NOTE 6 - RESTATEMENT TO REFLECT CHANGE IN REVENUE RECOGNITION POLICY

6 Months Ended

Jun. 30, 2013

Accounting Changes and Error Corrections [Text Block]

Accounting Changes and Error Corrections [Text Block]

NOTE 6 – RESTATEMENT TO REFLECT CHANGE IN REVENUE RECOGNITION POLICY

The Company has restated its previously issued 2012 financial statements for the correction of an error in the method of revenue recognition.   Subsequent to the issuance of the financial statements of the Company as of December 31, 2012 and 2011, and for the years then ended, we reevaluated our policy regarding the recognition of pre-drilling and drilling service revenue.  Beginning with the fiscal year ending December 31, 2010 we have changed our revenue recognition policy to recognize all pre-drilling and drilling service revenue, provided under turnkey drilling agreements, at the time drilling of the well is completed.  Accordingly, the financial statements as of June 30, 2012, and for the periods then ended have been restated to correct an error in our method of revenue recognition to reflect changes in Deferred Revenue, Accumulated Deficit, Deferred Income Tax Asset, and Turnkey Drilling Revenue  relating to the Company’s revenue recognition method.  The effect on the Company’s issued June 30, 2012 financial statements is summarized below:

	As Previously
	Reported			As Restated
Balance sheet as of June 30, 2012:
Deferred Tax Asset-Noncurrent	$	6,986,892		$	7,159,586
Total Assets		20,173,028			20,345,722
Deferred Revenue from Turnkey Drilling		6,697,235			7,289,793
Total Current Liabilities		12,682,995			13,275,553
Total Liabilities		13,264,094			13,856,652
Accumulated Deficit		23,175,477			23,595,341
Total paid in capital and accumulated deficit		6,436,676			6,016,812
Total Stockholder’s Equity		6,908,934			6,489,070
Total Liabilities and Stockholder’s Equity		20,173,028			20,345,722
Statement of Comprehensive Loss for the period ended June 30, 2012:
Turnkey Drilling		592,558			0
Total Revenues		1,829,949			1,237,391
Loss From Operations		(3,126,442	)		(3,719,000	)
LossBefore Income Tax Benefit		(3,194,804	)		(3,787,362	)
Income Tax Benefit		(931,089	)		(1,103,783	)
Net Loss		(2,263,715	)		(2,683,579	)
Comprehensive Loss		(2,263,472	)		(2,683,336	)