Note 3 - Oil and Gas Properties

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Oil and Gas Properties [Text Block]

NOTE 3 – OIL AND GAS PROPERTIES

The Company entered into a Letter of Intent with Chicorica, LLC on December 13, 2018 and extended the agreement through March 4, 2022. On March 1, 2022, the Company entered into an extension agreement with Chicorica to extend the Closing through August 5, 2022. In return, the Company must pay $30,000 by April 1, 2022, $35,000 by July 8, 2022 and $30,000 by August 5, 2022.

On June 25, 2020, the Company entered into a Purchase and Sale Agreement with Pure Oil & Gas, Inc. (“Pure”) and ZQH Holding, LLC (“ZQH”) to acquire oil and gas assets in Rogers County Oklahoma (the “Project”) in consideration of a purchase price of $1,000,000. Pursuant to the agreement, the Company has taken assignment of all of ZQH and Pure's working interest in the Project and has recognized a note payable to ZQH and Pure as of December 31, 2020 of $1,060,000 consisting of the purchase price of $1,000,000 and the principal and accrued interest on an existing note totaling to $60,000. (See Note 7). The Company, ZQH, and Pure agreed that the sellers' combined working interest in the Project is 87.5%. Pursuant to the Agreement, the Company has taken assignment of all of ZQH and Pure's Working Interest in the Project. The current operator of the Project and owner of the residual Working Interest is Premier Gas Company, LLC (“Premier”). As of December 31, 2020, the Company fully impaired the Project due to the lack of funds for development.

On July 6, 2020, Premier filed a mechanic’s lien in Rogers County alleging past unpaid invoices and also claiming incorrectly that Alpha’s ownership is 75% rather than 87.5%. No documentation has been provided Alpha of any past due invoices by Premier, Pure, or ZQH, and we intend to contest the lien vigorously.

The Company notes that the Project is included in the lands in eastern Oklahoma affected by a decision of the U.S. Supreme Court issued on July 9, 2020. In McGirt v. Oklahoma the Supreme Court held that a large portion of eastern Oklahoma reserved for the Creek Nation in the 19th century remains Indian Country for purposes of the federal Major Crimes Act. The impact of this decision on title to the lands and leases included in the Project is uncertain at this point, and the Company will continue to monitor developments concerning the effects of this decision. The Company has subsequently determined that the assignment appears to represent no actual, tangible assets. The Company has notified ZQH and Pure of these findings and informed them of our decision to not pursue the Project. ZQH and Pure have hired legal counsel to examine the question of whether Alpha can legally withdraw from the PSA even with no actual asset.

On June 30, 2020, the Company entered into an option Agreement with Progressive Well Service, LLC (“Progressive”) to acquire oil and gas assets in Lincoln and Logan Counties in Central Oklahoma (the “Coral Project”, called the “Logan 1 Project” in the Agreement). The agreement gives the Company until December 31, 2020 to exercise its option (the “Option Period”). During the Option Period, Progressive may not sell the Coral Project to any third party. In return for this exclusivity, the Company issued 10,000 shares of its common stock with a fair value of $10,000, such shares to bear a legend restricting sale during the Option Period. At closing the Company shall make a cash payment of $600,000 (less Monthly Extension Payments) to Progressive (the “Project Payment”) and guarantee to Progressive a further payment of 3% of the net revenue stream from any new wells drilled in the Coral Project (the “Production Payment”) until Progressive has received an additional $350,000. Since December 2020, the Company and Progressive have entered into various Extension Agreements, the current one being dated June 30th, 2021 (the “Extension Agreement”). The Extension Agreement extends the period by which Closing must occur through November 30, 2021, in return for which the Company makes a monthly payment of ten thousand dollars ($10,000), which sum is to be applied toward the Project Payment. On November 30, 2021, the Company and Progressive verbally agreed to extend the closing to February 2022. On March 9, 2022, the Company closed on the acquisition of 34 well bores and related assets under the PSA. We are entitled to receive the proceeds of production from January 1, 2022 under the terms of the PSA and Progressive is required to operate the properties and transfer ownership and royalty decks to Company following a one-month transition period. Under the PSA we are obligated to make a further payment of three (3%) percent of the net revenue from new wells drilled until Progressive receives an additional $350,000.

On September 8, 2020, the Company entered into an Option Agreement with Kadence Petroleum, LLC. (“Kadence”) to acquire oil and gas assets in Logan County in Central Oklahoma, called the “Logan 2 Project” in the Agreement). The Agreement gives the Company until February 8, 2021 to exercise its option (the “Option Period”). During the Option Period, Kadence may not sell the Logan 2 Project to any third party. In return for this exclusivity, the Company will pay $10,000 per month. The Company paid $10,000 to Brian Tribble, Managing Member of Kadence, through AEI Acquisition, LLC revolving credit note, on September 18, 2020. At closing, Alpha shall tender to Kadence a cash payment of $350,000 (the “Project Payment”). Alpha shall agree at Closing to make a monthly payment equal to 3% of the net revenue stream from any new wells (not workovers, restarts, or recompletions) drilled in the Project area after the Closing until such time as Kadence shall have accrued $800,000 from such new wells (the “Production Payment”). Together, the Option Payment, Production Payment, and Project Payment shall satisfy the Purchase Price. On March 3, 2021, the Company amended the agreement until May 1, 2021, with a $10,000 monthly payment in January through April 2021. The Company had advanced $85,500 in option payments through September 30, 2021. The agreement is cancelled, and the Company wrote off the $85,500 as of September 30, 2021.

Oil and gas properties at December 31, 2021 and 2020 consisted of the following:

	Balance						Balance
Account	12/31/2020		Additions		Impairment		12/31/2021
Leasehold Improvements - Chico Rica, LLC	$	10,000	$	-	$	-	$	10,000
Leasehold Improvements - Undeveloped		-		15,791		-		15,791
Lease Acquisition Costs - Logan County Project I		10,000		110,000		-		120,000
Lease Acquisition Costs - Logan County Project II		50,000		35,500		85,500		-
Total oil and gas related assets	$	70,000	$	161,291	$	85,500	$	145,791