OIL AND GAS PROPERTY

12 Months Ended

Aug. 31, 2014

OIL AND GAS PROPERTY [Text Block]

7.

OIL AND GAS PROPERTY

On September 17, 2013 the Company entered into an AMI Participation Agreement with Downhole Energy LLC to participate in 100% gross interest and 75% net revenue interest for drilling, completion and production of up to 100 oil wells on certain oil and gas leases covering 2,924 in the historic field located in Forest and Venango counties, Pennsylvania. In order to earn the interest in this property, the Company is required to make the following payments:

• Issuing to the Vendor 100,000 common shares in the capital stock of the Company as soon as practicable following the execution of this Agreement (issued at $0.02 per share),
• Drilling up to 10 wells in year one and issuing 10,000 common shares per producing well after 60 days of commercial production on or before the first anniversary of this Agreement,
• Drilling up to 20 wells in year two and issuing 10,000 common shares per producing well after 60 days of commercial production on or before the second anniversary of this Agreement,
• Drilling up to 30 wells in year three and issuing 10,000 common shares per producing well after 60 days of commercial production on or before the third anniversary of this Agreement, and
• Drilling up to 40 wells in year four and issuing 10,000 common shares per producing well after 60 days of commercial production on or before the fourth anniversary of this Agreement.

On execution of this agreement the Company issued 100,000 of its common shares at $0.04 per share to Downhole Energy LLC. During the year ended August 31, 2014, based on the management’s assessment the result from the oil and gas property, the Company decided that it will not proceed with the terms of the Agreement and as a result the oil and gas property has been written off to $Nil.