Annual report pursuant to Section 13 and 15(d)

Property and Equipment

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Property and Equipment
12 Months Ended
Dec. 31, 2017
Property, Plant and Equipment [Abstract]  
Property and Equipment

Note 4 – Property and Equipment

 

Oil and Gas Properties

 

The Company’s oil and gas properties at December 31, 2017 and 2016 are located in the United States of America.

  

The carrying values of the Company’s oil and gas properties, net of depletion, depreciation, amortization, and impairment at December 31, 2017 and 2016 are set forth below in the following table:

 

    December 31,  
    2017     2016  
Unproved leasehold (1)   $ 977,936     $ 1,181,421  
Proved leasehold     10,094,760       10,252,568  
Properties subject to depletion, net of depletion     580,158        
Exploratory wells – construction-in-progress (1) (2)     1,479,282        
Total   $ 13,132,136     $ 11,433,989  

 

(1) Not subject to depletion;
(2) Expected to be reclassified from exploratory to properties subject to amortization in the first quarter of 2018.

 

          Exploration and           Depreciation, Depletion, Amortization,        
Year   Acquisition     Development     Disposition     and        
Incurred   Costs     Costs     of Assets     Impairment     Total  
                               
2016 and prior   $ 10,252,568     $ 1,181,421     $     $     $ 11,433,989  
2017           3,223,931             (1,525,784 )     1,698,147  
Total   $ 10,252,568     $ 4,405,352     $     $ (1,525,784 )   $ 13,132,136  

 

During the year ended December 31, 2017, the Company engaged in the following activities associated with its oil and gas properties:

 

Acquired a 21.6% non-operated working interest in two exploratory horizontal gas wells in the Uinta Basin from an undisclosed party. Both wells are operated by EOG. We expect total cost of both wells will be $3.2 million. These wells align with the Company’s overall growth strategy for the Uinta Basin. The well was drilled successfully and had a small amount of production, and completion will be finalized in 2018. As of December 31, 2017, the Company incurred $1,501,377 in costs for our working interest share. The wells are classified on our consolidated balance sheets as construction-in-progress and not subject to amortization until completion has occurred which is expected to be late in the first quarter of 2018.
   
Drilled a test well on the Labokay prospect to the total measured depth of 8,795 feet, where hydrocarbons shows were not in commercial quantities to warrant completion. This well was plugged and abandoned. Since the well was not commercially viable the Company’s working interest in the underlying mineral lease terminated and we no longer have a right to acquire title to said property. We incurred $1,507,768 in the drilling of this well which was charged to impairment expense. Civil lawsuits were filed against FPOI arising from unpaid accounts in connection with drilling of this well – see Note 11 – Commitments and contingencies for additional information on the lawsuits.
   
Successfully worked over two Duck Creek wells obtaining production from the Green River formation. We incurred $70,937 in capitalized workover costs associated with these wells. 
   
Incurred costs of $22,691 for bonding, legal, title, engineering, geological and surveying in our Ladysmith project in Fremont County, Wyoming.

 

During the year ended December 31, 2016, the Company engaged in the following activities associated with its oil and gas properties:

 

Completed drilling of the Federal #1 test well in the Paw Paw project in Big Horn County, Wyoming. The test well reached total depth in the Madison Formation and the Company successfully logged and acquired valid data to further evaluate the project’s potential. Oil shows were found in the Muddy, Phosphoria, and Madison formations. The Phosphoria is a regionally productive formation and could end up being the secondary zone in sidetrack operations should that type of operation be deemed commercially economic. We incurred costs of approximately $730,000 in this project.
   
Acquired various proved oil and gas assets in Utah from Total Belief Limited, a wholly owned subsidiary of New Times Energy Corporation Limited. These assets included certain oil and gas wells throughout the Uinta Basin in Utah on acreage with over 30 proved undeveloped drilling locations, additional non-operating interest in other leases, and access to approximately 6,000 acres in the Uinta Basin with proven and probable reserves and existing infrastructure in place. Through the acquisition, the Company also obtained six shut-in wells in the Natural Buttes Field, Utah. The transaction provided the Company with the rights to an agreement to acquire up to 6,000 acres and up to 16 shut-in oil and gas wells with proved and proved undeveloped reserves on Tribal lands in the Uinta Basin. This acquisition delivered to the Company an additional 40% working interest in the Ladysmith Prospect covering 3,060 acres in the Greater Green River Basin, Wyoming, bringing the Company’s total working interest in the prospect from a pre-acquisition 35% up to 75%. We incurred $10,562,501 in acquiring these assets.
   
Incurred costs of $55,848 for to acquire additional leases and working interest and for bonding, legal, title, engineering, geological and surveying in our Ladysmith project in Fremont County, Wyoming.

  

Support Facilities and Equipment

 

The Company’s support facilities and equipment serve its oil and gas production activities. The following table summarizes these properties and equipment, together with their estimated useful lives:

 

    December 31,  
    2017     2016  
             
Tank   $ 30,000     $ 30,000  
Vehicle     69,446       69,446  
Accumulated depreciation     (31 )      
Construction in progress (1)     22,087        
Total support facilities and equipment, net   $ 121,502     $ 99,446  

 

  (1) Facilities constructed in conjunction with drilling for our two exploratory horizontal wells in Uintah County, Utah.

 

The Company recognized depreciation expense of $31 and $0 during the years ended December 31, 2017 and 2016, respectively.

 

Office Furniture, Equipment, and Other

 

As of December 31, 2017, and 2016, office furniture, equipment, and other consisted of the following:

 

    December 31,  
    2017     2016  
Computer equipment and fixtures   $ 22,453     $ 22,453  
Vehicle            
Accumulated depreciation     (8,632 )     (4,114 )
Office furniture, equipment, and other, net   $ 13,821     $ 18,339  

 

During the year ended December 31, 2017, the vehicle was reclassified to Support Facilities and Equipment, as it is used in oil and gas field operations of the Company.

 

During the years ended December 31, 2017 and 2016, depreciation expense was $8,632 and $4,114, respectively.