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Oil and Gas Assets

9 Months Ended

Jan. 31, 2016

The following table summarizes the oil and gas assets by project:

Cost	Oklahoma			Kansas			Missouri			Other		Total
Balance as of April 30, 2015	$	6,935,000		$	7,803,020		$	918,991		$	100,000	$	15,757,011
Additions		7,279			-			-			-		7,279
Disposals		(279,013	)		(7,727,287	)		-			-		(8,006,300	)
Depreciation, depletion and amortization		(21,224	)		(75,733	)		-			-		(96,957	)
Impairment		(5,951,622	)					(918,991	)				(6,870,613	)
Balance as of January 31, 2016	$	690,420		$	-		$	-		$	100,000	$	790,420

Divestiture of Kansas Properties. On December 23, 2015, Petro River Oil, LLC (“Petro”), a wholly owned subsidiary of Megawest, divested various interests in oil and gas leases, wells, records, data and related personal property located along the Mississippi Lime play in the state of Kansas, which assets were acquired by Petro in 2012. In connection with the divestiture, the assignee and purchaser of the interests agreed to pay the outstanding liabilities of the wells. No cash consideration was paid for the interests. The Company incurred a loss on sale of oil and gas property related to this divestiture of $7,519,460 during the three and nine months ended January 31, 2016.

Acquisition of Interest in Larne Basin. On January 19, 2016, Petro UK, a wholly owned subsidiary of the Company, entered into a Farmout Agreement to acquire a 9% interest in Petroleum License PL 1/10 and P2123 (the “Larne Licenses”) located in the Larne Basin in Northern Ireland (the “Larne Transaction”). The two Larne Licenses, one onshore and one offshore, together encompass approximately 130,000 acres covering the large majority of the prospective Larne Basin. The other parties to the Farmout Agreement are Southwestern Resources Ltd, a wholly owned subsidiary of Horizon Energy, which acquired a 16% interest, and Brigantes Energy Limited, which retained a 10% interest. Horizon Energy is 20% owned by Horizon Investments. See Note 4.

Under the terms of the Farmout Agreement, Petro UK deposited $735,798 into an escrow agreement (“Escrow Agreement”), which amount represents Petro UK’s obligation to fund the total projected cost to drill the first well under the terms of the Farmout Agreement. As of January 31, 2016, development of the first well had not commenced and the escrow payment was recorded as prepaid oil and gas development costs on the consolidated balance sheet. The total deposited amount to fund the cost to drill the first well is approximately $6,159,452. Petro UK will be responsible for its pro-rata costs of additional wells drilled under the Farmout Agreement.

Divestiture of Oklahoma Properties. During the nine months ended January 31, 2016, the Company disposed of some of its interests in its Oklahoma oil and gas assets and received proceeds totaling $279,013. The proceeds were offset against the full cost pool, therefore no gain or loss was recognized.

Impairment of Oil & Gas Properties. As of January 31, 2016, the Company assessed its oil and gas assets for impairment and recognized a charge of $5,951,622 related to the Oklahoma oil and gas property. The Company determined that it no longer planned to develop the Missouri oil and gas property and recognized an impairment charge of $918,991 for the assets remaining book value.