Acquisitions and Dispositions

6 Months Ended

Jun. 30, 2014

Acquisitions And Dispositions

2. Acquisitions and Dispositions

Dispositions

On June 5, 2014, Aurora completed the sale of all of its interest in the Lightnin’ property for cash consideration of $4,021,000. The effective date for the transaction was April 1, 2014. Aurora held a 20% working and 15% net revenue interest in the Lightnin’ property operated by a third party. Estimated daily net production to Aurora’s interest was approximately 36 BOEPD (barrels of oil equivalent per day) at the time of the sale from the 3 producing wells. The Company recognized a gain on the sale of the Lightnin’ property of $2,159,592 in its consolidated statement of operations for the three and six months ended June 30, 2014. The proforma impact of the sale of this interest is summarized below for the six months ended June 30, 2014 and 2013, respectively.

Acquisitions

On June 30, 2014, Aurora completed the initial closing (the “First Closing”) of a purchase of a 10% working and 7.5% net revenue interest in the proved and unproved Permian Basin Fairway Operations from a third party (the “Fairway Seller”) for $2,491,888 in cash, subject to customary purchase price adjustments. On the First Closing, the Fairway Seller assigned certain of the assets in its Permian Basin Fairway Operation (the “First Closing Assets”) to Aurora. The second closing (the “Second Closing”) awaits curative title work and additional purchase price adjustments and is expected in - August 2014. On the Second Closing, the Fairway Seller will assign the remainder of its assets in its Permian Basin Fairway Operations to Aurora. The Effective Date for the transfer of all assets is May 1, 2014. The total estimated daily net production to the Company from the First Closing Assets at the time of sale was approximately 64 BOEPD. The acquisition of the First Closing Assets includes 7 producing wells and 4 wells completed and awaiting production start-up. The acquisition of the First Closing Assets includes approximately 40 additional drilling locations for future development. The impact of the Lightnin’ disposition and the acquisition of the First Closing Assets is summarized below:

2014 Continuing Operations	As Reported for the Six Months Ended June 30, 2014			Disposed Operations		Acquired Operations		Pro Forma For the Six Months Ended June 30, 2014
Oil and Gas Revenues	$	432,690		$	207,364	$	1,365,769	$	1,591,005
Income (Loss) from operations	$	851,671		$	156,241	$	1,139,137	$	1,834,567
Net Income (Loss)	$	851,671		$	156,241	$	1,139,137	$	1,834,567
Net Income (Loss) attributable to Victory	$	(163,114	)	$	78,121	$	569,568	$	328,333
Earnings (Loss) Per Share
Basic	$	(0.01	)					$	0.01
Fully Diluted	$	(0.01	)					$	0.01

2013 Continuing Operations	As Reported for the Six Months Ended June 30, 2013			Disposed Operations		Acquired Operations		Pro Forma For the Six Months Ended June 30, 2013
Oil and Gas Revenues	$	255,678		$	80,163	$	883,464	$	1,058,979
Income (Loss) from operations	$	(838,386	)	$	56,459	$	717,496	$	(177,349	)
Net Income (Loss)	$	(838,386	)	$	56,459	$	717,496	$	(177,349	)
Net Income (Loss) attributable to Victory	$	(726,097	)	$	28,320	$	358,748	$	(395,669	)
Loss Per Share
Basic	$	(0.03	)					$	(0.01	)
Fully Diluted	$	(0.03	)					$	(0.01	)

	Purchase Price Allocation
Fair Value of Assets Acquired – Tangible and Intangible Well costs	$	1,808,062
Fair Value of Assets Acquired – Proved Producing Leasehold Costs		672,000
Fair Value of Assets Acquired Unproved Leasehold Costs		18,648
Fair Value of Liabilities Assumed – ARO	$	( 6,821	)
Net Asset Fair Value First Closing Only	$	2,491,888

As a result of the future adjustment to the Fairway operation and final closing event, the final purchase price allocation has not been finalized. Any future purchase price adjustments are to be recorded as adjustments to the value of the oil and gas property costs above.