Related Party Transactions

9 Months Ended

Sep. 30, 2011

Related Party Transactions

Related Party Transactions

Note 12 — Related Party Transactions

Nytis Exploration Company (“NEC”) is an independent oil and gas company whose nature of its business is the exploration, development, production, marketing and sale of oil, gas, coalbed methane and other hydrocarbons in locations other than the United States.  Prior to the closing of the Private Placement on June 29, 2011 (see Note 9 and Item 2 — Recent Developments), NEC had substantially the same stockholders as the Company.  The Company had engaged NEC to assist in the management, direction and supervision of the operations and business functions of the Company.  A service agreement between the Company and NEC provided for certain restrictions on NEC’s authority to perform acts in connection with the business of the Company and established provisions for the compensation of NEC in performing these duties.

The Company and NEC terminated this service agreement on June 30, 2011.  Effective July 1, 2011, the parties entered into a new agreement whereby the Company will manage, direct and supervise the operations and business of NEC for a monthly fee of $15,000.  The new agreement’s initial term of one year is automatically renewable for successive one-year terms.  For the quarter ending September 30, 2011, pursuant to the new service agreement, the Company charged NEC $45,000.

General and administrative expenses charged by NEC to the Company were nil and approximately $315,000 for the three months ended September 30, 2011 and 2010, respectively.  NEC charged the Company general and administrative expenses of approximately $673,000 and $876,000 for the nine months ended September 30, 2011 and 2010, respectively.  As of September 30, 2011, the Company owed NEC approximately $37,000.  This payable consists primarily of charges incurred under the service agreement.