscal years, using a retrospective transition method to each period presented. The Company plans to adopt the new standard December 31, 2017, and does not expect any impact on our consolidated statement of cash flows.

No wells were drilled or completed during the three or six months ended ~~March 31,~~June 30, 2017 or 2016.

In the three months ended June 30, 2017, the Company sold its net interest in the Hermes, Cronos and Mercury wells. These wells were not economic to our interests. We also sold our net interest in the unproved Bilbrey acreage that was held by production. The gross proceeds from the sale of our net interest in these properties was $2,145,000 and we recognized a gain of $2,030,477. We continue to evaluate our portfolio for other properties to divest in order to regain compliance with our bank’s debt covenants and with the NYSE American (formerly NYSE MKT).

On a quarterly basis, the Company compares our most recent engineering reports to ~~current~~forward strip pricing as of the end of the quarter and production to determine impairment charges, if needed, in order to write down the carrying value of certain properties to fair value. In order to determine the amounts of the impairment charges, the Company compares net capitalized costs of proved oil and natural gas properties to estimated undiscounted future net cash flows using management's expectations of economically recoverable proved reserves. If the net capitalized cost exceeds the undiscounted future net cash flows, the Company impairs the net cost basis down to the discounted future net cash flows, which is management's estimate of fair value. In order to determine the fair value, the Company estimates reserves, future operating and development costs, future commodity prices and a discounted cash flow model utilizing a 10 percent discount rate. The estimates used by management for the fair value measurements utilized in this review include significant unobservable inputs, and therefore, the fair value measurements are classified as Level 3 of the fair value hierarchy. Based on its current circumstances, the Company has not recorded any impairment charges during the three or six months ended ~~March 31,~~June 30, 2017.

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 7,177,010 warrants outstanding with an exercise price of $4.00 at ~~March 31,~~June 30, 2017 and 2016. The dilutive effect of the warrants for the three months ended ~~March 31,~~June 30, 2017 and 2016, is presented below.

For the three and six months ended ~~March 31,~~June 30, 2017 and 2016, the Company’s deferred tax assets were reduced in full by a valuation allowance due to our determination that it is more likely than not that some or all of the deferred tax assets will not be realized in the future. As a result, the Company has not recognized an income tax benefit associated with its net loss for the three or six months ended ~~March 31,~~June 30, 2016. For the three and six months ended June 30, 2017, the Company recognized $3,846 in state income tax expense, which is less than 1% income tax rate. This rate differs from the statutory federal and state rate due to net operating losses from prior years. The Company had no income tax expense for the three or six months ended June 30, 2016.

The Company has a line of credit with a bank with a borrowing base of $5,500,000 at ~~March 31,~~June 30, 2017, and December 31, 2016. The amount outstanding under this line of credit was $6,478,333 which is $978,333 over the borrowing base at ~~March 31, 2017, and~~ December 31, 2016. ~~The Company’s plans~~During the three months ended June 30, 2017, the company sold non-producing and non-economic assets in Lea County, New Mexico, and used $2,115,000 of the proceeds to pay toward the principal balance of our line of credit to cure ~~the~~our borrowing base ~~deficiency are discussed~~deficiency. Our loan balance is $4,363,333 as of June 30, 2017. Although our borrowing base is $5,500,000, we cannot draw additional amounts on the line of credit while we remain in ~~Note 2 - Liquidity and Going Concern.~~technical default on the loan. We plan to continue evaluating our portfolio for non-producing assets which can be liquidated to reduce debt further.

The sixth amendment to the original loan agreement requires quarterly interest-only payments until maturity on January 1, 2018. The interest rate is based on a LIBOR or Prime option. The Prime option provides for the interest rate to be prime plus a margin ranging between 1.75% and 2.25% and the LIBOR option to be the 3-month LIBOR rate plus a margin ranging between 2.75% and 3.25%, both depending on the borrowing base usage. Currently, we have elected the LIBOR interest rate option in which our interest rate was approximately 4% as of ~~March 31,~~June 30, 2017, and December 31, 2016, respectively. The commitment fee is .50% of the unused borrowing base. Citibank is in a first lien position on all our properties and assets.

The line of credit provides for certain financial covenants and ratios which include a current ratio that cannot be less than 1.10:1.00, a leverage ratio that cannot be more than 3.50:1.00, and an interest coverage ratio that cannot be less than 3.50:1.00. The Company is out of compliance with all three ratios as of ~~March 31,~~June 30, 2017, and December 31, 2016, and is in technical default of the agreement.

In October 2016, we executed a sixth amendment to the original loan agreement, which provides for Citibank’s forbearance from exercising remedies relating to the current defaults including the principal payment deficiencies. The Forbearance Agreement runs through January 1, 2018, and requires that we make a $500,000 loan principal pay down by September 30, 2017, and adhere to other requirements including weekly cash balance reports, quarterly operating reports, monthly accounts payable reports and that we pay all associated legal expenses. Furthermore, under the agreement Citibank may sweep any excess cash balances exceeding a net amount of $800,000 less equity offering proceeds, which will be applied towards the outstanding principal balance.
The Company paid $2,115,000 toward the principal balance in June 2017.

There were 7,177,010 warrants with an exercise price of $4.00 outstanding at ~~March 31,~~June 30, 2017. There have been no warrants issued or exercised during the three and six months ended ~~March 31,~~June 30, 2017. The weighted average expected life of the warrants was ~~1.00~~less than one year at ~~March 31,~~June 30, 2017.

As a signing bonus to his “at will” employment agreement, Phillip Roberson, as President and CFO, received a total of 50,000 shares of common stock ~~of which 10,000 shares were immediately~~that vested ~~in 2014 and 20,000 shares vested in 2015. An additional~~over a three year period beginning on July 1, 2014. On January 1, 2016, 10,000 shares were vested and ~~issued on January 1, 2016.~~issued. The ~~remaining~~final 10,000 shares vested at the last six-month anniversary date on July 1, 2016. The fair value of this stock grant was $275,000 on July 1, 2014, of which $13,750 was recognized as non-cash stock compensation expense during the ~~three~~six months ended ~~March 31, 2016. The signing bonus grant was fully vested on July 1,~~June 30, 2016. Mr. Roberson ~~will be entitled to receive,~~was awarded, as part of his annual compensation, on his third anniversary date 5,000 shares, and will receive on his fourth anniversary date 6,000 shares, on his fifth anniversary date 7,000 shares, on his sixth anniversary date 8,000 shares, on his seventh anniversary date 9,000 shares, and each annual anniversary date thereafter 10,000 shares.

~~On February 5, 2016,~~ Mr. Roberson’s contract was extended by the Company filed Form S-3 Registration Statement Under the Securities Act of 1933 with the Securities and Exchange Commission in anticipation of an at the market (ATM) offering. The Form S-3 was effective August 15, 2016, allowing the CompanyCompensation Committee to offer and sell from time to time up to $20,000,000 of its shares of common stock, par value $0.01, warrants, convertible debt securities, debt securities, right or units or any combination of these securities, in one or more transactions on terms to be determined at the time of sale.July 1, 2018.

On August 12, 2016, the Company entered into a binding Stock and Mineral Purchase Agreement (the “SMPA”) with HFT Enterprises, LLC (the “Buyer”) in order to provide liquidity to the Company. The Buyer purchased newly-issued restricted shares of common stock of the Company equal to 19.9% of the total number of issued and outstanding shares of the Company, as measured on the date of the Agreement, for a price of $0.45 per share. In ~~November~~ 2016, the Buyer purchased for gross proceeds of ~~$398,053~~$597,080 paid in consideration of ~~884,564 shares of unregistered common stock. In December 2016, the Buyer purchased for gross proceeds of $199,027 paid in consideration of 442,282~~1,326,846 shares of unregistered common stock. The remaining ~~442,282~~ shares were purchased in January 2017, for gross proceeds of $199,027 paid in consideration of 442,282 shares of unregistered common stock. Costs incurred by the Company to issue the stock was $11,807 for the ~~quarter~~six months ended ~~March 31,~~June 30, 2017. The shares are restricted shares that are also not registered under the Securities Act of 1933, as amended (the “Securities Act”), and therefore the Buyer must hold the Shares indefinitely unless they are registered with the Securities and Exchange Commission and qualified by state authorities, or an exemption from such registration and qualification requirements is available.

On ~~April 28,~~July 20, 2017, the Company ~~received notification from~~announced the ~~NYSE MKT that it was noncompliant with the NYSE MKT continued listing standards; specifically, Section 1003(a)(ii)~~sale of an additional 401 net acres of non-producing leasehold in Lea County, New Mexico, for $1,200,000. The Company used $1,000,000 of the ~~Company Guide. The Company’s stockholders’ equity has been below~~proceeds to reduce our credit line with Citibank to $3,363,333 and the ~~$2.0 million threshold required~~additional $200,000 was reserved for listed companies that have reported losses from continuing operations in two of its three most recently completed fiscal years (Section 1003(a)(i)) and is now below the $4.0 million threshold required for listed companies that have reported losses from continuing operations in three of its four most recent fiscal years (Section 1003(a)(ii)).general corporate purposes.

The Company has previously submitted a plan to the Exchange to regain compliance with Section 1003(a)(i) by November 13, 2017, which plan has been accepted by the Exchange. The Company is now required to supplement the plan no later than May 30, 2017, to address how it intends to regain compliance with Section 1003(a)(ii). If the supplemented Plan is accepted, the Company may be able to continue its listing but will be subject to periodic reviews by the Exchange. If the supplemented plan is not accepted or if it is accepted but the Company is not in compliance with the continued listing standards by November 13, 2017, or if the Company does not make progress consistent with the Plan, the Exchange will initiate delisting procedures as appropriate.

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.

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 has temporarily suspended drilling and exploration activities due to low commodity prices and has no near-term 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 our borrowing base has been decreased, we do not expect to reinstate our drilling programs until commodity prices and our cash flow improve.

We ~~have incurred~~had net ~~losses~~income of ~~$409,051 and $860,527~~$1,338,135 for the ~~three~~six months ended ~~March 31,~~June 30, 2017, due to the sale of non-producing and ~~2016, respectively.~~non-economic assets in Lea County, New Mexico, but continue to have negative operating cash flow. We incurred a net loss of $1,447,960 for the six months ended June 30, 2016. We expect that the Company will continue to experience operating losses and negative cash flow for so long as commodity prices remain depressed. ~~Our~~The audit report of our independent registered public accountants covering our financial statements for the fiscal years ended December 31, 2016 and 2015, include an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern. The financial statements have been prepared "assuming that the Company will continue as a going concern." Our ability to continue as a going concern is dependent on raising additional capital to fund our operations and ultimately on generating future profitable operations. We filed a new shelf registration statement on Form S-3 which was declared effective by the SEC on August 15, 2016, which will permit the future sale of equity securities, including a limited at the market (ATM) capital raise. We are investigating other sources of capital. There can be no assurance that we will be able to raise sufficient additional capital or have positive cash flow from operations to address all of our cash flow needs. If we are not able to find alternative sources of cash or generate positive cash flow from operations, our business and shareholders may be materially and adversely affected.

On August 12, 2016, the Company entered into a binding Stock and Mineral Purchase Agreement (the “SMPA”) with HFT Enterprises, LLC (the “Buyer”) in order to provide liquidity to the Company. The Buyer purchased newly-issued shares of common stock of the Company equal to 19.9% of the total number of issued and outstanding shares of the Company, as measured on the date of the Agreement, for a price of $0.45 per share (the shares to be purchased, the “Shares”). In November 2016, the Buyer purchased for gross proceeds of $398,053 paid in consideration of 884,564 shares of unregistered common stock. In December 2016, the Buyer purchased for gross proceeds of $199,027 paid in consideration of 442,282 shares of unregistered common stock. The remaining 442,282 shares were purchased in January 2017, for gross proceeds of $199,027 paid in consideration of 442,282 shares of unregistered common stock. Euro Pacific Capital, Inc. acted as the placement agent and garnered a fee of 5%.

Additionally, on April 28, 2017, the Company received notification from the NYSE ~~MKT~~American (formerly NYSE MKT) that it was noncompliant with the NYSE ~~MKT~~American (formerly NYSE MKT) continued listing standards; specifically, Section 1003(a)(ii) of the Company Guide. The Company’s stockholders’ equity has been below the $2.0 million threshold required for listed companies that have reported losses from continuing operations in two of its three most recently completed fiscal years (Section 1003(a)(i)) and is now below the $4.0 million threshold required for listed companies that have reported losses from continuing operations in three of its four most recent fiscal years (Section 1003(a)(ii)). The Company ~~is now required~~was given the opportunity to and submitted a supplement to the ~~plan to regain compliance no later than May 30, 2017~~Plan to address how it intends to regain compliance with Section 1003(a)(ii). IfThe Plan period to regain compliance with all of the ~~supplemented plan is accepted,~~continued listing standards by November 13, 2017, remain the same. The Company ~~may be able to continue its listing but~~ will be subject to periodic reviews by the Exchange. If ~~the supplemented plan is not accepted or if it is accepted but~~ the Company is not in compliance with the continued listing standards by November 13, 2017, or if the Company does not make progress consistent with the Plan, the Exchange will initiate delisting procedures as appropriate. If our initiatives to regain compliance are not successful and the Company is delisted from the NYSE ~~MKT,~~American (formerly NYSE MKT), it could have a significant adverse impact on our ability to raise additional capital.

During the three months ended June 30, 2017, the company sold non-producing and non-economic assets in Lea County, New Mexico, and used $2,115,000 of the proceeds to pay toward the principal balance of our line of credit to cure our borrowing base deficiency. Our loan balance is $4,363,333 as of June 30, 2017. We plan to continue evaluating our portfolio for non-producing assets which can be liquidated to reduce debt further.

The Company’s plans to mitigate our current financial situation and more details about the SMPA are discussed in Note 2 -– Liquidity and Going Concern in the financial statements for the quarter ended ~~March 31,~~June 30, 2017.

Oil and natural gas sales revenues increased ~~43%~~17% or ~~$245,989~~$129,940 to ~~$814,728~~$880,975 for the three months ended ~~March 31,~~June 30, 2017, from the comparable 2016 period. Average oil sales prices increased ~~60%~~27% to ~~$48.24~~$50.06 for the three months ended ~~March 31,~~June 30, 2017, compared to ~~$30.07~~$39.49 for the period ended ~~March 31,~~June 30, 2016. Average natural gas sales prices increased ~~82%~~37% to ~~$3.14~~$2.86 for the three months ended ~~March 31,~~June 30, 2017, compared to ~~$1.73~~$2.09 for the period ended ~~March 31,~~June 30, 2016. Decreased oil ~~and natural gas~~ production accounted for a decrease in revenue of approximately ~~$68,000.~~$78,000. Increased natural gas production accounted for an increase in revenue of approximately $16,000. Higher commodity prices for oil and natural gas accounted for an increase in revenue of approximately ~~$314,000.~~$192,000. 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.

Production expense ~~increased 8%~~decreased 13% or ~~$51,600~~$85,446 to ~~$711,875~~$595,643 for the three months ended ~~March 31,~~June 30, 2017, from the comparable 2016 period. This was primarily due to ~~an increase~~a decrease in unexpected workover activity and operating ~~costs and production taxes.~~costs. Lifting costs per BOE ~~increased $5.94~~decreased $3.04 to ~~$35.71~~$28.24 for the 2017 period compared to ~~$29.77~~$31.28 for the three months ended ~~March 31,~~June 30, 2016, due mainly to decreased workover activity and general decreases in costs and lease operating expenses. We anticipate lease operating expenses to decline slightly over the following quarters due to a cessation of new well activity as a result of low commodity pricing.

Depletion and depreciation decreased 31% or $94,246 to $213,554 for the three months ended June 30, 2017, versus $307,800 in the 2016 comparable period. This was primarily due to a lower depletable base and lower production volumes during the three months ended June 30, 2017.

General and administrative costs decreased 3% or $9,431 to $279,934 for the three months ended June 30, 2017, from the three months ended June 30, 2016. This was primarily attributable to a decrease in salaries and professional services. At this time, the Company anticipates general and administrative expenses to remain stable or decrease slightly in the coming quarters.

Other income, net for the quarter ended June 30, 2017, was $1,966,472, which included gain on sale of oil and natural gas properties of $2,030,477. Other expense, net for the quarter ended June 30, 2016, was $62,759. Interest expense was $64,277 and $63,542 for the three months ended June 30, 2017 and 2016, respectively.

	Six Months Ended June 30,
	2017	2016
Revenue:
Oil sales	$1,510,356	$1,217,717
Natural gas sales	185,347	102,057
Total oil and natural gas sales	$1,695,703	$1,319,774

Sales volumes:
Oil (Bbls)	30,714	34,942
Natural gas (Mcf)	61,925	54,071
Total (BOE)	41,035	43,954

Average sales prices:
Oil ($/Bbl)	$49.18	$34.85
Natural gas ($/Mcf)	2.99	1.89
Total ($/BOE)	$41.32	$30.03

Costs and expenses ($/BOE)
Production expense (lifting costs)	$31.86	$30.52
Depletion and depreciation	9.02	14.28
Accretion of discount on asset retirement obligations	1.27	1.23
General and administrative	13.74	15.12
Total	$55.89	$61.15

Oil and natural gas sales revenues increased 28% or $375,929 to $1,695,703 for the six months ended June 30, 2017, from the comparable 2016 period. Average oil sales prices increased 41% to $49.18 for the six months ended June 30, 2017, compared to $34.85 for the six months ended June 30, 2016. Average natural gas sales prices increased 58% to $2.99 for the six months ended June 30, 2017, compared to $1.89 for the six months ended June 30, 2016. Decreased oil production accounted for a decrease in revenue of approximately $147,000, offset by higher natural gas production of approximately $15,000. Higher commodity prices for oil and natural gas accounted for an increase in revenue of approximately $508,000. 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.

Production expense decreased 3% or $33,846 to $1,307,518 for the six months ended June 30, 2017, from the comparable 2016 period. This was primarily due to a decrease in unexpected workover activity and operating costs. Lifting costs per BOE increased $1.34 to $31.86 for the 2017 period compared to $30.52 for the six months ended June 30, 2016, due mainly to increased workover activity and general increases in costs and lease operating expenses. We anticipate lease operating expenses to decline slightly over the following quarters due to a cessation of new well activity as a result of low commodity pricing.

Depletion and depreciation decreased ~~51%~~41% or ~~$163,246~~$257,492 to ~~$156,554~~$370,108 for the ~~three~~six months ended ~~March 31,~~June 30, 2017, versus ~~$319,800~~$627,600 in the 2016 comparable period. This was primarily due to a lower depletable base and lower production volumes during the ~~three~~six months ended ~~March 31,~~June 30, 2017.

General and administrative costs decreased ~~24%~~15% or ~~$91,429~~$100,860 to ~~$284,008~~$563,942 for the ~~three~~six months ended ~~March 31,~~June 30, 2017, from the ~~three~~six months ended ~~March 31,~~June 30, 2016. This was primarily attributable to a decrease in salaries and professional services. At this time, the Company anticipates general and administrative expenses to remain stable or decrease slightly in the coming quarters.

Other income, net for the six months ended June 30, 2017, was $1,897,432, which included gain on sale of oil and natural gas properties of $2,030,477. Other expense, net for the ~~quarter~~six months ended ~~March 31, 2017,~~June 30, 2016, was ~~$69,040 compared to other expense, net of $62,728 for the quarter ended March 31, 2016.~~$125,487. Interest expense was ~~$69,054~~$133,331 and ~~$62,840~~$126,832 for the ~~three~~six months ended ~~March 31,~~June 30, 2017 and 2016, respectively.

Cash flow used in operating activities was ~~$67,811~~$402,843 for the ~~three~~six months ended ~~March 31,~~June 30, 2017, as compared to ~~$342,345~~$552,146 of cash flow used in operating activities in the comparable 2016 period. The decrease in cash flows ~~from~~used in operating activities was primarily due to ~~a smaller net loss~~the increase in oil and natural gas revenue during the six months ended 2017.

Cash flow ~~used in~~provided by investing activities was ~~$262,148~~$1,818,480 for the ~~three~~six months ended ~~March 31,~~June 30, 2017, which included proceeds of $2,145,000 from the sale of oil and ~~$60,257~~natural gas properties, offset by $326,520 in ~~the comparable 2016 period due to more~~ additions to oil and natural gas properties and ~~equipment~~equipment. Cash flow used in investing activities was $79,469 for the ~~current period.~~six months ended June 30, 2016, due to additions to oil and natural gas properties and equipment.

Cash flow ~~was provided by~~used in financing activities was $1,927,780 primarily due to payment of $2,115,000 principal on the ~~net~~long term debt that was partially offset by proceeds of $187,220 from the ~~issuance~~sale of ~~442,282 shares of unregistered~~common stock during the ~~three~~six months ended ~~March 31,~~June 30, 2017. No cash flow was provided by or used in financing activities for the ~~three~~six months ended ~~March 31,~~June 30, 2016.

We are out of compliance with the current ratio, leverage ratio, and interest coverage ratio required by our line of credit as of ~~March 31,~~June 30, 2017, and are in technical default of the agreement. In October 2016, we executed a sixth amendment to the original loan agreement, which provides for Citibank’s forbearance from exercising remedies relating to the current defaults including the principal payment deficiencies. The Forbearance Agreement runs through January 1, 2018, and requires that we make a $500,000 loan principal pay down by September 30, 2017, and adhere to other requirements including weekly cash balance reports, quarterly operating reports, monthly accounts payable reports and pay all associated legal expenses. Furthermore, under the agreement Citibank may sweep any excess cash balances exceeding a net amount of $800,000 less equity offering proceeds, which will be applied towards the outstanding principal balance. The Company paid $2,115,000 toward the principal balance in June 2017.

Additionally, on April 28, 2017, the Company received notification from the NYSE ~~MKT~~American (formerly NYSE MKT) that it was noncompliant with the NYSE ~~MKT~~American (formerly NYSE MKT) continued listing standards; specifically, Section 1003(a)(ii) of the Company Guide. The Company’s stockholders’ equity has been below the $2.0 million threshold required for listed companies that have reported losses from continuing operations in two of its three most recently completed fiscal years (Section 1003(a)(i)) and is now below the $4.0 million threshold required for listed companies that have reported losses from continuing operations in three of its four most recent fiscal years (Section 1003(a)(ii)). The Company ~~is now required~~was given the opportunity to and submitted a supplement to the ~~plan to regain compliance no later than May 30, 2017~~Plan to address how it intends to regain compliance with Section 1003(a)(ii). IfThe Plan period to regain compliance with all of the ~~supplemented plan is accepted,~~continued listing standards by November 13, 2017, remain the same. The Company ~~may be able to continue its listing but~~ will be subject to periodic reviews by the Exchange. If ~~the supplemented plan is not accepted or if it is accepted but~~ the Company is not in compliance with the continued listing standards by November 13, 2017, or if the Company does not make progress consistent with the Plan, the Exchange will initiate delisting procedures as appropriate. If our initiatives to regain compliance are not successful and the Company is delisted from the NYSE ~~MKT,~~American (formerly NYSE MKT), it could have a significant adverse impact on our ability to raise additional capital.

On ~~April 28,~~July 20, 2017, the Company ~~received notification from~~announced the ~~NYSE MKT that it was noncompliant with the NYSE MKT continued listing standards; specifically, Section 1003(a)(ii)~~sale of an additional 401 net acres of non-producing leasehold mineral interest in Lea County, New Mexico, for $1,200,000. The Company used $1,000,000 of the ~~Company Guide. The Company’s stockholders’ equity has been below~~proceeds to reduce our credit line with Citibank to $3,363,333 and the ~~$2.0 million threshold required~~additional $200,000 was reserved for listed companies that have reported losses from continuing operations in two of its three most recently completed fiscal years (Section 1003(a)(i)) and is now below the $4.0 million threshold required for listed companies that have reported losses from continuing operations in three of its four most recent fiscal years (Section 1003(a)(ii)).

~~The Company has previously submitted a~~general corporate purposes. We plan to ~~the Exchange~~continue evaluating our portfolio for non-producing assets which can be liquidated to regain compliance with Section 1003(a)(i) by November 13, 2017, which plan has been accepted by the Exchange. The Company is now required to supplement the plan no later than May 30, 2017, to address how it intends to regain compliance with Section 1003(a)(ii). If the supplemented Plan is accepted, the Company may be able to continue its listing but will be subject to periodic reviews by the Exchange. If the supplemented plan is not accepted or if it is accepted but the Company is not in compliance with the continued listing standards by November 13, 2017, or if the Company does not make progress consistent with the Plan, the Exchange will initiate delisting procedures as appropriate.

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. There were no commodity positions open at ~~March 31,~~June 30, 2017 or 2016.

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).

There have been no changes to the Company’s system of internal controls over financial reporting during the quarter ended ~~March 31,~~June 30, 2017, 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.

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.

None, except as previously disclosed on Current Reports on Form 8-K.

Our line of credit is a senior secured credit facility and provides for certain financial covenants and ratios which include a current ratio that cannot be less than 1.10:1.00, a leverage ratio that cannot be more than 3.50:1.00, and an interest coverage ratio that cannot be less than 3.50:1.00. The Company is out of compliance with all three ratios as of ~~March 31,~~June 30, 2017, and is in technical default of the agreement. As a result of the redetermination of the credit base, the Company had a borrowing base deficiency in the amount of $1,495,000 on December 1, 2015. As an election under the Loan Agreement, the Company agreed to pay and cure the deficiency in three equal monthly installments of $498,333 each, due on December 31, 2015, January 31, 2016 and February 29, 2016. We made our first required deficiency payment in the amount of $516,667 on December 29, 2015. However, we did not make the required deficiency payments in January or February 2016. As of ~~March~~December 31, 2017, our loan balance iswas $6,478,333 and our borrowing base deficiency was $978,333. ~~The Company’s plans~~During the three months ended June 30, 2017, the Company sold non-producing and non-economic assets in Lea County, New Mexico, and used $2,115,000 of the proceeds to pay toward the principal balance of our line of credit to cure ~~the~~our borrowing base ~~deficiency are discussed in Note 2 – Liquidity and Going Concern.~~deficiency. Our loan balance was $4,363,333 as of June 30, 2017. We plan to continue evaluating our portfolio for non-producing assets which can be liquidated to reduce debt further.

In October 2016, we executed a sixth amendment to the original loan agreement, which provides for Citibank’s forbearance from exercising remedies relating the current defaults including the principal payment deficiencies. The Forbearance Agreement runs through January 1, 2018, and requires that we make a $500,000 loan principal pay down by September 30, 2017, and adhere to other requirements including weekly cash balance reports, quarterly operating reports, monthly accounts payable reports and that we pay all associated legal expenses. Furthermore, under the agreement Citibank may sweep any excess cash balances exceeding a net amount of $800,000 less equity offering proceeds, which will be applied towards the outstanding principal balance. We are currently in compliance with the agreement, however the Agreement was supplemented by a closing letter agreement to allow the Company time to pay the associated legal costs and solidify the Deposit/Withdraw at Custodian Agreements (“DEWAC”) as provided for in the Forbearance Agreement. Citibank is in a first lien position on all of our properties and assets.

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.INS	XBRL Instance Document
101.SCH	XBRL Schema Document
101.CAL	XBRL Calculation Linkbase Document
101.LAB	XBRL Label Linkbase Document
101.PRE	XBRL Presentation Linkbase Document
101.DEF	XBRL Definition Linkbase Document

Colorado		84-0811034
(State or Other Jurisdiction ~~ofIncorporation~~of Incorporation or Organization)		(I.R.S. ~~EmployerIdentification~~Employer Identification No.)

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

	March 31,	December 31,	June 30,	December 31,
	2017	2016	2017	2016
ASSETS	ASSETS		ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$737,328	$880,067	$367,924	$880,067
Accounts receivable:
Oil and natural gas sales	373,701	321,500	415,232	321,500
Joint interest billings, less allowance for doubtful accounts of approximately $237,000 each period	236,255	243,106	238,096	243,106
Prepaid income taxes	11,485	8,776	17,135	8,776
Prepaid expenses and other current assets	58,691	37,837	74,808	37,837
Total current assets	1,417,460	1,491,286	1,113,195	1,491,286

PROPERTY AND EQUIPMENT:
Oil and natural gas properties (successful efforts method)	41,335,349	41,288,964	40,086,021	41,288,964
Other equipment	117,561	111,750	117,561	111,750
Less accumulated depletion, depreciation and impairment	(34,303,607)	(34,147,053)	(33,322,141)	(34,147,053)
Net property and equipment	7,149,303	7,253,661	6,881,441	7,253,661

OTHER ASSETS	25,000		25,000

Total assets	$8,591,763	$8,769,947	$8,019,636	$8,769,947

LIABILITIES AND STOCKHOLDERS’ DEFICIT
LIABILITIES AND STOCKHOLDERS’ EQUITY			LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Line of credit - current	$6,478,333		$4,363,333	$6,478,333
Accounts payable and accrued expenses	1,165,990	1,139,596	958,365	1,139,596
Oil and gas revenues payable	466,527	461,227	442,245	461,227
Asset retirement obligation - current	67,289	41,438	80,821	41,438
Total current liabilities	8,178,139	8,120,594	5,844,764	8,120,594

ASSET RETIREMENT OBLIGATION	1,686,571	1,700,469	1,700,633	1,700,469
Total liabilities	9,864,710	9,821,063	7,545,397	9,821,063

STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value, 75,000,000 shares authorized;	Common stock, $.01 par value, 75,000,000 shares authorized;		Common stock, $.01 par value, 75,000,000 shares authorized;
11,596,229 and 11,153,947 shares issued, respectively, and 10,669,229 and 10,226,947 outstanding, respectively	115,962	111,539	115,962	111,539
Additional paid-in capital	13,715,668	13,532,871	13,715,668	13,532,871
Accumulated deficit	(13,137,685)	(12,728,634)	(11,390,499)	(12,728,634)
Treasury stock, 927,000 shares, each period, at cost	(1,966,892)		(1,966,892)
Total stockholders’ deficit	(1,272,947)	(1,051,116)
Total liabilities and stockholders’ deficit	$8,591,763	$8,769,947
Total stockholders’ equity (deficit)			474,239	(1,051,116)
Total liabilities and stockholders’ equity			$8,019,636	$8,769,947

	Three Months Ended		Three Months Ended		Six Months Ended
	March 31,		June 30,
	2017	2016	2017	2016	2017	2016
REVENUE:
Oil and natural gas sales	$814,728	$568,739	$880,975	$751,035	$1,695,703	$1,319,774
Well operational and pumping fees	1,262		1,261	1,262	2,523	2,524
Disposal fees	22,436	14,712	17,455	28,283	39,891	42,995
Total revenue	838,426	584,713	899,691	780,580	1,738,117	1,365,293

COSTS AND EXPENSES:
Production expense	711,875	660,275	595,643	681,089	1,307,518	1,341,364
Depletion and depreciation	156,554	319,800	213,554	307,800	370,108	627,600
Accretion of discount on asset retirement obligations	26,000	27,000	26,000	27,000	52,000	54,000
General and administrative	284,008	375,437	279,934	289,365	563,942	664,802
Total costs and expenses	1,178,437	1,382,512	1,115,131	1,305,254	2,293,568	2,687,766

OPERATING LOSS	(340,011)	(797,799)	(215,440)	(524,674)	(555,451)	(1,322,473)

OTHER INCOME (EXPENSE):
Interest income	14	112	15	659	29	771
Interest expense	(69,054)	(62,840)	(64,277)	(63,542)	(133,331)	(126,382)
Gain on sale of oil and natural gas property			2,030,477	-	2,030,477	-
Miscellaneous			257	124	257	124
Total other income (expense)	(69,040)	(62,728)	1,966,472	(62,759)	1,897,432	(125,487)

NET LOSS	$(409,051)	$(860,527)
INCOME (LOSS) BEFORE INCOME TAXES			1,751,032	(587,433)	1,341,981	(1,447,960)

LOSS PER SHARE:
INCOME TAX EXPENSE – CURRENT			(3,846)	-	(3,846)	-
TOTAL INCOME TAX PROVISION			(3,846)	-	(3,846)	-

NET INCOME (LOSS)			$1,747,186	$(587,433)	$1,338,135	$(1,447,960)

EARNINGS (LOSS) PER SHARE:
BASIC	$(0.04)	$(0.10)	$0.16	$(0.07)	$0.13	$(0.16)
DILUTED	$(0.04)	$(0.10)	$0.16	$(0.07)	$0.13	$(0.16)

WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC	10,617,630	8,889,991	10,669,229	8,890,101	10,643,571	8,890,046
DILUTED	10,617,630	8,889,991	10,669,229	8,890,101	10,643,571	8,890,046

			For the Six Months Ended
	For the Three Months Ended		June 30,
	March 31,		2017	2016
	2017	2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$(409,051)	$(860,527)
Net income (loss)			$1,338,135	$(1,447,960)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depletion and depreciation	156,554	319,800	370,108	627,600
Accretion of discount on asset retirement obligations	26,000	27,000	52,000	54,000
Stock compensation expense	-	6,875	-	13,750
Gain on sale of oil and natural gas property			(2,030,477)	-
Changes in current assets and liabilities:
Accounts receivable	(45,350)	240,090	(88,722)	94,112
Prepaid income taxes	(2,709)	(541)	(8,359)	(61)
Prepaid expenses and other current assets	(20,854)	7,898	(36,971)	(7,362)
Accounts payable and accrued expenses	222,299	(74,219)	20,425	117,642
Oil and gas revenues payable	5,300	(8,721)	(18,982)	(3,867)
Net cash used in operating activities	(67,811)	(342,345)	(402,843)	(552,146)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and natural gas properties and other equipment	(262,148)	(60,257)	(326,520)	(79,469)
Net cash used in investing activities	(262,148)	(60,257)
Proceeds from sale of oil and natural gas property			2,145,000	-
Net cash provided by (used in) investing activities			1,818,480	(79,469)

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on long term debt			(2,115,000)	-
Net proceeds from issuance of common stock	187,220	-	187,220	-
Net cash provided by financing activities	187,220	-
Net cash used in financing activities			(1,927,780)	-

NET CHANGE IN CASH AND CASH EQUIVALENTS	(142,739)	(402,602)	(512,143)	(631,615)

CASH AND CASH EQUIVALENTS, beginning of the period	880,067	1,467,279	880,067	1,467,279

CASH AND CASH EQUIVALENTS, end of the period	$737,328	$1,064,677	$367,924	$835,664

SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest	$67,574	$65,385	$136,471	$128,308
Cash paid during the period for income taxes	$2,709	$542	$8,359	$1,343
Change in accrued capital expenditures	$115,800	$43,608	$113,434	$57,299

	For the Three Months Ended March 31,		For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2017	2016	2017	2016	2017	2016

Net loss	$(409,051)	$(860,527)
Net income (loss)			$1,747,186	$(587,433)	$1,338,135	$(1,447,960)

Weighted average common stock outstanding	10,617,630	8,889,991	10,669,229	8,890,101	10,643,571	8,890,046
Weighted average dilutive effect of stock warrants	-		-
Dilutive weighted average shares	10,617,630	8,889,991	10,669,229	8,890,101	10,643,571	8,890,046

Loss per share:
Earnings (loss) per share:
Basic	$(0.04)	$(0.10)	$0.16	$(0.07)	$0.13	$(0.16)
Diluted	$(0.04)	$(0.10)	$0.16	$(0.07)	$0.13	$(0.16)

	Quarter Ended March 31,		Quarter Ended June 30,
	2017	2016	2017	2016
Revenue:
Oil sales	$720,673	$517,201	$789,683	$700,516
Natural gas sales	94,055	51,538	91,292	50,519
Total oil and natural gas sales	$814,728	$568,739	$880,975	$751,035

Sales volumes:
Oil (Bbls)	14,938	17,202	15,776	17,740
Natural gas (Mcf)	30,001	29,857	31,925	24,214
Total (BOE)	19,938	22,179	21,096	21,776

Average sales prices:
Oil ($/Bbl)	$48.24	$30.07	$50.06	$39.49
Natural gas ($/Mcf)	3.14	1.73	2.86	2.09
Total ($/BOE)	$40.86	$25.64	$41.76	$34.49

Costs and expenses ($/BOE)
Production expense (lifting costs)	$35.71	$29.77	$28.24	$31.28
Depletion and depreciation	7.85	14.42	10.12	14.13
Accretion of discount on asset retirement obligations	1.30	1.22	1.23	1.24
General and administrative	14.24	16.93	13.27	13.29
Total	$59.10	$62.34	$52.86	$59.94


Date: ~~May 15,~~August 14, 2017	By:	/s/ Roger D. Bryant
		Roger D. Bryant
		Executive Officer



Date: ~~May 15,~~August 14, 2017	By:	/s/ Phillip H. Roberson
		Phillip H. Roberson
		Principal Financial Officer