Supplemental Information on Oil and Gas Operations

12 Months Ended

Apr. 30, 2016

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Supplemental Information on Oil and Gas Operations (Unaudited):

This supplementary oil and natural gas information is provided in accordance with the United States Financial Accounting Standards Board (“FASB”) Topic 932 - “Extractive Activities - Oil and Gas”.

The Company retains qualified independent reserves evaluators to evaluate the Company’s proved oil reserves. For the year ended April 30, 2016 and 2015, the report by Pinnacle Energy Services, LLC. (“Pinnacle”) covered 100% of the Company’s proved oil reserves.

Proved oil and natural gas reserves, as defined within the SEC Rule 4-10(a)(22) of Regulation S-X, are those quantities of oil and gas, which, by analysis of geoscience and engineering data can be estimated with reasonable certainty to be economically producible from a given date forward from known reservoirs, and under existing economic conditions, operating methods and government regulations prior to the time of which contracts providing the right to operate expire, unless evidence indicates that renewal is reasonably certain, regardless of whether determinable or probabilistic methods are used for the estimation. The project to extract the hydrocarbons must have commenced or the operator must be reasonably certain that it will commence the project within a reasonable time. Developed oil and natural gas reserves are reserves that can be expected to be recovered from existing wells with existing equipment and operating methods or in which the cost of the required equipment is relatively minor compared to the cost of a new well; and through installed extraction equipment and infrastructure operational at the time of the reserves estimate is the extraction is by means not involving a well. Estimates of the Company’s oil reserves are subject to uncertainty and will change as additional information regarding producing fields and technology becomes available and as future economic and operating conditions change.  

The following tables summarize the Company’s proved developed and undeveloped reserves within the United States, net of royalties, as of April 30, 2016 and 2015:

Oil (MBbls)	2016			2015
Proved reserves as at May 1		508			-
Extensions, Acquisitions and discoveries					508
Dispositions		(301	)		-
Production		(1	)		-
Revisions of prior estimates		-			-
Total Proved reserves as at April 30		206			508
Oil (MBbls)		2016			2015
Proved developed producing		-			35
Non-producing		206			286
Proved undeveloped		-			187
Total Proved reserves as at April 30		206			508
Gas (MCFs)	2016			2015
Proved reserves as at May 1		868			-
Extensions, Acquisitions and discoveries					868
Dispositions		(537	)		-
Production		-			-
Revisions of prior estimates		-			-
Total Proved reserves as at April 30		331			868
Gas (MCFs)		2016			2015
Proved developed producing		-			-
Non-producing		331			485
Proved undeveloped		-			383
Total Proved reserves as at April 30		331			868
Capitalized Costs Related to Oil and Gas Assets	2016			2015
Proved properties	$	7,753,575		$	8,062,394
Unproved properties		100,000			13,555,565
		7,853,575			21,617,959
Less: accumulated impairment		(6,975,349	)		(5,960,948	)
	$	878,226		$	15,657,011
Costs incurred in Oil and Gas Activities:		2016			2015
Development	$	102,864		$	8,701,100
Exploration		-			-
	$	102,864		$	8,701,100

The following standardized measure of discounted future net cash flows from proved oil reserves has been computed using the average first-day-of-the-month price during the previous 12-month period, costs as at the balance sheet date and year-end statutory income tax rates. A discount factor of 10% has been applied in determining the standardized measure of discounted future net cash flows. The Company does not believe that the standardized measure of discounted future net cash flows will be representative of actual future net cash flows and should not be considered to represent the fair value of the oil properties. Actual net cash flows will differ from the presented estimated future net cash flows due to several factors including: 

● Future production will include production not only from proved properties, but may also include production from probable and possible reserves;

● Future production of oil and natural gas from proved properties may differ from reserves estimated;

● Future production rates may vary from those estimated;

● Future rather than average first-day-of-the-month prices during the previous 12-month period and costs as at the balance sheet date will apply;

● Economic factors such as changes to interest rates, income tax rates, regulatory and fiscal environments and operating conditions cannot be determined with certainty;

● Future estimated income taxes do not take into account the effects of future exploration expenditures; and

● Future development and asset retirement obligations may differ from those estimated.

Future net revenues, development, production and restoration costs have been based upon the estimates referred to above. The following tables summarize the Company’s future net cash flows relating to proved oil reserves based on the standardized measure as prescribed in FASB ASC Topic 932 - “Extractive Activities - Oil and Gas”:

	2016			2015
Future cash flows relating to proved reserves:
Future cash inflows	$	9,588,000		$	37,455,000
Future operating costs		(5,170,000	)		(14,950,000	)
Future development costs		(820,000	)		(6,185,000	)
Future income taxes		(680,000	)		(2,385,000	)
Future net cash flows		2,918,000			13,935,000
10% discount factor		(779,000	)		(7,000,000	)
Standardized measure	$	2,139,000		$	6,935,000

Summary of Changes in Standardized Measure of Discounted Future Net Cash Flows

The following table summarizes the principal sources of changes in standardized measure of discounted future estimated net cash flows at 10% per annum for the years ended April 30, 2016 and 2015:

	2016			2015
Standardized measure, beginning of year	$	6,935,000		$	-
Sales of oil produced, net of production costs		388,000			-
Net changes in sales and transfer prices and in production costs and production costs related to future production		(4,245,000	)		-
Previously estimated development costs incurred during the period		-			-
Changes in future development costs		5,365,000			-
Revisions of previous quantity estimates due to prices and performance		(5,180,000	)		-
Accretion of discount		214,000			(7,000,000	)
Discoveries, net future production and development costs associated with these extensions and discoveries		-			13,935,000
Purchases and sales of minerals in place		-			-
Timing and other		(1,338,000	)		-
Standardized measure, end of year	$	2,139,000		$	6,935,000