At September 30, 2011, the Company had a working capital surplus of $32,110.
At September 30, 2011, the Company had current assets of $44,849 consisting of cash on hand and total assets of $10,382,754 that consisted of current assets, restricted cash, and undeveloped oil and gas leases in Val Verde County, Texas.
At September 30, 2011, the Company had current liabilities of $12,739, consisting of accounts payable and related party payables. Total liabilities of $15,546,490 consisted of current liabilities, accrued expenses, related party payables and long-term debt.
Total stockholders deficit was $5,163,736 as of September 30, 2011.
For the period from inception until September 30, 2011 we used cash flow in operating activities of $8,918,633. Cash flow used in operating activities for the nine months ended September 30, 2011 was $223,093 as compared to $914,831 for the nine months ended September 30, 2010. The change in cash flow used in operating activities in the current nine month period can be primarily attributed to the increase in non-cash compensation, a decrease in conversion rights on debt and the change in accounts payable. We expect to continue to use cash flow from operating activities until such time as revenue generating activities are in place.
For the period from inception until September 30, 2011, we used cash flow in investing activities of $13,570,022. Cash flow used in investing activities for the nine months ended September 30, 2011 was $0 as compared to $28,757 for the nine months ended September 30, 2010. Cash flow used in investing activities in the prior nine month period was due to the acquisition of property and equipment. We expect to continue to use cash flow in investing activities as our unproven oil and gas properties are developed.
For the period from inception until September 30, 2011, we realized cash flow provided by financing activities of $23,558,504. Cash flow provided by financing activities for the nine months ended September 30, 2011 was $267,200 as compared to cash flow used of $100,000 for the nine months ended September 30, 2010. Cash flow provided by financing activities in the current nine month period can be attributed to the collection of a stock subscription receivable for shares of the Companys common stock and the issuance of common stock. We expect to continue to realize cash flow provided by financing activities as the Company requires additional debt or equity financing to sustain and develop operations.
Our current assets are insufficient to conduct exploration and development activities over the next twelve (12) months or to maintain operations. We need a minimum of $4,000,000 in debt or equity financing to fund the completion of the Carson 10-1 and Carson 12-1 wells to determine whether natural gas can be produced from these sites and to meet minimum operational requirements. However, we have no commitments or arrangements for the requisite financing, though our shareholders are the most likely source of loans or equity placements. Our inability to obtain financing would have a material adverse affect on our business operations.
We have no intention of paying cash dividends in the foreseeable future.
We have no lines of credit or bank financing arrangements in place though we do have two letters of credit in the aggregate amount of $1,025,000 held respectively as a performance bond for the owners of the Val Verde County properties and a reclamation bond for the Texas Railroad Commission.
We have material commitments to the owners of the Val Verde County leases for future capital expenditures related to exploration activities which require us to drill two additional wells on or before February 28, 2013. The material commitment is approximately $10,000,000.