Discontinued Oil and Gas Operations

9 Months Ended

Sep. 30, 2013

Discontinued Oil And Gas Operations

Note 3. Discontinued Oil and Gas Operations

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 $49,338 in the nine month period ended September 30, 2013, as a result of the disposal.

The Company’s revenue, reported in discontinued operations, for the three and nine months ended September 30, 2013 were $0 and $0, respectively, and for the three and nine months ended September 30, 2012 were $7,034 and $16,549, respectively. The Company’s net income (loss) reported in discontinued operations for the three and nine months ended September 30, 2013 was $0 and $49,338, respectively, and for the three and nine months ended September 30, 2012 was $(424) and $(389), respectively. The Company has not recognized any revenue nor incurred expenses with respect to its previously owned oil and gas properties since the sale of its oil and gas properties, and will not recognize any continuing cash flows with respect to these properties in the future.

Assets and liabilities of discontinued operations in the accompanying balance sheets consist of the following:

	September 30, 2013		December 31, 2012
Assets
Unproven Properties	$	-	$	537,501
Depriciation and impairment		-		(513,374	)
Oil and gas properties, net	$	-	$	24,127
Liabilities
Accounts payable	$	-	$	(12,932	)
Asset retirement obligation		-		(57,532	)
	$	-	$	(70,464	)