Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Mar. 16, 2020 | Jun. 30, 2019 | |
Document And Entity Information | |||
Entity Registrant Name | VIKING ENERGY GROUP, INC. | ||
Entity Central Index Key | 0001102432 | ||
Document Type | 10-K | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Small Business | true | ||
Entity Shell Company | false | ||
Entity Emerging Growth Company | false | ||
Entity Current Reporting Status | Yes | ||
Document Period End Date | Dec. 31, 2019 | ||
Entity Filer Category | Non-accelerated Filer | ||
Document Fiscal Period Focus | FY | ||
Document Fiscal Year Focus | 2019 | ||
Entity Common Stock Shares Outstanding | 126,127,314 | ||
Entity Public Float | $ 16,740,719 | ||
EntityFileNumber | 000-29219 | ||
EntityAddressAddressLine1 | 15915 Katy Freeway | ||
EntityAddressAddressLine2 | Suite 450 | ||
EntityAddressPostalZipCode | 77094 | ||
EntityTaxIdentificationNumber | 980199508 | ||
EntityAddressCityOrTown | Houston | ||
LocalPhoneNumber | 404-4387 | ||
CityAreaCode | 281 | ||
EntityAddressStateOrProvince | TEXAS |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash | $ 1,761,495 | $ 4,009,892 |
Restricted cash | 3,877,229 | |
Accounts receivable - oil and gas | 2,864,114 | 258,300 |
Prepaid expenses | 168,994 | 124,443 |
Total current assets | 8,671,832 | 4,392,635 |
Oil and gas properties, full cost method | ||
Proved developed producing oil and gas properties, net | 68,924,441 | 81,331,986 |
Proved undeveloped and non-producing oil and gas properties, net | 50,817,675 | 50,492,906 |
Total Oil and gas properties, net | 119,742,116 | 131,824,892 |
Fixed assets, net | 509,934 | 200,243 |
Derivative asset | 681,776 | |
Deposits | 2,821,594 | 110,194 |
TOTAL ASSETS | 131,745,476 | 137,209,740 |
Current liabilities: | ||
Accounts payable | 3,791,894 | 2,549,280 |
Accrued expenses and other current liabilities | 3,229,594 | 1,014,661 |
Undistributed revenues and royalties | 2,247,678 | 1,207,605 |
Derivative liability | 5,158,822 | 2,531,718 |
Amount due to director | 590,555 | 395,555 |
Current portion of long-term debt - net of debt discount | 19,225,045 | 11,805,582 |
Total current liabilities | 34,243,588 | 19,504,401 |
Long term debt - net of current portion and debt discount | 84,988,117 | 92,076,857 |
Operating lease liability | 308,279 | |
Asset retirement obligation | 3,538,637 | 4,413,465 |
TOTAL LIABILITIES | 123,078,621 | 115,994,723 |
Commitments and contingencies (Note 8) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized, 28,092 Shares issued and outstanding as of December 31, 2019 and 2018 | 28 | 28 |
Common stock, $0.001 par value, 500,000,000 shares authorized, 124,198,309 and 90,989,025 shares issued and outstanding as of December 31, 2019 and 2018, respectively | 124,198 | 90,989 |
Additional Paid-In Capital | 38,825,392 | 32,015,913 |
Retained Earnings (Accumulated deficit) | (30,282,763) | (10,891,913) |
TOTAL STOCKHOLDERS' EQUITY | 8,666,855 | 21,215,017 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 131,745,476 | $ 137,209,740 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2019 | Dec. 31, 2018 |
STOCKHOLDERS' EQUITY | ||
Preferred stock, shares par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 5,000,000 | 5,000,000 |
Preferred stock, shares issued | 28,092 | 28,092 |
Preferred stock, shares outstanding | 28,092 | 28,092 |
Common stock, shares par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 500,000,000 | 500,000,000 |
Common stock, shares issued | 124,198,309 | 90,989,025 |
Common stock, shares outstanding | 124,198,309 | 90,989,025 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Revenue | ||
Oil and gas sales | $ 34,592,850 | $ 7,967,972 |
Operating expenses | ||
Lease operating costs | 12,203,777 | 3,835,549 |
General and administrative | 5,233,027 | 7,265,639 |
Stock based compensation | 951,533 | 2,303,213 |
Accretion - asset retirement obligations | 391,482 | 86,023 |
Depreciation, depletion & amortization | 10,936,446 | 1,644,693 |
Total operating expenses | 29,716,265 | 15,135,117 |
Income (Loss) from operations | 4,876,585 | (7,167,145) |
Other income (expenses) | ||
Interest expense | (12,988,695) | (1,910,387) |
Amortization of debt discount | (7,975,244) | (5,969,886) |
Change in fair value of derivatives | (3,308,880) | (1,604,916) |
Gain on disposal of assets | 623,960 | |
Interest and other income | 5,384 | |
Total other income (expenses) | (24,267,435) | (8,861,229) |
Net loss before income taxes | (19,390,850) | (16,028,374) |
Income tax benefit (expense) | 910,827 | |
Net loss | $ (19,390,850) | $ (15,117,547) |
Loss per weighted average number of common shares outstanding - basic and diluted | $ (0.20) | $ (0.18) |
Weighted average number of common shares outstanding - basic and diluted | 96,379,785 | 81,950,037 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Cash flows from operating activities | ||
Net income (loss) | $ (19,390,850) | $ (15,117,547) |
Adjustments to reconcile net loss to cash used in operating activities: | ||
Change in fair value of derivative liability | 3,308,880 | 1,604,916 |
Stock based compensation | 951,533 | 2,303,212 |
Gain on disposal of assets | (613,589) | |
Depreciation, depletion and amortization | 10,936,446 | 1,644,693 |
Accretion - Asset retirement obligation | 391,482 | 86,023 |
Amortization of right-of-use assets | 3,766 | |
Allowance for bad debt | 217,057 | |
Amortization of debt discount | 7,975,244 | 5,969,886 |
Changes in operating assets and liabilities | ||
Accounts receivable | (2,517,727) | 131,343 |
Other receivables | 548,714 | |
Prepaid expenses and other assets | (2,755,951) | (159,791) |
Accounts payable | 1,247,148 | (336,903) |
Accrued expenses and other current liabilities | 2,837,595 | 614,773 |
Undistributed revenues and royalties | 1,040,073 | 32,405 |
Deferred tax liability | (910,827) | |
Amounts due to director | 59,200 | |
Net cash provided by (used) in operating activities | 4,027,639 | (3,926,435) |
Cash flows from investing activities: | ||
Investment in and acquisition of oil and gas properties | (5,196,576) | (7,995,476) |
Acquisition of fixed assets | (11,115) | (130,000) |
Proceeds from sale of fixed assets | 45,000 | |
Proceeds from sale of oil and gas interests | 552,966 | 1,565,540 |
Net cash used in investing activities | (4,654,725) | (6,514,936) |
Cash flows from financing activities: | ||
Proceeds from long-term debt | 10,258,123 | 19,182,768 |
Repayment of long-term debt | (9,131,911) | (8,567,657) |
Debt issuance costs | (1,042,492) | |
Short term advance | 693,706 | |
Proceeds from amount due to director | 195,000 | 583,000 |
Repayment of amount due to director | (1,439,615) | |
Proceeds from exercise of warrants | 241,000 | |
Net cash provided by financing activities | 2,255,918 | 8,716,004 |
Net increase (decrease) in cash | 1,628,832 | (1,725,367) |
Cash, beginning of year | 4,009,892 | 5,735,259 |
Cash, end of year | 5,638,724 | 4,009,892 |
Supplemental Cash Flow Information: | ||
Cash paid for: Interest | 10,034,325 | 644,000 |
Cash paid for: Income taxes | ||
Supplemental Disclosure of Non-Cash Investing and Financing Activities: | ||
Recognition of asset retirement obligation | 94,796 | 1,901,019 |
Recognition of right-of-use asset and lease liability | 367,365 | |
Amortization of right-of-use asset and lease liability | 59,086 | |
Purchase of transportation equipment through direct financing | 56,760 | |
Proceeds from sale of oil and gas properties paid directly to reduce debt | 3,800,000 | |
Elimination of asset retirement obligation associated with sale of assets | 1,361,106 | |
Issuance of shares as payment of interest on debt | 620,508 | |
Issuance of warrants for services | $ 167,151 | |
Warrants exercised to reduce debt | 1,900,635 | |
Financing associated with oil and gas property acquisition | $ 81,957,150 | |
Issuance of shares and warrants as discount on debt | 3,129,012 | 8,263,789 |
Debt refinanced through new credit facility | 3,310,000 | 7,633,389 |
Purchase price adjustment of short-term advance | 693,706 | |
Private placement debt exchanged for new private placement debt | 5,583,311 | |
Purchase of working interest through new debt | 165,000 | |
Issuance of shares and warrants for services | 2,303,212 | |
Accrued expenses exchanged for long term debt | (866,743) | |
Conversion of debt | $ (15,000) |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders Equity - USD ($) | Total | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Prepaid Equity - Based Compensation [Member] | Retained Earnings (Accumulated Deficit) [Member] |
Balance, shares at Dec. 31, 2017 | 28,092 | 72,347,990 | ||||
Balance, amount at Dec. 31, 2017 | $ 22,508,313 | $ 28 | $ 72,348 | $ 19,029,892 | $ (11,827) | $ 3,417,872 |
Accounting principle change relative to certain derivative liabilities - Note 2. | 807,762 | 807,762 | ||||
Shares issued as debt discount, shares | 11,447,000 | |||||
Shares issued as debt discount, amount | 2,478,533 | $ 11,447 | 2,467,086 | |||
Shares issued as prepaid equity-based compensation, shares | 250,000 | |||||
Shares issued as prepaid equity-based compensation, amount | $ 250 | 54,750 | (55,000) | |||
Amortization of prepaid equity-based compensation | 66,827 | 66,827 | ||||
Shares issued for services, shares | 6,305,297 | |||||
Shares issued for services, amount | 1,462,997 | $ 6,306 | 1,456,691 | |||
Shares issued in debt conversion, shares | 75,000 | |||||
Shares issued in debt conversion, amount | 15,000 | $ 75 | 14,925 | |||
Warrants issued for services | 773,388 | 773,388 | ||||
Shares issued in cashless exercise of warrants, shares | 563,738 | |||||
Shares issued in cashless exercise of warrants, amount | $ 563 | (563) | ||||
Warrants issued as debt discount | 5,226,855 | 5,226,855 | ||||
Beneficial conversion feature of debt as debt discount | 2,812,145 | 2,812,145 | ||||
Warrants issued for subsidiary equity in acquisition of oil and gas properties | 180,744 | 180,744 | ||||
Net Income (Loss) | (15,117,547) | (15,117,547) | ||||
Balance, amount at Dec. 31, 2018 | $ 21,215,017 | $ 28 | $ 90,989 | $ 32,015,913 | $ (10,891,913) | |
Balance, shares at Dec. 31, 2018 | 28,092 | 90,989,025 | ||||
Shares issued for services, shares | 6,181,133 | |||||
Shares issued for services, amount | $ 783,782 | $ 6,181 | $ 777,601 | |||
Warrants issued for services | 167,751 | 167,751 | ||||
Shares issued in cashless exercise of warrants, shares | 1,961,755 | |||||
Shares issued in cashless exercise of warrants, amount | $ 1,962 | (1,962) | ||||
Warrants issued as debt discount | 3,129,012 | 3,129,012 | ||||
Net Income (Loss) | (19,390,850) | (19,390,850) | ||||
Shares issued for interest, shares | 3,650,046 | |||||
Shares issued for interest, amount | 620,508 | $ 3,650 | 616,858 | |||
Warrants exercised through reduction of debt, shares | 19,006,350 | |||||
Warrants exercised through reduction of debt, amount | 1,900,635 | $ 19,006 | 1,881,629 | |||
Warrant exercised for cash, shares | 2,410,000 | |||||
Warrant exercised for cash, amount | 241,000 | $ 2,410 | 238,590 | |||
Balance, amount at Dec. 31, 2019 | $ 8,666,855 | $ 28 | $ 124,198 | $ 38,825,392 | $ (30,282,763) | |
Balance, shares at Dec. 31, 2019 | 28,092 | 124,198,309 |
Nature of Business and Going Co
Nature of Business and Going Concern | 12 Months Ended |
Dec. 31, 2019 | |
Nature of Business and Going Concern | |
Note 1 - Nature of Business and Going Concern | Viking Energy Group, Inc. (“Viking” or the “Company”) is incorporated under the laws of the State of Nevada. In March 2017, the Company changed its name from Viking Investments Group, Inc. to Viking Energy Group, Inc. The Company's business plan is to engage in the acquisition, exploration, development and production of oil and natural gas properties, both individually and through collaborative partnerships with other companies in this field of endeavor. Since the beginning of 2018 the Company has had the following related activities: • On January 12, 2018, the Company, through Mid-Con Drilling, completed an acquisition of a 100% working interest in seven new oil and gas leases in Woodson and Allen Counties in Eastern Kansas. • Effective February 1, 2018, the Company, through Mid-Con Drilling, closed on the acquisition of a working interest in a lease with access to the mineral rights (oil and gas) concerning approximately 80 acres of property in Douglas County in eastern Kansas. • On December 28, 2018, the Company, through its subsidiary Ichor Energy, LLC (“Ichor Energy”) completed an acquisition of working interests in certain oil and gas leases in Texas (primarily in Orange and Jefferson Counties) and Louisiana (primarily in Calcasiue Parish), which include 58 producing wells and 31 salt water disposal wells. The properties produce hydrocarbons from known reservoirs/sands in the on-shore Gulf Coast region, with an average well depth in excess of 10,600 feet. • On May 1, 2019, the Company’s subsidiary, Mid-Con Development, LLC sold all of its interests in the oil and gas assets Mid-Con Development, LLC owned in Ellis and Rooks Counties, Kansas, consisting of working interests in approximately 41 oil leases comprising several thousand acres. • On May 10, 2019, Petrodome Louisiana Pipeline LLC ("Petrodome LA"), a subsidiary of the Company’s subsidiary, Petrodome Energy, LLC, acquired a majority working interest in 6 gas wells (including 2 producing gas wells), 1 producing oil well and 1 salt water disposal well located in the East Mud Lake Field in Cameron Parish, Louisiana, with leases to mineral rights (oil and gas) concerning approximately 765 acres. These consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company generated a net loss of $19,390,850 and $15,117,547 for the years ended December 31, 2019 and 2018 respectively. As of December 31, 2019, the Company has a working capital deficiency in excess of $25.5 million. The largest components of current liabilities creating this deficiency are (a) notes payable with a face value aggregating approximately $13.2 million due in August of 2020 and (b) other debtor obligations requiring principal payments of approximately $9 million in 2020. Management has evaluated these conditions and has developed a plan which, in part, address these obligations as follows: • The acquisition of Petrodome Energy LLC in 2017 and the oil and gas expertise retained by Petrodome at the end of 2017 provided an internal lease operating company to efficiently evaluate development opportunities. • The Ichor Energy Acquisition at the end of 2018 is believed to provide cash flow sufficient to not only satisfy the Company’s debt service associated with this acquisition, but to also fund a work over program to increase this purchased production beyond its current average daily production of 2,300 BOE and provide a quicker principal reduction, resulting in an increased equity position relative to these assets. Cash generated from the operation of these assets is restricted to lease operating expenses, the payment of debt service on the associated term loan, and distributions to Viking of $65,000 per month for general and administrative expenses, and a quarterly tax distribution at the current statutory rates. On a quarterly basis after appropriate distributions to the Company, any cash in excess of $2,000,000 plus unfunded approved development projects is swept by the term loan lender as an additional principal payment on the debt. • The Company has a revolving credit facility with CrossFirst Bank, which was approved for $30,000,000. The balance outstanding at December 31, 2019 is approximately $7,690,000 with an amended maturity date of May 10, 2021. Additional funds could be made available to the Company for projects reviewed and approved by the lender. • The Elysium Energy Acquisition on February 3, 2020 is believed to provide cash flow sufficient to not only satisfy the Company’s debt service associated with this acquisition, but to also fund a development program to increase this purchased production beyond its current average daily production of 2,700 BOE and provide a quicker principal reduction, resulting in an increased equity position relative to these assets. Cash generated from the operation of these assets is restricted to lease operating expenses, the payment of debt service on the associated term loan, certain oil and gas development projects approved by the lender, and a cost allocation for general and administrative expenses of $150,000 per month. Additionally, to the extent that Elysium has Excess Cash Flow (as defined in the loan agreement), the Company is required to make mandatory prepayments, without penalty or premium, equal to seventy-five percent (75%) of such Excess Cash Flow. • With respect to the $13.2 million notes payable due in August of 2020, the Company has invited holders of the promissory notes to exchange all or a portion of their principal and/or accrued interest into a new subordinated, secured, convertible debt offering (see Note 10, Subsequent Events). The new offering commenced on February 18, 2020, and includes equity incentives, a conversion entitlement, additional security and a maturity date of February 11, 2022. There is no obligation for holders to exchange into the New Offering. Furthermore, the global COVID-19 pandemic could have a negative impact on our financial position and results of operations. Negative impacts could include but are not limited to: our ability to sell our oil and gas production, reduction in the selling price of our oil and gas, failure of a counterparty to make required hedge payments, possible disruption of production as a result of worker illness or mandated production shutdowns, our ability to maintain compliance with loan covenants and/or refinance existing indebtedness, and access to new capital. These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern. The Company’s ability to continue as a going concern is dependent upon its ability to utilize the resources in place to generate future profitable operations, to develop additional acquisition opportunities, and to obtain the necessary financing to meet its obligations and repay its liabilities arising from business operations when they come due. Management believes the Company will be able to continue to develop new opportunities, and will be able to obtain additional funds through debt and / or equity financings to facilitate its development strategy; however, there is no assurance of additional funding being available. These consolidated financial statements do not include any adjustments to the recorded assets or liabilities that might be necessary should the Company have to curtail operations or be unable to continue in existence. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Note 2 - Summary of Significant Accounting Policies | a) Basis of Presentation The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for consolidated financial information and with the instructions to Form 10-K as promulgated by the Securities and Exchange Commission (the "SEC"). Accordingly, these consolidated financial statements include all of the disclosures required by generally accepted accounting principles for complete consolidated financial statements. Certain prior year amounts have been reclassified for consistency with the current year presentation. An adjustment has been made to the Consolidated Statement of Operations for the year ended December 31, 2018 to separately identify amortization of debt discount of $5,969,886 previously included in interest expense. This reclassification had no effect on the previously reported net loss. b) Basis of Consolidation The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiaries, Viking Oil & Gas (Canada) ULC, a Canadian corporation formed to provide a base of operations for properties in Canada; Mid-Con Petroleum, LLC, Mid-Con Drilling, LLC, and Mid-Con Development, LLC, which were all formed to provide a base of operations for properties in the Central United States, and Petrodome Energy, LLC, Ichor Holdings, LLC, Ichor Energy, LLC, Ichor Energy (TX), LLC, and Ichor Energy (LA), LLC, all based in Houston, Texas which provides a base of operations to facilitate property acquisitions in Texas, Louisiana and Mississippi. All significant intercompany transactions and balances have been eliminated. c) Use of Estimates in the Preparation of Financial Statements The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. Significant areas requiring the use of management estimates relate to impairment of long-lived assets, stock-based compensation, asset retirement obligations, and the determination of expected tax rates for future income tax recoveries. The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized. d) Financial Instruments Accounting Standards Codification, “ASC” Topic 820-10, “Fair Value Measurement” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measurement. The carrying amounts reported in the consolidated balance sheets for deposits, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to director, and convertible notes each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: • Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement. Assets and liabilities measured at fair value as of December 31, 2019 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Commodity Derivative $ - $ - $ - $ - Financial liabilities Commodity Derivative $ - $ 5,158,822 $ - $ (3,308,880 ) $ - $ 5,158,822 $ - $ (3,308,880 ) Assets and liabilities measured at fair value as of December 31, 2018, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Commodity Derivative $ - $ 681,776 $ - $ 926,802 $ - $ 681,776 $ - $ 926,802 Financial liabilities Commodity Derivative $ - $ 2,531,718 $ - $ (2,531,718 ) $ - $ 2,531,718 $ - $ (2,531,718 ) The Company has entered into certain commodity derivative instruments containing swaps and collars, which management believes are effective in mitigating commodity price risk associated with a portion of its future monthly natural gas and crude oil production and related cash flows. The Company does not designate its commodities derivative instruments as hedges and therefore does not apply hedge accounting. Changes in fair value of derivative instruments subsequent to the initial measurement are recorded as change in fair value on derivative liability, in other income (expense). The estimated fair value amounts of the Company’s commodity derivative instruments have been determined at discrete points in time based on relevant market information which resulted in the Company classifying such derivatives as Level 2. Although the Company’s commodity derivative instruments are valued using public indices, as well as the Black-Sholes model, the instruments themselves are traded with unrelated counterparties and are not openly traded on an exchange. In a commodities swap agreement, the Company trades the fluctuating market prices of oil or natural gas at specific delivery points over a specified period, for fixed prices. As a producer of oil and natural gas, the Company holds these commodity derivatives to protect the operating revenues and cash flows related to a portion of its future natural gas and crude oil sales from the risk of significant declines in commodity prices, which helps reduce exposure to price risk and improves the likelihood of funding its capital budget. If the price of a commodity rises above what the Company has agreed to receive in the swap agreement, the amount that it agreed to pay the counterparty is expected to be offset by the increased amount it received for its production. The Company has also entered into collar agreements related to oil and gas production with established floors and ceilings. Upon settlement, if the current market price of the commodity is below the floor, the Company receives the difference. Conversely, if the current market price of the commodity is above the ceiling at settlement, the Company pays the excess over the ceiling price. Although the Company is exposed to credit risk to the extent of nonperformance by the counterparties to these derivative contracts, the Company does not anticipate such nonperformance and monitors the credit worthiness of its counterparties on an ongoing basis. The derivative assets were $1,402,543 and $681,776 as of December 31, 2019 and 2018 respectively, and the derivative liabilities were $6,561,364 and $2,531,718 as of December 31, 2019 and 2018 respectively. The change in the fair value of the derivative assets and liabilities for the year ended December 31, 2019 consisted of a decrease of $4,512,598 associated with existing commodity derivatives and an increase of $1,203,719 associated with the new commodity derivative related to the acquisition accomplished on December 28, 2018, and a loss recognized in the consolidated statement of operations in the amount of $3,308,880. The table below is a summary of the Company’s commodity derivatives as of December 31, 2019: Natural Gas Period Average MMBTU per Month Fixed Price per MMBTU Swap Dec-18 to Dec-22 118,936 $ 2.715 Crude Oil Period Average BBL per Month Price per BBL Swap Dec-18 to Dec- 22 24,600 $ 50.85 Swap Jan-20 to Jun-20 1,400 $ 52.71 Collar Dec-17 to Jun-20 4,000 $ 55.00/$72.00 e) Cash and Cash Equivalents Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At December 31, 2019 and 2018, the Company has cash deposits in excess of FDIC insured limits in the amounts of $4,163,360 and $3,045,695. Restricted cash in the amount of $3,877,229 as of December 31, 2019 represents the balance of cash held by Ichor Energy, LLC (the “Borrower”) and/or its subsidiaries, generated through the operations of those subsidiaries. Pursuant to the Term Loan Credit Agreement to which the Borrower and its subsidiaries are parties, following March 31, 2019 the Borrower is required at all times to maintain a minimum cash balance of $2,000,000 (the “MLR”). Within 30 days of the end of each quarter, commencing with the quarter ended June 30, 2019, the Borrower is required to pay the lenders, as an additional principal payment on the debt, any cash in excess of (i) the MLR and (ii) any funds necessary for the capital expenditures contemplated to be expended in the next six month period by an approved plan of development (“APOD Capex Amount”). At December 31, 2019, the restricted cash did not exceed the MLR and the APOD Capex Amount. f) Accounts receivable Accounts receivable consist of oil and gas receivables. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company has recorded an allowance for doubtful accounts of $217,057 at December 31, 2019 and 2018 respectively. g) Oil and Gas Properties The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Company’s oil and gas properties for the years ended December 31, 2019 and 2018 were as follows: Oil and Gas Properties by Geographical Cost Center Years ended, December 31, Cost Center 2019 2018 Canada $ - $ 21,387 United States 10,936,446 1,623,306 $ 10,936,446 $ 1,644,693 h) Limitation on Capitalized Costs Under the full-cost method of accounting, we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. The Company did not recognize an impairment loss on oil and gas properties for the years ended December 31, 2019 and 2018, respectively. i) Oil and Gas Reserves Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. j) Income (loss) per Share Basic income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. At December 31, 2019 there were approximately 84,554,939 common stock equivalents that were anti-dilutive. At December 31, 2018, there were 183,313,800 common stock equivalents that were not dilutive due to the market price being at or lower than the corresponding exercise price. k) Revenue Recognition Sales of crude oil, natural gas, and natural gas liquids (NGLs) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (MMBtu) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant. The following table disaggregates the Company’s revenue by source for the years ended December 31, 2019 and 2018: Years Ended December 31, 2019 2018 Oil $ 28,572,971 $ 7,777,100 Natural gas and Natural gas liquids 6,019,879 190,872 $ 34,592,850 $ 7,967,972 l) Income Taxes The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse. The Company recognizes deferred tax assets and liabilities to the extent that we believe that these assets and/or liabilities are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In assessing the realizability of its deferred tax assets, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets, will be realized. The realization of its deferred tax assets relates directly to the Company’s ability to generate taxable income. The valuation allowance is then adjusted accordingly. The Company has estimated net operating losses in excess of $20,000,000 at December 31, 2019. The potential benefit of these net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. In December 2017, tax legislation was enacted limiting the deduction for net operating losses from taxable years beginning after December 31, 2017 to 80% of current year taxable income and eliminating net operating loss carrybacks for losses arising in taxable years ending after December 31, 2017 (though any such tax losses may be carried forward indefinitely). Net operating losses originating in taxable years beginning prior to January 1, 2018 are still subject to former carryover rules. The net operating loss carryforwards generated prior to this date of approximately $11,000,000, will expire between 2019 through 2038. m) Stock-Based Compensation The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of stock options and warrants is determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. The following table represents stock warrant activity as of and for the year ended December 31, 2019: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding – December 31, 2018 54,821,690 0.26 6.0 years - Granted 18,922,500 0.30 4.9 years - Exercised 29,114,251 - - - Forfeited/expired/cancelled - - - - Warrants Outstanding – December 31, 2019 44,629,939 $ 0.26 5.6 years $ - Outstanding Exercisable – December 31, 2018 54,821,690 $ 0.27 6.0 years $ - Outstanding Exercisable – December 31, 2019 44,629,939 $ 0.26 5.6 years $ - n) Impairment of long-lived assets The Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the years ended December 31, 2019 and 2018. t) Accounting for Asset Retirement Obligations Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. The following table describes the changes in the Company’s asset retirement obligations for the years ended December 31, 2019 and 2018: Year ended December 31, 2019 Year ended December 31, 2018 Asset retirement obligation – beginning $ 4,413,465 $ 3,096,263 Oil and gas purchases 94,796 1,898,019 Adjustments through disposals and settlements (1,361,106 ) (666,840 ) Accretion expense 391,482 86,023 Asset retirement obligation – ending $ 3,538,637 $ 4,413,465 u) Undistributed Revenues and Royalties The Company records a liability for cash collected from oil and gas sales that have not been distributed. The amounts get distributed in accordance with the working interests of the respective owners. v) Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 “Leases” (ASU 2016-02) and subsequently issued supplemental adoption guidance and clarification (collectively, Topic 842). Topic 842 amends a number of aspects of lease accounting, including requiring lessees to recognize right-of-use assets and lease liabilities for operating leases with a lease term greater than one year. Topic 842 supersedes Topic 840 “Leases.” On January 1, 2019, the Company adopted Topic 842 using the modified retrospective approach. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 840. We elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed us to carry forward the historical lease classification, retain the initial direct costs for any leases that existed prior to the adoption of the standard and not reassess whether any contracts entered into prior to the adoption are leases. We also elected to account for lease and non-lease components in our lease agreements as a single lease component in determining lease assets and liabilities. In addition, we elected not to recognize the right-of-use assets and liabilities for leases with lease terms of one year or less. Upon adoption of Topic 842, we recorded $367,365 of right-of-use assets and operating lease liabilities as of January 1, 2019. The adoption did not have a material impact on our Consolidated Statements of Operations or Consolidated Statements of Cash Flows w) Subsequent events The Company has evaluated all subsequent events from December 31, 2019, through the date of filing this report, and determined there are no additional items to disclose other than those described in Note 10. |
Business Acquisition
Business Acquisition | 12 Months Ended |
Dec. 31, 2019 | |
Business Acquisition | |
Note 3 - Business Acquisition | Certain Working Interests in Texas and Louisiana As discussed in Note 1, on December 28, 2018, the Company, through its subsidiary Ichor Energy, LLC (“Ichor Energy”) completed an acquisition of working interests in certain oil and gas leases in Texas and Louisiana. The total consideration given, representing the full purchase price of the working interests in these certain oil and gas leases in Texas and Louisiana, is calculated as follows: Total Consideration Given Cash consideration $ 3,701,698 Term loan - net 61,528,602 Fair value of Ichor Energy Warrants 180,744 Accrued obligation 330,314 Note payable Seller 23,777,948 $ 89,519,306 Provisional Fair Value of Assets and Liabilities Oil and Gas Properties $ 91,189,272 Asset retirement obligations assumed (1,669,966 ) $ 89,519,306 The accrued obligation of $330,314 is included in accrued expenses at December 31, 2018. Proforma unaudited condensed selected financial data for the year ended December 31, 2018 as though this acquisition had taken place at January 1, 2018 are as follows: Year Ended December 31, 2018 Revenues $ 49,664,112 Net Loss (excludes unrealized gains / losses) $ 1,441,930 Loss per share $ 0.02 |
Oil and Gas Properties
Oil and Gas Properties | 12 Months Ended |
Dec. 31, 2019 | |
Oil and Gas Properties | |
Note 4 - Oil and Gas Properties | The following table summarizes the Company’s oil and gas activities by classification and geographical cost center for the year ended December 31, 2019: December 31, 2018 Adjustments Impairments December 31, 2019 Proved developed producing oil and gas properties Canada cost center $ - $ - $ - $ - United States cost center 81,936,721 (5,403,736 ) - 76,532,985 Accumulated depreciation, depletion and amortization (604,735 ) (7,003,809 ) - (7,608,544 ) Proved developed producing oil and gas properties, net $ 81,331,986 $ (12,407,545 ) $ - $ 68,924,441 Undeveloped and non-producing oil and gas properties Canada cost center $ - $ - $ - $ - United States cost center 51,973,719 4,194,709 - 56,168,428 Accumulated depreciation, depletion and amortization (1,480,813 ) (3,869,940 ) - (5,350,753 ) Undeveloped and non-producing oil and gas properties, net $ 50,492,906 $ 324,769 $ - $ 50,817,675 Total Oil and Gas Properties, Net $ 131,824,892 $ (12,082,776 ) $ - $ 119,742,116 The following table summarizes the Company’s oil and gas activities by classification and geographical cost center for the year ended December 31, 2018: December 31, 2017 Adjustments Impairments December 31, 2018 Proved developed producing oil and gas properties Canada cost center $ 23,279 $ (23,279 ) $ - $ - United States cost center 12,513,088 69,423,633 - 81,936,721 Accumulated depreciation, depletion and amortization (235,226 ) (369,509 ) - (604,735 ) Proved developed producing oil and gas properties, net $ 12,301,141 $ 69,030,845 $ - $ 81,331,986 Undeveloped and non-producing oil and gas properties Canada cost center $ 382,935 $ (382,935 ) $ - $ - United States cost center 26,851,244 25,122,475 - 51,973,719 Accumulated depreciation, depletion and amortization (374,545 ) (1,106,268 ) - (1,480,813 ) Undeveloped and non-producing oil and gas properties, net $ 26,859,634 $ 23,633,272 $ - $ 50,492,906 Total Oil and Gas Properties, Net $ 39,160,775 $ 92,664,117 $ - $ 131,824,892 On January 12, 2018, the Company, through Mid-Con Drilling, closed on an acquisition of a 100% working interest in seven new oil and gas leases in Woodson and Allen Counties in Kansas. The purchase includes an undivided interest in all oil and gas wells, equipment, fixtures and other personal property located upon the leased properties. To facilitate this transaction, the Company, through Mid-Con Drilling, executed a Promissory Note, dated January 12, 2018, in favor of Cornerstone Bank in the amount of $366,000. The acquisition price for this acquisition was $480,000. Effective February 1, 2018, the Company, through Mid-Con Drilling, closed on the acquisition of a working interest in a lease with access to the mineral rights (oil and gas) concerning approximately 80 acres of property in Douglas County in eastern Kansas. The acquisition price was $50,000. During November, 2018, the Company created, Ichor Energy Holdings, LLC, (a Nevada Limited Liability Company), Ichor Energy, LLC (a Nevada Limited Liability Company), Ichor Energy (TX), LLC (a Texas Limited Liability company), and Ichor Energy (LA), LLC (a Louisiana Limited Liability Company) to facilitate the acquisition and ownership of certain oil and gas leases in Texas and Louisiana. The acquisition closed on December 28, 2018, and in connection therewith: (i) Ichor Energy (LA), LLC, a wholly-owned subsidiary of Ichor Energy, acquired all of the purchased assets located in Louisiana; and (ii) Ichor Energy (TX), LLC, a wholly-owned subsidiary of Ichor Energy, acquired all of the purchased assets located in Texas. To facilitate the above-noted acquisition, the Company executed a Security and Pledge Agreement along with a $23,777,948 Promissory Note in favor of the seller, and caused Ichor Energy Holdings and Ichor Energy Holdings’ wholly-owned subsidiary, Ichor Energy, to enter into a Term Loan Credit Agreement On December 28, 2018, the Company, through one of its subsidiaries, Ichor Energy LLC, entered into a Term Loan Credit Agreement with various lenders represented by ABC Funding, LLC as administrative agent. The agreement provides for a total loan amount of $63,592,000, bearing interest at a rate per annum equal to the greater of (i) a floating rate of interest equal to 10% plus LIBOR, and (ii) a fixed rate of interest equal to 12%, payable monthly on the last day of each calendar month, commencing January 31, 2019. Principal payments shall be made quarterly at 1.25% of the initial loan amount, commencing on the last business day of the fiscal quarter ending June 30, 2019. Cash generated from the operation of these assets is restricted to lease operating expenses, the payment of debt service on the Term Loan, approximately $12,000,000 of oil and gas development projects approved by the lender, and distributions to the Company of $65,000 per month for general and administrative expenses, and a quarterly tax distribution at the current statutory rates. On a quarterly basis, commencing with the quarter ended June 30, 2019, after appropriate distributions to the Company, any cash in excess of $2,000,000 plus unfunded approved development projects will be swept by the lender as an additional principal payment on the debt. To the extent not previously paid, all loans under the Loan Agreement shall be due and payable on the December 28, 2023 (the Maturity Date). |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2019 | |
Related Party Transactions | |
Note 5 - Related Party Transactions | The Company’s CEO and director, James Doris has incurred expenses on behalf of, and made advances to, the Company in order to provide the Company with funds to carry on its operations. Additionally, Mr. Doris has made several loans through promissory notes to the Company, all accruing interest at 12%, and payable on demand. As of December 31, 2019 and 2018, the total amount due to Mr. Doris for these loans is $590,555 and $395,555, respectively. Accrued interest of $102,505 and $78,116 is included in accrued expenses and other current liabilities at December 31, 2019 and 2018, respectively, The Company’s CFO, Frank W. Barker, Jr., renders professional services to the Company through FWB Consulting, Inc., an affiliate of Mr. Barker’s. As of December 31, 2019, and 2018, the total amount due to FWB Consulting, Inc. is $184,468 and $114,468, respectively, and is included in accounts payable. |
Capital Stock and Additional Pa
Capital Stock and Additional Paid-in Capital | 12 Months Ended |
Dec. 31, 2019 | |
Capital Stock and Additional Paid-in Capital | |
Note 6 - Capital Stock and Additional Paid-in Capital | (a) Preferred Stock The Company is authorized to issue 5,000,000 shares of Preferred Stock, par value $0.001 per share (the “Preferred Stock”), of which 50,000 have been designated as Series C Preferred Stock (the “Series C Preferred Stock”). Pursuant to the amended Certification of Designation of the Series C Preferred Stock filed on September 5, 2019, each share of Series C Preferred Stock entitles the holder thereof to 32,500 votes on all matters submitted to the vote of the stockholders of the Company. Each share of Series C Preferred Stock is convertible, at the option of the holder, at any time after the date of issuance of such share, at the office of the Company or any transfer agent for such stock, into one share of fully paid and non-assessable common stock. (b) Common Stock On November 5, 2018, the Company amended its Articles of Incorporation to increase the number of shares of common stock the Company is authorized to issue from 100,000,000 to 500,000,000. During the year ended December 31, 2018, the Company issued the shares of its common stock as follow: • 11,447,000 shares of common stock issued as debt discount valued at fair market value on the date of each transaction totaling $2,478,533. • 250,000 shares of common stock issued as prepaid equity-based compensation valued at fair market value at the date of the transaction, totaling $55,000. • 6,305,297 shares of common stock issued for services valued at the fair market value on the date of each transaction totaling $1,462,997 • 75,000 shares of common stock issued in a debt conversion valued at $0.20 per share, or $15,000. • 563,738 shares of common stock issued pursuant to a cashless exercise of warrants valued at fair market value on the date of exercise. During the year ended December 31, 2019, the Company issued the shares of its common stock as follow: • 6,181,133 shares of common stock issued for services valued at the fair market value on the date of each transaction totaling $783,782. • 3,650,046 shares of common stock issued to satisfy accrued interest valued at fair market value at the date of the transaction, totaling $620,508. • 19,006,350 shares of common stock issued pursuant to a warrant exercise for the reduction of debt in the amount of $1,900,635. • 2,410,000 shares of common stock issued pursuant to the exercise of warrants in the amount of $241,000. • 1,961,755 shares of common stock issued pursuant to cashless exercise of warrants |
Long Term Debt and other short-
Long Term Debt and other short-term borrowings | 12 Months Ended |
Dec. 31, 2019 | |
Long Term Debt and other short-term borrowings | |
Note 7 - Long Term Debt and other short-term borrowings | Long term debt and other short-term borrowings consisted of the following at December 31, 2019 and December 31, 2018: December 31, 2019 December 31, 2018 Long-term debt: During June through December of 2018, the Company borrowed $9,459,750 from private lenders, and exchanged $5,514,000 of amounts due lenders from prior borrowings as well as $191,250 in accrued interest, pursuant to a 10% Secured Promissory Note with 50% of the principal convertible into the Company’s common stock at $0.20 per share, all principal and accrued interest payable on the initial maturity date of August 31, 2019. Concurrently, the Company issued the Note holders 11,373,750 warrants (5-year term and an exercise price of $0.20 per share). On August 31, 2019, the Company, pursuant to the terms of the notes, elected to extend the maturity date to August 31, 2020, by increasing the interest rate to 12%, and issuing the Note holders an additional 115,000 warrants (5-year term and an exercise price of $0.20 per share) for every $100,000 invested, resulting in an additional 17,422,500 new warrants. The fair value of all these warrants was recorded as a debt discount and amortized over the life of the notes. The balance shown is net of unamortized discount of $2,086,008 at December 31, 2019 and $5,981,012 at December 31, 2018. A majority of these lenders are also Viking shareholders. 11,163,357 9,168,988 On June 13, 2018, the Company borrowed $12,400,000 pursuant to a revolving line of credit facility with a maximum principal amount of $30,000,000 from Crossfirst Bank, bearing interest 1.5% above a base rate equal to the prime rate of interest published by the Wall Street Journal, interest only for June and July of 2018, at which time Principal is payable at $100,000 monthly through the maturity date of May 10, 2021, at which time all remaining unpaid principal and accrued interest shall be due. The balance shown is net of unamortized discount of $34,411 at December 31, 2019 and $103,421 at December 31, 2018 7,655,589 11,728,911 On December 28, 2018, to facilitate the acquisition of certain oil and gas assets, the Company, through one of its subsidiaries, Ichor Energy LLC, entered into a Term Loan Credit Agreement with various lenders represented by ABC Funding, LLC as administrative agent. The agreement provides for a total loan amount of $63,592,000, bearing interest at a rate per annum equal to the greater of (i) a floating rate of interest equal to 10% plus LIBOR, and (ii) a fixed rate of interest equal to 12%, payable monthly on the last day of each calendar month, commencing January 31, 2019. Principal payments are made quarterly at 1.25% of the initial loan amount, commencing on the last business day of the fiscal quarter ending June 30, 2019. Cash generated from the operation of these assets is restricted to lease operating expenses, the payment of debt service on the Term Loan, approximately $12,000,000 of oil and gas development projects approved by the lender, and distributions to the Company of $65,000 per month for general and administrative expenses, and a quarterly tax distribution at the current statutory rates. Within 30 days of the end of each quarter, commencing with the quarter ended June 30, 2019, Ichor Energy, LLC is required to pay, as an additional principal payment on the debt, any cash in excess of the MLR and the APOD Capex Amount. To the extent not previously paid, all loans under the Loan Agreement shall be due and payable on the December 28, 2023 (the Maturity Date). The loan agreement contains prepayment penalties through December 28, 2021 and “make-whole” obligations through December 28, 2020. In addition, at maturity (or sooner under certain circumstances which include prepayment of the loan or sale of Ichor Energy, LLC) the lenders will receive a payment approximating 5% of the fair value of Ichor Energy, LLC at that time; such amount is not estimable. The balance shown is net of unamortized discount of $3,507,364 at December 31, 2019 and $4,385,408 at December 31, 2018. 53,699,940 59,206,592 On December 28, 2018, the Company issued a 10% secured promissory note in the amount of $23,777,948, payable to RPM Investments, secured by 100% of the membership interests of Ichor Energy Holdings, LLC. All accrued interest and unpaid principal are due on the earlier of (i) the date the Company or one of its affiliates completes an acquisition with one or more of the sellers for a purchase price equal to or greater than $50,000,000 or (ii) January 31, 2020. As described in Note 10, Subsequent Events, this note was extinguished on February 3, 2020 in connection with an acquisition of oil and gas interests and exchanged for a new note in the amount of approximately $20.869 million with a maturity date of June 1, 2021. As a result, the balance of this note at December 31, 2019 has been classified as non-current. 23,777,948 23,777,948 On February14, 2019, the Company executed a promissory note payable to CrossFirst Bank in the amount of $56,760 for the purchase of transportation equipment, bearing interest at 7.15%, payable in 60 installments of $1,130, with a maturity date of February 14, 2024. 48,658 - On July 24, 2019, the Company through its wholly owned subsidiary, Mid-Con Petroleum, LLC, executed a promissory note payable to Cornerstone Bank in the amount of $2,241,758, bearing interest at 6%, payable interest only for the first year, then payable in 59 installments of $43,438, with a final payment due on a maturity date of July 24, 2025. The balance shown is net of unamortized discount of $26,538 at December 31, 2019. 2,215,221 - On July 24, 2019, the Company through its wholly owned subsidiary, Mid-Con Drilling, LLC, executed a promissory note payable to Cornerstone Bank in the amount of $1,109,341, bearing interest at 6%, payable interest only for the first year, then payable in 59 installments of $21,495, with a final payment due on a maturity date of July 24, 2025. The balance shown is net of unamortized discount of $26,464 at December 31, 2019. 1,032,215 - 99,592,928 103,882,439 Other short-term borrowings: On September 30, 2019, the Company received $910,000 under an agreement that requires the Company to make 28 weekly payments aggregating $1,237,600 through April 13, 2020. On December 23, 2019, the Company received an additional $242,750 under a replacement agreement that requires the Company to make 25 weekly payments aggregating $1,620,000 through June 15, 2020. The agreement provides discounts for early payment. The balance shown is net of the maximum discount of $413,445 at December 31, 2019. 1,141,755 - On October 3, 2019, the Company received $480,200 under an agreement that requires the Company to make 28 weekly payments aggregating $666,400 through April 20, 2020. The agreement provides discounts for early payment. The balance shown is net of the maximum discount of $132,289 at December 31, 2019. 423,111 - On December 23, 2019, the Company received $2,939,970 under an agreement that requires the Company to make 25 weekly payments aggregating $4,050,000 through June 15, 2020. The agreement provides discounts for early payment. The balance shown is net of the maximum discount of $1,110,030 at December 31, 2019. 2,855,368 - On November 26, 2019, the Company received $200,000 from an individual. The advance is non-interest bearing and payable on demand. 200,000 - Total long-term debt and other short-term borrowings 104,213,162 103,882,439 Less current portion (19,225,045 ) (11,805,582 ) $ 84,988,117 $ 92,076,857 Principal maturities of long-term debt for the next five years and thereafter are as follows: Period ended December 31, Principal Unamortized Discount Net 2020 $ 22,233,521 $ 3,008,476 $ 19,225,045 2021 33,800,583 888,057 32,912,526 2022 3,571,250 888,057 2,683,193 2023 49,183,721 881,309 48,302,412 2024 735,234 9,529 725,705 Thereafter 369,637 5,356 364,281 $ 109,893,946 $ 5,680,784 $ 104,213,162 Loan Covenants Pursuant to the terms of the Revolving Line of Credit Facility executed on June 13, 2018 with CrossFirst Bank for a maximum principal amount of $30,000,000, the Company is required to provide on a quarterly basis, certain information to the Bank relative to operational performance of the Borrowers, to include internally prepared consolidated financial statements, hedge reports, and a compliance certificate. Pursuant to the terms of the Term Loan Credit Agreement executed on December 28, 2018 with various lenders in the initial amount of $63,592,000, the Company is required to provide, periodically to the lenders, certain information relative to financial and operational performance of the related assets , accompanied by a compliance certificate At December 31, 2019, the Company is not in default of any loan covenants. |
Commitments and contingencies
Commitments and contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and contingencies | |
Note 8 - Commitments and contingencies | In April 2018, the Company’s subsidiary, Petrodome Energy, LLC entered into a 66-month lease for 4,147 square feet of office space for the Company’s corporate office in Houston, Texas. The annual base rent commenced at $22.00 per square foot, and escalates at $0.50 per foot each year through expiration of the lease term. A right-of-use asset and operating lease liability has been recorded with the adoption of Topic 842, pertaining to this office lease. As this lease does not provide an implicit interest rate, we used a portfolio approach to determine a collateralized incremental borrowing rate of 10% based on the information available at the date of adoption of Topic 842 to determine the lease liability. Operating lease expense is recognized on a straight-line basis over the lease term. Operating lease expense was $96,304 for the year ended December 31, 2019. The Company's commitment for minimum lease payments under this operating lease for the next five years and thereafter as of December 31, 2019 are as follows: Period ended December 31, 2020 $ 94,690 2021 96,763 2022 98,837 2023 82,940 $ 373,230 From time to time the Company may be a party to litigation involving commercial claims against the Company. Management believes that the ultimate resolution of these matters will not have a material effect on the Company’s financial position or results of operations. The staff (the “Staff”) of the SEC’s Division of Enforcement has notified the Company, that the Staff has made a preliminary determination to recommend that the SEC file an enforcement action against the Company, as well as against its CEO and it CFO, for alleged violations of Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder during the period from early 2014 through late 2016. The Staff’s notice is not a formal allegation or a finding of wrongdoing by the Company, and the Company is in dialogue with the Staff regarding its preliminary determination. The Company believes it has adequate defenses and intends to vigorously defend any enforcement action that may be initiated by the SEC. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Note 9 - Income Taxes | The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse. The Company recognizes deferred tax assets to the extent that we believe that these assets are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In assessing the realizability of its deferred tax assets, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets, will be realized. The realization of its deferred tax assets relates directly to the Company’s ability to generate taxable income. The valuation allowance is then adjusted accordingly. The Company has estimated net operating loss carry forwards of approximately $35,800,000 and $20,700,000 (revised from prior year estimate) as of December 31, 2019 and 2018 respectively. The potential benefit of these net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. The net operating loss carryforwards generated prior to the January 1, 2018 effective date of the “Tax Cuts and Jobs Act of 2017” will expire in 2027 through 2037. Net operating losses arising in taxable years beginning after December 31, 2017 are carried forward indefinitely and are limited to 80 percent of taxable income. The current and deferred income tax expense (benefit) consists of the following for the years ending December 31, 2019 and 2018: December 31, 2019 December 31, 2018 Current Federal $ (3,174,242 ) $ (2,496,519 ) State - - Total current tax expense (benefit) (3,174,242 ) (2,496,519 ) Deferred tax timing differences Federal (894,687 ) (866,288 ) State - - Increase (decrease) in valuation allowance 4,068,929 2,451,980 Income tax expense (benefit) $ - $ (910,827 ) The components of deferred tax assets and liabilities as of December 31, 2019, and 2018 is as follows: December 31, 2019 December 31, 2018 Deferred tax assets: NOL carry forwards $ 8,077,099 $ 4,902,857 Bad debt reserves 77,896 77,896 Impairment of oil and gas assets 403,289 403,289 Unrealized loss 695 695 Derivative losses 1,301,952 607,087 Share based compensation 2,456,423 2,256,601 Total deferred tax assets 12,317,354 8,248,425 Deferred tax liabilities: Derivative gains (121,947 ) (121,947 ) Bargain purchase gain (5,674,498 ) (5,674,498 ) Total deferred tax liabilities (5,796,445 ) (5,796,445 ) Deferred tax asset (liability) - before valuation allowance 6,520,909 2,451,980 Less valuation allowance (6,520,909 ) (2,451,980 ) Deferred tax asset (liability) - net $ - $ - A reconciliation of the federal and state statutory income tax rates to the Company’s effective income tax rate applicable to income before income tax benefit from continuing operations is as follows for the years ended December 31, 2019 and 2018: December 31, 2019 December 31, 2018 Continuing operations Expected provision at US statutory rate 21.00 % 21.00 % State income tax net of federal benefit 0.00 % 0.00 % Other items effecting timing differences -4.6 % -5.4 % Valuation allowance 0.00 % - % Effective income tax rate 16.4 % 15.6 % The Company files income tax returns on a consolidated basis in the United States federal jurisdiction. As of December 31, 2019, the tax returns for the Company for the years ending 2016 through 2018 remain open to examination by the Internal Revenue Service. The Company and its subsidiaries are not currently under examination for any period. Should the Company undergo an ownership change as defined in Section 382 of the Internal Revenue Code, the Company’s tax net operating loss carry forwards generated prior to the ownership change will be subject to an annual limitation, which could reduce or defer the utilization of these losses. |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2019 | |
Subsequent Events | |
Note 10 - Subsequent Events | Acquisition of Oil and Gas Properties Purchase and Sale Agreement On February 3, 2020, Elysium Energy, LLC (“Elysium”), a wholly-owned subsidiary of Viking’s subsidiary, Elysium Energy Holdings, LLC (“Elysium Holdings”), acquired interests in certain oil and gas properties located in Texas and Louisiana (the “Acquisition”). The purchase price was approximately $46.3 million (subject to adjustment) which was substantially accomplished through cash on hand (which included the proceeds provided by the Camber Energy, Inc. (“Camber”) promissory note described below), a term loan, and settlement of a promissory note previously issued to certain of the sellers. The assets purchased included leases, working interests, and over-riding royalty interests in oil and gas properties in Texas (approximately 72 wells) and Louisiana (approximately 55 wells), along with associated equipment. On February 4, 2020, Elysium hedged 75% Supplemental pro forma financial information has not been provided as the initial accounting for the acquired interests has not been completed. Term Loan In connection with the Acquisition, Elysium Holdings (Elysium’s parent), Elysium, and Elysium’s subsidiaries (collectively the “Borrowers”) entered into a $35.0 million term loan at a 4.0% original issue discount. The loan matures on August 3, 2022, unless accelerated sooner pursuant to the loan agreement. The loan bears interest at the prime rate plus seven and three quarters percent (7.75%) payable monthly. Principal payments are due beginning on May 1, 2020, and on each month thereafter at one percent (1%) of the then-outstanding balance and, to the extent not previously paid, on the maturity date. The Borrowers have the right to prepay the term loan, subject to a prepayment fee of 5% for prepayments prior to February 3, 2021, 3% for prepayments from February 3, 2021 to February 3, 2022, and 0% for prepayments thereafter. Additionally, to the extent that the Borrowers have Excess Cash Flow (as defined in the loan agreement), the Borrowers are required to make mandatory prepayments, without penalty or premium, equal to seventy-five percent (75%) of such Excess Cash Flow. The Loan Agreement contains various customary covenants, some of which limit the ability of Elysium to, among other things, incur additional indebtedness; grant certain liens; engage in certain asset acquisitions and dispositions; make certain loans; make or declare certain dividends or distributions; issue additional equity interests; engage in certain changes in their organizational structure; engage in certain transactions with affiliates; make certain capital expenditures; amend their organizational documents or form or acquire additional subsidiaries. The loan agreement also contains covenants that require the maintenance of specified financial ratios or conditions. Obligations under the loan agreement are secured by mortgages on the oil and gas leases of the Elysium and its subsidiaries, a security agreement covering all assets of Elysium and its subsidiaries, and a pledge of all of Elysium’s membership interests. Promissory Notes Certain of the selling entities were holders of the Company’s $23.7 million secured promissory note dated December 31, 2018. This note (and all unpaid accrued interest) was extinguished in connection with this acquisition. In exchange, the Company issued a new promissory note dated February 3, 2020, for approximately $20.869 million, which is secured by a pledge of the membership interests of Viking’s wholly-owned subsidiary, Ichor Energy Holdings, LLC. The note bears interest at a rate of 10% per annum, payable at maturity (June 1, 2021). The note also requires that if following Viking’s merger with Camber (as described below) or Viking’s direct up-listing to a national stock exchange, it completes an equity raise through the issuance of its common stock, then seventy-five percent (75%) of such proceeds are to be applied to reduce the amount outstanding under the promissory note. Further, to the extent the Borrowers are due any post-closing adjustment payments in connection with the Acquisition, such payments are to be applied to reduce the balance owing under the promissory note. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | The accompanying consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America ("U.S. GAAP") for consolidated financial information and with the instructions to Form 10-K as promulgated by the Securities and Exchange Commission (the "SEC"). Accordingly, these consolidated financial statements include all of the disclosures required by generally accepted accounting principles for complete consolidated financial statements. Certain prior year amounts have been reclassified for consistency with the current year presentation. An adjustment has been made to the Consolidated Statement of Operations for the year ended December 31, 2018 to separately identify amortization of debt discount of $5,969,886 previously included in interest expense. This reclassification had no effect on the previously reported net loss. |
Basis of Consolidation | The financial statements presented herein reflect the consolidated financial results of the Company and its wholly owned subsidiaries, Viking Oil & Gas (Canada) ULC, a Canadian corporation formed to provide a base of operations for properties in Canada; Mid-Con Petroleum, LLC, Mid-Con Drilling, LLC, and Mid-Con Development, LLC, which were all formed to provide a base of operations for properties in the Central United States, and Petrodome Energy, LLC, Ichor Holdings, LLC, Ichor Energy, LLC, Ichor Energy (TX), LLC, and Ichor Energy (LA), LLC, all based in Houston, Texas which provides a base of operations to facilitate property acquisitions in Texas, Louisiana and Mississippi. All significant intercompany transactions and balances have been eliminated. |
Use of Estimates in the Preparation of Financial Statements | The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and timing of revenues and expenses, the reported amounts and classification of assets and liabilities, and disclosure of contingent assets and liabilities. Significant areas requiring the use of management estimates relate to impairment of long-lived assets, stock-based compensation, asset retirement obligations, and the determination of expected tax rates for future income tax recoveries. The estimates of proved, probable and possible oil and gas reserves are used as significant inputs in determining the depletion of oil and gas properties and the impairment of proved and unproved oil and gas properties. There are numerous uncertainties inherent in the estimation of quantities of proved, probable and possible reserves and in the projection of future rates of production and the timing of development expenditures. Similarly, evaluations for impairment of proved and unproved oil and gas properties are subject to numerous uncertainties including, among others, estimates of future recoverable reserves and commodity price outlooks. Actual results could differ from the estimates and assumptions utilized. |
Financial Instruments | Accounting Standards Codification, “ASC” Topic 820-10, “Fair Value Measurement” requires disclosure of the fair value of financial instruments held by the Company. ASC Topic 820-10, defines fair value, and establishes a three-level valuation hierarchy for disclosures of fair value measurement that enhances disclosure requirements for fair value measurement. The carrying amounts reported in the consolidated balance sheets for deposits, accrued expenses and other current liabilities, accounts payable, derivative liabilities, amount due to director, and convertible notes each qualify as financial instruments and are a reasonable estimate of their fair values because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. The three levels of valuation hierarchy are defined as follows: • Level 1: inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets. • Level 2: inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument. • Level 3: inputs to the valuation methodology are unobservable and significant to the fair value measurement. Assets and liabilities measured at fair value as of December 31, 2019 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Commodity Derivative $ - $ - $ - $ - Financial liabilities Commodity Derivative $ - $ 5,158,822 $ - $ (3,308,880 ) $ - $ 5,158,822 $ - $ (3,308,880 ) Assets and liabilities measured at fair value as of December 31, 2018, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Commodity Derivative $ - $ 681,776 $ - $ 926,802 $ - $ 681,776 $ - $ 926,802 Financial liabilities Commodity Derivative $ - $ 2,531,718 $ - $ (2,531,718 ) $ - $ 2,531,718 $ - $ (2,531,718 ) The Company has entered into certain commodity derivative instruments containing swaps and collars, which management believes are effective in mitigating commodity price risk associated with a portion of its future monthly natural gas and crude oil production and related cash flows. The Company does not designate its commodities derivative instruments as hedges and therefore does not apply hedge accounting. Changes in fair value of derivative instruments subsequent to the initial measurement are recorded as change in fair value on derivative liability, in other income (expense). The estimated fair value amounts of the Company’s commodity derivative instruments have been determined at discrete points in time based on relevant market information which resulted in the Company classifying such derivatives as Level 2. Although the Company’s commodity derivative instruments are valued using public indices, as well as the Black-Sholes model, the instruments themselves are traded with unrelated counterparties and are not openly traded on an exchange. In a commodities swap agreement, the Company trades the fluctuating market prices of oil or natural gas at specific delivery points over a specified period, for fixed prices. As a producer of oil and natural gas, the Company holds these commodity derivatives to protect the operating revenues and cash flows related to a portion of its future natural gas and crude oil sales from the risk of significant declines in commodity prices, which helps reduce exposure to price risk and improves the likelihood of funding its capital budget. If the price of a commodity rises above what the Company has agreed to receive in the swap agreement, the amount that it agreed to pay the counterparty is expected to be offset by the increased amount it received for its production. The Company has also entered into collar agreements related to oil and gas production with established floors and ceilings. Upon settlement, if the current market price of the commodity is below the floor, the Company receives the difference. Conversely, if the current market price of the commodity is above the ceiling at settlement, the Company pays the excess over the ceiling price. Although the Company is exposed to credit risk to the extent of nonperformance by the counterparties to these derivative contracts, the Company does not anticipate such nonperformance and monitors the credit worthiness of its counterparties on an ongoing basis. The derivative assets were $1,402,543 and $681,776 as of December 31, 2019 and 2018 respectively, and the derivative liabilities were $6,561,364 and $2,531,718 as of December 31, 2019 and 2018 respectively. The change in the fair value of the derivative assets and liabilities for the year ended December 31, 2019 consisted of a decrease of $4,512,598 associated with existing commodity derivatives and an increase of $1,203,719 associated with the new commodity derivative related to the acquisition accomplished on December 28, 2018, and a loss recognized in the consolidated statement of operations in the amount of $3,308,880. The table below is a summary of the Company’s commodity derivatives as of December 31, 2019: Natural Gas Period Average MMBTU per Month Fixed Price per MMBTU Swap Dec-18 to Dec-22 118,936 $ 2.715 Crude Oil Period Average BBL per Month Price per BBL Swap Dec-18 to Dec- 22 24,600 $ 50.85 Swap Jan-20 to Jun-20 1,400 $ 52.71 Collar Dec-17 to Jun-20 4,000 $ 55.00/$72.00 |
Cash and Cash Equivalents | Cash and cash equivalents include cash in banks and highly liquid investment securities that have original maturities of three months or less. At December 31, 2019 and 2018, the Company has cash deposits in excess of FDIC insured limits in the amounts of $4,163,360 and $3,045,695. Restricted cash in the amount of $3,877,229 as of December 31, 2019 represents the balance of cash held by Ichor Energy, LLC (the “Borrower”) and/or its subsidiaries, generated through the operations of those subsidiaries. Pursuant to the Term Loan Credit Agreement to which the Borrower and its subsidiaries are parties, following March 31, 2019 the Borrower is required at all times to maintain a minimum cash balance of $2,000,000 (the “MLR”). Within 30 days of the end of each quarter, commencing with the quarter ended June 30, 2019, the Borrower is required to pay the lenders, as an additional principal payment on the debt, any cash in excess of (i) the MLR and (ii) any funds necessary for the capital expenditures contemplated to be expended in the next six month period by an approved plan of development (“APOD Capex Amount”). At December 31, 2019, the restricted cash did not exceed the MLR and the APOD Capex Amount. |
Accounts receivable | Accounts receivable consist of oil and gas receivables. The Company evaluates these accounts receivable for collectability and, when necessary, records allowances for expected unrecoverable amounts. The Company has recorded an allowance for doubtful accounts of $217,057 at December 31, 2019 and 2018 respectively. |
Oil and Gas Properties | The Company uses the full cost method of accounting for its investment in oil and natural gas properties. Under this method of accounting, all costs associated with acquisition, exploration and development of oil and gas reserves, including directly related overhead costs, are capitalized. General and administrative costs related to production and general overhead are expensed as incurred. All capitalized costs of oil and gas properties, including the estimated future costs to develop proved reserves, are amortized on the unit of production method using estimates of proved reserves. Disposition of oil and gas properties are accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter the relationship between capitalized costs and proved reserves of oil and gas, in which case the gain or loss is recognized in operations. Unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is included in loss from operations before income taxes and the adjusted carrying amount of the unproved properties is amortized on the unit-of-production method. Depreciation, depletion and amortization expense utilizing the unit-of-production method for the Company’s oil and gas properties for the years ended December 31, 2019 and 2018 were as follows: Oil and Gas Properties by Geographical Cost Center Years ended, December 31, Cost Center 2019 2018 Canada $ - $ 21,387 United States 10,936,446 1,623,306 $ 10,936,446 $ 1,644,693 |
Limitation on Capitalized Costs | Under the full-cost method of accounting, we are required, at the end of each reporting date, to perform a test to determine the limit on the book value of our oil and natural gas properties (the “Ceiling” test). If the capitalized costs of our oil and natural gas properties, net of accumulated amortization and related deferred income taxes, exceed the Ceiling, this excess or impairment is charged to expense. The expense may not be reversed in future periods, even though higher oil and natural gas prices may subsequently increase the Ceiling. The Ceiling is defined as the sum of: (a) the present value, discounted at 10 percent, and assuming continuation of existing economic conditions, of 1) estimated future gross revenues from proved reserves, which is computed using oil and natural gas prices determined as the unweighted arithmetic average of the first-day-of-the-month price for each month within the 12-month hedging arrangements pursuant to SAB 103, less 2) estimated future expenditures (based on current costs) to be incurred in developing and producing the proved reserves, plus (b) the cost of properties not being amortized; plus (c) the lower of cost or estimated fair value of unproven properties included in the costs being amortized, net of (d) the related tax effects related to the difference between the book and tax basis of our oil and natural gas properties. The Company did not recognize an impairment loss on oil and gas properties for the years ended December 31, 2019 and 2018, respectively. |
Oil and Gas Reserves | Reserve engineering is a subjective process that is dependent upon the quality of available data and the interpretation thereof, including evaluations and extrapolations of well flow rates and reservoir pressure. Estimates by different engineers often vary sometimes significantly. In addition, physical factors such as the results of drilling, testing and production subsequent to the date of an estimate, as well as economic factors such as changes in product prices, may justify revision of such estimates. Because proved reserves are required to be estimated using recent prices of the evaluation, estimated reserve quantities can be significantly impacted by changes in product prices. |
Income (loss) per Share | Basic income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed by dividing the net income (loss) by the weighted-average number of common shares and, adjusted by any effects of warrants and options outstanding, if dilutive, that may add to the number of common shares during the period. At December 31, 2019 there were approximately 84,554,939 common stock equivalents that were anti-dilutive. At December 31, 2018, there were 183,313,800 common stock equivalents that were not dilutive due to the market price being at or lower than the corresponding exercise price. |
Revenue Recognition | Sales of crude oil, natural gas, and natural gas liquids (NGLs) are included in revenue when production is sold to a customer in fulfillment of performance obligations under the terms of agreed contracts. Performance obligations primarily comprise delivery of oil, gas, or NGLs at a delivery point, as negotiated within each contract. Each barrel of oil, million BTU (MMBtu) of natural gas, or other unit of measure is separately identifiable and represents a distinct performance obligation to which the transaction price is allocated. Performance obligations are satisfied at a point in time once control of the product has been transferred to the customer. The Company considers a variety of facts and circumstances in assessing the point of control transfer, including but not limited to: whether the purchaser can direct the use of the hydrocarbons, the transfer of significant risks and rewards, the Company’s right to payment, and transfer of legal title. In each case, the time between delivery and when payments are due is not significant. The following table disaggregates the Company’s revenue by source for the years ended December 31, 2019 and 2018: Years Ended December 31, 2019 2018 Oil $ 28,572,971 $ 7,777,100 Natural gas and Natural gas liquids 6,019,879 190,872 $ 34,592,850 $ 7,967,972 |
Income Taxes | The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the consolidated financial statements. Under this method, the Company determines deferred tax assets and liabilities on the basis of the differences between the consolidated financial statements and the tax basis of assets and liabilities by using estimated tax rates for the year in which the differences are expected to reverse. The Company recognizes deferred tax assets and liabilities to the extent that we believe that these assets and/or liabilities are more likely than not to be realized. In making such a determination, we consider all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income, tax planning strategies, and results of recent operations. If we determine that the Company would be able to realize our deferred tax assets in the future in excess of their net recorded amount, we would make an adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income taxes. In assessing the realizability of its deferred tax assets, management evaluated whether it is more likely than not that some portion, or all of its deferred tax assets, will be realized. The realization of its deferred tax assets relates directly to the Company’s ability to generate taxable income. The valuation allowance is then adjusted accordingly. The Company has estimated net operating losses in excess of $20,000,000 at December 31, 2019. The potential benefit of these net operating losses has not been recognized in these financial statements because the Company cannot be assured it is more likely than not that it will utilize the net operating losses carried forward in future years. In December 2017, tax legislation was enacted limiting the deduction for net operating losses from taxable years beginning after December 31, 2017 to 80% of current year taxable income and eliminating net operating loss carrybacks for losses arising in taxable years ending after December 31, 2017 (though any such tax losses may be carried forward indefinitely). Net operating losses originating in taxable years beginning prior to January 1, 2018 are still subject to former carryover rules. The net operating loss carryforwards generated prior to this date of approximately $11,000,000, will expire between 2019 through 2038. |
Stock-Based Compensation | The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period. The fair value of stock options and warrants is determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instrument. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends. The following table represents stock warrant activity as of and for the year ended December 31, 2019: Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding – December 31, 2018 54,821,690 0.26 6.0 years - Granted 18,922,500 0.30 4.9 years - Exercised 29,114,251 - - - Forfeited/expired/cancelled - - - - Warrants Outstanding – December 31, 2019 44,629,939 $ 0.26 5.6 years $ - Outstanding Exercisable – December 31, 2018 54,821,690 $ 0.27 6.0 years $ - Outstanding Exercisable – December 31, 2019 44,629,939 $ 0.26 5.6 years $ - |
Impairment of long-lived assets | The Company is required to review its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable through the estimated undiscounted cash flows expected to result from the use and eventual disposition of the assets. Whenever any such impairment exists, an impairment loss will be recognized for the amount by which the carrying value exceeds the fair value. Assets are grouped and evaluated at the lowest level for their identifiable cash flows that are largely independent of the cash flows of other groups of assets. The Company considers historical performance and future estimated results in its evaluation of potential impairment and then compares the carrying amount of the asset to the future estimated cash flows expected to result from the use of the asset. If the carrying amount of the asset exceeds estimated expected undiscounted future cash flows, the Company measures the amount of impairment by comparing the carrying amount of the asset to its fair value. The estimation of fair value is generally determined by using the asset's expected future discounted cash flows or market value. The Company estimates fair value of the assets based on certain assumptions such as budgets, internal projections, and other available information as considered necessary. There is no impairment of long-lived assets during the years ended December 31, 2019 and 2018. |
Accounting for Asset Retirement Obligations | Asset retirement obligations (“ARO”) primarily represent the estimated present value of the amount the Company will incur to plug, abandon and remediate its producing properties at the projected end of their productive lives, in accordance with applicable federal, state and local laws. The Company determined its ARO by calculating the present value of estimated cash flows related to the obligation. The retirement obligation is recorded as a liability at its estimated present value as of the obligation’s inception, with an offsetting increase to proved properties. The following table describes the changes in the Company’s asset retirement obligations for the years ended December 31, 2019 and 2018: Year ended December 31, 2019 Year ended December 31, 2018 Asset retirement obligation – beginning $ 4,413,465 $ 3,096,263 Oil and gas purchases 94,796 1,898,019 Adjustments through disposals and settlements (1,361,106 ) (666,840 ) Accretion expense 391,482 86,023 Asset retirement obligation – ending $ 3,538,637 $ 4,413,465 |
Undistributed Revenues and Royalties | The Company records a liability for cash collected from oil and gas sales that have not been distributed. The amounts get distributed in accordance with the working interests of the respective owners. |
Recently Accounting Pronouncements | In February 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2016-02 “Leases” (ASU 2016-02) and subsequently issued supplemental adoption guidance and clarification (collectively, Topic 842). Topic 842 amends a number of aspects of lease accounting, including requiring lessees to recognize right-of-use assets and lease liabilities for operating leases with a lease term greater than one year. Topic 842 supersedes Topic 840 “Leases.” On January 1, 2019, the Company adopted Topic 842 using the modified retrospective approach. Results for reporting periods beginning after January 1, 2019 are presented under Topic 842, while prior period amounts are not adjusted and continue to be reported in accordance with our historical accounting under Topic 840. We elected the package of practical expedients permitted under the transition guidance within Topic 842, which allowed us to carry forward the historical lease classification, retain the initial direct costs for any leases that existed prior to the adoption of the standard and not reassess whether any contracts entered into prior to the adoption are leases. We also elected to account for lease and non-lease components in our lease agreements as a single lease component in determining lease assets and liabilities. In addition, we elected not to recognize the right-of-use assets and liabilities for leases with lease terms of one year or less. Upon adoption of Topic 842, we recorded $367,365 of right-of-use assets and operating lease liabilities as of January 1, 2019. The adoption did not have a material impact on our Consolidated Statements of Operations or Consolidated Statements of Cash Flows. |
Subsequent events | The Company has evaluated all subsequent events from December 31, 2019, through the date of filing this report, and determined there are no additional items to disclose other than those described in Note 10. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies (Tables) | |
Financial Assets and liabilities measured at fair value | Assets and liabilities measured at fair value as of December 31, 2019 are classified below based on the three fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Commodity Derivative $ - $ - $ - $ - Financial liabilities Commodity Derivative $ - $ 5,158,822 $ - $ (3,308,880 ) $ - $ 5,158,822 $ - $ (3,308,880 ) Assets and liabilities measured at fair value as of December 31, 2018, are classified below based on the three-level fair value hierarchy described above: Description Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Total Gains (Losses) Financial Assets Commodity Derivative $ - $ 681,776 $ - $ 926,802 $ - $ 681,776 $ - $ 926,802 Financial liabilities Commodity Derivative $ - $ 2,531,718 $ - $ (2,531,718 ) $ - $ 2,531,718 $ - $ (2,531,718 ) |
Summary of company commodity derivatives | Natural Gas Period Average MMBTU per Month Fixed Price per MMBTU Swap Dec-18 to Dec-22 118,936 $ 2.715 Crude Oil Period Average BBL per Month Price per BBL Swap Dec-18 to Dec- 22 24,600 $ 50.85 Swap Jan-20 to Jun-20 1,400 $ 52.71 Collar Dec-17 to Jun-20 4,000 $ 55.00/$72.00 |
Depreciation, depletion and amortization expense | Oil and Gas Properties by Geographical Cost Center Years ended, December 31, Cost Center 2019 2018 Canada $ - $ 21,387 United States 10,936,446 1,623,306 $ 10,936,446 $ 1,644,693 |
Summary of disaggregates the company's revenue by source | Years Ended December 31, 2019 2018 Oil $ 28,572,971 $ 7,777,100 Natural gas and Natural gas liquids 6,019,879 190,872 $ 34,592,850 $ 7,967,972 |
Summary of stock warrant activity | Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Life Aggregate Intrinsic Value Warrants Outstanding – December 31, 2018 54,821,690 0.26 6.0 years - Granted 18,922,500 0.30 4.9 years - Exercised 29,114,251 - - - Forfeited/expired/cancelled - - - - Warrants Outstanding – December 31, 2019 44,629,939 $ 0.26 5.6 years $ - Outstanding Exercisable – December 31, 2018 54,821,690 $ 0.27 6.0 years $ - Outstanding Exercisable – December 31, 2019 44,629,939 $ 0.26 5.6 years $ - |
Summary of changes in the company's asset retirement obligations | Year ended December 31, 2019 Year ended December 31, 2018 Asset retirement obligation – beginning $ 4,413,465 $ 3,096,263 Oil and gas purchases 94,796 1,898,019 Adjustments through disposals and settlements (1,361,106 ) (666,840 ) Accretion expense 391,482 86,023 Asset retirement obligation – ending $ 3,538,637 $ 4,413,465 |
Business Acquisition (Tables)
Business Acquisition (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Business Acquisition (Tables) | |
Schedule of cah consideration | Total Consideration Given Cash consideration $ 3,701,698 Term loan - net 61,528,602 Fair value of Ichor Energy Warrants 180,744 Accrued obligation 330,314 Note payable Seller 23,777,948 $ 89,519,306 Provisional Fair Value of Assets and Liabilities Oil and Gas Properties $ 91,189,272 Asset retirement obligations assumed (1,669,966 ) $ 89,519,306 |
Summary of Proforma unaudited condensed selected financial data as through acquisition | Year Ended December 31, 2018 Revenues $ 49,664,112 Net Loss (excludes unrealized gains / losses) $ 1,441,930 Loss per share $ 0.02 |
Oil and Gas Properties (Tables)
Oil and Gas Properties (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Oil and Gas Properties (Tables) | |
Summary of oil and gas activities by classification and geographical cost | December 31, 2018 Adjustments Impairments December 31, 2019 Proved developed producing oil and gas properties Canada cost center $ - $ - $ - $ - United States cost center 81,936,721 (5,403,736 ) - 76,532,985 Accumulated depreciation, depletion and amortization (604,735 ) (7,003,809 ) - (7,608,544 ) Proved developed producing oil and gas properties, net $ 81,331,986 $ (12,407,545 ) $ - $ 68,924,441 Undeveloped and non-producing oil and gas properties Canada cost center $ - $ - $ - $ - United States cost center 51,973,719 4,194,709 - 56,168,428 Accumulated depreciation, depletion and amortization (1,480,813 ) (3,869,940 ) - (5,350,753 ) Undeveloped and non-producing oil and gas properties, net $ 50,492,906 $ 324,769 $ - $ 50,817,675 Total Oil and Gas Properties, Net $ 131,824,892 $ (12,082,776 ) $ - $ 119,742,116 December 31, 2017 Adjustments Impairments December 31, 2018 Proved developed producing oil and gas properties Canada cost center $ 23,279 $ (23,279 ) $ - $ - United States cost center 12,513,088 69,423,633 - 81,936,721 Accumulated depreciation, depletion and amortization (235,226 ) (369,509 ) - (604,735 ) Proved developed producing oil and gas properties, net $ 12,301,141 $ 69,030,845 $ - $ 81,331,986 Undeveloped and non-producing oil and gas properties Canada cost center $ 382,935 $ (382,935 ) $ - $ - United States cost center 26,851,244 25,122,475 - 51,973,719 Accumulated depreciation, depletion and amortization (374,545 ) (1,106,268 ) - (1,480,813 ) Undeveloped and non-producing oil and gas properties, net $ 26,859,634 $ 23,633,272 $ - $ 50,492,906 Total Oil and Gas Properties, Net $ 39,160,775 $ 92,664,117 $ - $ 131,824,892 |
Long Term Debt and other shor_2
Long Term Debt and other short-term borrowings (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Long Term Debt and other short-term borrowings | |
Schedule of Long-term Debt | Long term debt and other short-term borrowings consisted of the following at December 31, 2019 and December 31, 2018: December 31, 2019 December 31, 2018 Long-term debt: During June through December of 2018, the Company borrowed $9,459,750 from private lenders, and exchanged $5,514,000 of amounts due lenders from prior borrowings as well as $191,250 in accrued interest, pursuant to a 10% Secured Promissory Note with 50% of the principal convertible into the Company’s common stock at $0.20 per share, all principal and accrued interest payable on the initial maturity date of August 31, 2019. Concurrently, the Company issued the Note holders 11,373,750 warrants (5-year term and an exercise price of $0.20 per share). On August 31, 2019, the Company, pursuant to the terms of the notes, elected to extend the maturity date to August 31, 2020, by increasing the interest rate to 12%, and issuing the Note holders an additional 115,000 warrants (5-year term and an exercise price of $0.20 per share) for every $100,000 invested, resulting in an additional 17,422,500 new warrants. The fair value of all these warrants was recorded as a debt discount and amortized over the life of the notes. The balance shown is net of unamortized discount of $2,086,008 at December 31, 2019 and $5,981,012 at December 31, 2018. A majority of these lenders are also Viking shareholders. 11,163,357 9,168,988 On June 13, 2018, the Company borrowed $12,400,000 pursuant to a revolving line of credit facility with a maximum principal amount of $30,000,000 from Crossfirst Bank, bearing interest 1.5% above a base rate equal to the prime rate of interest published by the Wall Street Journal, interest only for June and July of 2018, at which time Principal is payable at $100,000 monthly through the maturity date of May 10, 2021, at which time all remaining unpaid principal and accrued interest shall be due. The balance shown is net of unamortized discount of $34,411 at December 31, 2019 and $103,421 at December 31, 2018 7,655,589 11,728,911 On December 28, 2018, to facilitate the acquisition of certain oil and gas assets, the Company, through one of its subsidiaries, Ichor Energy LLC, entered into a Term Loan Credit Agreement with various lenders represented by ABC Funding, LLC as administrative agent. The agreement provides for a total loan amount of $63,592,000, bearing interest at a rate per annum equal to the greater of (i) a floating rate of interest equal to 10% plus LIBOR, and (ii) a fixed rate of interest equal to 12%, payable monthly on the last day of each calendar month, commencing January 31, 2019. Principal payments are made quarterly at 1.25% of the initial loan amount, commencing on the last business day of the fiscal quarter ending June 30, 2019. Cash generated from the operation of these assets is restricted to lease operating expenses, the payment of debt service on the Term Loan, approximately $12,000,000 of oil and gas development projects approved by the lender, and distributions to the Company of $65,000 per month for general and administrative expenses, and a quarterly tax distribution at the current statutory rates. Within 30 days of the end of each quarter, commencing with the quarter ended June 30, 2019, Ichor Energy, LLC is required to pay, as an additional principal payment on the debt, any cash in excess of the MLR and the APOD Capex Amount. To the extent not previously paid, all loans under the Loan Agreement shall be due and payable on the December 28, 2023 (the Maturity Date). The loan agreement contains prepayment penalties through December 28, 2021 and “make-whole” obligations through December 28, 2020. In addition, at maturity (or sooner under certain circumstances which include prepayment of the loan or sale of Ichor Energy, LLC) the lenders will receive a payment approximating 5% of the fair value of Ichor Energy, LLC at that time; such amount is not estimable. The balance shown is net of unamortized discount of $3,507,364 at December 31, 2019 and $4,385,408 at December 31, 2018. 53,699,940 59,206,592 On December 28, 2018, the Company issued a 10% secured promissory note in the amount of $23,777,948, payable to RPM Investments, secured by 100% of the membership interests of Ichor Energy Holdings, LLC. All accrued interest and unpaid principal are due on the earlier of (i) the date the Company or one of its affiliates completes an acquisition with one or more of the sellers for a purchase price equal to or greater than $50,000,000 or (ii) January 31, 2020. As described in Note 10, Subsequent Events, this note was extinguished on February 3, 2020 in connection with an acquisition of oil and gas interests and exchanged for a new note in the amount of approximately $20.869 million with a maturity date of June 1, 2021. As a result, the balance of this note at December 31, 2019 has been classified as non-current. 23,777,948 23,777,948 On February14, 2019, the Company executed a promissory note payable to CrossFirst Bank in the amount of $56,760 for the purchase of transportation equipment, bearing interest at 7.15%, payable in 60 installments of $1,130, with a maturity date of February 14, 2024. 48,658 - On July 24, 2019, the Company through its wholly owned subsidiary, Mid-Con Petroleum, LLC, executed a promissory note payable to Cornerstone Bank in the amount of $2,241,758, bearing interest at 6%, payable interest only for the first year, then payable in 59 installments of $43,438, with a final payment due on a maturity date of July 24, 2025. The balance shown is net of unamortized discount of $26,538 at December 31, 2019. 2,215,221 - On July 24, 2019, the Company through its wholly owned subsidiary, Mid-Con Drilling, LLC, executed a promissory note payable to Cornerstone Bank in the amount of $1,109,341, bearing interest at 6%, payable interest only for the first year, then payable in 59 installments of $21,495, with a final payment due on a maturity date of July 24, 2025. The balance shown is net of unamortized discount of $26,464 at December 31, 2019. 1,032,215 - 99,592,928 103,882,439 Other short-term borrowings: On September 30, 2019, the Company received $910,000 under an agreement that requires the Company to make 28 weekly payments aggregating $1,237,600 through April 13, 2020. On December 23, 2019, the Company received an additional $242,750 under a replacement agreement that requires the Company to make 25 weekly payments aggregating $1,620,000 through June 15, 2020. The agreement provides discounts for early payment. The balance shown is net of the maximum discount of $413,445 at December 31, 2019. 1,141,755 - On October 3, 2019, the Company received $480,200 under an agreement that requires the Company to make 28 weekly payments aggregating $666,400 through April 20, 2020. The agreement provides discounts for early payment. The balance shown is net of the maximum discount of $132,289 at December 31, 2019. 423,111 - On December 23, 2019, the Company received $2,939,970 under an agreement that requires the Company to make 25 weekly payments aggregating $4,050,000 through June 15, 2020. The agreement provides discounts for early payment. The balance shown is net of the maximum discount of $1,110,030 at December 31, 2019. 2,855,368 - On November 26, 2019, the Company received $200,000 from an individual. The advance is non-interest bearing and payable on demand. 200,000 - Total long-term debt and other short-term borrowings 104,213,162 103,882,439 Less current portion (19,225,045 ) (11,805,582 ) $ 84,988,117 $ 92,076,857 |
Schedule of Principal maturities of long-term debt | Period ended December 31, Principal Unamortized Discount Net 2020 $ 22,233,521 $ 3,008,476 $ 19,225,045 2021 33,800,583 888,057 32,912,526 2022 3,571,250 888,057 2,683,193 2023 49,183,721 881,309 48,302,412 2024 735,234 9,529 725,705 Thereafter 369,637 5,356 364,281 $ 109,893,946 $ 5,680,784 $ 104,213,162 |
Commitments and contingencies (
Commitments and contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and contingencies | |
Schedule of minimum lease payments | Period ended December 31, 2020 $ 94,690 2021 96,763 2022 98,837 2023 82,940 $ 373,230 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes (Tables) | |
Schedule of current and deferred income tax expense (benefit) | December 31, 2019 December 31, 2018 Current Federal $ (3,174,242 ) $ (2,496,519 ) State - - Total current tax expense (benefit) (3,174,242 ) (2,496,519 ) Deferred tax timing differences Federal (894,687 ) (866,288 ) State - - Increase (decrease) in valuation allowance 4,068,929 2,451,980 Income tax expense (benefit) $ - $ (910,827 ) |
Schedule of deferred tax assets and liabilities | December 31, 2019 December 31, 2018 Deferred tax assets: NOL carry forwards $ 8,077,099 $ 4,902,857 Bad debt reserves 77,896 77,896 Impairment of oil and gas assets 403,289 403,289 Unrealized loss 695 695 Derivative losses 1,301,952 607,087 Share based compensation 2,456,423 2,256,601 Total deferred tax assets 12,317,354 8,248,425 Deferred tax liabilities: Derivative gains (121,947 ) (121,947 ) Bargain purchase gain (5,674,498 ) (5,674,498 ) Total deferred tax liabilities (5,796,445 ) (5,796,445 ) Deferred tax asset (liability) - before valuation allowance 6,520,909 2,451,980 Less valuation allowance (6,520,909 ) (2,451,980 ) Deferred tax asset (liability) - net $ - $ - |
Summary of reconciliation of federal and state statutory income tax rates | December 31, 2019 December 31, 2018 Continuing operations Expected provision at US statutory rate 21.00 % 21.00 % State income tax net of federal benefit 0.00 % 0.00 % Other items effecting timing differences -4.6 % -5.4 % Valuation allowance 0.00 % - % Effective income tax rate 16.4 % 15.6 % |
Nature of Business and Going _2
Nature of Business and Going Concern (Details Narrative) | Feb. 03, 2020USD ($)bbl | May 01, 2019integer | Dec. 31, 2018bbl | Dec. 28, 2018USD ($)integer | Dec. 31, 2019USD ($)ashares | Dec. 31, 2018USD ($)shares | May 10, 2019ainteger | Feb. 01, 2018a | Jan. 12, 2018 |
Net income (loss) | $ (19,390,850) | $ (15,117,547) | |||||||
Working capital deficiency description | The Company has a working capital deficiency in excess of $25.5 million | ||||||||
Viking Investments Group, Inc. [Member] | |||||||||
State of incorporation | Nevada | ||||||||
Date of incorporation | Mar. 31, 2017 | ||||||||
Mid-Con Drilling, LLC [Member] | |||||||||
Area of oil and gas acquisition | a | 80 | ||||||||
Ownership interest, percentage | 100.00% | ||||||||
Mid-Con Drilling, LLC [Member] | February 1, 2018 [Member] | |||||||||
Area of oil and gas acquisition | a | 80 | ||||||||
Mid-Con Development, LLC [Member] | |||||||||
Number of oil lease | integer | 41 | ||||||||
Revolving credit facility [Member] | Cross First Bank [Member] | |||||||||
Long-term line of credit | $ 30,000,000 | ||||||||
Outstanding Balance | $ 7,690,000 | ||||||||
Maturity date | May 10, 2021 | ||||||||
Subsequent Event [Member] | Warrant [Member] | Purchase and Sale Agreement [Member] | |||||||||
Issuance of common stock | shares | |||||||||
Number of warrants elected to be exercised | shares | |||||||||
Elysium Energy [Member] | Subsequent Event [Member] | |||||||||
Daily barrel production | bbl | 2,700 | ||||||||
Cash acquired in excess of payments, Percentage | 75.00% | ||||||||
General and administrative expenses | $ 150,000 | ||||||||
Ichor Energy [Member] | |||||||||
Daily barrel production | bbl | 2,300 | ||||||||
General and administrative expenses | $ 65,000 | ||||||||
Cash acquired in excess of payments | $ 2,000,000 | ||||||||
Acquisition of working interest, description | The properties produce hydrocarbons from known reservoirs/sands in the on-shore Gulf Coast region, with an average well depth in excess of 10,600 feet. | ||||||||
Producing wells | integer | 58 | ||||||||
Salt water disposal wells | integer | 31 | ||||||||
Petrodome Louisiana Pipeline, LLC [Member] | |||||||||
Producing wells | integer | 1 | ||||||||
Area of oil and gas acquisition | a | 765 | ||||||||
Gas well | integer | 6 | ||||||||
Petrodome Energy, LLC [Member] | |||||||||
Producing wells | integer | 1 | ||||||||
Seller [Member] | |||||||||
Promissory note payable | $ 13,200,000 | ||||||||
Due date | Aug. 31, 2020 | ||||||||
Principal payment, other debtors obligation | $ 9,000,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Financial Assets | ||
Commodity Derivative | $ 926,802 | |
Total Financial Assets | 926,802 | |
Financial Liabilities | ||
Commodity Derivative | (3,308,880) | (2,531,718) |
Total Financial Liabilities | (3,308,880) | (2,531,718) |
Quoted Prices in Active Markets for Identical Assets/Level 1 [Member] | ||
Financial Assets | ||
Commodity Derivative | ||
Total Financial Assets | ||
Financial Liabilities | ||
Commodity Derivative | ||
Total Financial Liabilities | ||
Significant Other Observable Inputs/Level 2 [Member] | ||
Financial Assets | ||
Commodity Derivative | 681,776 | |
Total Financial Assets | 681,776 | |
Financial Liabilities | ||
Commodity Derivative | 5,158,822 | 2,531,718 |
Total Financial Liabilities | 5,158,822 | 2,531,718 |
Significant Unobservable Inputs/Level 3 [Member] | ||
Financial Assets | ||
Commodity Derivative | ||
Total Financial Assets | ||
Financial Liabilities | ||
Commodity Derivative | ||
Total Financial Liabilities |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies (Details 1) | Dec. 31, 2019integer$ / bbl$ / mmtu |
Dec-18 to Dec-22 [Member] | Swap [Member] | Natural Gas [Member] | |
Average MMBTU per Month | 118,936 |
Fixed Price per MMBTU | $ / mmtu | 2.715 |
Dec-18 to Dec-22 [Member] | Crude Oil [Member] | Swap 1 [Member] | |
Average BBL per Month | 24,600 |
Fixed Price per BBL | $ / bbl | 50.85 |
Jan-20 to Jun-20 [Member] | Crude Oil [Member] | Swap 2 [Member] | |
Average BBL per Month | 1,400 |
Fixed Price per BBL | $ / bbl | 52.71 |
Dec-17 to Jun-20 [Member] | Crude Oil [Member] | Collar [Member] | Minimum [Member] | |
Average BBL per Month | 4,000 |
Fixed Price per BBL | $ / bbl | 55 |
Dec-17 to Jun-20 [Member] | Crude Oil [Member] | Collar [Member] | Maximum [Member] | |
Average BBL per Month | 4,000 |
Fixed Price per BBL | $ / bbl | 72 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies (Details 2) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Amortization expense for the oil and gas properties | $ 10,936,446 | $ 1,644,693 |
Canada [Member] | ||
Amortization expense for the oil and gas properties | 21,387 | |
United States [Member] | ||
Amortization expense for the oil and gas properties | $ 10,936,446 | $ 1,623,306 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies (Details 3) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies (Details 1) | ||
Oil | $ 28,572,971 | $ 7,777,100 |
Natural gas and natural gas liquids | 6,019,879 | 190,872 |
Total revenue | $ 34,592,850 | $ 7,967,972 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies (Details 4) | 12 Months Ended |
Dec. 31, 2019USD ($)$ / sharesshares | |
Number of Shares | |
Granted | shares | 18,922,500 |
Exercised | shares | 29,114,251 |
Forfeited/expired/cancelled | shares | |
Outstanding, Ending | shares | 44,629,939 |
Outstanding, Exercisable, Beginning | shares | 54,821,690 |
Outstanding, Exercisable, Ending | shares | 44,629,939 |
Weighted Average Exercise Price | |
Granted | $ / shares | $ 0.30 |
Exercised | $ / shares | |
Forfeited/expired/cancelled | $ / shares | |
Outstanding, Ending | $ / shares | 0.26 |
Outstanding, Exercisable, Beginning | $ / shares | 0.26 |
Outstanding, Exercisable, Ending | $ / shares | $ 0.27 |
Weighted Average Remaining Contractual Life | |
Outstanding, Beginning | 6 years |
Grant | 4 years 10 months 24 days |
Outstanding, Ending | 5 years 7 months 6 days |
Outstanding, Exercisable, Beginning | 6 years |
Outstanding, Exercisable, Ending | 5 years 7 months 6 days |
Aggregate Intrinsic Value | |
Granted | $ | |
Forfeited/expired/cancelled | $ | |
Outstanding, Ending | $ | |
Outstanding, Exercisable, Beginning | $ | |
Outstanding, Exercisable, Ending | $ |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies (Details 5) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies (Details 5) | ||
Asset retirement obligation, beginning | $ 4,413,465 | $ 3,096,263 |
Oil and gas purchases | 94,796 | 1,898,019 |
Adjustments through disposals and settlements | (1,361,106) | (666,840) |
Accretion expense | 391,482 | 86,023 |
Asset retirement obligation, ending | $ 3,538,637 | $ 4,413,465 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies (Details Narrative) | ||
Derivative asset | $ 1,402,543 | $ 681,776 |
Derivative liability | 6,561,364 | 2,531,718 |
Financial Asset | 4,512,598 | |
Financial Liabilities | $ 1,203,719 | |
Common stock equivalents as anti-dilutive | 183,313,800 | |
Restricted cash | $ 3,877,229 | |
Change in fair value of derivatives | (3,308,880) | (1,604,916) |
Allowance for doubtful accounts | $ 217,057 | 217,057 |
Dilutive common stock equivalents | 84,554,939 | |
Leases term | 1 year | |
Net operating losses | $ 20,000,000 | |
Net operating loss carryback, percentage | 80.00% | |
Net operating loss carryforwards | $ 11,000,000 | |
Net operating loss carryforwards expire | between 2019 through 2038. | |
Cash in excess of FDIC insured amount | $ 4,163,360 | 3,045,695 |
Recognition of right-of-use asset and lease liability | $ 367,365 | |
Term Loan Credit Agreement, description | The Borrower is required at all times to maintain a minimum cash balance of $2,000,000 (the “MLR”). Within 30 days of the end of each quarter, commencing with the quarter ended June 30, 2019, the Borrower is required to pay the lenders, as an additional principal payment on the debt, any cash in excess of (i) the MLR and (ii) any funds necessary for the capital expenditures contemplated to be expended in the next six month period by an approved plan of development (“APOD Capex Amount”). At December 31, 2019, the restricted cash did not exceed the MLR and the APOD Capex Amount. | |
Amortization of debt discount previously included in interest expense | $ 5,969,886 |
Business Acquisition (Details)
Business Acquisition (Details) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Total Consideration Given | |
Accrued obligation | $ 330,314 |
Certain Working Interests in Texas and Louisiana [Member] | |
Total Consideration Given | |
Cash consideration | 3,701,698 |
Term loan - net | 61,528,602 |
Fair value of Ichor Energy Warrants | 180,744 |
Accrued obligation | 330,314 |
Note payable Seller | 23,777,948 |
Provisional Fair Value of Assets and Liabilities | |
Oil and Gas Properties | 91,189,272 |
Asset retirement obligations assumed | (1,669,966) |
Total Consideration Given | $ 89,519,306 |
Business Acquisition (Details 1
Business Acquisition (Details 1) - Proforma [Member] | 12 Months Ended |
Dec. 31, 2018USD ($)$ / shares | |
Revenues | $ 49,664,112 |
Net Income (excludes unrealized gains / losses) | $ 1,441,930 |
Income per share | $ / shares | $ 0.02 |
Business Acquisition (Details N
Business Acquisition (Details Narrative) | 12 Months Ended |
Dec. 31, 2018USD ($) | |
Business Acquisition | |
Accrued obligation | $ 330,314 |
Oil and Gas Properties (Details
Oil and Gas Properties (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Total Oil and Gas Properties, Net | $ 119,742,116 | $ 131,824,892 | $ 39,160,775 |
Total Oil and Gas Properties, Net, Adjustment | (12,082,776) | ||
Oil and gas properties, net | 81,331,986 | 12,301,141 | |
Proved Developed Producing [Member] | |||
Canada cost center | 23,279 | ||
United States cost center | 76,532,985 | 81,936,721 | 12,513,088 |
Accumulated depreciation, depletion and amortization | (7,608,544) | (604,735) | (235,226) |
United States cost center, Adjustment | (5,403,736) | ||
Accumulated depreciation, depletion and amortization, Adjustment | (7,003,809) | ||
Oil and gas properties, net, Adjustment | (12,407,545) | ||
Oil and gas properties, net | 68,924,441 | 81,331,986 | 12,301,141 |
Undeveloped and Non-producing [Member] | |||
Total Oil and Gas Properties, Net | 131,824,892 | 39,160,775 | |
Canada cost center | 382,935 | ||
United States cost center | 56,168,428 | 51,973,719 | 26,851,244 |
Accumulated depreciation, depletion and amortization | (5,350,753) | (1,480,813) | (374,545) |
United States cost center, Adjustment | 4,194,709 | ||
Accumulated depreciation, depletion and amortization, Adjustment | (3,869,940) | ||
Oil and gas properties, net, Adjustment | 324,769 | ||
Oil and gas properties, net | 50,817,675 | 50,492,906 | 26,859,634 |
Impairments Proved Developed Producing [Member] | |||
Total Oil and Gas Properties, Net | |||
Canada cost center | |||
United States cost center | |||
Accumulated depreciation, depletion and amortization | |||
Oil and gas properties, net | |||
Impairments Undeveloped and non-producing [Member] | |||
Total Oil and Gas Properties, Net | |||
Canada cost center | |||
United States cost center | |||
Accumulated depreciation, depletion and amortization | |||
Oil and gas properties, net |
Oil and Gas Properties (Detai_2
Oil and Gas Properties (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Oil and gas properties, net | $ 81,331,986 | $ 12,301,141 | |
Total Oil and gas properties, net | $ 119,742,116 | 131,824,892 | 39,160,775 |
Proved Developed Producing [Member] | |||
Oil and gas properties, net | 68,924,441 | 81,331,986 | 12,301,141 |
Canada cost center | 23,279 | ||
United States cost center | 76,532,985 | 81,936,721 | 12,513,088 |
Accumulated depreciation, depletion and amortization | 7,608,544 | 604,735 | 235,226 |
Undeveloped and Non-producing [Member] | |||
Oil and gas properties, net | 50,817,675 | 50,492,906 | 26,859,634 |
Total Oil and gas properties, net | 131,824,892 | 39,160,775 | |
Canada cost center | 382,935 | ||
United States cost center | 56,168,428 | 51,973,719 | 26,851,244 |
Accumulated depreciation, depletion and amortization | 5,350,753 | 1,480,813 | 374,545 |
Impairments Proved Developed Producing [Member] | |||
Oil and gas properties, net | |||
Total Oil and gas properties, net | |||
Canada cost center | |||
United States cost center | |||
Accumulated depreciation, depletion and amortization | |||
Impairments Undeveloped and non-producing [Member] | |||
Oil and gas properties, net | |||
Total Oil and gas properties, net | |||
Canada cost center | |||
United States cost center | |||
Accumulated depreciation, depletion and amortization | |||
Adjustments Proved Developed Producing [Member] | |||
Oil and gas properties, net | 69,030,845 | ||
Canada cost center | (23,279) | ||
United States cost center | 69,423,633 | ||
Accumulated depreciation, depletion and amortization | 369,509 | ||
Adjustments Undeveloped and non-producing [Member] | |||
Oil and gas properties, net | 23,633,272 | ||
Total Oil and gas properties, net | 92,664,117 | ||
Canada cost center | (382,935) | ||
United States cost center | 25,122,475 | ||
Accumulated depreciation, depletion and amortization | $ 1,106,268 |
Oil and Gas Properties (Detai_3
Oil and Gas Properties (Details Narrative) | Jan. 12, 2018USD ($)integer | Dec. 28, 2018USD ($) | Dec. 31, 2018USD ($) | Feb. 01, 2018a |
Certain Working Interests in Texas and Louisiana [Member] | ||||
Note payable Seller | $ 23,777,948 | |||
Ichor Energy [Member] | ||||
Term loan original principal amount | $ 63,592,000 | |||
Interest rate description | (i) a floating rate of interest equal to 10% plus LIBOR, and (ii) a fixed rate of interest equal to 12%, payable monthly on the last day of each calendar month, commencing January 31, 2019. | |||
General and administrative expenses | $ 65,000 | |||
Debt Instrument, interest rate, periodic principal payment | 1.25% | |||
Cash acquired in excess of payments | $ 2,000,000 | |||
Ichor Energy [Member] | Business Acquisition [Member] | ||||
Costs incurred, development costs | $ 12,000,000 | |||
Maturity date | Dec. 28, 2023 | |||
Oil and Gas Properties [Member] | Mid-Con Drilling [Member] | ||||
Acquired working interest | 100.00% | |||
Promissory note executed for acquition | $ 366,000 | |||
Business acquisition total purchase price | $ 480,000 | |||
Number of oil and gas lease | integer | 7 | |||
Oil and Gas Properties [Member] | Mid-Con Drilling [Member] | February 1, 2018 [Member] | ||||
Business acquisition price | $ 50,000 | |||
Mid-Con Drilling, LLC [Member] | ||||
Area of oil and gas acquisition | a | 80 |
Related Party Transactions (Det
Related Party Transactions (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Mr. Barker [Member] | ||
Accounts payable | $ 184,468 | $ 114,468 |
Mr. James Doris [Member] | ||
Accrued interest | $ 102,505 | 78,116 |
Interest rate | 12.00% | |
Due to related party | $ 590,555 | $ 395,555 |
Capital Stock and Additional _2
Capital Stock and Additional Paid-in Capital (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Preferred stock Series, par value | $ 0.001 | $ 0.001 |
Preferred stock Series, authorized | 5,000,000 | 5,000,000 |
Series C preferred stock designated shares | 50,000 | |
Description for series C preferred stock voting rights | Pursuant to the amended Certification of Designation of the Series C Preferred Stock filed on September 5, 2019, each share of Series C Preferred Stock entitles the holder thereof to 32,500 votes on all matters submitted to the vote of the stockholders of the Company. | |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 500,000,000 | 500,000,000 |
Amendment to articles of incorporation description | To increase the number of shares of common stock the Company is authorized to issue from 100,000,000 to 500,000,000. | |
Fair value of common stock issued for services | $ 783,782 | $ 1,462,997 |
Transaction Three [Member] | ||
Common stock issued against debt discount | ||
Common stock issued against debt discount | 19,006,350 | |
Fair value of Common stock issued as discount against debt | ||
Fair value of Common stock issued as discount against debt | $ 1,900,635 | |
Common stock shares issued, upon exercise warrants, shares | ||
Common stock shares issued, upon exercise warrants, shares | 2,410,000 | |
Common stock shares issued, upon exercise warrants, amount | ||
Common stock shares issued, upon exercise warrants, amount | $ 241,000 | |
Common stock shares issued in cashless exercise warrants | 1,961,755 | |
Transaction Two [Member] | ||
Common stock issued as prepaid equity-based compensation | 3,650,046 | |
Fair value of common stock issued as prepaid equity-based compensation | $ 620,508 | |
Transaction One [Member] | ||
Common stock issued for services | 6,181,133 | |
Fair value of common stock issued for services | $ 783,782 | |
Transaction [Member] | ||
Common stock shares issued, upon exercise warrants, shares | 75,000 | |
Common stock shares issued, upon exercise warrants, amount | $ 15,000 | |
Common stock issued as prepaid equity-based compensation | 250,000 | |
Common stock issued for services | 6,305,297 | |
Fair value of common stock issued for services | ||
Shares issued upon debt discount | 11,447,000 | |
Shares issued upon debt discount, fair market value | $ 2,478,533 | |
Fair value of common stock issued for services | $ 1,462,997 | |
Common stock issued for accrued interest on promissory note | 563,738 | |
Shares issued upon share based compensation, amount | $ 55,000 | |
Shares issued upon conversion of debt, converted instrument, price per share | $ 0.20 |
Long Term Debt and other shor_3
Long Term Debt and other short-term borrowings (Details) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Long term debt | $ 99,592,928 | $ 103,882,439 |
Total long-term debt and other short-term borrowings | 104,213,162 | 103,882,439 |
Less current portion | (19,225,045) | (11,805,582) |
Long term debt - net of current portion and debt discount | 84,988,117 | 92,076,857 |
Long-term Debt Six [Member] | ||
Long term debt including current and non-current portion | 1,032,215 | |
Long-term Debt Five [Member] | ||
Long term debt including current and non-current portion | 2,215,221 | |
Long-term Debt [Member] | ||
Long term debt including current and non-current portion | 11,163,357 | 9,168,988 |
Long-term Debt One [Member] | ||
Long term debt including current and non-current portion | 7,655,589 | 11,728,911 |
Long-term Debt Two [Member] | ||
Long term debt including current and non-current portion | 53,699,940 | 59,206,592 |
Long-term Debt Three [Member] | ||
Long term debt including current and non-current portion | 23,777,948 | 23,777,948 |
Long-term Debt Four [Member] | ||
Long term debt including current and non-current portion | 48,658 | |
Other Short Term Borrowings Three [Member] | ||
Other short-term borrowings | 200,000 | |
Other Short Term Borrowings Two [Member] | ||
Other short-term borrowings | 2,855,368 | |
Other Short Term Borrowings One [Member] | ||
Other short-term borrowings | 423,111 | |
Other Short Term Borrowings [Member] | ||
Other short-term borrowings | $ 1,141,755 |
Long Term Debt and other shor_4
Long Term Debt and other short-term borrowings (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
2020 | $ 19,225,045 | |
2021 | 32,912,526 | |
2022 | 2,683,193 | |
2023 | 48,302,412 | |
2024 | 725,705 | |
Thereafter | 364,281 | |
Long term debt, Total | 104,213,162 | $ 103,882,439 |
Principal [Member] | ||
2020 | 22,233,521 | |
2021 | 33,800,583 | |
2022 | 3,571,250 | |
2023 | 49,183,721 | |
2024 | 735,234 | |
Thereafter | 369,637 | |
Long term debt, Total | 109,893,946 | |
Unamortized Discount [Member] | ||
2020 | 3,008,476 | |
2021 | 888,057 | |
2022 | 888,057 | |
2023 | 881,309 | |
2024 | 9,529 | |
Thereafter | 5,356 | |
Long term debt, Total | $ 5,680,784 |
Long Term Debt and other shor_5
Long Term Debt and other short-term borrowings (Details Narrative) - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Jun. 13, 2018 | |
Accrued interest | $ 1,500,000 | ||
General and administrative expenses | 5,233,027 | $ 7,265,639 | |
Crossfirst Bank [Member] | |||
Maximum principal amount | $ 30,000,000 | ||
ABC Funding, LLC [Member] | Term Loan Credit Agreement [Member] | |||
Term loan original principal amount | 63,592,000 | ||
July and August of 2017 convertible promissory note 1 [Member] | |||
Promissory note | $ 1,475,000 | ||
Interest rate | 10.00% | ||
Unamortized discount | $ 271,403 | ||
December 22, 2017 promissory note [Member] | |||
Promissory note | 8,510,638 | ||
Unamortized discount | $ 0 | ||
Interest rate description | an OID of 6%., bearing interest initially at 9.875% through June 2018, then 11.375% through December 2018, then 12.875% through June 2019, then 14.375% through December 2019. Interest only through June 2018, at which time Principal will be payable at $75,000 monthly for six months and then $125,000 monthly to the maturity date of December 22, 2019. | ||
October 3 of 2017 promissory note [Member] | Cornerstone Bank [Member] | |||
Promissory note | $ 204,000 | ||
Unamortized discount | $ 0 | ||
Interest rate description | Payable interest only for the first twelve months commencing November 3, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on October 3, 2025. | ||
September 29 of 2017 promissory note [Member] | Cornerstone Bank [Member] | |||
Promissory note | $ 290,000 | ||
Unamortized discount | $ 0 | ||
Interest rate description | Payable interest only for the first twelve months commencing October 29, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 29, 2025. | ||
September 8 of 2017 promissory note [Member] | Cornerstone Bank [Member] | |||
Promissory note | $ 256,983 | ||
Unamortized discount | $ 0 | ||
Interest rate description | Interest only for the first twelve months commencing October 8, 2017, variable interest rate, currently at 5.5%, followed by 83 monthly payments of $3,765, interest at 6%, final payment due on September 8, 2025. | ||
August through December of 2017 promissory note [Member] | |||
Promissory note | $ 3,230,000 | ||
Interest rate | 10.00% | ||
Unamortized discount | $ 0 | ||
Maturity date | Oct. 31, 2018 | ||
Convertible promissory notes | $ 4,609,000 | ||
Payment to promissory note | 1,610,000 | ||
October 4, 2016 promissory note 1 [Member] | Crossfirst Bank [Member] | |||
Promissory note | $ 1,800,000 | ||
Interest rate | 10.00% | ||
Unamortized discount | $ 0 | ||
Debt instrument periodic payments | $ 15,000 | ||
Frequency of periodic payments | Monthly | ||
December 31, 2016 promissory note [Member] | |||
Promissory note | $ 630,000 | ||
Interest rate | 10.00% | ||
Maturity date | Apr. 3, 2017 | ||
Original issue discount, Percentage | 37.50% | ||
Original issue discount, Description | The discount was modified to fifty percent (50%) retroactively | ||
Interest payable, Description | Interest is payable on the outstanding principal of these notes at 10% per annum on the various maturity dates. | ||
Amendment to maturity date description | Extension of the maturity to June 2017. | ||
December 31, 2016 promissory note [Member] | Secured Promissory Notes [Member] | |||
Additional amount | $ 917,833 | ||
June through December of 2018 promissory note [Member] | |||
Accrued interest | 191,250 | ||
Promissory note | 9,459,750 | ||
Unamortized discount | $ 5,981,012 | ||
Interest rate description | A 10% Secured Promissory Note with 50% of the principal convertible into the Company’s common stock at $0.20 per share, all principal and accrued interest payable on the maturity date of August 31, 2019. The terms of these notes contain a provision whereby the Company has the right to extend the Maturity Date for one additional year to August of 2020. Consideration for the one-year extension is an increase in the interest rate to 12% for the extension period and the issuance of a warrant to purchase an additional 50,000 common shares per $100,000 of outstanding principal of each note on a pro rata basis. | ||
June through December of 2018 promissory note [Member] | Private Lenders [Member] | |||
Promissory note | $ 5,514,000 | ||
June 13, 2018 promissory note [Member] | |||
Promissory note | $ 12,400,000 | ||
Interest rate | 1.50% | ||
Unamortized discount | $ 103,421 | ||
Maturity date | Sep. 30, 2020 | ||
Debt instrument periodic payments | $ 100,000 | ||
Frequency of periodic payments | Monthly | ||
Maximum principal amount | $ 30,000,000 | ||
December 28, 2018 promissory note [Member] | |||
Promissory note | 23,777,948 | ||
Unamortized discount | $ 4,385,408 | ||
Interest rate description | (i) a floating rate of interest equal to 10% plus LIBOR, and (ii) a fixed rate of interest equal to 12%, payable monthly on the last day of each calendar month, commencing January 31, 2019. Principal payments shall be made quarterly at 1.25% of the initial loan amount, commencing on the last business day of the fiscal quarter ending June 30, 2019. | ||
Maturity date | Dec. 28, 2023 | ||
Loan amount | $ 63,592,000 | ||
General and administrative expenses | 65,000 | ||
Additional principal payment on debt | 2,000,000 | ||
Oil and gas development projects | $ 12,000,000 | ||
Ownership percentage | 100.00% |
Commitments and contingencies_2
Commitments and contingencies (Details) | Dec. 31, 2019USD ($) |
Commitments and contingencies (Details) | |
2020 | $ 94,690 |
2021 | 96,763 |
2022 | 98,837 |
2023 | 82,940 |
Operating Leases, Future Minimum Payments Receivable | $ 373,230 |
Commitments and contingencies_3
Commitments and contingencies (Details Narrative) | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments and contingencies (Details Narrative) | |
Operating lease expense | $ 96,304 |
Lease agreement, description | the Company’s subsidiary, Petrodome Energy, LLC entered into a 66-month lease for 4,147 square feet of office space for the Company’s corporate office in Houston, Texas. The annual base rent commenced at $22.00 per square foot, and escalates at $0.50 per foot each year through expiration of the lease term. |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Current | ||
Federal | $ (3,174,242) | $ (2,496,519) |
State | ||
Current fedreal and state | (3,174,242) | (2,496,519) |
Deferred tax timing differences | ||
Federal | (894,687) | (866,288) |
State | ||
Increase (decrease) in valuation allowance | 4,068,929 | 2,451,980 |
Income tax expense (benefit) | $ (910,827) |
Income Taxes (Details 1)
Income Taxes (Details 1) - USD ($) | Dec. 31, 2019 | Dec. 31, 2018 |
Deferred tax assets: | ||
NOL carry forwards | $ 8,077,099 | $ 4,902,857 |
Bad debt reserves | 77,896 | 77,896 |
Impairment of oil and gas assets | 403,289 | 403,289 |
Unrealized loss | 695 | 695 |
Derivative losses | 1,301,952 | 607,087 |
Share based compensation | 2,456,423 | 2,256,601 |
Total deferred tax assets | 12,317,354 | 8,248,425 |
Deferred tax liabilities: | ||
Derivative gains | (121,947) | (121,947) |
Bargain purchase gain | (5,674,498) | (5,674,498) |
Total deferred tax liabilities | (5,796,445) | (5,796,445) |
Deferred tax asset (liability) - before valuation allowance | 6,520,909 | 2,451,980 |
Less valuation allowance | (6,520,909) | (2,451,980) |
Deferred tax asset (liability) - net |
Income Taxes (Details 2)
Income Taxes (Details 2) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Continuing operations | ||
Expected provision at US statutory rate | 21.00% | 21.00% |
State income tax net of federal benefit | 0.00% | 0.00% |
Other items effecting timing differences | (4.60%) | (5.40%) |
Valuation allowance | 0.00% | 0.00% |
Effective income tax rate | 16.40% | 15.60% |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Limitation of net operating losses deduction | 80.00% | |
Net operating loss | $ 20,000,000 | |
Net operating loss carryforwards expire | between 2019 through 2038. | |
Operating Losses [Member] | ||
Net operating loss | $ 35,800,000 | $ 20,700,000 |
Net operating loss carryforwards expire | 2027 through 2037. |
Subsequent Events (Details Narr
Subsequent Events (Details Narrative) | Feb. 03, 2020USD ($) | Feb. 18, 2020USD ($) | Feb. 03, 2020USD ($)integer | Jul. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | Dec. 31, 2019USD ($) | Mar. 23, 2020USD ($) | Dec. 31, 2018USD ($) |
Convertible debt issued | $ 13,500,000 | ||||||||
Subsequent Event [Member] | New Debt Offerings [Member] | |||||||||
New debt offering terms | (i) Maturity Date: Feb. 11, 2022; (ii) Interest Rate: 12% per annum (payable quarterly or monthly at the Company’s option; (iii) Conversion Entitlement: the holder may convert all or a portion of the amount outstanding into common shares in the capital stock of the Company at a price of $0.175 per share; (iv) Equity Kicker: for every $100,000 exchanged or advanced into the new offering, the holder will receive 60,000 common shares in the capital stock of the Company; and (v) Security: holders will receive, pari passu with all other holders, including Camber Energy, Inc. (which is further described in this Subsequent Events section), a pledge of the membership interests of the Company’s interest in Elysium Energy Holdings, LLC, and, as soon as the Company’s obligations to EMC Capital Partners, LLC are satisfied, a pledge of the membership interests of the Company’s interest in Ichor Energy Holdings, LLC. | ||||||||
Promissory notes due | $ 13,200,000 | ||||||||
Investement amount | $ 980,000 | ||||||||
New offering investements | $ 100,000 | ||||||||
Subsequent Event [Member] | Promissory note [Member] | |||||||||
Promissory note amount | $ 500,000 | $ 500,000 | |||||||
Interest rate | 10.50% | 10.50% | |||||||
Prepayment penalty | 10.50% | 10.50% | |||||||
Warrant [Member] | Purchase and Sale Agreement [Member] | Texas [Member] | |||||||||
Oil and gas wells | integer | 72 | ||||||||
Warrant [Member] | Purchase and Sale Agreement [Member] | Louisiana [Member] | |||||||||
Oil and gas wells | integer | 55 | ||||||||
Warrant [Member] | Purchase and Sale Agreement [Member] | Subsequent Event [Member] | |||||||||
Oil and gas production, percentage | 50.00% | 60.00% | 75.00% | ||||||
Purchase and sale hedge, description | Theses hedges have a floor of $45 and a ceiling ranging from $52.70 to $56 for oil, and a floor of $2 and a ceiling of $2.425 for natural gas | ||||||||
Purchase price | $ 46,300,000 | $ 46,300,000 | |||||||
Warrant [Member] | Purchase and Sale Agreement [Member] | Subsequent Event [Member] | Elysium Holdings [Member] | |||||||||
Term loan maturity period | Aug. 3, 2022 | ||||||||
Term loan | $ 35,000,000 | ||||||||
Original issue discount | 4.00% | ||||||||
Term loan description | The loan bears interest at the prime rate plus seven and three quarters percent (7.75%) payable monthly. Principal payments are due beginning on May 1, 2020, and on each month thereafter at one percent (1%) of the then-outstanding balance and, to the extent not previously paid, on the maturity date. | ||||||||
Term loan prepayment, description | Subject to a prepayment fee of 5% for prepayments prior to February 3, 2021, 3% for prepayments from February 3, 2021 to February 3, 2022, and 0% for prepayments thereafter. |