CRUDE OIL AND NATURAL GAS PROPERTIES

3 Months Ended

Mar. 31, 2017

CRUDE OIL AND NATURAL GAS PROPERTIES

NOTE 6—CRUDE OIL AND NATURAL GAS PROPERTIES

The Company's oil and gas properties are located entirely within the United States. The net capitalized costs related to the Company's oil and gas producing activities were as follows:

	March 31, 2017			December 31, 2016
Proved oil and gas properties	$	16,412,110		$	8,132,881
Unproved oil and gas properties(1)		4,923,814			4,092,550
Wells in progress(2)		403,563			2,168,092

Total capitalized costs		21,739,487			14,393,523
Accumulated depletion, depreciation and amortization		(1,229,486	)		(783,320	)

Net capitalized costs	$	20,510,001		$	13,610,203

(1)Unproved oil and gas properties represent unevaluated costs the Company excludes from the amortization base until proved reserves are established or impairment is determined.

(2)Costs from wells in progress are excluded from the amortization base until production commences.

Costs Incurred in Crude Oil and Natural Gas Activities. Costs incurred in connection with the Company's crude oil and natural gas acquisition, exploration and development activities for each of the periods are shown below:

	March 31,
	2017		2016
Exploration costs	$	64,705	$	2,700
Development costs		6,679,964		17,041
Acquisition of properties
Proved		—		590,274
Unproved		666,000		199,979

Total	$	7,410,669	$	809,994

During the three months ended March 31, 2017 and 2016, depletion expense was $446,166 and $nil, respectively.