RELATED PARTY TRANSACTIONS

3 Months Ended

Aug. 31, 2011

RELATED PARTY TRANSACTIONS

NOTE 12. RELATED PARTY TRANSACTIONS

Stone Street Operating Company, LLC ("Stone Street") is related to the Company by common ownership and management. Stone Street is the operator for the Frost Bank, Resendez and LaDuquesa properties.

At August 31, 2011, the amount due from Stone Street totaled $18,738.  On January 28, 2011, Black Rock funded a $25,000 one year certificate of deposit in order for Stone Street to secure an additional letter of credit for the benefit of the Railroad Commission of Texas in regards to obligations for the Resendez, La Duquesa and Frost Bank wells. Subsequent to funding, Black Rock assigned the certificate of deposit to Stone Street. The certificate of deposit is expected to be liquidated in the near future and the proceeds returned to Black Rock as the operating responsibilities of Stone Street in regards to the properties is in the process of being transferred to a wholly owned subsidiary of Red Mountain.  As of August 31, 2011, the Certificate of  Deposit plus accrued interest totaled $25,160.

For the period ended August 31, 2011, the following summarizes the transactions between Stone Street and the Company in regards to the operations of the properties:

Revenues
Oil and Gas Sales	$	57,151
Operating Expenses
Production Taxes		3,271
Lease Operating Expenses		25,450
Gas Marketing and Transportation Expense		6,126
Total Operating Expenses	$	34,847
Net Proceeds	$	22,304