Note 6 - Prepaid Drilling Services

3 Months Ended

Dec. 31, 2015

Notes

Note 6 - Prepaid Drilling Services:

NOTE 6 – 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 represented discounts on future drilling services, or cash if we did 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 year ended September 30, 2015, we used $75,685 in drilling services, and we accepted $275,000 as a settlement of the remaining portion of prepaid drilling services that was due to be paid to the Company in November 2015 ($144,315) and November 2016 ($220,000), resulting in an $89,315 loss on settlement of prepaid drilling services.   As of September 30, 2015 and at December 31, 2015, the balance of the prepaid drilling services is nil.

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

	Year ended September 30, 2015
Beginning balance	$	440,000
Cash received in lieu of drilling services		(275,000)
Loss on settlement of prepaid drilling services		(89,315)
Prepaid drilling services used		(75,685)
Less current portion		-
Ending balance	$	0