CHANGE IN ACCOUNTING POLICY

9 Months Ended

Feb. 29, 2012

Accounting Changes and Error Corrections [Abstract]

Accounting Changes and Error Corrections [Text Block]

NOTE 3. CHANGE IN ACCOUNTING POLICY

The Company has elected to adopt the “Successful Efforts Method of Accounting” for accounting of its oil and gas activities, effective June 1, 2011.   The change from the Full Cost Method to Successful Efforts Method is a change in accounting principle.  This change in accounting principle is deemed to be material in reporting our Financial Statements and therefore the change must be retrospectively adjusted for the cumulative effective for the prior year.    The Company believes the Successful Efforts Method of Accounting provides more transparency in presenting the Company’s successes or failures and will more fairly reflect the true cost of its properties and the reserves directly associated with those properties.  Further, the Successful Efforts Method of Accounting is the preferred method of accounting for oil and gas properties. Under this method, property acquisition costs, whether the property is proved or unproved, are capitalized as incurred.  For other costs incurred under this method, a direct relationship between costs incurred and specific reserves discovered is required before costs are permitted to be capitalized.  Costs that cannot be directly related to the discovery of specific oil and gas reserves are expensed immediately as incurred.

The change resulted in a decrease in depletion expense and accumulated depletion of $116,930 and $486,758 for the three and nine months ended February 29, 2012 and a decrease of $81,529 and $304,553 for the three and nine months ended February 28, 2011.  There was no change in gross oil and gas properties between the two methods, because Black Rock had incurred no geological costs, dry holes, or impairment.   The change increased income from operations by $116,930 and $486,758 for the three and nine months ended February 29, 2012 as reported on the Statement of Operations and increased retained earnings by $779,074 as reported on the Balance Sheet and Statement of Stockholders’ Equity. The change did not impact cash flows from operations, investing or financing activities.

A comparison of the Company’s net income, earnings per share, oil and gas properties and accumulated deficit under the Successful Efforts Method of Accounting and the full cost method as disclosed herein, as follows:

Income Statements
February 29, 2012	Three Months Ended February 29, 2012									Nine Months Ended February 29, 2012
				As computed									As computed
	As computed			Under			Effect			As computed			Under			Effect
	Under Full Cost			Successful Efforts			of Change			Under Full Cost			Successful Efforts			of Change
Revenue:
Oil and Gas Sales	$	1,709,051		$	1,709,051		$	-		$	3,779,706		$	3,779,706		$	-
Operating Expenses:
Exploration Expense		48,286			48,286			-			92,049			92,049			-
Production Taxes		118,948			118,948			-			220,794			220,794			-
Lease Operating Expenses		487,366			487,366			-			688,558			688,558			-
Gas Transportation and Marketing expenses		32,567			32,567			-			142,310			142,310			-
Depreciation, Depletion and Amortization		766,398			649,468			(116,930	)		1,709,709			1,222,951			(486,758	)
General and administrative expense		1,760,701			1,760,701			-			3,478,372			3,478,372			-
Total Operating Expense		3,214,266			3,097,336			(116,930	)		6,331,792			5,845,034			(486,758	)
Income (loss) from Operations		(1,505,215	)		(1,388,285	)		116,930			(2,552,086	)		(2,065,328	)		486,758
Total Other Income (Expense)		(1,100,736	)		(1,100,736	)		-			(5,315,300	)		(5,315,300	)		-
Net Income (Loss) before income taxes		(2,605,951	)		(2,489,021	)		116,930			(7,867,386	)		(7,380,628	)		486,758
Income Tax Provision		-			-			-			-			-			-
Net Income (Loss)		(2,605,951	)		(2,329,231	)		116,930			(7,867,386	)		(7,380,628	)		486,758
Net income(loss) per share-Basic and Diluted	$	(0.03	)	$	(0.03	)	$	0.00		$	(0.11	)	$	(0.10	)	$	0.01
Basic and Diluted Weighted Average Common Shares Outstanding		81,189,671			81,189,671			-			70,659,413			70,659,413			-

Income Statements
February 28, 2011	Three Months Ended February 28, 2011									Nine Months Ended February 28, 2011
				As computed									As computed
	As computed			Under			Effect			As computed			Under			Effect
	Under Full Cost			Successful Efforts			of Change			Under Full Cost			Successful Efforts			of Change
Revenue:
Oil and Gas Sales	$	1,018,240		$	1,018,240		$	-		$	2,852,922		$	2,852,922		$	-
Operating Expenses:
Exploration Expense		-			-			-			-			-			-
Production Taxes		50,442			50,442			-			175,747			175,747			-
Lease Operating Expenses		28,034			28,034			-			107,681			107,681			-
Gas Transportation and Marketing expenses		60,886			60,886			-			177,398			177,398			-
Depreciation, Depletion and Amortization		272,768			191,239			(81,529	)		856,162			551,609			(304,553	)
General and administrative expense		215,001			215,001			-			215,006			215,006			-
Total Operating Expense		627,131			545,602			(81,529	)		1,531,994			1,227,441			(304,553	)
Operating Income (Loss)		391,109			472,638			81,529			1,320,928			1,625,481			304,553
Total Other Income (Expense)		(51,542	)		(51,542	)		-			(147,183	)		(147,183	)		-
Net Income (Loss)		339,567			421,096			81,529			1,173,745			1,478,298			304,553
Income Tax Provision		-			-			-			-			-			-
Net Income		339,597			421,096			81,529			1,173,745			1,478,298			304,553
Basis and Diluted earnings per share	$	0.01		$	0.02		$	0.00		$	0.04		$	0.05		$	0.01
Basic and Diluted Weighted Average Common Shares Outstanding		27,000,000			27,000,000			-			27,000,000			27,000,000			-

Balance Sheet				As computed
February 29, 2012	As computed			Under			Effect
	Under Full Cost			Successful Efforts			of Change
Total Current Assets	$	4,005,351		$	4,005,351		$	-
Total Long Term Investments		9,241,115			9,241,115			-
Oil and Gas Properties
Proved Properties		26,002,971			26,002,971			-
Unproved Properties		1,584,662			1,584,662			-
Other Property, Plant & Equipment		557,106			557,106			-
Less Accum Depreciation and Depletion		(2,690,136	)		(1,911,062	)		779,074
Other Assets		27,222			27,222			-
Total Assets	$	38,728,291		$	39,507,365		$	779,074
Total Current Liabilities	$	15,060,358		$	15,060,358		$	-
Total Non Current Liabilities		4,604,281			4,604,281			-
Common Stock		826			826			-
Additional Paid In Capital		24,869,872			24,869,872			-
Retained Earnings (Accumulated Deficit)		(5,807,046	)		(5,027,972	)		779,074
Total Stockholder's Equity		19,063,652			19,842,726			779,074
Total Liabilities and Stockholder's Equity	$	38,728,291		$	39,507,365		$	779,074

Balance Sheet				As computed
May 31, 2011	As computed			Under			Effect
	Under Full Cost			Successful Efforts			of Change
Total Current Assets		662,052			662,052			-
Total Long Term Investments		4,102,942			4,102,942			-
Oil and Gas Properties
Proved oil and gas properties		9,532,190			9,292,797			(239,393	)
Unproved Property					239,393			239,393
Less Accumulated  Depreciation and Depletion		(977,274	)		(716,656	)		260,618
Oil and Gas Properties, net		8,554,916			8,815,534			260,618
Other Assets		35,895			35,895			-
Total Assets		13,355,805			13,616,423			260,618
Total Current Liabilities		11,023,963			11,023,963			-
Total Non Current Liabilities		239,536			239,536			-
Stockholders' Equity		2,092,306			2,352,924			260,618
Total Liabilities and Stockholders' Equity		13,355,805			13,616,423			260,618