ADDISON ACQUISITION

12 Months Ended

Dec. 31, 2015

Business Combinations [Abstract]

ADDISON ACQUISITION

On April 5, 2013, the Company acquired from Addison Oil, L.L.C. (“Addison”) approximately 51,460 net acres held by production in the Austin Chalk adjacent to 25,926 net acres held by the Company at that time.  This acquisition increased the Company’s acreage holdings in the Austin Chalk to over 77,000 net acres at the time of closing.  The purchase price was $7.5 million, with an effective date of January 1, 2013.  The Company granted a two percent overriding royalty to the sellers, and sellers have a right to participate in new wells or new side tracks for a twenty-five percent (25%) working interest.  This acquisition complemented the Company’s existing acreage position and substantially increased the Company’s number of proved undeveloped drilling locations and proved reserve values.

Associated with this acquisition, the Company recorded $6,043,412 for the associated future asset retirement obligations and $1,440,702 in suspended royalty and revenue obligations, net of related receivables at the time of the merger.