Oil and Gas Properties

3 Months Ended

Mar. 31, 2013

Oil And Gas Properties

Note 3. Oil and Gas Properties

On February 18, 2013, we completed the sale of our working interest in the Onnie Ray #1, Haile #1, Pearce #1 and Stahl #1 oil wells. We entered into an Assignment Agreement with Leexus Oil LLC, the wells operator, whereby the Company assigned its right, title and interest in the oil, gas and mineral leases and the oil and gas wells. Consideration for the assignment was the assumption of all outstanding liabilities and assumption of all future payments for any and all work performed on the wells.

On February 19, 2013, we completed the sale of our working interest in the Cooke #6 well. We entered into an Assignment Agreement with Millennium Petro-Physics, the well operator, whereby we assigned the right, title and interest in the oil, gas and mineral leases and the oil and gas wells. Consideration for the assignment was $3,000 cash.

The carrying amount of the oil and gas properties was $24,127 on the date of disposal. The related asset retirement obligation amounted to $57,532 and liabilities assumed amounted to $12,932. Including the $3,000 cash received, the Company recognized a gain of $49,337 during the three months ended March 31, 2013 as a result of the disposal.

The aggregate amount of capitalized costs relating to crude oil and natural gas producing activities and the aggregate amount of related accumulated depreciation, depletion and amortization at March 31, 2013 and December 31, 2012 were:

	March 31			December 31
	2013			2012				Change ($)
Unproven Properties		$	-		$	537,501			$	(537,501	)
Depreciation and impairment			-			(513,374	)			513,374
Oil and gas properties, net		$	-		$	24,127			$	(24,127	)

There were no material costs incurred in oil and gas property acquisition, exploration and development activities for the three month periods ended March 31, 2013 and 2012

Due to the 40 to 60 day lead-time for receiving financial results of well operating activities, the effective date of the sale to Leexus Oil LLC and Millennium Petro-Physics was January 1, 2013. Accordingly, we had no revenue, operating expenses or impairment charges for the three month period ended March 31, 2013.

Asset Retirement Obligation

The following table summarizes the activity for the Company’s asset retirement obligations:

	March 31,			December 31,
	2013			2013
Asset retirement obligations, beginning of period	$	57,532		$	55,316
Accretion expense		-			2,216
Liability settled upon sale of properties		(57,532	)		-
Asset retirement obligations, end of period		-			57,532
Less: current portion		-			-
Long-term asset retirement obligations, end of period	$	-		$	57,532