SUPPLEMENTAL INFORMATION ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)

12 Months Ended

Dec. 31, 2023

Oil and Gas Exploration and Production Industries Disclosures [Abstract]

Oil and Gas Exploration and Production Industries Disclosures [Text Block]

NOTE 15 – SUPPLEMENTAL INFORMATION ABOUT OIL AND GAS PRODUCING ACTIVITIES (UNAUDITED)

The following estimates of proved oil and gas reserves, both developed and undeveloped, represent interest we owned, which are located solely in the United States. Proved reserves represent estimated quantities of crude oil and natural gas which geological and engineering data demonstrate to be reasonably certain to be recoverable in the future from known reservoirs under existing economic and operating conditions. Proved developed oil and gas reserves are reserves that can be expected to be recovered through existing wells, with existing equipment and operating methods. Proved undeveloped oil and gas reserves are reserves that are expected to be recovered from new wells on undrilled acreage, or from existing wells for which relatively major expenditures are required for completion.

Disclosures of oil and gas reserves, which follow, are based on estimates prepared by independent petroleum engineering consultant Netherland, Sewell & Associates, Inc., the net reserve value of our proved developed and undeveloped reserves was approximately $10.7 million at December 31, 2023, based on the average Henry Hub natural gas price spot price of $2.637 per MCF and for oil volumes, the average West Texas Intermediate price of $78.21 per barrel as applied on a field-by-field basis. Netherland, Sewell & Associates, Inc. provided reserve value information for our California, Texas, and Oklahoma properties. Such estimates are subject to numerous uncertainties inherent in the estimation of quantities of proved reserves and in the projection of future rates of production and the timing of development expenditures. These estimates do not include probable or possible reserves.

The technical persons responsible for preparing the reserves estimates presented in the report of Netherland, Sewell & Associates, Inc., meet the requirements regarding qualifications, independence, objectivity, and confidentiality set forth in the Standards Pertaining to the Estimating and Auditing of Oil and Gas Reserves Information promulgated by the Society of Petroleum Engineers. Netherland, Sewell & Associates, Inc. is a firm of independent petroleum engineers, geologists, geophysicists, and petrophysicists; and do not own an interest in our properties and are not employed on a contingent basis. All activities and reports performed and completed by Netherland, Sewell & Associates, Inc. with regards to our reserve valuation estimates are reviewed by our management.

These estimates are furnished and calculated in accordance with requirements of the FASB and the SEC. Because of unpredictable variances in expenses and capital forecasts, crude oil and natural gas price changes, largely influenced and controlled by U.S. and foreign government actions, and the fact that the bases for such estimates vary significantly, management believes the usefulness of these projections is limited. Estimates of future net cash flows presented do not represent our management’s assessment of future profitability or future cash flows. Management’s investment and operating decisions are based upon reserve estimates that include proved reserves prescribed by the SEC as well as probable reserves, and upon different price and cost assumptions from those used here.

It should be recognized that applying current costs and prices and a 10 percent standard discount rate does not convey absolute value. The discounted amounts arrived at are only one measure of the value of proved reserves.

Changes in Estimated Reserve Quantities

The net interest in estimated quantities of proved developed reserves of crude oil and natural gas at December 31, 2023 and 2022, and changes in such quantities during each of the years then ended, were as follows:

Total Proved Reserves
	2023						2022
	Oil (BBL)			Gas (MCF)			Oil (BBL)			Gas (MCF)
Beginning of period		372,300			1,133,300			1,579,100			1,354,300
Revisions of previous estimates		(185,261	)		(720,023	)		(1,283,285	)		(85,864	)
Production		(22,399	)		(128,160	)		(18,015	)		(135,136	)
Extensions, discoveries and improved recovery		53,140			188,423			94,500			-
Merger Acquisition		-			-			-			-
Purchase of minerals in place		-			-			-			-
Sales of minerals in place		-			-			-			-
Proved reserves end of period		217,780			473,540			372,300			1,133,300

Proved Developed
	2023				2022
	Oil (BBL)		Gas (MCF)		Oil (BBL)		Gas (MCF)
Proved developed reserves:
Beginning of period		182,000		942,000		193,600		939,100
End of period		138,060		357,940		182,000		942,000

Proved Undeveloped
	2023				2022
	Oil (BBL)		Gas (MCF)		Oil (BBL)		Gas (MCF)
Proved undeveloped reserves:
Beginning of period		190,300		191,300		1,385,500		415,200
End of period		79,720		115,600		190,300		191,300

During 2023, our overall proved developed and undeveloped oil reserves decreased by 41.5% and our previously estimated proved developed and undeveloped oil reserve quantities were revised downward by approximately 185 thousand barrels. This downward revision was mainly the result of a decrease in proved undeveloped oil reserves from drilling locations which the Company had previously estimated. Our overall proved developed and undeveloped natural gas reserves decreased by 58.2% and our previously estimated proved developed and undeveloped natural gas reserve quantities were revised downward by approximately 720 thousand cubic feet of natural gas. This downward revision was mainly the result of a decrease in proved undeveloped natural gas reserves from drilling locations which we had previously estimated.

Standardized Measure of Discounted Future Net Cash Flows Relating to Proved Oil and Gas Reserves

The future net cash inflows are developed as follows:

• Estimates are made of quantities of proved reserves and the future periods during which they are expected to be produced based on year-end economic conditions.

• The estimated future production of proved reserves is priced on the basis of year-end prices.

• The resulting future gross revenue streams are reduced by estimated future costs to develop and to produce proved reserves, based on year-end estimates. Estimated future development costs by year are as follows:

2024	$	8,200
2025		-
2026		-
Thereafter		-
	$	8,200

The resulting future net revenue streams are reduced to present value amounts by applying a 10 percent discount.

Disclosure of principal components of the standardized measure of discounted future net cash flows provides information concerning the factors involved in making the calculation. In addition, the disclosure of both undiscounted and discounted net cash flows provides a measure of comparing proved oil and gas reserves both with and without an estimate of production timing. The standardized measure of discounted future net cash flow relating to proved reserves reflects estimated income taxes.

Changes in standardized measure of discounted future net cash flow from proved reserve quantities

The standardized measure of discounted future net cash flows is presented below for the years ended December 31, 2023, and 2022.

This statement discloses the sources of changes in the standardized measure from year to year. The amount reported as “Net changes in prices and production costs” represents the present value of changes in prices and production costs multiplied by estimates of proved reserves as of the beginning of the year. The “accretion of discount” was computed by multiplying the 10 percent discount factor by the standardized measure on a pretax basis as of the beginning of the year. The “Sales of oil and gas produced, net of production costs” are expressed in actual dollar amounts. “Revisions of previous quantity estimates” is expressed at year-end prices. The “Net change in income taxes” is computed as the change in present value of future income taxes.

	2023			2022
Future cash inflows	$	17,559,800		$	38,766,900
Future production costs		(6,860,800	)		(14,094,900	)
Future development costs		(8,200	)		(1,378,500	)
Future income tax expense		(3,207,240	)		(6,988,050	)
Future net cash flows		7,483,560			16,305,450
10% annual discount for estimated timing of cash flows		(3,011,664	)		(6,044,467	)
Standardized measure of discounted future net cash flows		4,471,896			10,260,983
Sales of oil and gas produced, net of production costs		(322,560	)		(608,735	)
Revisions of previous quantity estimates		(10,359,602	)		(12,855,765	)
Net changes in prices and production costs		946,740			(287,425	)
Sales of minerals in place		-			-
Extensions, discoveries and improved recovery		2,067,392			4,266,500
Accretion of discount		(602,094	)		884,088
Net change in income tax		2,481,037			2,580,401
Net increase (decrease)	$	(5,789,087	)	$	(6,020,936	)

Future Development Costs

In order to realize future revenues from our proved reserves estimated in our reserve report, it will be necessary to incur future costs to develop and produce the proved reserves. The following table estimates the costs to develop and produce our proved reserves in the year 2024.

	2024
Future development cost of:
Proved developed reserves (PDP)	$	-
Proved non-producing reserves (PDNP)		8,200
Proved undeveloped reserves (PUD)		-
Total	$	8,200

Common assumptions include such matters as the real extent and average thickness of a particular reservoir, the average porosity and permeability of the reservoir, the anticipated future production from existing and future wells, future development and production costs and the ultimate hydrocarbon recovery percentage. As a result, oil and gas reserve estimates and discounted present value estimates are frequently revised in subsequent periods to reflect production data obtained after the date of the original estimate. If the reserve estimates are inaccurate, production rates may decline more rapidly than anticipated, and future production revenues may be less than estimated.

Additional data relating to our oil and natural gas properties is disclosed in Supplemental Information About Oil and Gas Producing Activities (Unaudited), attached to our Financial Statements, in Note 15.

Historic Development Costs for Proved Reserves

In each year we expend funds to drill and develop some of our proved undeveloped reserves. We have incurred no cost in any of the past three fiscal years to drill and develop reserves that were classified as proved undeveloped reserves as of December 31 of the immediately preceding year.