2.	Oil and Natural Gas Properties

The Company made no purchases of oil and natural gas properties during the years ended December 31, 2014 and 2013.

During 2014, the Company drilled and completed four successful development wells in Texas. During 2013, the Company drilled and completed one successful development well in New Mexico.

On June 1, 2014, the Company executed and closed on the first transaction with Riley Exploration Group, LLC ("Riley"). Pursuant to the terms of the exploration agreement FieldPoint assigned 6 net Taylor sand wells in the Serbin Field to Riley in return for 7 net wells in the same field. In addition, FieldPoint assigned to Riley 240 net acres in exchange for 239 net acres. On July 1, 2014, the Company executed a second closing with Riley. Pursuant to the terms of the exploration agreement FieldPoint assigned 23 net Taylor sand wells in the Serbin Field to Riley in return for 20 net wells in the same field. In addition, FieldPoint assigned Riley 759 net acres in exchange for 760 net acres. Both Riley transactions were a non-cash contribution of interests with substantially the same fair value. Operations in the field transferred from FieldPoint to Riley for these leases. FieldPoint and Riley plan to jointly re-develop these leases by plugging the legacy wells and drilling new horizontal wells.

During 2014, we unsuccessfully recompleted the University Z2 well in Andrews County, Texas. We recognized exploration expense of $462,302 during the year ended December 31, 2014. In 2013, the Irby #1 on the Riverdale Prospect in Goliad County, Texas, was plugged and abandoned when it was determined it was non-economic. Exploration expense of $152,650 was recognized for the twelve months ending December 31, 2013.

The Company recorded impairment charges of $3,085,787 and $485,999 during the years ended December 31, 2014 and 2013, respectively, as a result of writing down the carrying value of certain properties to fair value. In order to determine the amounts of the impairment charges, the Company compares net capitalized costs of proved oil and natural gas properties to estimated undiscounted future net cash flows using management's expectations of economically recoverable proved reserves. If the net capitalized cost exceeds the undiscounted future net cash flows, the Company impairs the net cost basis down to the discounted future net cash flows, which is management's estimate of fair value. In order to determine the fair value, the Company estimates reserves, future operating and development costs, future commodity prices and a discounted cash flow model utilizing a 10 percent discount rate. The estimates used by management for the fair value measurements utilized in this review include significant unobservable inputs, and therefore, the fair value measurements are classified as Level 3 of the fair value hierarchy.

The Company sold its interest in the Stauss Field in October 2013 for net proceeds of $5,000. A gain of $4,000 was recognized on the sale as the property had been previously impaired.