Property and Equipment

6 Months Ended

Jun. 30, 2013

Property And Equipment

Property and Equipment

5 – Property and equipment

Oil and natural gas properties

The following table sets forth the capitalized costs under the successful efforts method for oil and natural

gas properties:

	June 30,			December 31,
	2013			2012
Oil and natural gas properties	$	54,125,148		$	34,986,566
Less accumulated depletion and impairment		(18,804,212	)		(9,667,031	)
Net oil and natural gas properties capitalized costs	$	35,320,936		$	25,319,535

Capitalized costs related to proved oil and natural gas properties, including wells and related equipment and facilities, are evaluated for impairment based on the Company’s analysis of undiscounted future net cash flows. If undiscounted future net cash flows are insufficient to recover the net capitalized costs related to proved properties, then the Company recognizes an impairment charge in income equal to the difference between carrying value and the estimated fair value of the properties. Estimated fair values are determined using discounted cash flow models. The discounted cash flow models include management’s estimates of future oil and natural gas production, operating and development costs, and discount rates.

Uncertainties affect the recoverability of these costs as the recovery of the costs outlined above are dependent upon the Company obtaining and maintaining leases and achieving commercial production or sale.

Other property and equipment

The historical cost of other property and equipment, presented on a gross basis with accumulated depreciation is summarized as follows:

	June 30,			December 31,
	2013			2012
Other property and equipment	$	130,469		$	130,470
Less accumulated depreciation		(86,509	)		(77,190	)
Net property and equipment	$	43,960		$	53,280