"poor results" is probably an understatement.
The outstanding shares increased by 2.89 million (+43%) - primarily attributed to yet another toxic convertible debt conversion.
Cash on hand - only $34k
Good news: Oil & Gas net revenues = $38k (6 months)
Bad news: Expenses = $369k (6 months) - primarily attributable to the huge G&A and interest expenses for this one man operation.
On January 3, 2012, the Company entered into a participation agreement in an oil and gas drilling project in Calcasieu Parish, Louisiana (the “Participation Agreement”). Under the terms of the Participation Agreement, the Company will participate in the drilling of one well and may participate in the drilling of future wells if it chooses. The Company will pay 25% of the drilling cost of the first well and will receive 13.59% of the net revenue from the well. The Company anticipates that its share of the total drilling and completion cost of the initial well, projected to be drilled to approximately 15,500 feet, will be $3.4 million. The Company has paid $40,000 of its share of the costs of the well to date. The Company does not have cash on hand in order to fully satisfy its obligations under the Participation Agreement and is currently seeking additional required financing. There is no guarantee that the Company will be able to obtain adequate financing, and the Company currently does not have a firm commitment from a lender to loan additional funds.
On January 19, 2012, the Company entered into a working interest purchase and sale agreement (the “Big Canyon Agreement”) related to 640 acres of land located in Terrell County, Texas (the “Big Canyon Prospect”). According to the terms of the Big Canyon Agreement, the Company will purchase an 82.5% working interest and will receive a 64.35% net royalty interest in the Big Canyon Prospect. The Company will pay $60,000 for the rights under this contract. This amount is payable in weekly installments of $5,000 beginning January 27, 2012. Under the terms of the Big Canyon Agreement, the Company will have the right to drill one well within six months and a second well within the next six months if the first well is unsuccessful. If either well is successful, the Company must pay a $200 per acre bonus for the entire leased acreage. No wells were drilled on the Big Canyon Prospect prior to the expiration of the Big Canyon Agreement. As a result, the amounts paid under the contract were considered impaired and were reclassified to the full cost amortization pool as of September 30, 2012.
Unevaluated Properties
Louisiana – During October 2012, we acquired a (unstated) working interest in the Lake Boeuf Field in Southeast Louisiana. The field covers 300 acres in Lafourche Parish. The prospect is a 12,025 foot directional well and will be drilled utilizing a land rig. The trap is structural closure bounded by two faults which form a wedge shaped block. Approximately 50 feet of structural advantage should be gained over the downdip wells. We paid approximately $57,000 for this (undeclared) working interest.
Oklahoma – In April 2012, we purchased a 1.41% working interest in a well in the South Merrick Project in Logan County, Oklahoma for $30,000. The price paid for the working interest includes the completion of a 7,500 foot well.
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