Note 7 - Long-lived Assets Impairment Loss

9 Months Ended

Sep. 30, 2017

Notes to Financial Statements

Long Lived Assets Impairment Loss [Text Block]

N

ote

7

-

LONG-LIVED ASSETS IMPAIRMENT LOSS

Oil and gas producing properties

are monitored for potential impairment when circumstances indicate that they

are

not

expected to recover their entire carrying value through future cash flows. The evaluations involve significant judgment since the results are based on estimated future events, such as inflation rates, future sales prices for oil and gas, future production costs, estimates of future oil and gas reserves to be recovered and the timing thereof, the economic and regulatory climates and other factors. The need to test a property for impairment

may

result from significant declines in sales prices or unfavorable adjustments to oil and gas reserves.

Between periods in which reserves would normally be calculated, the Company updates the reserve calculations utilizing updated estimates of forward crude oil and natural gas prices. The assessment determined

no

impairment provision was needed for the

three

months ended

September 

30,

2017

and

2016.

For the

nine

months ended

September 

30,

2017,

the assessment resulted in an impairment provision of

$88,764

and for the same period in

2016,

the impairment provision was

$508,964.

The impairment provisions for both

2017

and

2016

were principally the result of lower projected future prices for oil and gas. A reduction in oil or gas prices, or a decline in reserve volumes, could lead to additional impairment that

may

be material to the Company.