Blueprint

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

	June 30,	December 31,
	2018	2017
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$348,931	$408,656
Accounts receivable:
Oil and natural gas sales	379,530	366,939
Joint interest billings, less allowance for doubtful accounts of approximately $237,000 each period	251,938	260,816
Income tax receivable	30,695	25,057
Prepaid expenses and other current assets	62,568	48,998
Total current assets	1,073,662	1,110,466

PROPERTY AND EQUIPMENT:
Oil and natural gas properties (successful efforts method)	33,765,038	33,753,833
Other equipment	117,561	117,561
Less accumulated depletion, depreciation and impairment	(27,671,524)	(27,425,652)
Net property and equipment	6,211,075	6,445,742

OTHER ASSETS	157,227	157,227

Total assets	$7,441,964	$7,713,435

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Line of credit - current	$2,585,132	$2,761,632
Accounts payable and accrued expenses	788,529	897,101
Oil and gas revenues payable	425,969	427,859
Asset retirement obligation - current	139,470	146,066
Total current liabilities	3,939,100	4,232,658

ASSET RETIREMENT OBLIGATION	1,732,017	1,678,420
Total liabilities	5,671,117	5,911,078

STOCKHOLDERS’ EQUITY:
Common stock, $.01 par value, 75,000,000 shares authorized;
11,596,229 and 10,669,229 shares issued and outstanding, respectively	115,962	115,962
Additional paid-in capital	13,715,668	13,715,668
Accumulated deficit	(10,093,891)	(10,062,381)
Treasury stock, 927,000 shares, each period, at cost	(1,966,892)	(1,966,892)
Total stockholders’ equity	1,770,847	1,802,357
Total liabilities and stockholders’ equity	$7,441,964	$7,713,435

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2018	2017	2018	2017
REVENUE:
Oil and natural gas sales	$592,612	$880,975	$1,058,459	$1,695,703
Well operational and pumping fees	2,988	1,261	4,670	2,523
Disposal fees	8,019	17,455	33,452	39,891
Total revenue	603,619	899,691	1,096,581	1,738,117

COSTS AND EXPENSES:
Production expense	277,257	595,643	508,738	1,307,518
Depletion and depreciation	148,754	213,554	249,508	370,108
Accretion of discount on asset retirement obligations	28,000	26,000	55,000	52,000
General and administrative	278,431	279,934	588,058	563,942
Total costs and expenses	732,442	1,115,131	1,401,304	2,293,568

OPERATING LOSS	(128,823)	(215,440)	(304,723)	(555,451)

OTHER INCOME (EXPENSE):
Interest income	30	15	45	29
Interest expense	(37,571)	(64,277)	(72,459)	(133,331)
Gain on sale of oil and natural gas property	345,399	2,030,477	345,399	2,030,477
Miscellaneous	228	257	228	257
Total other income (expense)	308,086	1,966,472	273,213	1,897,432

INCOME (LOSS) BEFORE INCOME TAXES	179,263	1,751,032	(31,510)	1,341,981

INCOME TAX EXPENSE – CURRENT	-	(3,846)	-	(3,846)
TOTAL INCOME TAX PROVISION	-	(3,846)	-	(3,846)

NET INCOME (LOSS)	$179,263	$1,747,186	$(31,510)	$1,338,135

EARNINGS (LOSS) PER SHARE:
BASIC	$0.02	$0.16	$(0.00)	$0.13
DILUTED	$0.02	$0.16	$(0.00)	$0.13

WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC	10,669,229	10,669,229	10,669,229	10,643,571
DILUTED	10,669,229	10,669,229	10,669,229	10,643,571

	For the Six Months Ended
	June 30,
	2018	2017
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)	$(31,510)	$1,338,135
Adjustments to reconcile net income (loss) to net cash used in operating activities:
Depletion and depreciation	249,508	370,108
Accretion of discount on asset retirement obligations	55,000	52,000
Gain on sale of oil and natural gas property	(345,399)	(2,030,477)
Changes in current assets and liabilities:
Accounts receivable	(3,713)	(88,722)
Income tax receivable	(5,638)	(8,359)
Prepaid expenses and other current assets	(13,570)	(36,971)
Accounts payable and accrued expenses	(20,191)	20,425
Oil and gas revenues payable	(1,890)	(18,982)
Net cash used in operating activities	(117,403)	(402,843)

CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to oil and natural gas properties and other equipment	(135,822)	(326,520)
Proceeds from sale of oil and natural gas property	370,000	2,145,000
Net cash provided by investing activities	234,178	1,818,480

CASH FLOWS FROM FINANCING ACTIVITIES:
Payments on line of credit - current	(176,500)	(2,115,000)
Net proceeds from issuance of common stock	-	187,220
Net cash used in financing activities	(176,500)	(1,927,780)

NET CHANGE IN CASH AND CASH EQUIVALENTS	(59,725)	(512,143)

CASH AND CASH EQUIVALENTS, beginning of the period	408,656	880,067

CASH AND CASH EQUIVALENTS, end of the period	$348,931	$367,924

SUPPLEMENTAL INFORMATION:
Cash paid during the period for interest	$34,888	$136,471
Cash paid during the period for income taxes	$5,638	$8,359
Change in accrued capital expenditures	$96,380	$113,434

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, 2017.

Our condensed consolidated financial statements for the six months ended June 30, 2018 and 2017, 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 issuance of these consolidated financial statements. Continued low oil and natural gas prices during 2017 and 2018 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, 2018, and December 31, 2017, the Company has a working capital deficit of approximately $2,865,000 and $3,122,000, respectively, primarily due to the classification of our line of credit as a current liability. Citibank is in a first lien position on all of our properties. On December 1, 2015, Citibank lowered our borrowing base from $11,000,000 to $5,500,000 and lowered it again to $2,761,632 on December 29, 2017. Our borrowing base was lowered again on June 30, 2018, to $2,585,132. 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, 2018, and we do not expect to regain compliance in 2018. A Forbearance Agreement was executed in October 2016 and amended on December 29, 2017, March 30, 2018, and June 30, 2018, as discussed below.

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 ran through January 1, 2018, and required 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.

On December 29, 2017, we executed a seventh amendment to the original loan agreement and first amendment to the forbearance, which reduced our borrowing base to $2,761,632, our loan balance at December 31, 2017, and provided for Citibank’s forbearance from exercising remedies relating to the current defaults including the principal payment deficiencies. The Forbearance Agreement ran through March 31, 2018, and required that we adhere to certain reporting requirements such as weekly cash reports and pay all of the fees and expenses of the Lender’s counsel invoiced on or before the effective date. On March 30, 2018, we executed an eighth amendment to the original loan agreement and second amendment to the forbearance which extended it to June 30, 2018. The terms of the second amendment remained the same as under the first amendment to the forbearance. On July 25, 2018, we executed a ninth amendment to the original loan agreement and third amendment to the forbearance which extends it to September 30, 2018. The terms of the second amendment increased the interest rate 2% and reduced our borrowing base $176,500 to our current loan balance of $2,585,132. All other terms remain the same as under the first amendment to the forbearance.

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 are continuing our effort to identify and market all possible non-producing assets in our portfolio to maximize cash in-flows while minimizing a loss of cash flow. We are also investigating other possible sources to refinance our debt as we continue to pay down our outstanding senior debt balance with a minimal effect on cash flow and our assets by selling properties that are non-producing or low producing. Finally, we are continuing discussion with various individuals and groups that could be willing to provide capital to fund operations and growth of the Company.

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 our cash flow needs. Additional capital could be on terms that are highly dilutive to our shareholders. If we are not able to find alternative sources of cash or generate positive cash flow from operations, our business and shareholders may be materially and adversely affected.

In February 2016, the FASB issued Accounting Standards 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.

On January 1, 2018, the Company adopted Accounting Standards Codification (“ASC”) Topic 606 “Revenue from Contracts with Customers” (“ASC 606”) using the modified retrospective approach, which only applies to contracts that were not completed as of the date of the application. The adoption did not require an adjustment to operating retained earnings for the cumulative effect adjustment and does not have a material impact on the Company’s ongoing consolidated balance sheet, statement of operations, statement of stockholders’ equity or statement of cash flows.

The Company recognizes revenues from the sales of oil, natural gas and natural gas liquids (“NGL”) to its customers in accordance with the five-step revenue recognition model prescribed in ASC 606. Specifically, revenue is recognized when the Company’s performance obligations under contracts with customers (purchasers) are satisfied, which generally occurs with the transfer of control of the products to the purchasers. Control is generally considered transferred when the following criteria are met: (i) transfer of physical custody, (ii) transfer of title, (iii) transfer of risk of loss and (iv) relinquishment of any repurchase rights or other similar rights. Given the nature of the sales, revenue is recognized at a point in time based on the amount of consideration the Company expects to receive in accordance with the price specified in the contracts. Consideration under the marketing contracts is typically received from the purchaser one to two months after production and, as a result, the Company is required to estimate the amount of production that was delivered to the purchaser and the price that will be received for the sale of the product. The Company records the differences between estimates and the actual amounts received for product sales once payment is received from the purchaser. Such differences have historically not been significant as the Company uses knowledge of its properties and their historical performance, spot market prices and other factors as the basis for these estimates. At June 30, 2018, the Company had receivables related to contracts with customers of $379,530.

Oil Contracts. Under its oil sales contracts, the Company sells oil at the delivery point specified in the contract and collects an agreed-upon index price, net of pricing differentials. At the delivery point, the purchaser takes custody, title and risk of loss of the product and, therefore, control as defined under ASC 606 passes at the delivery point. The Company recognizes revenue at the net price received when control transfers to the purchaser.

The Company does not disclose the value of unsatisfied performance obligations under its contracts with customers as it applies the practical exemption in accordance with ASC 606. The exemption, as described in ASC 605-10-50-14(a), applies to variable consideration that is recognized as control of the product is transferred to the purchaser. Since each unit of product represents a separate performance obligation, future volumes are wholly unsatisfied and disclosure of the transaction price allocated to remaining performance obligations is not required.

In the three months ended June 30, 2018, the Company sold its net interest in the Buchanan wells and associated acreage in the Spraberry field that were not economic to our interests. The gross proceeds for the Buchanan properties was $370,000 and the Company recognized a gain of $345,399. In the six 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.

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, 2018.

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 distributed warrants as a dividend to stockholders as of the record date, March 23, 2012. The Company had 7,177,010 warrants outstanding with an exercise price of $4.00 at December 31, 2017. The warrants expired March 23, 2018. The dilutive effect of the warrants for the six months ended June 30, 2018 and 2017, is presented below.

	For the Three Months Ended June 30,		For the Six Months Ended June 30,
	2018	2017	2018	2017

Net income (loss)	$179,263	$1,747,186	$(31,510)	$1,338,135

Weighted average common stock outstanding	10,669,229	10,669,229	10,669,229	10,643,571
Weighted average dilutive effect of stock warrants	-	-	-	-
Dilutive weighted average shares	10,669,229	10,669,229	10,669,229	10,643,571

Earnings (loss) per share:
Basic	$0.02	$0.16	$(0.00)	$0.13
Diluted	$0.02	$0.16	$(0.00)	$0.13

On December 22, 2017, the President of the United States signed into law what is informally called the Tax Cuts and Jobs Act of 2017 (the “Act”), a comprehensive U.S. tax reform package that, effective January 1, 2018, among other things, lowered the corporate income tax rate from 35% to 21%, repealed the Alternative Minimum Tax and made the AMT credit refundable. Accounting rules require companies to recognize the effects of changes in tax laws and tax rates on deferred tax assets and liabilities in the period in which the new legislation was enacted. We recorded a total income tax benefit of $157,227 in the year ended December 31, 2017, the amount of our AMT credit that will be refundable in tax years beginning after 2017. The refund is reported as a long-term asset in other assets on the balance sheet.

The Company also reassessed the realizability of our deferred tax assets but determined that it continues to be more likely than not that the deferred tax assets will not be utilized in the future and continue to record a full valuation allowance of the deferred tax assets. As a result, no income tax benefit was recognized by the Company for the three or six months ended June 30, 2018, or the year ended December 31, 2017. The Company had no income tax expense for the three or six months ended June 30, 2018. For the three and six months ended June 30, 2017, the Company recognized $3,846 in state income tax expense, which is less than a 1% income tax rate. This rate differs from the statutory federal and state rate due to net operating losses from prior years.

The amended loan agreement requires quarterly interest-only payments until expiration. 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 5% as of June 30, 2018, and December 31, 2017. On July 25, 2018, we executed a ninth amendment to the original loan agreement and third amendment to the forbearance which increased the interest rate 2% for the term of the loan through September 30, 2018. The commitment fee is .50% of the unused borrowing base.

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, 2018, and December 31, 2017, and is in technical default of the agreement. Citibank is in a first lien position on all our properties and assets.

On December 29, 2017, we executed a seventh amendment to the original loan agreement and first amendment to the forbearance, which reduced our borrowing base to $2,761,632, our loan balance at December 31, 2017, and provided for Citibank’s forbearance from exercising remedies relating to the current defaults including the principal payment deficiencies. The Forbearance Agreement ran through March 31, 2018, and required that we adhere certain reporting requirements such as weekly cash reports and pay all of the fees and expenses of the Lender’s counsel invoiced on or before the effective date. On March 30, 2018, we executed an eighth amendment to the original loan agreement and second amendment to the forbearance which extended it to June 30, 2018. The terms of the second amendment were the same as under the first amendment to the forbearance. On July 25, 2018, we executed a ninth amendment to the original loan agreement and third amendment to the forbearance which extends it to September 30, 2018. The terms of the second amendment increased the interest rate 2% and reduced our borrowing base $176,500 to our current loan balance of $2,585,132. All other terms remain the same as under the first amendment to the forbearance.

Phillip Roberson, President and CFO, 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. However, Mr. Roberson declined the 5,000 and 6,000 shares that would have been awarded on his third and fourth anniversary dates, July 1, 2017 and 2018, respectively. On August 10, 2018, the Compensation Committee ratified the automatic extension of Mr. Roberson’s contract to July 1, 2019.

During 2018, the Company received netted Joint Interest Billing statements from Trivista Operating, LLC for approximately $78,000. This amount was netted against disputed outstanding invoices which Trivista claims were acquired from the prior operator. Trivista Operating, LLC is believed to be controlled by Natale Rea, who owns approximately 6.98% of the Company’s common stock through control of 2390530 Ontario Inc. and Natale Rea (2013) Family Trust.

As previously disclosed in the Company’s Current Report on Form 8-K dated May 8, 2018, the Company is a party to a civil action captioned Trivista Operating, LLC v. Bass Petroleum, Inc. and Fieldpoint Petroleum Corporation, Cause No. 16,539 in the District Court of Lee County, Texas, 335 Judicial District (the “Trivista Litigation”). Trivista filed suit for non-payment of outstanding disputed invoices of $107,000 plus attorney fees and court costs on February 26, 2018. Trivista Operating LLC is controlled by one of our major shareholders, Natale Rea (2013) Family Trust. The Company disputes that it has any liability to the plaintiff in that action and intends to vigorously defend same.

The Company is a party to a civil action captioned A.C.T. Equipment Company, LLC v. Fieldpoint Petroleum Corporation, Cause No. 21,191 in the 109th Judicial District Court of Andrews, Andrews County, Texas (the “A.C.T. Litigation”). A.C.T. filed suit for non-payment of outstanding disputed invoices of $18,832 plus attorney fees and court costs on July 24, 2018. The Company disputes that it has any liability to the plaintiff in that action and intends to vigorously defend same.

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

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

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

We had a net loss of $31,510 and net income of $1,338,135 for the six months ended June 30, 2018 and 2017, respectively and continue to have negative operating cash flow in both periods. We expect that the Company will continue to experience operating losses and negative cash flow for so long as commodity prices remain depressed. The audit report of our independent registered public accountants covering our financial statements for the fiscal years ended December 31, 2017 and 2016, include an explanatory paragraph expressing substantial doubt as to our ability to continue as a going concern. The financial statements have been prepared "assuming that the Company will continue as a going concern”. Our ability to continue as a going concern is dependent on raising additional capital to fund our operations and ultimately on generating future profitable operations. There can be no assurance that we will be able to raise sufficient additional capital or have positive cash flow from operations to address all of our cash flow needs. If we are not able to find alternative sources of cash or generate positive cash flow from operations, our business and shareholders may be materially and adversely affected.

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

In the six months ended June 30, 2018, the Company sold its net interest in the Buchanan wells in the Spraberry field that were not economic to our interests. The gross proceeds for the wells was $370,000 and the Company recognized a gain of $345,399. The Company used $176,500 of the proceeds to pay toward the principal balance of our line of credit. 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.

	Quarter Ended June 30,
	2018	2017
Revenue:
Oil sales	$540,408	$789,683
Natural gas sales	52,204	91,292
Total oil and natural gas sales	$592,612	$880,975

Sales volumes:
Oil (Bbls)	8,590	15,776
Natural gas (Mcf)	28,078	31,925
Total (BOE)	13,270	21,096

Average sales prices:
Oil ($/Bbl)	$62.91	$50.06
Natural gas ($/Mcf)	1.86	2.86
Total ($/BOE)	$44.66	$41.76

Costs and expenses ($/BOE)
Production expense (lifting costs)	$20.90	$28.24
Depletion and depreciation	11.21	10.12
Accretion of discount on asset retirement obligations	2.11	1.23
General and administrative	20.98	13.27
Total	$55.20	$52.86

Oil and natural gas sales revenues decreased 33% or $288,363 to $592,612 for the three months ended June 30, 2018, from the comparable 2017 period. Average oil sales prices increased 26% to $62.91 for the three months ended June 30, 2018, compared to $50.06 for the period ended June 30, 2017. Average natural gas sales prices decreased 35% to $1.86 for the three months ended June 30, 2018, compared to $2.86 for the period ended June 30, 2017. Decreased oil and natural gas production, due in part to the sale of fields that were noneconomic, and lower commodity prices for natural gas accounted for a decrease in revenue of approximately $399,000. Higher commodity prices for oil accounted for an increase in revenue of approximately $111,000. We have temporarily suspended drilling and exploration activity due to low commodity prices and expect our volumes to decline in the coming quarters until drilling and exploration activities are re-established.

Production expense decreased 53% or $318,386 to $277,257 for the three months ended June 30, 2018, from the comparable 2017 period. This was primarily due to a decrease in workover activity and operating costs associated with properties sold in 2017. Lifting costs per BOE decreased $7.34 to $20.90 for the 2018 period compared to $28.24 for the three months ended June 30, 2017, due mainly to decreased workover activity and general decreases in costs and lease operating expenses associated with properties sold in 2017, which had higher than average operating costs per BOE. We anticipate lease operating expenses to decline slightly over the following quarters due to less anticipated work over activity and a decrease in costs and lease operating expenses associated with properties sold in 2017 which had higher than average operating costs per BOE.

Other income, net for the quarter ended June 30, 2018, was $308,086, which included gain on sale of oil and natural gas properties of $345,399. Interest expense was $37,571 for the three months ended June 30, 2018. Other income, net for the quarter ended June 30, 2017, was $1,966,472, which included gain on sale of oil and natural gas properties of $2,030,477. Interest expense was $64,277 for the three months ended June 30, 2017.

	Six Months Ended June 30,
	2018	2017
Revenue:
Oil sales	$965,416	$1,510,356
Natural gas sales	93,043	185,347
Total oil and natural gas sales	$1,058,459	$1,695,703

Sales volumes:
Oil (Bbls)	16,204	30,714
Natural gas (Mcf)	41,945	61,925
Total (BOE)	23,195	41,035

Average sales prices:
Oil ($/Bbl)	$59.58	$49.18
Natural gas ($/Mcf)	2.22	2.99
Total ($/BOE)	$45.63	$41.32

Costs and expenses ($/BOE)
Production expense (lifting costs)	$21.93	$31.86
Depletion and depreciation	10.76	9.02
Accretion of discount on asset retirement obligations	2.37	1.27
General and administrative	25.35	13.74
Total	$60.41	$55.89

Oil and natural gas sales revenues decreased 38% or $637,244 to $1,058,459 for the six months ended June 30, 2018, from the comparable 2017 period. Average oil sales prices increased 21% to $59.58 for the six months ended June 30, 2018, compared to $49.18 for the six months ended June 30, 2017. Average natural gas sales prices decreased 26% to $2.22 for the six months ended June 30, 2018, compared to $2.99 for the six months ended June 30, 2017. Decreased oil and natural gas production and lower commodity prices for natural gas accounted for a decrease in revenue of approximately $806,000. Higher commodity prices for oil accounted for an increase in revenue of approximately $169,000. We have temporarily suspended drilling and exploration activity due to low commodity prices and expect our volumes to decline in the coming quarters until drilling and exploration activities are re-established.

Production expense decreased 61% or $798,780 to $508,738 for the six months ended June 30, 2018, from the comparable 2017 period. This was primarily due to a decrease in unexpected workover activity and operating costs. Lifting costs per BOE decreased $9.93 to $21.93 for the 2018 period compared to $31.86 for the six months ended June 30, 2017, due mainly to decreased workover activity and general decreases in costs and lease operating expenses associated with properties sold in 2017, which had higher than average operating costs per BOE. We anticipate lease operating expenses to decline slightly over the following quarters due to a decrease in costs and lease operating expenses associated with properties sold in 2017.

General and administrative costs increased 4% or $24,116 to $588,058 for the six months ended June 30, 2018, from the six months ended June 30, 2017. This was primarily attributable to an increase in salaries and professional services. At this time, the Company anticipates general and administrative expenses to remain stable or increase slightly in the coming quarters.

Other income, net for the six months ended June 30, 2018, was $273,213 which included gain on sale of oil and natural gas properties of $345,399. Other income, net for the six months ended June 30, 2017, was $1,897,432, which included gain on sale of oil and natural gas properties of $2,030,477. Interest expense was $72,459 and $133,331 for the six months ended June 30, 2018 and 2017, respectively.

Cash flow provided by investing activities was $234,178 for the six months ended June 30, 2018, due to proceeds from sale of oil and natural gas properties of $370,000 offset by additions to oil and natural gas properties and equipment of $135,822. Cash flow provided by investing activities was $1,818,480 for the six months ended June 30, 2017, which included proceeds of $2,145,000 from the sale of oil and natural gas properties, offset by $326,520 in additions to oil and natural gas properties and equipment.

Cash flow used in financing activities was a payment of $176,500 principal on our credit facility during the six months ended June 30, 2018. Cash flow used in financing activities was $1,927,780 primarily due to payment of $2,115,000 principal on the line of credit that was partially offset by proceeds of $187,220 from the sale of common stock during the six months ended June 30, 2017.

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

On December 29, 2017, we executed a seventh amendment to the original loan agreement and first amendment to the forbearance, which reduced our borrowing base to our current loan balance of $2,761,632 and it provided for Citibank’s forbearance from exercising remedies relating to the current defaults including the principal payment deficiencies. The Forbearance Agreement ran through March 31, 2018, and required that we adhere certain reporting requirements such as weekly cash reports and pay all of the fees and expenses of the Lender’s counsel invoiced on or before the effective date. On March 30, 2018, we executed an eighth amendment to the original loan agreement and second amendment to the forbearance which extended it to June 30, 2018. The terms of the second amendment remained the same as under the first amendment to the forbearance. On July 25, 2018, we executed a ninth amendment to the original loan agreement and third amendment to the forbearance which extends it to September 30, 2018. The terms of the second amendment increased the interest rate 2% and reduced our borrowing base $176,500 to our current loan balance of $2,585,132. All other terms remain the same as under the first amendment to the forbearance.

We periodically enter into certain commodity price risk management transactions to manage our exposure to oil and natural gas price volatility. These transactions may take the form of futures contracts, swaps or options. All data relating to our derivative positions is presented in accordance with authoritative guidance. Accordingly, unrealized gains and losses related to the change in fair value of derivative contracts that qualify and are designated as cash flow hedges are recorded as other comprehensive income or loss and such amounts are reclassified to oil and natural gas sales revenues as the associated production occurs. Derivative contracts that do not qualify for hedge accounting treatment are recorded as derivative assets and liabilities at fair value in the consolidated balance sheet, and the associated unrealized gains and losses are recorded as current expense or income in the consolidated statement of operations. While such derivative contracts do not qualify for hedge accounting, management believes these contracts can be utilized as an effective component of commodity price risk management activities. There were no commodity positions open at June 30, 2018 or 2017.

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

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

There have been no changes to the Company’s system of internal controls over financial reporting during the quarter ended June 30, 2018, that have materially affected, or are reasonably likely to materially affect, the Company’s system of controls over financial reporting. As part of a continuing effort to improve the Company’s business processes, management is evaluating its internal controls and may update certain controls to accommodate any modifications to its business processes or accounting procedures.

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

As previously disclosed in the Company’s Current Report on Form 8-K dated May 8, 2018, the Company is a party to a civil action captioned Trivista Operating, LLC v. Bass Petroleum, Inc. and Fieldpoint Petroleum Corporation, Cause No. 16,539 in the District Court of Lee County, Texas, 335 Judicial District (the “Trivista Litigation”). Trivista Operating LLC is controlled by one of our major shareholders, Natale Rea (2013) Trust. The Company disputes that it has any liability to the plaintiff in that action and intends to vigorously defend same.

On December 1, 2015, Citibank lowered our borrowing base from $11,000,000 to $5,500,000 and lowered it again to $2,761,632 on December 29, 2017. The line of credit provides for certain financial covenants and ratios measured quarterly 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, 2018, and we do not expect to regain compliance in 2018. A Forbearance Agreement was executed in October 2016 and amended on December 29, 2017, March 30, 2018, and on June 30, 2018, as discussed below.

31.1		Certifications of Chief Executive Officer
31.2		Certifications of Chief Financial Officer
32.1		Certification of Chief Executive Officer Pursuant to U.S.C. Section 1350
32.2		Certification of Chief Financial Officer Pursuant to U.S.C. Section 1350
101.INS		XBRL Instance Document
101.SCH		XBRL Schema Document
101.CAL		XBRL Calculation Linkbase Document
101.LAB		XBRL Label Linkbase Document
101.PRE		XBRL Presentation Linkbase Document
101.DEF		XBRL Definition Linkbase Document

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

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


Date: August 14, 2018	By:	/s/ Roger D. Bryant
		Roger D. Bryant, Principal Executive Officer


Date: August 14, 2018	By:	/s/ Phillip H. Roberson
		Phillip H. Roberson, Principal Financial Officer

	For the Three Months Ended		For the Six Months Ended
	June 30,		June 30,
	2018	2017	2018	2017
Revenues
Oil	$540,408	$789,683	$965,416	$1,510,356
Natural Gas and NGL	52,204	91,292	93,043	185,347
Total oil, natural gas and NGL	$592,612	$880,975	$1,058,459	$1,695,703