Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2017 | Aug. 10, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | FIELDPOINT PETROLEUM CORP | |
Entity Central Index Key | 316,736 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 10,674,229 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2017 |
UNAUDITED CONDENSED CONSOLIDATE
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
CURRENT ASSETS: | ||
Cash and cash equivalents | $ 367,924 | $ 880,067 |
Accounts receivable: | ||
Oil and natural gas sales | 415,232 | 321,500 |
Joint interest billings, less allowance for doubtful accounts of approximately $237,000 each period | 238,096 | 243,106 |
Prepaid income taxes | 17,135 | 8,776 |
Prepaid expenses and other current assets | 74,808 | 37,837 |
Total current assets | 1,113,195 | 1,491,286 |
PROPERTY AND EQUIPMENT: | ||
Oil and natural gas properties (successful efforts method) | 40,086,021 | 41,288,964 |
Other equipment | 117,561 | 111,750 |
Less accumulated depletion, depreciation and impairment | (33,322,141) | (34,147,053) |
Net property and equipment | 6,881,441 | 7,253,661 |
OTHER ASSETS | 25,000 | 25,000 |
Total assets | 8,019,636 | 8,769,947 |
CURRENT LIABILITIES: | ||
Line of credit - current | 4,363,333 | 6,478,333 |
Accounts payable and accrued expenses | 958,365 | 1,139,596 |
Oil and gas revenues payable | 442,245 | 461,227 |
Asset retirement obligation - current | 80,821 | 41,438 |
Total current liabilities | 5,844,764 | 8,120,594 |
ASSET RETIREMENT OBLIGATION | 1,700,633 | 1,700,469 |
Total liabilities | 7,545,397 | 9,821,063 |
STOCKHOLDERS' EQUITY: | ||
Common stock, $.01 par value, 75,000,000 shares authorized; 11,596,229 and 11,153,947 shares issued, respectively, and 10,669,229 and 10,226,947 outstanding, respectively | 115,962 | 111,539 |
Additional paid-in capital | 13,715,668 | 13,532,871 |
Accumulated deficit | (11,390,499) | (12,728,634) |
Treasury stock, 927,000 shares, each period, at cost | (1,966,892) | (1,966,892) |
Total stockholders’ equity (deficit) | 474,239 | (1,051,116) |
Total liabilities and stockholders’ equity | $ 8,019,636 | $ 8,769,947 |
UNAUDITED CONDENSED CONSOLIDAT3
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Accounts receivable: | ||
Allowance for doubtful accounts of joint interest billings | $ 237,000 | $ 237,000 |
STOCKHOLDERS' EQUITY: | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 75,000,000 | 75,000,000 |
Common stock, shares issued (in shares) | 11,596,229 | 11,153,947 |
Common stock, shares outstanding (in shares) | 10,669,229 | 10,226,947 |
Treasury stock, shares (in shares) | 927,000 | 927,000 |
UNAUDITED CONDENSED CONSOLIDAT4
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
REVENUE: | ||||
Oil and natural gas sales | $ 880,975 | $ 751,035 | $ 1,695,703 | $ 1,319,774 |
Well operational and pumping fees | 1,261 | 1,262 | 2,523 | 2,524 |
Disposal fees | 17,455 | 28,283 | 39,891 | 42,995 |
Total revenue | 899,691 | 780,580 | 1,738,117 | 1,365,293 |
COSTS AND EXPENSES: | ||||
Production expense | 595,643 | 681,089 | 1,307,518 | 1,341,364 |
Depletion and depreciation | 213,554 | 307,800 | 370,108 | 627,600 |
Accretion of discount on asset retirement obligations | 26,000 | 27,000 | 52,000 | 54,000 |
General and administrative | 279,934 | 289,365 | 563,942 | 664,802 |
Total costs and expenses | 1,115,131 | 1,305,254 | 2,293,568 | 2,687,766 |
OPERATING LOSS | (215,440) | (524,674) | (555,451) | (1,322,473) |
OTHER INCOME (EXPENSE): | ||||
Interest income | 15 | 659 | 29 | 771 |
Interest expense | (64,277) | (63,542) | (133,331) | (126,382) |
Gain on sale of oil and natural gas property | 2,030,477 | 0 | 2,030,477 | 0 |
Miscellaneous | 257 | 124 | 257 | 124 |
Total other income (expense) | 1,966,472 | (62,759) | 1,897,432 | (125,487) |
INCOME (LOSS) BEFORE INCOME TAXES | 1,751,032 | (587,433) | 1,341,981 | (1,447,960) |
INCOME TAX EXPENSE - CURRENT | (3,846) | 0 | (3,846) | 0 |
TOTAL INCOME TAX PROVISION | (3,846) | 0 | (3,846) | 0 |
NET INCOME (LOSS) | $ 1,747,186 | $ (587,433) | $ 1,338,135 | $ (1,447,960) |
EARNINGS (LOSS) PER SHARE:: | ||||
BASIC | $ 0.16 | $ (0.07) | $ 0.13 | $ (0.16) |
DILUTED | $ 0.16 | $ (0.07) | $ 0.13 | $ (0.16) |
WEIGHTED AVERAGE SHARES OUTSTANDING: | ||||
BASIC | 10,669,229 | 8,890,101 | 10,643,571 | 8,890,046 |
DILUTED | 10,669,229 | 8,890,101 | 10,643,571 | 8,890,046 |
UNAUDITED CONDENSED CONSOLIDAT5
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 6 Months Ended | |
Jun. 30, 2017 | Jun. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ 1,338,135 | $ (1,447,960) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depletion and depreciation | 370,108 | 627,600 |
Accretion of discount on asset retirement obligations | 52,000 | 54,000 |
Stock compensation expense | 0 | 13,750 |
Gain on sale of oil and natural gas property | (2,030,477) | 0 |
Changes in current assets and liabilities: | ||
Accounts receivable | (88,722) | 94,112 |
Prepaid income taxes | (8,359) | (61) |
Prepaid expenses and other current assets | (36,971) | (7,362) |
Accounts payable and accrued expenses | 20,425 | 117,642 |
Oil and gas revenues payable | (18,982) | (3,867) |
Net cash used in operating activities | (402,843) | (552,146) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to oil and natural gas properties and other equipment | (326,520) | (79,469) |
Proceeds from sale of oil and natural gas property | 2,145,000 | 0 |
Net cash provided by (used in) investing activities | 1,818,480 | (79,469) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments on long term debt | (2,115,000) | 0 |
Net proceeds from issuance of common stock | 187,220 | 0 |
Net cash used in financing activities | (1,927,780) | 0 |
NET CHANGE IN CASH AND CASH EQUIVALENTS | (512,143) | (631,615) |
CASH AND CASH EQUIVALENTS, beginning of the period | 880,067 | 1,467,279 |
CASH AND CASH EQUIVALENTS, end of the period | 367,924 | 835,664 |
SUPPLEMENTAL INFORMATION: | ||
Cash paid during the period for interest | 136,471 | 128,308 |
Cash paid during the period for income taxes | 8,359 | 1,343 |
Change in accrued capital expenditures | $ 113,434 | $ 57,299 |
Nature of Business, Organizatio
Nature of Business, Organization and Basis of Preparation and Presentation | 6 Months Ended |
Jun. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Nature of Business, Organization and Basis of Preparation and Presentation | FieldPoint Petroleum Corporation (the “Company”, “FieldPoint”, “our”, or “we”) is incorporated under the laws of the state of Colorado. The Company is engaged in the acquisition, operation and development of oil and natural gas properties, which are located in Louisiana, New Mexico, Oklahoma, Texas, and Wyoming. The condensed consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted. However, in the opinion of management, all adjustments (which consist only of normal recurring adjustments) necessary to present fairly the financial position and results of operations for the periods presented have been made. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the notes thereto included in the Company's Form 10-K filing for the year ended December 31, 2016. |
Liquidity and Going Concern
Liquidity and Going Concern | 6 Months Ended |
Jun. 30, 2017 | |
Liquidity [Abstract] | |
Liquidity and Going Concern | Our condensed consolidated financial statements for the six months ended June 30, 2017 and 2016, were prepared assuming that we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these consolidated financial statements. Continued low oil and natural gas prices during 2016 and 2017 have had a significant adverse impact on our business, and as a result of our financial condition, substantial doubt exists that we will be able to continue as a going concern. As of June 30, 2017, and December 31, 2016, the Company has a working capital deficit of approximately $4,732,000 and $6,629,000, respectively, primarily due to the classification of our line of credit as a current liability. The line of credit provides for certain financial covenants and ratios measured quarterly which include a current ratio, leverage ratio, and interest coverage ratio requirements. The Company is out of compliance with all three ratios as of June 30, 2017, and we do not expect to regain compliance in 2017. A Forbearance Agreement was executed in October 2016 as discussed below. Citibank is in a first lien position on all our properties. We are current on all interest payments but Citibank lowered our borrowing base from $11,000,000 to $5,500,000 on December 1, 2015. During the three months ended June 30, 2017, the Company sold non-producing and non-economic assets in Lea County, New Mexico, and used $2,115,000 of the proceeds to pay toward the principal balance of our line of credit to cure our borrowing base deficiency. Our loan balance is $4,363,333 as of June 30, 2017. In October 2016, we executed a sixth amendment to the original loan agreement, which provides for Citibank’s forbearance from exercising remedies relating to the current defaults including the principal payment deficiencies. The Forbearance Agreement runs through January 1, 2018, and requires that we make a $500,000 loan principal pay down by September 30, 2017, and adhere to other requirements including weekly cash balance reports, quarterly operating reports, monthly accounts payable reports and that we pay all associated legal expenses. Furthermore, under the agreement Citibank may sweep any excess cash balances exceeding a net amount of $800,000 less equity offering proceeds, which will be applied towards the outstanding principal balance. The Company paid $2,115,000 toward the principal balance in June 2017. To mitigate our current financial situation, we are taking the following steps. We are actively meeting with investors for possible equity investments, including business combinations. We filed a new shelf registration statement on Form S-3 that was effective August 15, 2016, to permit the future sale of equity securities, including a limited at the market (ATM) capital raise. The shelf registration statement will be effective for a period of three years from its effective date; provided, however, if the Company’s common stock is delisted from the NYSE American (formerly NYSE MKT) due to its non-compliance with continued listing requirements (see disclosures below), the Company will no longer be eligible to use Form S-3 and will be required to withdraw its shelf registration statement. We are investigating other sources of capital. On August 12, 2016, the Company entered into a binding Stock and Mineral Purchase Agreement (the “SMPA”) with HFT Enterprises, LLC (the “Buyer”), to provide liquidity to the Company. The Buyer purchased newly-issued shares of common stock of the Company equal to 19.9% of the total number of issued and outstanding shares of the Company, as measured on the date of the Agreement, for a price of $0.45 per share (the shares to be purchased, the “Shares”). In November 2016, the Buyer purchased for gross proceeds of $398,053 paid in consideration of 884,564 shares of unregistered common stock. In December 2016, the Buyer purchased for gross proceeds of $199,027 paid in consideration of 442,282 shares of unregistered common stock. The remaining 442,282 shares of the second tranche were purchased in January 2017 for gross proceeds of $199,027 paid in consideration of 442,282 shares of unregistered common stock. Euro Pacific Capital, Inc. acted as the placement agent and garnered a fee of 5%. The SMPA also granted to the Buyer, a related party after the purchase of the stock discussed above, the right to purchase an undivided 100% working interest on or before December 31, 2016, in the Company’s Elkhorn and JC Kinney leases in the Big Muddy Oil Field in Converse County, Wyoming for a purchase price of $430,000. The SMPA was amended on January 9, 2017, to add the right to the Buyer to purchase an undivided 100% of working interest in the mineral lease covering the Quinoco Sulimar Field in Chaves County, New Mexico, in lieu of the Wyoming property, for a purchase price to be determined. Additionally, it extended the purchase date of either property to on or before April 1, 2017. The Board of Directors voted March 24, 2017, to extend the agreement for the Quinoco Sulimar Field only to June 30, 2017. The agreement has been verbally extended to August 31, 2017. As a condition of the purchase, all proceeds from the sale of the working interest must be used to pay down the Company’s indebtedness owed to Citibank. Other conditions include the requirement that Citibank will have agreed to extend the maturity date on the Company’s current indebtedness owed until December 31, 2017, which was accomplished in the Forbearance Agreement discussed above. Also, the Buyer has been granted the right to nominate one member of the Board of Directors. On May 11, 2016, the Company received notification from the NYSE American (formerly NYSE MKT) that it was noncompliant with the NYSE American (formerly NYSE MKT) continued listing standards; specifically, Section 1003(a)(i) of the Company Guide related to financial impairment. The Company’s stockholders’ equity is below the $2.0 million threshold required for listed companies that have reported losses from continuing operations in two of its three most recently completed fiscal years. The Company submitted a plan to regain compliance; whereupon NYSE Regulation reviewed the plan and determined to accept it, as supplemented, and granted a plan period through November 13, 2017, to regain compliance, the targeted completion date. NYSE Regulation staff will review the Company periodically for compliance with the initiatives outlined in the plan. Additionally, on April 28, 2017, the Company received notification from the NYSE American (formerly NYSE MKT) that it was noncompliant with the NYSE American (formerly NYSE MKT) continued listing standards; specifically, Section 1003(a)(ii) of the Company Guide. The Company’s stockholders’ equity has been below the $2.0 million threshold required for listed companies that have reported losses from continuing operations in two of its three most recently completed fiscal years (Section 1003(a)(i)) and is now below the $4.0 million threshold required for listed companies that have reported losses from continuing operations in three of its four most recent fiscal years (Section 1003(a)(ii)). The Company was given the opportunity to and submitted a supplement to the Plan to address how it intends to regain compliance with Section 1003(a)(ii). The Plan period to regain compliance with all of the continued listing standards by November 13, 2017, remain the same. The Company will be subject to periodic reviews by the Exchange. If the Company is not in compliance with the continued listing standards by November 13, 2017, or if the Company does not make progress consistent with the Plan, the Exchange will initiate delisting procedures as appropriate. If our initiatives to regain compliance are not successful and the Company is delisted from the NYSE American (formerly NYSE MKT), it could have a significant adverse impact on our ability to raise additional capital. Our warrants listed on the NYSE American (formerly NYSE MKT) as FPP WS expire March 23, 2018. If the warrants trade at sub-penny before that date, the NYSE will immediately suspend and move to delist the warrants. Our ability to continue as a “going concern” is dependent on many factors, including, among other things, our ability to comply with the covenants in our existing debt agreements, our ability to cure any defaults that occur under our debt agreements or to obtain waivers or forbearances with respect to any such defaults, and our ability to pay, retire, amend, replace or refinance our indebtedness as defaults occur or as interest and principal payments come due. Our ability to continue as a going concern is also dependent on raising additional capital to fund our operations and ultimately on generating future profitable operations. While we are actively involved in seeking new sources of working capital, there can be no assurance that we will be able to raise sufficient additional capital or to have positive cash flow from operations to address all of our cash flow needs. Additional capital could be on terms that are highly dilutive to our shareholders. If we are not able to find alternative sources of cash or generate positive cash flow from operations, our business and shareholders may be materially and adversely affected. |
Recently Issued Accounting Pron
Recently Issued Accounting Pronouncements | 6 Months Ended |
Jun. 30, 2017 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recently Issued Accounting Pronouncements | In May 2014, the FASB issued Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers”. Under this new standard, revenue is recognized at the time goods or services are transferred to a customer for the amount of consideration the entity expects to be entitled in exchange for the specific goods or services. Additional disclosures will be required to describe the nature, amount, timing, and uncertainty of revenue and cash flows from contracts with customers. The Company currently follows the sales method of accounting for oil, NGL and natural gas production, which is generally consistent with the revenue recognition provision of the new standard. However, we are currently evaluating the impact, if any, that this standard will have on our consolidated financial statements. Our evaluation process includes (i) review of revenue contracts and transactions and (ii) assessing the impact this guidance will have on our processes and internal controls. This evaluation will continue throughout 2017, and we are currently planning to adopt this new standard January 1, 2018. In February 2016, the FASB issued Update No. 2016-02, “Leases”, to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This authoritative guidance is effective for fiscal years beginning after December 15, 2018 and interim periods within those fiscal years. The Company is currently evaluating the provisions of this guidance and assessing its impact in relation to the Company's leases. In November 2016, the FASB issued Accounting Standards Update No. 2016-18, “Statement of Cash Flows: Restricted Cash”, to require amounts generally described as restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for the annual period ending after December 15, 2017, and interim periods within those fiscal years, using a retrospective transition method to each period presented. The Company plans to adopt the new standard December 31, 2017, and does not expect any impact on our consolidated statement of cash flows. |
Oil and Natural Gas Properties
Oil and Natural Gas Properties | 6 Months Ended |
Jun. 30, 2017 | |
Oil and Gas Property [Abstract] | |
Oil and Natural Gas Properties | No wells were drilled or completed during the three or six months ended June 30, 2017 or 2016. In the three months ended June 30, 2017, the Company sold its net interest in the Hermes, Cronos and Mercury wells. These wells were not economic to our interests. We also sold our net interest in the unproved Bilbrey acreage that was held by production. The gross proceeds from the sale of our net interest in these properties was $2,145,000 and we recognized a gain of $2,030,477. We continue to evaluate our portfolio for other properties to divest in order to regain compliance with our bank’s debt covenants and with the NYSE American (formerly NYSE MKT). On a quarterly basis, the Company compares our most recent engineering reports to forward strip pricing as of the end of the quarter and production to determine impairment charges, if needed, in order to write down the carrying value of certain properties to fair value. In order to determine the amounts of the impairment charges, the Company compares net capitalized costs of proved oil and natural gas properties to estimated undiscounted future net cash flows using management's expectations of economically recoverable proved reserves. If the net capitalized cost exceeds the undiscounted future net cash flows, the Company impairs the net cost basis down to the discounted future net cash flows, which is management's estimate of fair value. In order to determine the fair value, the Company estimates reserves, future operating and development costs, future commodity prices and a discounted cash flow model utilizing a 10 percent discount rate. The estimates used by management for the fair value measurements utilized in this review include significant unobservable inputs, and therefore, the fair value measurements are classified as Level 3 of the fair value hierarchy. Based on its current circumstances, the Company has not recorded any impairment charges during the three or six months ended June 30, 2017. |
Earnings Per Share
Earnings Per Share | 6 Months Ended |
Jun. 30, 2017 | |
EARNINGS (LOSS) PER SHARE:: | |
Earnings Per Share | Basic earnings per share are computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per share take common stock equivalents (such as options and warrants) into consideration using the treasury stock method. The Company had 7,177,010 warrants outstanding with an exercise price of $4.00 at June 30, 2017 and 2016. The dilutive effect of the warrants for the three months ended June 30, 2017 and 2016, is presented below. For the Three Months Ended June 30, For the Six Months Ended June 30, 2017 2016 2017 2016 Net income (loss) $ 1,747,186 $ (587,433 ) $ 1,338,135 $ (1,447,960 ) Weighted average common stock outstanding 10,669,229 8,890,101 10,643,571 8,890,046 Weighted average dilutive effect of stock warrants - - - - Dilutive weighted average shares 10,669,229 8,890,101 10,643,571 8,890,046 Earnings (loss) per share: Basic $ 0.16 $ (0.07 ) $ 0.13 $ (0.16 ) Diluted $ 0.16 $ (0.07 ) $ 0.13 $ (0.16 ) |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | For the three and six months ended June 30, 2017 and 2016, the Company’s deferred tax assets were reduced in full by a valuation allowance due to our determination that it is more likely than not that some or all of the deferred tax assets will not be realized in the future. As a result, the Company has not recognized an income tax benefit associated with its net loss for the three or six months ended June 30, 2016. For the three and six months ended June 30, 2017, the Company recognized $3,846 in state income tax expense, which is less than 1% income tax rate. This rate differs from the statutory federal and state rate due to net operating losses from prior years. The Company had no income tax expense for the three or six months ended June 30, 2016. |
Line of Credit
Line of Credit | 6 Months Ended |
Jun. 30, 2017 | |
Debt Disclosure [Abstract] | |
Line of Credit | The Company has a line of credit with a bank with a borrowing base of $5,500,000 at June 30, 2017, and December 31, 2016. The amount outstanding under this line of credit was $6,478,333 which is $978,333 over the borrowing base at December 31, 2016. During the three months ended June 30, 2017, the company sold non-producing and non-economic assets in Lea County, New Mexico, and used $2,115,000 of the proceeds to pay toward the principal balance of our line of credit to cure our borrowing base deficiency. Our loan balance is $4,363,333 as of June 30, 2017. Although our borrowing base is $5,500,000, we cannot draw additional amounts on the line of credit while we remain in technical default on the loan. We plan to continue evaluating our portfolio for non-producing assets which can be liquidated to reduce debt further. The sixth amendment to the original loan agreement requires quarterly interest-only payments until maturity on January 1, 2018. The interest rate is based on a LIBOR or Prime option. The Prime option provides for the interest rate to be prime plus a margin ranging between 1.75% and 2.25% and the LIBOR option to be the 3-month LIBOR rate plus a margin ranging between 2.75% and 3.25%, both depending on the borrowing base usage. Currently, we have elected the LIBOR interest rate option in which our interest rate was approximately 4% as of June 30, 2017, and December 31, 2016, respectively. The commitment fee is .50% of the unused borrowing base. Citibank is in a first lien position on all our properties and assets. The line of credit provides for certain financial covenants and ratios which include a current ratio that cannot be less than 1.10:1.00, a leverage ratio that cannot be more than 3.50:1.00, and an interest coverage ratio that cannot be less than 3.50:1.00. The Company is out of compliance with all three ratios as of June 30, 2017, and December 31, 2016, and is in technical default of the agreement. In October 2016, we executed a sixth amendment to the original loan agreement, which provides for Citibank’s forbearance from exercising remedies relating to the current defaults including the principal payment deficiencies. The Forbearance Agreement runs through January 1, 2018, and requires that we make a $500,000 loan principal pay down by September 30, 2017, and adhere to other requirements including weekly cash balance reports, quarterly operating reports, monthly accounts payable reports and that we pay all associated legal expenses. Furthermore, under the agreement Citibank may sweep any excess cash balances exceeding a net amount of $800,000 less equity offering proceeds, which will be applied towards the outstanding principal balance. The Company paid $2,115,000 toward the principal balance in June 2017. |
Stockholders' Equity
Stockholders' Equity | 6 Months Ended |
Jun. 30, 2017 | |
STOCKHOLDERS' EQUITY: | |
Stockholders' Equity | There were 7,177,010 warrants with an exercise price of $4.00 outstanding at June 30, 2017. There have been no warrants issued or exercised during the three and six months ended June 30, 2017. The weighted average expected life of the warrants was less than one year at June 30, 2017. As a signing bonus to his “at will” employment agreement, Phillip Roberson, as President and CFO, received a total of 50,000 shares of common stock that vested over a three year period beginning on July 1, 2014. On January 1, 2016, 10,000 shares were vested and issued. The final 10,000 shares vested at the last six-month anniversary date on July 1, 2016. The fair value of this stock grant was $275,000 on July 1, 2014, of which $13,750 was recognized as non-cash stock compensation expense during the six months ended June 30, 2016. Mr. Roberson was awarded, as part of his annual compensation, on his third anniversary date 5,000 shares, and will receive on his fourth anniversary date 6,000 shares, on his fifth anniversary date 7,000 shares, on his sixth anniversary date 8,000 shares, on his seventh anniversary date 9,000 shares, and each annual anniversary date thereafter 10,000 shares. Mr. Roberson’s contract was extended by the Compensation Committee to July 1, 2018. On August 12, 2016, the Company entered into a binding Stock and Mineral Purchase Agreement (the “SMPA”) with HFT Enterprises, LLC (the “Buyer”) in order to provide liquidity to the Company. The Buyer purchased newly-issued restricted shares of common stock of the Company equal to 19.9% of the total number of issued and outstanding shares of the Company, as measured on the date of the Agreement, for a price of $0.45 per share. In 2016, the Buyer purchased for gross proceeds of $597,080 paid in consideration of 1,326,846 shares of unregistered common stock. The remaining shares were purchased in January 2017, for gross proceeds of $199,027 paid in consideration of 442,282 shares of unregistered common stock. Costs incurred by the Company to issue the stock was $11,807 for the six months ended June 30, 2017. The SMPA also granted to the Buyer, a related party after the purchase of the stock discussed above, the right to purchase an undivided 100% working interest on or before December 31, 2016, in the Company’s Elkhorn and JC Kinney leases in the Big Muddy Oil Field in Converse County, Wyoming for a purchase price of $430,000. The SMPA was amended on January 9, 2017, to add the right to the Buyer to purchase an undivided 100% of working interest in the mineral lease covering the Quinoco Sulimar Field in Chaves County, New Mexico, in lieu of the Wyoming property, for a purchase price to be determined. Additionally, it extended the purchase date of either property to on or before April 1, 2017. The Board of Directors voted March 24, 2017, to extend the agreement for the Quinoco Sulimar Field only to June 30, 2017. The agreement has been verbally extended to August 31, 2017. As a condition of the purchase, all proceeds from the sale of the working interest must be used to pay down the Company’s indebtedness owed to Citibank. Other conditions include the requirement that Citibank will have agreed to extend the maturity date on the Company’s current indebtedness owed until December 31, 2017, which was accomplished in the Forbearance Agreement discussed above. Also, the Buyer has been granted the right to nominate one member of the Board of Directors. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | On July 20, 2017, the Company announced the sale of an additional 401 net acres of non-producing leasehold in Lea County, New Mexico, for $1,200,000. The Company used $1,000,000 of the proceeds to reduce our credit line with Citibank to $3,363,333 and the additional $200,000 was reserved for general corporate purposes. |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 6 Months Ended |
Jun. 30, 2017 | |
EARNINGS (LOSS) PER SHARE:: | |
Schedule of Earnings Per Share, Basic and Diluted | For the Three Months Ended June 30, For the Six Months Ended June 30, 2017 2016 2017 2016 Net income (loss) $ 1,747,186 $ (587,433 ) $ 1,338,135 $ (1,447,960 ) Weighted average common stock outstanding 10,669,229 8,890,101 10,643,571 8,890,046 Weighted average dilutive effect of stock warrants - - - - Dilutive weighted average shares 10,669,229 8,890,101 10,643,571 8,890,046 Earnings (loss) per share: Basic $ 0.16 $ (0.07 ) $ 0.13 $ (0.16 ) Diluted $ 0.16 $ (0.07 ) $ 0.13 $ (0.16 ) |
Liquidity and Going Concern (De
Liquidity and Going Concern (Details Narrative) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Liquidity [Abstract] | ||
Working capital (deficit) | $ (4,732,000) | $ (6,629,000) |
Borrowing base | $ 5,500,000 | 5,500,000 |
Borrowing base deficiency | $ 978,333 |
Earnings Per Share (Details)
Earnings Per Share (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2017 | Jun. 30, 2016 | Jun. 30, 2017 | Jun. 30, 2016 | |
EARNINGS (LOSS) PER SHARE:: | ||||
Net income (loss) | $ 1,747,186 | $ (587,433) | $ 1,338,135 | $ (1,447,960) |
Weighted average common stock outstanding (in shares) | 10,669,229 | 8,890,101 | 10,643,571 | 8,890,046 |
Weighted average dilutive effect of stock warrants (in shares) | 0 | 0 | 0 | 0 |
Dilutive weighted average shares (in shares) | 10,669,229 | 8,890,101 | 10,643,571 | 8,890,046 |
Earnings (loss) per share: - Basic (in dollars per share) | $ 0.16 | $ (0.07) | $ 0.13 | $ (0.16) |
Earnings (loss) per share: - Diluted (in dollars per share) | $ 0.16 | $ (0.07) | $ 0.13 | $ (0.16) |
Line of Credit (Details Narrati
Line of Credit (Details Narrative) - USD ($) | Jun. 30, 2017 | Dec. 31, 2016 |
Debt Disclosure [Abstract] | ||
Borrowing base | $ 5,500,000 | $ 5,500,000 |
Outstanding line of credit | $ 4,363,333 | 6,478,333 |
Borrowing base deficiency | $ 978,333 |