Note 7 - Prepaid Drilling Services

6 Months Ended

Mar. 31, 2015

Notes

Note 7 - Prepaid Drilling Services:

NOTE 7 – PREPAID DRILLING SERVICES:

During the year ended September 30, 2012, we obtained $1,100,000 in prepaid drilling services as a portion of the consideration received from the sale of Timberline Drilling.  The prepayment amount represents discounts on future drilling services, or cash if we do not use the prepaid drilling services, to be provided by Timberline Drilling to us between November 2011 and November 2016.  During the year ended September 30, 2014, we accepted $150,000 as settlement of the portion of the prepaid drilling services that was due to be paid to the Company in November 2014 ($220,000).  During the six months ended March 31, 2015, we used $75,685 in prepaid drilling services. 

The following table summarizes activity in the Company’s prepaid drilling services:

	Six months ended March 31, 2015		Year ended September 30, 2014
Beginning balance	$	440,000	$	660,000
Cash received in lieu of drilling services		-		(150,000)
Loss on settlement of prepaid drilling services		-		(70,000)
Prepaid drilling services used		(75,685)		-
Less current portion		(144,315)		-
Ending balance	$	220,000	$	440,000