Accounts Payable Due to Drilling Operator

3 Months Ended

Mar. 31, 2015

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Accounts Payable Due to Drilling Operator

NOTE 3 — ACCOUNTS PAYABLE DUE TO DRILLING OPERATOR

We have historically been the drilling operator for wells drilled on our behalf in which we own a working interest. In 2012, another working interest owner became the drilling operator for wells in which we own a working interest. We owed the drilling operator $13,032,589 and $5,777,983 for charges incurred, but not paid, as of March 31, 2015 and December 31, 2014, respectively. The amount due to the operator reported at December 31, 2014 has been reduced for consideration received from the Republic purchase and sale agreement, which is to be paid in the form of a credit against the expenses incurred by Republic Energy Ventures on behalf of American Shale (see Note 6). The amount due to the operator reported at March 31, 2015 and December 31, 2014, is net of a $796,964 and $708,467 credit, respectively, related to intercompany charges related to employee salary reimbursements, travel expenses, and lease costs.