Oil And Gas Properties

3 Months Ended

Mar. 31, 2012

Oil and Gas Exploration and Production Industries Disclosures [Abstract]

Oil And Gas Properties

NOTE 4 – OIL AND GAS PROPERTIES

Oil and gas properties are stated at cost. The Company recognized depletion expense totaling $57,054 and $-0- during the years ended December 31, 2011 and 2010, respectively. As of December 31, 2011 and 2010 oil and gas properties consisted of the following:

	December 31, 2011			December 31, 2010
Producing Activities
Proved properties	$	981,336		$	—
Accumulated depletion		(57,054	)		—
Net Oil and Gas Properties	$	924,282		$	—

On March 1, 2011, the Company purchased a 100 percent working interest on a 70 percent net revenue interest in certain oil and gas leases and related well operating equipment in Pratt County, Kansas for $260,000. Of this total, $149,000 was allocated to oil and gas leases, and the remaining $111,000 was allocated to the purchased well operating equipment. During the period ended December 31, 2011 the Company incurred $23,310 of exploration costs and $33,711 of development costs which have been capitalized to the value of oil and gas properties. The Company also purchased an additional $2,968 in support equipment on these leases.

On June 11, 2011, the Company purchased a 30 percent working interest on an 24.45 percent net revenue interest in an unproved oil and gas well located in Cowley County, KS. The Company paid $17,220 for the lease on 640 acres at $85 per acre. Subsequent to acquiring the interest in these wells the Company incurred an additional $119,350 of exploration costs and $110,531 of development costs on the property which have been capitalized to the value of oil and gas properties.

On July 7, 2011, the Company purchased a 20 percent working interest on an 16.41 percent net revenue interest in a proved and producing oil and gas well located in Cowley County, KS. The Company paid $45,000 to acquire the leases and incurred an additional $26,881 of development costs which were capitalized to the value of oil and gas properties.

On September 27, 2011, the Company purchased two leases and related well operating equipment located in Pratt County for $72,500. Of this total, $22,500 was allocated to oil and gas leases, and the remaining $50,000 was allocated to the purchased well operating equipment. The leases carry a 100 percent working interest of 70 percent net revenue interest. Subsequent to purchase the Company capitalized $990 in exploration costs and $17,533 in development costs relating to these leases.

On September 27, 2011, the Company also purchased a 23 percent interest in a net revenue interest ranging from 18.66 to 19.65 percent in three leases in Barton and Stafford Counties, Kansas for $220,800. The three leases combined contain slightly more than 564 net acres. Subsequent to purchase the Company capitalized $2,326 in development costs relating to these leases. 

On December 19, 2011, the Company purchased a 15 percent interest in net revenue interests ranging from 12.675 percent to 13.125 percent in four leases in Cowley County, Kansas for $75,600. The four leases combined contain approximately 720 acres. The Company has incurred no exploration or development costs with respect to these properties as of December 31, 2011.

During the year ended December 31, 2011, the Company established an asset retirement obligation of $116,586 for the wells acquired by the Company during the 2011 fiscal year, which was capitalized to the value of the oil and gas properties. The wells have an estimated useful life of 25 years. The accretion expense on the asset retirement obligation recorded for the year ended December 31, 2011 was $5,263, leaving an ending balance of $121,849.