2.4.0.80010 - Disclosure - 5. OIL AND GAS PROPERTIEStruefalsefalse1false falsefalseFrom2013-01-01to2013-03-31http://www.sec.gov/CIK0001075773duration2013-01-01T00:00:002013-03-31T00:00:001true 1us-gaap_ExtractiveIndustriesAbstractus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsexbrli:stringItemTypestringfalse0Extractive Industries [Abstract]2false 2us-gaap_OilAndGasPropertiesTextBlockus-gaap_truenadurationfalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00There were no property acquisitions during the three months ended March 31, 2013, however, a 4% ORRI was repurchased.  The 1,000,000 shares were valued at $38,000 but were immediately impaired and expensed based on the December 31, 2012, reserve report.   On September 21, 2012, the Company purchased the Converse lease and issued a promissory note in the amount of $328,012.  The note requires two (2) $20,000 payments in October, 2012, and $20,000 per month thereafter.  Interest accrues at a rate of 7%.  As of December 31, 2012, the Company was in default by $2,500 on the December payment.  During the quarter ended March 31, 2013, the Company returned the property to the lender and was released from further obligations.  The carrying value on the Converse lease was zero and the asset retirement obligation was $166,882 at the time of the disposition. This resulted in a gain on the sale of the asset of $166,882 with the relief of the ARO. The company also recognized a gain on retirement of debt of $258,566 due to the related debt being relieved with the transfer.   On May 31, 2011, the Company issued a promissory note in the amount of $692,539 for the Great 8 leases in Texas, the payment terms of which are: monthly payments including interest and principal with the final payment due on June 1, 2012. This note accrues interest at 5%.  During the quarter ended March 31, 2013, the Company paid off the note and accrued interest in full through borrowing from other lenders who the company is now indebted to for $275,000.  As an additional expense related to the original default on the former note payable, the Company transferred the Willingham lease and equipment to the former lender. The carrying value at the time of the disposition for the related lease and well equipment was $54,741 and the carrying value of the related asset retirement obligation was $1,700. The Company recorded a loss of $53,041 on this disposition.   During the first quarter of 2013 the Company sold a 5% net revenue interest within the San Juan #3 well located within the Companys Belize lease for $45,000. The well is currently being drilled and is unproved at the time of this filing. The agreement entails that the Company return the $45,000 to the investor within 60 days if the well is considered to be a dry hole. Based on the uncertainty of the well at this time the $45,000 was accrued within liabilities as of March 31, 2013.   Our geographical proved and unproved properties are as follows:   <table cellspacing="0" cellpadding="0" style="font: 8pt Calibri, Helvetica, Sans-Serif; width: 100%"> <tr style="vertical-align: bottom"> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%">03/31/13</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td colspan="2" style="border-bottom: black 1pt solid; text-align: center; line-height: 115%">12/31/12</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="width: 78%; line-height: 115%">Oilfield Support Equipment</td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 8%; text-align: right; line-height: 115%">795,127</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td> <td style="width: 1%; text-align: right; line-height: 115%"> </td> <td style="width: 1%; line-height: 115%">$</td> <td style="width: 8%; text-align: right; line-height: 115%">846,196</td> <td nowrap="nowrap" style="width: 1%; line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Less: accumulated depreciation</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%">(177,791</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%">(160,662</td> <td nowrap="nowrap" style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Total</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; text-align: right; line-height: 115%">617,336</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; text-align: right; line-height: 115%">685,534</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td>   Proved developed producing:  </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Texas</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">1,035,061</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%">$</td> <td style="text-align: right; line-height: 115%">1,049,577</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Less: accumulated depletion</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%">(977,540</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%">(965,091</td> <td nowrap="nowrap" style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Total</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; text-align: right; line-height: 115%">57,521</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; text-align: right; line-height: 115%">84,486</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Unproved:</td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Belize</td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">48,075</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%">48,075</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> <tr style="vertical-align: bottom; background-color: #CCEEFF"> <td style="line-height: 115%">Accumulated Impairment</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%">(48,075</td> <td nowrap="nowrap" style="line-height: 115%">)</td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; line-height: 115%"> </td> <td style="border-bottom: black 1pt solid; text-align: right; line-height: 115%">(48,075</td> <td nowrap="nowrap" style="line-height: 115%">)</td></tr> <tr style="vertical-align: bottom; background-color: white"> <td style="line-height: 115%">Total</td> <td style="line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt double; text-align: right; line-height: 115%">-0-</td> <td nowrap="nowrap" style="line-height: 115%"> </td> <td style="text-align: right; line-height: 115%"> </td> <td style="border-bottom: black 1.5pt double; line-height: 115%">$</td> <td style="border-bottom: black 1.5pt double; text-align: right; line-height: 115%">0</td> <td nowrap="nowrap" style="line-height: 115%"> </td></tr> </table>   Production of Oil from all fields   We recorded depletion expense of $12,448 and $7,389  for the three months ended March 31, 2013 and 2012,  respectively,  based on total production of approximately 1,084 and 1,076 barrels.   For the three months ended March 31, 2013, we shipped 1,084 barrels, and reflect a $16,047 net receivable (after  royalty and production tax reductions) for shipments made prior to March 31, 2013.   Carved Out Production Payment   As noted in the 10-K filed for the year ended December 31, 2012, we entered into an agreement with an investor to sell a 5% permanent royalty and a 15% temporary royalty to be paid until production reaches 200 barrels per day for $600,000.  The interests for both the permanent and temporary royalties relate to all current and future Texas leases.   Once total Texas production exceeds 200 barrels per day, the temporary 15% royalties will revert to Treaty Energy Corporation.   In recording the temporary portion of the royalties sold, an advance on a production payment liability was established.  Since the amount of proceeds to be paid out in the future is not readily determinable and the Company is not responsible for any shortfall in payment related to future production, the temporary 15% is treated as a Carved-Out Production Payment Payable in Product consistent with the guidance in ASC 932-10.  Moreover, since the payout amounts are uncertain, no allocation of the proceeds between the permanent 5% and the temporary 15% Overriding Royalty was made, and therefore, no gain or loss was recorded on the transaction.   Consistent with the aforementioned guidance, the cash received related to the 15% carved-out production interest is treated as deferred revenue and amortized with production and payment to the holder.  The proportional amount of carrying value of oil and gas assets will be amortized with production to match the costs to the production periods.   Amortization was based on the independent reserve report and is subject to future changes in estimates.   For the three months ended March 31, 2013 and  March 31, 2012, the amortization of the Carved Out Production payment was $11,132 and $1,496,  respectively.  The net asset value of the Carved Out Production payment was $59,103 and $70,235, at March 31, 2013 and December 31, 2012, respectively.   For the three months ended March 31, 2013 and March 31, 2012, the amortization of the Deferred Revenue was $79,899 and $24,668, respectively.  The balance of deferred revenue at March 31, 2013 and December 31, 2012, was $424,195 and $504,094, respectively.  falsefalsefalsenonnum:textBlockItemTypenaThe entire disclosure for properties used in normal conduct of oil and gas exploration and producing operations. This disclosure may include property accounting policies and methodology, a schedule of property, plant and equipment gross, additions, deletions, transfers and other changes, depreciation, depletion and amortization expense, net, accumulated depreciation, depletion and amortization expense and useful lives.No definition available.false0OIL AND GAS PROPERTIESfalse5. OIL AND GAS PROPERTIESUnKnownUnKnownUnKnownUnKnowntruefalsefalseSheethttp://treatyenergy.com/role/OilAndGasProperties12