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Sweet thanks for posting that
Computers can't keep up with this one its so hot!!!!
Exactly the majority of close stops were taken out in the morning shake. It was actualy very encouraging as someone with money was trying to get cheap shares as they think the share price will climb substantially higher or they would not have done it
Woopee 7 out of 8 recommend it to a friend see walgreens reviews. It's what the people think that counts not if it turns your toilet green.
Pharma drama in pennyland? What's unique about SNPK is that it has the aura of being a pharma stock. Not that it is one. But think of it. Drug companies sell stock to finance etc., go into big debt, bleed revinue big time hoping that after yrs. they can sell a drug. Here we have a pill to fill a percieved nich with a huge population, and no development costs etc. It's producing revenue now. But it's never been truley promoted big. Just thought there is a rough parallel here in concept/principle at least. Yes it's a promo, but doesn't big pharma prep then launch a big sales drive when they get approved? Goofy thought I know but and interesting one. I've seen 1 pharma go from a $1 to 16 back to 9 then bought out for 26 and they never made one dime in profit on the drug. the co that bought them has yrs to go yet if they ever see anything for their efforts.
Thanks for your view of the day. Thats about the feel I had of the day too. Would have liked to see maybe a little more volume, but I guess after Friday You could say todays events were very encouraging. Looks like things are setting up nicely.
That Rocks good laugh!
Coltamin on shelfs now. In small pharmacies, 4 or so in Sd Ca Whats different here is the national add campaign. Promote something enough and you can sell fast food puke with a goofy clown. Cigaretts which are slow death poison. etc. etc. This will go but how far, how hard will they campain? How long will they pump it? If they make money they will keep promting it. Big retailers don't waste money/time with product that doen't sell. And there seems to be a consensus here of big retailers that this one has potential enough to expend the resources to add it to their stores
Thanks I think this one has enough of an "air of legitimicy" to make a big run, maybe bigger than LEXG? Statment of SNPK says FINRA has already checked them out etc. Thats what blew up R#ys bad news and in 30min they were toast. So looks like we have at least a shot at bad news free sailing here. Only pumps and good pr from SNPK.
Opinion? When/if the commercials air tommorrow, are there a bunch of people ready to jump in here with money based on their seeing that happen. After getting the pumps then seeing the commercials. If so won't that be a significat catalist for upward pps?
Thanks for your insight. I've been in 2 or three of these and made far less money than I should have. Been scanning though your posts for pointers. I didn't think the dip fri. was a dump either. Just alot of stops busted through. Many had made double or so and decided to get out starting the run down. I notice this is traded on only one exchange and get the notion that this exchanges servers are overloaded with the huge volume. 25 million shares from all over. Usually a stock on the nasdac shows 3or 4 exchanges handling trades. I'm guessing that makes it hard for a stop to get exicuted untill the price is a few percent below the stop.
This one has me excited as it has more percieved legitamcy with actual product being sold. It may actually be worth something after all is said an done . But I am taking your view and will get out before I think it's peaking.
silly question is trading halted on this today?
WONDER IF THERE IS NEWS? Does a rig worker know something we dont?
WOW CRACK THAT ASK .019
Oil Prices at $200 a Barrel? Some Think It's Coming
http://www.cnbc.com/id/46809606
Israel Security Cabinet Votes 8 To 6 To Attack Iran
Wonder if this is the reason most oil stocks are up today?
http://www.zerohedge.com/news/brent-126-israel-cabinet-votes-8-6-attack-iran
Ask @ .18 for Simular Mississipian Play neighbor
Funny thing is with just a 10 to 13% working interest in just their 4 wells the share is this high and price gaps up with each new well. SIOR potential?
NEIGHBOR TO SIOR HITS NEW GUSHER
http://www.austexoil.com/IRM/Company/ShowPage.aspx/PDFs/1307-76964182/DrillingSuccessLudwickNo1WellKansas
A share deal can be done well or badly done. Just like any transaction. It just depends on how many shares are added to the operating shares and what we get for it. The added shares diminish the piece of the pie a share holder has. In this case if enough well production results it can boost the value to the point that it mitigates the effect of dillution.
Here's some more motive from a financial, expected soon to be $130 per barrel point of view
http://video.cnbc.com/gallery/?video=3000077325
Fundimental reality of Iran here now, also the reality of horizontal fracking. Yes fundimentals can and do change but the motive to drill now I say is very strong.Might add the possiblity of qe3 kicks in the cash costs of drilling will skyrocket as inflation devalues the dollar. Much cheaper to drill now and have the oil in hand to hedge inflation.
Why drill sooner than later? Doubtfull WTI price will go down much right now with the Iran nuke thing. But as we have seen in just a couple yrs. nat gas price has crashed due to horizontal fracking technology creating and abundant supply. Some analysts are saying a simular effect could occur with crude. Maybe in as little as 3 yrs.So better to produce now while the price is up.
5% correction in much of the market almost. At least we know it's not all related to SIOR
NEXT Surprise? DRilling? lets all hope so!
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2010
OR
¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission File Number: 000-50173
Superior Oil and Gas Co.
(Exact name of registrant as specified in its charter)
NEVADA
(state of
incorporation)
87-0537621
(IRS Employer
I.D. Number)
844 South Walbaum Road
Calumet, Ok 73014
405-884-2080
(Address and telephone number of registrant's principal
executive offices and principal place of business)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Large accelerated filer ¨
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company x
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
As of November 22, 2010, there were 199,700,000 shares of the Registrant's Common Stock, par value $0.001 per share, outstanding.
TABLE OF CONTENTS
Page
PART I - FINANCIAL INFORMATION
3
Item 1. Financial Statements
3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
11
Item 4. Controls and Procedures
13
PART II - OTHER INFORMATION
14
Item 1. Legal Proceedings
14
Item 2. Unregistered Sales of Equity Securities
15
Item 6. Exhibits
16
SIGNATURES
17
2
PART I - FINANCIAL INFORMATION
Item 1.
Financial Statements
PAGE
Balance Sheets September 30, 2010 and December 31, 2009 (Unaudited)
4
Statements of Operations for the Three Months and Nine Months Ended
September 30, 2010 and 2009 (Unaudited)
5
Statements of Cash Flows for the Nine Months Ended
September 30, 2010 and 2009 (Unaudited)
6
Notes to Financial Statements
7
3
Superior Oil and Gas Co.
Balance Sheets
(unaudited)
(unreviewed)
September 30,
December 31,
2010
2009
ASSETS
Current Assets
Cash
$ 84 $ 218
Accounts receivable
22,082 1,616
Total Current Assets
22,166 1,834
Property and Equipment
Oil and gas properties
Pipeline Right of Way
111,600 111,600
Unproved property
- 189,581
111,600 301,181
Other property and equipment
Leasehold improvements
553,170 553,170
Furniture and fixtures
67,714 67,714
620,884 620,884
Less accumulated depreciation and amortization
(149,538 ) (100,795 )
471,346 520,089
Total Property and Equipment
582,946 821,270
Total Assets
$ 605,112 $ 823,104
LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities
Accounts payable
$ 1,430,456 $ 1,438,156
Accrued salaries
323,975 323,975
Accrued interest
17,326 -
Notes payable
103,500 -
Convertible debenture payable, net of discount of $127,127
22,873 -
Debtor judgment payable
707,914 682,588
Advances from shareholders
157,134 293,528
Derivative liability
247,447 -
Total Liabilities
3,010,625 2,738,247
Shareholders' Deficit
Common stock, $0.001 par value per share
200,000,000 shares authorized, 199,700,000
outstanding at September 30, 2010 and
56,234,082 at December 31, 2009
199,700 56,235
Additional paid-in capital
15,554,737 6,485,226
Accumulated deficit
(18,159,950 ) (8,456,604 )
Total Shareholders' Deficit
(2,405,513 ) (1,915,143 )
Total Liabilities and Shareholders' Deficit
$ 605,112 $ 823,104
See accompanying notes to the financial statements.
4
Superior Oil and Gas Co.
Statements of Operations
(unaudited)
(unreviewed)
Three
Nine
Months Ended
Months Ended
Months Ended
Months Ended
September 30,
September 30,
September 30,
September 30,
2010
2009
2010
2009
Revenue
Oil
$ 3,051 $ 15,593 $ 18,846 $ 20,374
Gas
3,409 244 10,865 998
6,460 15,837 29,711 21,372
Operating Expenses
Lease operating expenses
5,541 10,149 44,903 15,251
Impairment expense
- 58,472 369,371 248,357
Administrative
48,881 1,734,713 9,336,567 1,882,745
Interest
15,700 8,442 65,525 25,326
Depreciation and amortization
16,248 16,235 48,743 48,814
Gain on the sale of scrap equipment
- (23,000 ) - (23,000 )
86,370 1,805,011 9,865,109 2,197,493
Loss from operations
(79,910 ) (1,789,174 ) (9,835,398 ) (2,176,121 )
Loss on derivative (gain)
- - (97,447 ) -
Other income
- - 229,497 54,928
Loss before income taxes
(79,910 ) (1,789,174 ) (9,703,348 ) (2,121,193 )
Deferred income tax expense (benefit)
- - - -
Net loss
$ (79,910 ) $ (1,789,174 ) $ (9,703,348 ) $ (2,121,193 )
Basis loss per share:
Weighted average shares outstanding
199,700,000 33,625,386 191,564,820 47,849,555
Loss per share
$ (0.00 ) $ (0.05 ) $ (0.05 ) $ (0.04 )
See Accompanying Notes to Financial Statements
5
Superior Oil and Gas Co.
Statements of Cash Flow
(unaudited)
(unreviewed)
Nine
Nine
Months Ended
Months Ended
September 30, 2010
September 30, 2009
Cash flows from operating activities:
Net loss
$ (9,703,348 ) $ (2,121,193 )
Adjustment to reconcile net loss to net cash
used in operating activities:
Amortization of debt discount
22,873
Loss on derivative liability
97,447 (54,928 )
Gain from settlement of accounts payable
(229,497 )
Depreciation and amortization
48,743 48,814
Impairment expense
369,371 248,357
Share based compensation
9,118,183 1,680,000
Changes in operating assets and liabilities:
Accounts receivable
(20,466 ) 58,450
Accounts payable
161,384 (44,921 )
Accrued expenses
17,326 38,575
Increase in debtor judgment payable
25,326 25,326
Net cash used in operating activities
(92,658 ) (121,520 )
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of unproved oil & gas properties
(150,000 ) -
Net cash used in investing activities
(150,000 ) -
Cash flows from financing activities:
Loan from officers
(10,976 ) 122,254
Proceeds from bank loan
253,500 -
242,524 122,254
Decrease in cash
(134 ) 734
Cash at beginning of period
218 712
Cash at end of period
$ 84 $ 1,446
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid for interest
$ - $ -
Non Cash Investing and Financing Activities
Stock issued for oil & gas properties
$ 94,790 $ -
See notes to the financial statements.
6
Superior Oil and Gas Co.
Notes to Financial Statements
(unaudited)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited and unreviewed interim financial statements of Superior Oil and Gas Co., (the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the audited financial statements and notes thereto contained in Superior's Annual Report on Form 10-K filed with the SEC. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which substantially duplicate the disclosure contained in the audited financial statements for fiscal 2009 as reported in the Form 10-K have been omitted.
Recently Issued Accounting Pronouncements
In January 2010, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2010-06, Improving Disclosures about Fair Value Measurements (ASU 2010-06). This update provides amendments to Subtopic 820-10 and requires new disclosures for 1) significant transfers in and out of Level 1 and Level 2 and the reasons for such transfers and 2) activity in Level 3 fair value measurements to show separate information about purchases, sales, issuances and settlements. In addition, this update amends Subtopic 820-10 to clarify existing disclosures around the disaggregation level of fair value measurements and disclosures for the valuation techniques and inputs utilized (for Level 2 and Level 3 fair value measurements). The provisions in ASU 2010-06 are applicable to interim and annual reporting periods beginning subsequent to December 15, 2009, with the exception of Level 3 disclosures of purchases, sales, issuances and settlements, which will be required in reporting periods beginning after December 15, 2010. The adoption of ASU 2010-06 did not impact the Company’s operating results, financial position or cash flows, but did impact the Company’s disclosures on fair value measurements. See Note 6, “Fair Value Measurements.”
In February 2010, FASB issued ASU No. 2010-09, Amendments to Certain Recognition and Disclosure Requirements (ASU 2010-09). This update amends Subtopic 855-10 and gives a definition to SEC filer, and requires SEC filers to assess for subsequent events through the issuance date of the financial statements. This amendment states that an SEC filer is not required to disclose the date through which subsequent events have been evaluated for a reporting period. ASU 2010-09 becomes effective upon issuance of the final update. The Company adopted the provisions of ASU 2010-09 for the period ended March 31, 2010.
In April 2010, the FASB issued ASU No. 2010-12, Accounting for Certain Tax Effects of the 2010 Health Care Reform Acts (ASU 2010-12). This update clarifies questions surrounding the accounting implications of the different signing dates of the Health Care and Education Reconciliation Act (signed March 30, 2010) and the Patient Protection and Affordable Care Act (signed March 23, 2010). ASU 2010-12 states that the FASB and the Office of the Chief Accountant at the SEC would not be opposed to view the two Acts together for accounting purposes. The Company is currently assessing the impact, if any, the adoption of ASU 2010-12 will have on the Company’s disclosures, operating results, financial position and cash flows.
7
Superior Oil and Gas Co.
Notes to Financial Statements
(unaudited)
NOTE 2: GOING CONCERN CONSIDERATIONS
The Company neither has sufficient cash on hand nor is it generating sufficient revenues to cover its operating overhead. These facts raise substantial doubts as to the Company’s ability to continue as a going concern. The Company has been operating over the past year based on loans, stock sales, sales of oil and gas properties and increases in its accounts payable. There is no guarantee that such sources of financing will continue to be available for operations to the Company. In order to be able to complete the wells it is in the process of drilling and completing and to produce those wells, the Company will be required to obtain significant funding. Management’s plans include attempting to find partners for its drilling prospects. Management intends to make every effort to identify and develop sources of funds. There is no assurance that Management’s plans will be successful.
NOTE 3: STOCK TRANSACTIONS
On March 13, 2010, the Company issued 140 million common shares to two shareholders for compensation for past investment and for a partial interest in an oil and gas leases and three marginally producing oil and gas wells. The value was $0.065 per share or a total of $9,100,000.
All but $94,000 was for compensation of the two shareholders for their past investment in the Company. $94,000 was the fair value of the properties purchased based on replacement costs.
In order to maintain control of the Company in its present controlling shareholders, the Company is to amend its articles of incorporation (i) to increase the number of authorized shares of common stock and (ii) to authorize a new class of stock - a Preferred Stock - with a 10 million-share Series A Voting Convertible Preferred Stock, each share of which can cast 14 votes and also be convertible into 14 shares of Common Stock. The Company is expected to issue these 10 million shares to affiliates of the present management of the Company and thereby achieve a balancing of the voting power of the two shareholders mentioned above, on the one hand, and Superior's present management (and the controlling shareholder), on the other hand.
In order to maintain a balance in the voting power of the controlling shareholders and the two shareholders, in consideration of the Company’s agreeing to order the issuance of the 140 million shares of common stock to the two shareholders, the two shareholders agree that, until after the 10 million shares of Series A Preferred Stock have been authorized and issued and delivered to the owners of those shares, the two shareholders will only exercise the voting power of its shares consistent with the written instructions of the Company’s management (controlling shareholders). As a result, the issuance of the 140 million shares of common stock to the two shareholders did not result in change of control of the Company.
8
Superior Oil and Gas Co.
Notes to Financial Statements
(unaudited)
On April 14, 2010, the Company issued 3,765,918 shares of common stock to five persons for services. The value was $0.03 per share or a total of $112,977 based on the quoted market price of the common stock on the date of grant.
NOTE 4: NOTE PAYABLE
The note payable is a promissory note to an unrelated individual due March 31, 2011 with interest at 8% per annum.
NOTE 5: CONVERTIBLE DEBENTURE PAYABLE AND DERIVATIVE LIABILITY
On March 13, 2010 the company entered into a convertible, 15% debenture to an unrelated individual. The debenture is due with interest on October 9, 2010 and is convertible into 15 million shares of the Company’s common stock. At the date of issuance, we did not have 15 million authorized but unissued shares available and thus we could not assert that we had sufficient authorized shares to settle this share-settleable instrument if called upon by the holder. As a result of this, under ASC 815-25, the embedded conversion option should be classified as a derivative liability at its fair value.
As at the nine months ended September 30, 2010, we noted the following issued and outstanding shares and share-settleable instruments:
Common shares issued and outstanding
199,700,000
Common shares convertible from debenture
15,000,000
Total
214,700,000
Accordingly, at September 30, 2010 we still could not assert that we had sufficient authorized shares to share-settle any conversion of the convertible debenture. As a result, the embedded conversion option should continue to be classified as a derivative liability and measured at fair value.
The valuation of our embedded derivative is determined using the Black-Scholes option pricing model. To determine the fair value of our derivatives, management evaluates assumptions regarding the probability of certain future events. Certain factors used to determine fair value include our period end stock price $0.02, historical stock volatility 338%, risk free interest rate 0.18% and derivative term 0.2 year.
NOTE 6: FAIR VALUE MEASUREMENT
FASB ASC 820, Fair Value Measurements and Disclosures defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. FASB ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. FASB ASC 820 describes three levels of inputs that may be used to measure fair value:
9
Superior Oil and Gas Co.
Notes to Financial Statements
(unaudited)
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Our derivative liabilities are classified as Level 2.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are financial instruments whose values are determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant judgment or estimation.
If the inputs used to measure the financial assets and liabilities fall within more than one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The following table provides a summary of the fair value of our derivative liabilities measured on a recurring basis:
Fair value measurements on a recurring
basis March 31, 2010
Level 1
Level 2
Level 3
Liabilities
Embedded derivatives related to Convertible debentures
$
-
$
247,447
$
-
NOTE 7: IMPAIRMENT OF UNPROVED PROPERTIES
In accordance with ASC 360-10, Accounting for the Impairment or Disposal of Long-Lived Assets, long-lived assets such as oil and gas properties and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount of the fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposed group classified as held for sale would be presented separately in the appropriate asset and liability sections of the balance sheet.
Impairment of unproved oil and gas properties is determined by ASC 932, “Extractive Activities – Oil and Gas” Impairment charges on oil and gas properties in 2010 and 2009 amounted to $369,371 and $189,885, respectively.
10
Item 2.
Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the financial statements and the accompanying notes thereto for the period ended September 30, 2010 and is qualified in its entirety by the foregoing and by more detailed financial information appearing elsewhere. See "Item 1. Financial Statements." The discussion includes management’s expectations for the future.
Such expressions of expectation are not historical in nature and are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are subject to risks and uncertainties that may cause actual future results to differ materially from those expressed in any forward-looking statement. Such risks and uncertainties are discussed in the Risk Factors section of our Annual Report on Form 10-K. Copies of that filing may be obtained by contacting Gayla McCoy of our company at 844 South Walbaum Road, Calumet, OK 73014, telephone (405) 884-2080.
Results of Operations – First Three and Nine Months Ended September 30, 2010 Compared to the Three and Nine Months Ended September 30, 2009
We had oil and gas revenue of $6,460 and $29,711 respectively for our interest in three oil and gas wells for the three and nine months ended September 30, 2010 compared to $15,837 and $21,372 revenue for our interest in five oil and gas wells for the same periods in 2009. All of our wells have been shut in periodically during the periods due to lack of working capital resulting in uneven and uncomparable revenues. The wells are operated enough to maintain our leases.
Late in 2006 we drilled two oil and gas wells which were initially completed in 2007. The neutron log on the Windy Vista #1 well in Garfield County, Oklahoma indicated numerous formations which may contain oil or natural gas. Initial completion attempts on the Wilcox Formation were not commercially successful, we believe, due to a poor cement job. We have now completed the well in the Mississippi zone. That well was lost due to a legal judgment in the third quarter of 2009. The company was able to get 25% of this well back in a settlement with the owners.
Initial completion attempts in the Wilcox Formation on the Lonesome River #1 well in Blaine County, Oklahoma indicated substantial amounts of water. The well has now been completed in the Viola zone. The company also fractured the Hunton and Mississippi zones to enhance production on this well. We have only been able to get minimal production from this well and it has been shut in and the lease lost due to non-production.
We drilled the Chickie #1 and Gayla #1 wells in Logan County, Oklahoma in late 2007 and early 2008. In addition we did a recompletion on the Lindsey on the same lease during that time frame. Due to completion problems on the wells we have only been able to get minimal production on the wells.
The revenue of $21,372 in the nine months in 2009 was from our working interest from sporadic production in these wells. They were shut in most of the time due to lack of funds for operations. The revenue for oil production for the periods in 2010 was for oil produced in the Logan County wells. These wells were shut in most of the time in the first quarter of 2010 due to lack of funds necessary to pay for cost of production.
11
Lease operating expenses for the three and nine months ended September 30, 2010 were $5,541 and $44,903 respectively compared to $10,149 and $15,251 respectively for the same periods in 2009. Most of the expenditures in 2010 were for workover costs in trying to get the wells producing again.
Impairment expense in the three and nine months periods ended September 30, 2010 were $-0- and $369,371 respectively and for the three and nine months periods ended September 30, 2009 the expense was $58,472 and $248,357 respectively relating to three leases which expired in the second quarter of 2009. The acreage contained 316 total acres of which the Company owned a 50% interest or 158 net acres.
General and administrative expenses were $48,881 and $9,336,567 respectively for the three and nine months ended September 30, 2010 compared to $1,734,713 and $1,882,745 respectively for the same periods in 2009, a decrease of $1,685,832 for the three months ended September 30, 2010 from the same period in 2009 and an increase of $7,453.822 for the nine months ended September 30, 2010 from the same period in 2009. The decrease in the three month period in 2010 compared to 2009 was mostly due to the fact that there was a decrease in share based compensation for the 2010 period. The increase in the nine months in 2010 was mostly due to increases in share based compensation in 2010 over the same period in 2009.
Interest expense was $15,700 and $65,523 respectively for the three and nine months ended September 30, 2010 compared to $8,442 and $25,326 in the same periods in 2009. The increases were for interest on the $253,500 debentures and notes the company entered into in 2010 and to the amortization of debt discount related to the debentures.
Depreciation and amortization expense was $16,248 and $48,743 respectively for the three and nine month periods ended September 30, 2010 compared to $16,235 and $48,814 respectively for the same periods in 2009. There were no changes in depreciable property between the periods so depreciation remained virtually unchanged.
Loss on derivative in 2010 is in relation to $150,000 debentures that the company obtained in 2010. The debenture has a conversion feature in which the holder has the right to convert the debenture at $0.01 conversion price. This would result in a $97,447 loss for the nine months ended September 30, 2010.
Gain on settlement of liabilities in 2010 is for the forgiveness of debt by a large shareholder during the period. In 2009 the company negotiated with three of its creditors who had liens on property to settle the amount owed for $54,928 less than the total amount due which reflects this income. The company plans to negotiate the remainder of its accounts payable if funds can be raised for the settlements.
12
Net Income (Loss)
We suffered a net loss of $79,910 and $9,703,348 respectively for the three and nine months ended September 30, 2010 as compared to $1,789,174 and $2,121,193 respectively for the same three and nine month periods in 2009, a decrease and increase in losses of $1,709,264 and $7,582,155 respectively for the three and nine months ended September 30, 2010 as compared to the same periods in 2009. The decrease in net loss in the three months ended September 30, 2010 as compared to the same period in 2009 was primarily attributable to a decrease in general and administrative costs, $1,685,832 and a decrease in impairment expense, $58,472 which was offset by a decrease in oil and gas sales net of operating expenses of $4,719; increase in interest expense, $7,258; increase in depreciation, $13; and a decrease in gain on scrap sales of $23,000; gain from derivatives of $139,423; and increase in impairment expense of $179,486. The increase in net loss in the nine months ended September 30, 2010 as compared to the same period in 2009 was primarily attributable to a decrease in oil and gas sales net of operating expenses of $21,313; increase in general and administrative costs, $7,453,822; increase in interest expense, $40,199; increase in loss on derivative, $97,447; and an increase in impairment expense of $121,014. All of this was offset by a decrease in depreciation expense of $71, a decrease in settlement of liabilities of $174,569, and a gain on scrap sales, $23,000.
We financed our loss of $9,703,348 for the nine months ended September 30, 2010 primarily with a decrease in cash, $134; depreciation and amortization expense, $48,743; stock based compensation expense, $9,118,183; increase in impairment of $369,371; increase in accounts payable, $161,384; increase in accrued expenses, $17,326; notes payable, $103,500; and an increase in debtor judgment payable, $25,326. These sources of funds were offset by increase in the gain in settlement from accounts payable of $229,497, decrease in accounts receivable, $20,466; amortization of debt discount, $23,873; non cash loss on derivative liability, $97,447; and a decrease in loans from officers, $10,976.
There were no material changes in financial condition during the nine months ended September 30, 2010.
Material changes in results of operations. The results of operations obtained during the first six months of 2010 differ markedly from those of the first nine months of 2009. The 2010 results reflect share based compensation expense of $9,005,206, a loss on impairment of $369,371, a gain on settlement issue of $229,497, and loss on derivative of $97,447.
Item 4.
Controls and Procedures
Evaluation of disclosure controls and procedures.
As of September 30, 2010, under the direction of our Chief Executive Officer who is also our Chief Financial Officer, we evaluated our disclosure controls and procedures as of September 30, 2010 and concluded that our disclosure controls and procedures were ineffective as of September 30, 2010 due to a material weakness because of the lack of segregation of duties. The lack of segregation of duties results from lack of accounting staff with accounting technical expertise necessary for an effective system of internal control. At any time, if it appears that any control can be implemented to continue to mitigate such weaknesses, it is immediately implemented. As soon as our finances allow, we will hire sufficient accounting staff and implement appropriate procedures for monitoring and review of work performed by our Chief Executive Officer.
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Changes in Internal Control Over Financial Reporting.
There were no changes in our internal control over financial reporting during the fiscal quarter ended September 30, 2010, that have materially affected, or are likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 3.
LEGAL PROCEEDINGS.
Following is a synopsis of lawsuits that have a potential impact on Superior Oil and Gas Company.
We are a judgment debtor in the case of Gotz Werner & Roman Werner v. Daniel Lloyd, McCoy Energy Co., Superior Oil and Gas Co., and Big Daddy’s BBQ Sauce & Spices Co., Superior Court of Arizona, Maricopa County, No. CV 99-11813. The principal amount of the judgment is $337,686 with ten percent interest accruing from and after October 14, 1999. As of September 30, 2010, the amount of the judgment including interest was $707,914.
Daniel Lloyd, McCoy Energy Co. and Big Daddy’s BBQ Sauce & Spices Co. are also judgment debtors in this litigation, each to the same extent and in the same amount as our company. Daniel Lloyd was the chief executive officer, chief financial officer and a director of our company until his death in July 2008. McCoy Energy Co. is under the control of Gayla McCoy, the secretary and treasurer of our company. Big Daddy’s BBQ Sauce & Spices Co. is under the control of Mr. Dan Lloyd, Jr. and Ms. McCoy.
Brooks Investments, LLC, et al. v. Blue Quail Resources, Inc., et al., Case No. CJ-2006-595, District Court of Canadian County, State of Oklahoma wherein Superior Oil and Gas Company, Daniel H. Lloyd and Gayla McCoy are named as co-defendants. Plaintiffs have alleged that Blue Quail Resources, Inc. committed securities fraud when it sold interests in the Lonesome River #1 oil and gas project and are seeking rescission of their contract and actual and punitive damages against Blue Quail and the other co-defendants. The primary plaintiff, an attorney, has testified that no one from Superior or Dan Lloyd or Gayla McCoy ever made any representations to him regarding the Lonesome River #1 oil and gas project. Furthermore, it has been admitted by the plaintiffs that neither Superior Oil and Gas Company, Daniel Lloyd or Gayla McCoy have ever had a contractual relationship with any of the plaintiffs and that the only reason they have been named as defendants was on the basis of their attorney’s advice. That attorney has now been terminated from further representation and a Motion for Summary Judgment is now pending before the Court which Superior’s attorneys anticipate will result in a dismissal as to Superior Oil and Gas Company, Daniel H. Lloyd and Gayla McCoy.
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HOCO Drilling, LLC v. Superior Oil and Gas Company, et al., Case No. CJ-2007-59-01, District Court of Garfield County, State of Oklahoma wherein Superior Oil and Gas Company is being sued for breach of contract by HOCO Drilling, LLC for $179,263.23, plus costs and attorneys fees. Superior filed an answer and counterclaim against HOCO for breach of contract and negligence in an amount in excess of that claimed by HOCO, plus costs and attorney’s fees. Subsequent to December 31, 2008, this lawsuit was settled with the agreement that the Company will pay to the plaintiff $100,000 within one year from May 1, 2009. The $100,000 amount is included in the accounts payable at September 30, 2010.
Midwest Mortgage Brokers and Paul Gee v. Hershey S. Baum, et al., Case No. CJ-2004-7796, District Court of Tulsa County, State of Oklahoma wherein Superior Oil and Gas Company is a named co-defendant involves a loan that was made by Paul Gee and Midwest Mortgage Brokers and Paul Gee to Hershey S. Baum and others for which Superior Oil and Gas purportedly agreed to repurchase 100,000 shares of stock from plaintiffs as part of the consideration for making the loan. The court granted summary judgment against Superior Oil and Gas Company in the amount of $286,448.39 on April 23, 2008 and Superior has filed an appeal from this judgment with the Oklahoma Supreme Court. The attorneys for Superior believe they will be successful in overturning the summary judgment and ultimately prevailing in the lawsuit.
James B. Jackson v. Superior Oil & Gas Co., District Court, Canadian County, Case No. CJ-2008-87. The plaintiff’s claims relate to geological service provided to Superior for which he has not been paid. A default judgment was entered against Superior in the amount of $14,578.29 plus costs and attorney’s fees. Sufficient amounts have been recorded in accounts payable at the balance sheet date to cover the cost of this judgment.
Eagle Well Services, Inc. v. Superior Oil and Gas Co., District Court, Oklahoma County, Case No. CJ-2009-773 involves a claim by Eagle Well Services d/b/a Bronco Energy Services for $94,649.69 for services performed by it for the company. The amount of the claim is in accounts payable at September 30, 2010.
Superior Oil and Gas Co. v. Vince Freechea, District Court, Oklahoma County, Case No. CJ-2009-1793 involves a claim by Superior against an individual who operated a company known as High Plains Tubular. The claim arises out of that individual’s procurement of casing and tubing on behalf of Superior. Mr. Freechea subsequently wrongfully sold this casing and tubing to a third party and refused to remit the proceeds of the sale to Superior. Superior paid Mr. Freechea in excess of $220,000 for the product and is seeking to recover its cost plus the profit for a total of $350,000.
Item 2.
Unregistered Sales of Equity Securities
There have been no sales of unregistered securities since our last report of June 30, 2010.
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Item 6.
Exhibits
The following exhibits are filed, by incorporation by reference, as part of this Form 10-Q:
3(i)
Articles of Incorporation
*
3(ii)
Bylaws
*
10.5
Purchase and Sale Agreement entered into December 13, 2005 between Superior Oil and Gas Co. and William H. Foster.
**
10.6
Purchase and Sale Agreement entered into April 24, 2006 between Enerhance Energy, Inc. and Superior Oil and Gas Co.
**
10.7
Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Kingfisher County, Oklahoma
***
10.8
Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Canadian County, Oklahoma
***
10.9
Assignment of Oil and Gas Leases executed May 23, 2006 from Hudson Resources Corp to Superior Oil and Gas Co. covering lands in Pushmataha County, Oklahoma
***
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Code of Ethics for the Chief Executive Officer and Senior Financial Officers.
+++
16
Letter on Change in Certifying Accountant
*
31.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
*
Previously filed with Form 10-SB on January 31, 2003, EDGAR Accession #0001060830-03-000019; incorporated herein.
+++
Previously filed with Form 10-KSB, SEC #000-50173, on April 19, 2005; incorporated herein.
**
Previously filed with Form 10-QSB 03-31-06 on May 22, 2006, EDGAR Accession #0001010549-06-000326; incorporated herein.
***
Previously filed with Form 8-K Current Report 05-23-06 on May 30, 2006, EDGAR Accession #0001010549-06-000348; incorporated herein.
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SIGNATURES
Pursuant to the requirements of the Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Date: November 22, 2010
Superior Oil and Gas Co.
By
/s/ B.J. Sparks
B.J. Sparks, President
17
LOOKS LIKE THE NEXT IN 2010 after the last most recent we had.
Looks like they are filling in to get current
http://www.companyspotlight.com/22371/SIOR/Superior-Oil--Gas-Co guess I get to eat crow courtesy of etrade it's just the old 10k
ETRADEPRO shows the annual report is out. SIOR no longer a non reporting pink
JUst a guesstamet ya if all then .05c current o/s would be .15c
So a buyout at the current O/S could net something like .15c per share and if at 600 a/s would net .05c.Of course that could happen here too.
Well put notice SA article's stock picking critieria
http://seekingalpha.com/article/407481-4-small-cap-high-risk-high-reward-bio-pharmas?source=yahoo
#1 particularly "A company that constantly issues press releases could be a pump and dump scam and/or desperate for money so they pr excessively hoping to attract investors to buy the company shares, thus raising money faster."
Guaranteed IF you get any kind of positive news you will never see .007 again unless there is substantial dillution.IT will gap up instantly. just look at DEJ after every news blip. it gaps up but falls back to a higher low evey time. The same threat/cloud of dilution is on the table for DEJ by warrents that have been issued to the management etc. JUst remember for those to be worth anything the share price has to be there. So far none of the current DEJ warrents have been exercised. They know the effects of a good balence sheet or the lack there of. So unless SIOR is planning to ruin this company for good, they will think twice about substantial dillution. That definitely ruins the value of the shares SIOR owners/managment has. ANd as has been commented on if that were the purpose of this why wait this long? They could have long ago got one of those shady P&D offshore financers to back them in a P&D scheme.
I admit for a nano second the thought has crossed my mind but I have not sold any SIOR since buying in over a yr ago. Don't see any point at these levels. As far as I'm concerned management has done exactly what they said they were going to. Not according to an exact plan but their purpose to drill. They have set the table for it already. Now I just hope when they do drill, and these leases will get drilled by somebody, they get a producer this time. Just too much money to leave sitting in the ground.
Excuse me if I sound like a pumper here
JUst like all the other oil plays once the ball gets rolling here with just 1 or 2 producing wells look out. DEJ has just what 3 or 4 producing oil wells and also nat gas, that is a looser for them right now, but simular to SIOR they have substantial leaseholds albeit to a vastly greater degree. They're trading at.46c right now. Their outstanding share count is 130mil so about 2/3rds of SIOR. Whats 2/3 of their share price? Ya! and they have a price target well over 1$ base on just 5% of their estimated leases/proven reserves.They need money to drill too. Have they taken advantage of their sharholders to do it ? Not yet but they could easly. But the chances for a pot of gold is certainly there for a long.
Just 4 producing wells 200plus barrels a day at austex oil and the buy is up today 1c to .10c. They have 280mil shares issued. 80 mil more OS than SIOR currently has. I may be dreaming but the management team here is old school. Thats why I have confidence in them. From the days when a hand shake meant something.
Even GRPR is down off its high for the day.I just specutale that the saudi bomob story scare is over and people jump in at the start of that. Now that its over they are bailing on the oil stocks. By the way does anyone know any oil co with just 2 or more 50 barrel a day producing wells that trades at the SIOR price? Regardless of the a/s share count? Don't thin I have ever seen one. GRPR doesn't have 1 producing well does it?
Whole market is down today
even CAT has giving ground back, some good stocks at bargan prices right now
EPA Declares fracking safe
ttp://www.wealthwire.com/news/energy/2773?r=1
With any drilling news the boat will sail leaving those not aboard behind
I guess what it boils down to is do you trust SIOR to do the right thing for it's shareholders? They have the table set to get a deal done or they could just do like so many other pinks have. I think the history shows they have made good faith efforts to make this a going concern,attempts at wells etc., that so far have had minimal results. But the technology has drastically improved in just the last year or 2. That increases the odds for success this time. The value/success/share price shows of so many other companies in the play, the upside share price potential of success here is substantial.