RELATED PARTY TRANSACTIONS

9 Months Ended

Feb. 29, 2012

Related Party Transactions [Abstract]

Related Party Transactions Disclosure [Text Block]

NOTE 15. 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 (“the operated properties”).

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 was liquidated 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 As on November 2, 2011, the certificate of deposit was withdrawn from Central State Bank and deposited into the Black Rock operating account in the amount of $25,210 including accrued interest less an early withdrawal penalty of $69 for a net deposit of $25,141.

For the nine month period ended February 29, 2012, Stone Street paid us $148,891 for our share of revenues from the operated properties and we paid Stone Street $85,487 for our portion of the operated properties’ operating expenses for net proceeds of $63,402.

Other transactions for the nine month period ended February 29, 2012 with Stone Street included Black Rock reimbursing Stone Street a total of $52,280 for expenses incurred by Stone Street on behalf of Black Rock. Black Rock received $20,493 on behalf of Stone Street for condensate proceeds and forwarded those funds to Stone Street.

In addition, Stone Street loaned Red Mountain $100,000 and $180,000 which was repaid September 26, 2011 and October 26, 2011, respectively, by Red Mountain.

On November 21, 2011 Randell K. Ford became a member of the Board of Directors for Red Mountain. The following transactions were incurred by Red Mountain and its consolidated subsidiaries either with Mr. Ford directly or with one of the following companies for which Mr. Ford has a significant ownership interest:

Red Mountain paid rent to Mr. Ford for its Midland Offices in the amount of $12,600 for the nine months ended February 29, 2012. Red Mountain paid Cabal Energy drilling overhead in the amount of $16,422 and paid Cabal Energy for drilling services in the amount of $1,246,463 for the nine month period ended February 29, 2012.

The Company paid Mr. Ford consulting fees in the amount of $194,495 and paid Western Drilling $1,079,013 for drilling services during the nine months ended February 29, 2012.

Black Rock paid Mr. Ford consulting fees of $400 during the nine month period ended February 29, 2012.

The Company reimbursed Enerstar, a Company controlled by Mr. Tommy Folsom, the Company’s Executive Vice President and Director of Exploration and Production, for expenses out of pocket expenses of $2,298 paid on behalf of Mr. Folsom.