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SUPPLEMENTAL INFORMATION ON OIL & GAS (Unaudited)
12 Months Ended
Dec. 31, 2011
Notes to Financial Statements  
NOTE 12 - SUPPLEMENTAL INFORMATION ON OIL & GAS (Unaudited)

 

Capitalized Costs Relating to Oil and Gas Producing      
     Activities at December 31, 2011      
       
Unproved Oil and Gas Properties   $ 202,886  
Proved Oil and Gas Properties     1,858,977  
      2,061,863  
          Less Accumulated Depletion     (628,795 )
         
Net Capitalized Costs Relating to Oil and Gas Producing Activities   $ 1,433,068  
         
Costs incurred in Oil and Gas Producing Activities for the        
     year ended December 31, 2011        
         
Property acquisition cost:        
     Proved   $ -  
     Unproved     54,100  
Exploration and development costs     555,440  
         
Depletion rate per equivalent barrel of production   $ 23.26  
         
Results of Operations for Oil and Gas Producing Activities        
     for the year ended December 31, 2011        
         
Oil and Gas Sales   $ 192,839  
Less:  Production Costs     271,873  
          Depletion, Depreciation and Amortization     37,100  
      (116,134 )
Income Tax Benefit     -  
         
Results of Operations for Oil and Gas Producing Activities        
     (excluding corporate overhead and financing costs)   $ (116,134 )

 

Reserve Information

 

The estimates of proved oil and gas reserves utilized in the preparation of the financial statements were prepared by independent petroleum engineers. Such estimates are in accordance with guidelines established by the SEC and the FASB. All of our reserves are located in the United States.

 

In 2009, the SEC issued its final rule on the modernization of oil and gas reporting, and the FASB adopted conforming changes to ASC Topic 932, “Extractive Industries”, to align the FASB’s reserves requirements with those of the SEC. The final rule is now in effect for companies with fiscal years ending on or after December 31, 2009.

 

As it affects our reserve estimates and disclosures, the final rule:

 

· amends the definition of proved reserves to require the use of average commodity prices based upon the prior 12-month period rather than year-end prices (Oil - $90.63 bbl; Gas – $3.99mcf for year ended December 31, 2011);
· expands the type of technologies available to establish reserve estimates and categories;

 

· modifies certain definitions used in estimating proved reserves;
· permits disclosure of probable and possible reserves;

 

· requires disclosure of internal controls over reserve estimations and the qualifications of technical persons primarily responsible for the preparation or audit of reserve estimates;
· permits disclosure of reserves based on different price and cost criteria, such as futures prices or management forecasts; and

 

· requires disclosure of material changes in proved undeveloped reserves, including a discussion of investments and progress made to convert proved undeveloped reserves to proved developed reserves

 

We emphasize that reserve estimates are inherently imprecise. Accordingly, the estimates are expected to change as more current information becomes available. In addition, a portion of our proved reserves are classified as proved developed nonproducing and proved undeveloped, which increases the imprecision inherent in estimating reserves which may ultimately be produced.