UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 22, 2013
Prairie West Oil & Gas, Ltd.
(Exact name of registrant as specified in its charter)
Nevada | 001-34770 | 83-0375241 |
(State or other jurisdiction | (Commission | (IRS Employer |
of incorporation) | File Number) | Identification Number) |
9500 W. Flamingo #205, Las Vegas, NV | 89147 |
(Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (702) 525-2024
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
. Written communications pursuant to Rule 425 under the Securities Act
. Soliciting material pursuant to Rule 14a-12 under the Exchange Act
. Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act
. Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
Item 1.01 Entry into a Material Definitive Agreement.
On January 22, 2013, Prairie West Oil & Gas, Ltd. (Nevada) (“Prairie Nevada”) entered into an exchange agreement to purchase 100% of the outstanding interests of Prairie West Oil & Gas, Ltd. (Canada)(“Prairie Canada”) in exchange for 5,000,000 common shares of Prairie Nevada stock. Prairie Canada is now a wholly-owned subsidiary of Prairie Nevada and Prairie Nevada has acquired the business and operations of Prairie Canada. The Exchange Agreement contains customary representations, warranties, and conditions. The Exchange Agreement is attached hereto as Exhibit 99.
Prairie West Oil & Gas is a producing energy company with both established production and assets within the center of Canada's highest reserve epicenters; the oil boom provinces of Alberta and now Saskatchewan. The company believes that present conditions have never been better for a swift and innovative company such as Prairie West to thrive in today’s energy market.
By continuously adding value through low risk acquisition / development of both mature and immature properties, Prairie is setting the stage for long term growth while remaining focused on short term profitability and increasing net asset value.
Prairie operates under the notion that phase changes in commodity price cycles require different strategies and will identify opportunities for growth regardless of phase. By utilizing a multi-discipline approach, the company has and will continue to unlock the upside potential of acquired properties leading to increased production and incremental reserves.
The experienced team at Prairie West has the expertise and proven execution required for success in today's rapidly changing energy sector. This has been clearly demonstrated with the Maidstone acquisition, the more recent eleven well expansion located in close proximity to current production and a new 27 well producing gas play in Saskatchewan Canada.
The company is currently focused on three projects:
1) The Maidstone Project (Heavy Oil - Producing)
2) The Shackleton Project (Natural Gas - Producing)
3) The Twinning Project (Light Sweet Crude - Drilling completed August 1, 2012, currently working towards well completion.
An independent asset, reserve and resource evaluation (NI 51-101) done by Chapman Petroleum Engineering Ltd that has valued Prairie West's assets at $22,957,000 (CDN) undiscounted. This report conforms to industry standard and is an accepted primary means of asset evaluation.
Objectives
1) Develop to full potential through lower risk 'developmental drilling' the company's current long term developmental project which is strategically placed within the highly productive Twining area (Section 17-31-23W4.) and surrounded by major multinational oil / gas giants.
2) Acquire oil and gas producing properties that have proven reserves and established in-field drilling locations through a combination of cash, debt, and equity. Positive metrics and the ability to enhance for maximum production efficiency is key. In addition, there must be the opportunity to streamline operational costs and administration overhead with the goal maximizing profits.
3) Add value and reserves through the identification of plays and prospects which demonstrate attractive metrics and a high chance of success.
4) Focus operational efforts around today's technological advancements so that the company can effectively maximize return on capital invested by reducing drilling risk and enhancing ability to cost effectively grow reserves and production volumes.
5) Keep operational costs to the lowest possible levels through a streamlined operational and management process.
6) Continue to practice strict fiscal discipline as 'Team Prairie West' is experienced enough to know that a large debt load can easily be the end of junior energy corporation. Prairie West has been able to accomplish all it has done to date with "Zero bank or institutional financing".
2
7) Continue to have strong due diligence control mechanisms in place in regards to potential acquisitions.
8) Continue to mitigate risk through diversification and expertise.
9) Successfully raise capital through the public markets to further finance company goals and objectives.
10) Remain fully transparent to shareholders through open communication, regular updates and filings.
The company is currently focused on three projects:
1) The Maidstone Project (Heavy Oil - Producing)
2) The Shackleton Project (Natural Gas - Producing)
3) The Twinning Project (Light Sweet Crude)
Twinning, Alberta, CAN Type of project: Light Sweet Crude Status: Working Towards well completion Number of wells: 2 | “The Twinning project is becoming a more valuable asset every day as other companies continue to have great success in the area and prices continue to skyrocket as a result.” - Prairie West President :Anthony Sarvucci |
KEY POINTS:
Located in East-Central Alberta Canada within the prolific Western Canada Sedimentary Basin, Prairie West 's developmental project is strategically placed within the highly productive Twining area (Section 17-31-23W4.) and surrounded by major multinational oil / gas giants.
Prairie's property is immediately adjacent to the enormous Twining Rundle/Mannville Pool with Original Oil In Place of 1.013 billion barrels equivalent.
Prairie has identified a prospect in the prolific Devonian Nisku carbonate, with pool analogues in the immediate area having oil reserves approaching 60 mmbbls (OOIP).
Detailed geological and geophysical mapping of the Nisku reservoir under Prairie West 's land, demonstrates a potential accumulation of almost 300 acres, with a potential mean resource of 2.4 million barrels(OOIP). P10 resource however is closer to 4.0 mmbbls.
Proximal Nisku pools tend to be in the 40-42 API crude, and therefore receive some of the best netbacks in the basin. With success on Prairie's first well, an aggressive 40 acre pool development will be implemented, with the goal being to grow the property to the 1000 BOPD range within the first 2 to 3 years. Horizontal well application and selective acid fracture stimulation will also be evaluated which would ultimately increase productivity and recovery of the pool's reserves.
An engineering study of this prospect by Canadian Petroleum Engineering, Inc. found that at the then current price of a barrel of oil at $50 a barrel, that the prospect was a viable drilling target. With the recent uptick in oil prices the potential of this project for Prairie and its shareholders is huge.
The first well was successfully drilled on August 1st, 2012. Multiple zones that have tested positive and the company is presently working towards completing the wells to producing status.
Maidstone
Location: Maidstone, Saskatchewan, CAN
Type of project: Heavy Oil
Status: Producing
Number of wells: 12
3
KEY POINTS:
The Maidstone Project currently has production online and consists of eleven heavy oil wells plus one licensed horizontal water disposal well.
The economics of the most recent acquisition / expansion made perfect sense as management knows the area extremely well, had an existing footprint in close proximity and has rock solid relationships already in place. From an operational standpoint this translates into lower operating costs, the ability to act swiftly and higher profits.
Prairie West's operator David Forest is a heavy oil specialist and efficiency expert who in the past was able to take a company's production from 135 barrels a day to 800 barrels a day without drilling a well. This is important to note because a comprehensive nine well Maidstone work over program is in the works that is designed to utilize the latest technology to both maximize the output and efficiency of Prairie West's latest heavy oil play.
The licensed horizontal disposal well located within Prairie's Maidstone project is an excellent revenue source as most wells in the area make water and are required by law to dispose of it in a licensed water disposal unit. Not only does this well have the capacity to handle all of Prairie West's disposal needs but it is also fully equipped to act as a disposal solution for other companies in the area.
The desirability of investing in oil in Saskatchewan continues to get better all the time. The support for the industry starts at the premier level and is mirrored through all levels of government. This has resulted in a very favorable business climate in terms of simplified regulation and economic terms. The province has huge heavy oil resources, very good producing infrastructure and a highly skilled work force. For these reasons at this time Prairie West can think of no better place to do business and will be actively looking to further expand in this geographical area.
Shackleton
Location: Shackleton, Saskatchewan, CAN
Type of project: Natural Gas
Status: Scheduled shut in for maintenance
Number of wells: 27
KEY POINTS:
The Shackleton project consists of a 99% interest in 27 wells situated on 15 sections (9600 Acres) of oil and gas property located in the prolific Shackleton area within an energy rich area of the Western Canadian Sedimentary basin.
The company is currently performing a strategic in-depth geological analysis for the full 9600 acres and has already identified multiple drilling targets that have a high probability of carrying a low risk, high reward profile.
From a viability standpoint, this project for Prairie West remains viable and profitable at current natural gas prices due to Prairie West's low operating costs in the area. If natural gas turns bullish as a result of new 'Fracking' regulations, the company has positioned itself for accelerated profits moving forward.
It is important to note that the recent additional 49% ownership increase in the Shackleton project has increased Prairie West's assets past the $22,957,000 (undiscounted) number contained in the NI 51-101 as the report was created before the acquisition took place.
At the end of May 2012, Prairie West began its scheduled summer overhaul of the company's Shackleton natural gas asset. The entire project is being revamped with the goal of producing higher revenues in the fall season through greater efficiency, lower operating costs and traditionally higher fall natural gas prices.
4
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Prairie West Oil & Gas, Ltd.
(An Exploration Stage Company)
888 – 3rd Street SW
West Bankers Hall, 10th Floor
Calgary, Alberta, Canada
T2P 5C5
We have audited the accompanying balance sheets of Prairie West Oil & Gas, Ltd. (the “Company”) (An Exploration State Company) as of December 31, 2012 and 2011 and the related statements of operations, stockholders’ equity (deficit), and cash flows for the years ended December 31, 2012 and 2011. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Prairie West Oil & Gas, Ltd. as of December 31, 2012 and 2011and the results of its operations and changes in stockholders’ deficit, and its cash flows for each of the years in the period ended December 31, 2012 and 2011, and the period from October 15, 2007 (inception) to December 31, 2012, in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Prairie West Oil & Gas Ltd. will continue as a going concern. As discussed in Note 3, conditions exist which raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regards to these matters are also described in Note 3. The financial statements do not include adjustments that might result from the outcome of these uncertainties.
/s/W.T. Uniack & Co., CPA’s P.C.
Woodstock, Georgia
May 23, 2013
F-1
Prairie West Oil & Gas, Ltd.
Balance Sheet
for the Periods Ended
|
| 12/31/2012 |
| 12/31/2011 |
|
|
|
|
|
Total Assets |
|
|
|
|
|
|
|
|
|
Cash & Cash Equivalents | $ | 5,144 | $ | 23,927 |
Other Assets |
| 85,176 |
| 18,505 |
Total Current Assets |
| 90,320 |
| 42,431 |
|
|
|
|
|
Tangible Drilling costs-net |
| 182,523 |
| 95,902 |
lntangile Drilling & Completion costs - net |
| 128,418 |
| 147,362 |
lntangilble Drillings rights-net |
| 1,023,445 |
| 104,382 |
Total Tangible and Intangible costs - net |
| 1,334,386 |
| 347,646 |
|
|
|
|
|
Other Assets-joint venture costs |
| 553,080 |
| 550,152 |
Total Assets | $ | 1.977,786 | $ | 940,230 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Shareholders' !Deficit/Equity |
|
|
|
|
|
|
|
|
|
Accounts Payable | $ | 827,068 | $ | 152,307 |
Loan from Emporium Group |
| 190,690 |
| 778,186 |
Loans Payable |
| 57,347 |
| - |
Accrued Expenses |
| 199,320 |
| 71,991 |
Total current liabilities |
| 1,274,425 |
| 1,002,484 |
|
|
|
|
|
Shareholder Loans |
| 277,728 |
| 236,851 |
Loans Payable |
| - |
| 49,121 |
Total Long-term Liabilities |
| 277,728 |
| 285,972 |
|
|
|
|
|
Total Liabilities |
| 1,552,153 |
| 1,288,457 |
|
|
|
|
|
Shareholders' (Deficit)/Equity: |
|
|
|
|
Common stock-no par |
| 907,768 |
| 354,348 |
Paid in Capital |
| 21,370 |
| - |
Retained Deficit |
| (503,505) |
| (702,575) |
Total Shareholders' (Deficit)/Equity |
| 425,633 |
| (348,227) |
|
|
|
|
|
Total Liabilities & Shareholders' (Deficit)/Equity | $ | 1,977,786 | $ | 940,230 |
See accompanying notes to financial statements
F-2
Prairie West Oil & Gas, Ltd. Statement of Operations For the Years Ending
|
| 12/31/2012 |
| 12/31/2011 |
Revenues: |
|
|
|
|
Oil and natural gas income | $ | 50,346 | $ | 7,289 |
|
|
|
|
|
Cost and expenses: |
|
| ||
Production and lease operating expenses |
| 18,954 |
| 13,474 |
Depletion, depreciation and amortization |
| 9,647 |
| 12,243 |
|
|
|
|
|
General & administrative expenses |
| 269,214 |
| 270,057 |
Total costs and expenses |
| 297,815 |
| 295,774 |
Loss from operations |
| (247,469) |
| (288,486) |
|
|
|
|
|
Other income/(expense) |
| (118) |
| (193) |
Debt discount on conversion |
| 534,235 |
| - |
Loss on currency conversion |
| (7,132) |
| - |
Interest expense |
| (80,446) |
| (71,217) |
Net income/(loss) | $ | 199,070 | $ | (359,896) |
|
|
|
|
|
Net income/{loss) per common share |
|
|
|
|
-basic and diluted | $ | 0.04 | $ | (0.16) |
|
|
|
|
|
weighted average |
|
|
|
|
number of common |
| 4,644,352 |
| 2,278,761 |
shares outstanding basic and diluted |
|
|
See accompanying notes to financial statements
F-3
Prairie West Oil & Gas Ltd.
Statement of Stockholders' (Deficit) Equity for the Periods Ended
|
| Series A shares |
| Series A Amount |
| Accumulated Deficit |
| Paid in Capital |
| Totals |
Beginning Balance-09/06/2009 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock series A. |
| 556,250 | $ | 9,824 | $ | 9,824 | $ | - | $ | - |
Net (loss) |
|
|
|
|
|
|
|
|
|
|
End of the year 12131/2009 |
| 556,250 |
| 9,824 |
| - |
| - |
| 9,824 |
|
| 1,675,238 |
| 247,885 |
| - |
| - |
| 247,885 |
Common stock series A. |
|
|
|
|
|
|
|
|
|
|
Net (loss) |
| - |
| - |
| - |
| (342,679) |
| (342,679) |
End of the year 12/31/2010 |
| 2,231,488 |
| 257,709 |
| - |
| (342,679) |
| (84,970) |
|
| 78,639 |
| 96,639 |
| - |
| - |
| 96,639 |
Common stock series A. |
|
|
|
|
|
|
|
|
|
|
Net {loss) |
| - |
| - |
| - |
| (359,896) |
| (359,896) |
End of the year 12/31/2011 |
| 2,310,127 |
| 354,348 |
| - |
| (702,575) |
| (348,227) |
|
| 6,085,657 |
| 553,420 |
| - |
| - |
| 553,420 |
Common stock series A. |
|
|
|
|
|
|
|
|
|
|
Paid in Capital |
| - |
| - |
| 21,370 |
| - |
| 21,370 |
Net Income |
| - |
| - |
| - |
| 199,070 |
| 199,070 |
End of the year 12/31/2012 |
| 8,395,784 | $ | 907,768 | $ | 21,370 | $ | (503,505) | $ | 425,633 |
See accompanying notes to financial statements
F-4
Prairie West Oil & Gas Ltd. Statement of Cash Flows for the Periods Ended
|
| 12/31/2012 |
| 12/31/2011 |
|
|
|
|
|
Net lncome/{loss) |
| 199,070 |
| (359,896) |
|
|
|
|
|
Non-cash adjustments to reconcile net income/ |
|
|
|
|
floss\ to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
Depletion |
| 9,327 |
| 12,243 |
Amortization |
| 320 |
| - |
Debt converted to equity |
| (1,120,704) |
| - |
Debt conversion discount |
| 534,235 |
| - |
|
|
|
|
|
{lncrease)/decrease in assets and |
|
|
|
|
lncrease/ldecrease) in liabilities: |
|
|
|
|
|
|
|
|
|
Other assets |
| (66,992) |
| (4,911) |
Accounts Payable and accrued expenses |
| 802,090 |
| 161,431 |
Net cash used in operating activities |
| 357,346 |
| (191,133) |
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
|
|
Intangible and Tangible Drilling Costs/investments |
| (996,067) |
| (12,243) |
Investment in Joint Venture |
| (2,928) |
| (550, 152) |
Net cash used in investing activities |
| (998,995) |
| (562,395) |
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
|
|
Issuance of debt |
|
|
|
|
|
| 8,226 |
| - |
Repayment of debt |
| (1,027) |
| 502,746 |
Shareholder loans |
| 40,877 |
| 170,339 |
Issuance of common stock |
| 553,420 |
| 96,639 |
Paid in Capital |
| 21,370 |
| - |
Net cash provided by financing activities |
| 622,866 |
| 769,724 |
|
|
|
|
|
lncrease/(decrease) in cash |
| (18,783) |
| 16,196 |
|
|
|
|
|
Cash at beginning of year |
| 23,927 |
| 7,731 |
Cash at end of year |
| 5,144 |
| 23,927 |
See accompanying notes to financial statements
F-5
Note 1. Summary of Significant Accounting Policies. Nature of operations and organization
Prairie West Oil & Gas is a producing energy company incorporated in Alberta, Canada on September 29, 2009, with both established production and assets within the center of Canada's highest reserve epicenters; the oil boom provinces of Alberta and now Saskatchewan.
The company is currently focused on three projects:
1)
The Maidstone Project (Heavy Oil - Producing)
2)
The Shackleton Project (Natural Gas - Producing)
3)
The Twinning Project (Light Sweet Crude - Drilling completed August 1, 2012, currently working towards well completion.
An independent asset, reserve and resource evaluation (NI 51-101) done by Chapman Petroleum Engineering Ltd that has valued Prairie West's assets at $22,957,000 (CDN) undiscounted. This report conforms to industry standard and is an accepted primary means of asset evaluation.
The Company is engaged in two joint ventures. They are as follows:
1.) Shackleton - (aka Sand box Energy Corp.) ownership of 99% by the Company. 2.) Maidstone - (aka Western Plains Ltd.) ownership of36% by the Company.
Basis of Presentation and Use of Estimates
These financial statements have been prepared m accordance with accounting principles generally accepted in United States of America which requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and the disclosures of revenues and expenses for the reported year. Actual results may differ from those estimates.
Oil and Gas Properties
The Company accounts for its oil and natural gas properties using the successful efforts method of accounting. Under this method, all costs associated with property acquisitions, all development wells, and asset retirement obligation assets are capitalized. Additionally, interest is capitalized while wells are drilled and the underlying property is in development. Costs of exploratory wells are capitalized pending determination of whether each well has resulted in the discovery of proved reserves. Oil and natural gas mineral leasehold costs are capitalized as incurred. Items charged to expense generally include geological and geophysical costs, costs of unsuccessful exploratory wells, and oil and natural gas production costs. Capitalized costs of proved properties including associated salvage are depleted on a well-by-well or field-by-field (common reservoir) basis using the units-of -production method based upon proved producing oil and natural gas reserves. The depletion rate is the current period production as a percentage of the total proved producing reserves. The depletion rate is applied to the net book value of property costs to calculate the depletion expense. Proved reserves materially impact depletion expense. If the proved reserves decline, then the depletion rate (the rate at which we record depletion expense) increases, reducing net income. Dispositions of oil and natural gas properties are accounted for as adjustments to capitalized costs with gain or loss recognized upon sale. A gain (loss) is recognized to the extent the sales price exceeds or is less than original cost or the carrying value, net of impairment. Oil and natural gas properties are also subject to impairment at the end of each reporting period. Unproved property costs are excluded from depletable costs until the related properties are developed.
Ceiling Test
The net book value of all capitalized oil and natural gas properties within a cost center, less related deferred income taxes, is subject to a full cost ceiling limitation which is calculated quarterly. Under the ceiling limitation, costs may not exceed an aggregate of the present value of future net revenues attributable to proved oil and natural gas reserves discounted at 1O percent using current prices, plus the lower of cost or market value of unproved properties included in the amortization base, plus the cost of unevaluated properties, less any associated tax effects. Any excess of the net book value, less related deferred tax benefits, over the ceiling is written off as expense. Impairment expense recorded in one period may not be reversed in a subsequent period even though higher oil and gas prices may have increased the ceiling applicable to the subsequent period. As of December 31, 2012 no impairment of oil and gas properties was recorded.
F-6
Asset Retirement Obligation
The Company follows FASB ASC 410, Asset Retirement and Environmental Obligations which requires entities to record the fair value of a liability for asset retirement obligations ("ARO") and recorded a corresponding increase in the carrying amount of the related long-lived asset. The asset retirement obligation primarily relates to the abandonment of oil and gas properties. The present value of the estimated asset retirement cost is capitalized as part of the carrying amount of oil and gas properties and is depleted over the useful life of the asset. The settlement date fair value is discounted at our credit adjusted risk-free rate in determining the abandonment liability. The abandonment liability is accreted with the passage of time to its expected settlement fair value. Revisions to such estimates are recorded as adjustments to ARO are charged to operations in the period in which they become known. At the time the abandonment cost is incurred, the Company is required to recognize a gain or loss if the actual costs do not equal the estimated costs included in ARO. The ARO is based upon numerous estimates and assumptions, including future abandonment costs, future recoverable quantities of oil and gas, future inflation rates, and the credit adjusted risk free interest rate.
Changes in estimates at our non-operating properties are reflected in current period net income (loss). We had no accruals for closure costs, reclaruation and environmental matters for operating and non-operating properties at December 31, 2012.
Revenue and Cost Recognition
The Company uses the sales method to account for sales of crude oil and natural gas. Under this method, revenues are recognized based on actual volumes of oil and gas sold to purchasers. The volumes sold may differ from the volumes to which the Company is entitled based on the interest in the properties. These differences create imbalances which are recognized as a liability only when the imbalance exceeds the estimate of remaining reserves. Costs associated with production are expensed in the period incurred. The Company recognizes well remediation revenues when the services are complete and accepted by the customer.
Stock-Based Compensation
The Company follows the provisions of ASC 718, "Share-Based Payment." which requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their grant-date fair values. The Company uses the Black-Scholes pricing model for determining the fair value of stock based compensation.
We account for non-employee share-based awards based upon ASC 505-50, "Equity-Based Payments to Non-Employees." ASC 505-50 requires the costs of goods and services received in exchange for an award of equity instruments to be recognized using the fair value of the goods and services or the fair value of the equity award, whichever is more reliably measurable. The fair value of the equity award is determined on the measurement date, which is the earlier of the date that a performance commitment is reached or the date that performance is complete. Generally, our awards do not entail performance commitments. When an award vests over time such that performance occurs over multiple reporting periods, we estimate the fair value of the award as of the end of each reporting period and recognize an appropriate portion of the cost based on the fair value on that date. When the award vests, we adjust the cost previously recognized so that the cost ultimately recognized is equivalent to the fair value on the date the performance is complete.
We recognize the cost associated with share-based awards that have a graded vesting schedule on a straight-line basis over the requisite service period of the entire award.
New Accounting Pronouncements
Management has considered all recent accounting pronouncements issued since the last audit of our financial statements. The Company's management believes that these recent pronouncements will not have a material effect on the Company's financial statements.
Note 2. Derivatives
The Company did not engage nor does it have any contingent exposure or resultant liability for any contract associated with derivative (s).
F-7
Note 3. Going Concern
These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the satisfaction ofliabilities and commitments in the normal course of business. As of December 31, 2011 and December 31, 2012, the Company incurred a net loss of $(359,896) (US) and net income of $199,070 (US), respectively. The Company has remained in business primarily through private placement issues, loans and investments from related parties. We intend on financing our future development activities from the same sources, until such time that funds provided by operations are sufficient to fund working capital requirements.
These factors, among others, raise substantial doubt about our ability to continue as a going concern for a reasonable period of time.
Note 4. Foreign Currency- Translation
The functional currency is United States Dollars. The Company's books and records have been converted from Canadian dollars to U.S. dollars. All profit and loss items are converted to U.S. dollars at the average conversion for the year. All balance sheet items are converted usually at historical rates.
Note 5. Stock Split
A 10 for 1 stock split was affected in August 2012. All shares and per share calculations reflect this split.
Note 6. Corporate Income Taxes
The Company's operations, to a large extent, are domiciled in Canada. The Company has not filed Canadian tax returns for 2009-inception, 2010, 2011 and 2012. Ifthe Company was filing in United States it would have net operating loss carry-forwards to the extent or ranging to approximately $500,000 less any foreign tax credit for taxes paid to Canadian authorities. Under United States generally accepted accounting principles, it would be uncertain if the Company would have taxable income in the future so a valuation allowance would be recorded to the extent of any and all operating loss carry-forwards. Within the United States loss carry-forwards expire 20 years after each year's incurrence.
Note 7. Notes Payable
Consists of the following at December 31, 2012:
Johann Lisson - $50,280 (US) due; date of note 08/05/2011 accrued interest $7,067 (US); at a 10% interest. Original maturity date of 0113112013 has been extended to 06/28/2013.
The Emporium Group S.A. - original amount due $1,000,000; date of loan 7/27/2010; outstanding as of 12/3112012 $190,690 (US) including interest. Interest rate of 10%. Original maturity date of 12/31/2012 has been extended to 06/28/13.
Note 8. Lawsuit
The Company is subject to a lawsuit that resulted in a judgment of approximately $125,000. While the Company is contesting its outcome, it has been accrued for and is reflected within the financial statements.
Note 9. Related Parties
Spouse of president and CEO - amount(s) due upon demand; non-interest bearing loan of $10,056 (US) and $12,202 (US) at an interest rate of 10%; accrued interest is $3,527 (US).
Father-in law of president and CEO - amount $154,800 (US) at an interest rate of 10% due upon demand; accrued interest is $21,336 (US).
Loan from CEO and president - $65,383 (US) at a 10% interest rate due upon demand; accrued interest is $16,350 (US).
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Note 10. Conversion of Debt to Equity
During the course of the year, debt in the amount of $1,120,704 (US) was converted into 6,085,657 shares of the Company's common stock for a value of $560,352 (US). This resulted in other income of $534,235 (US) as disclosed within the financial statements.
Note 11. Subsequent Event (Unaudited)
On January 22, 2013, Prairie West Oil & Gas, Ltd. (Nevada) ("Prairie Nevada") entered into an exchange agreement to purchase 100% of the outstanding interests of Prairie West Oil & Gas, Ltd. (Canada) ("Prairie Canada") in exchange for 5,000,000 common shares of Prairie Nevada stock. Prairie Canada is now a wholly-owned subsidiary of Prairie Nevada and Prairie Nevada has acquired the business and operations of Prairie Canada. The Exchange Agreement contains customary representations, warranties, and conditions.
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Item 5.01 Changes in Control of Registrant.
On January 22, 2013, Prairie West Oil & Gas, Ltd. (Nevada) (“Prairie Nevada”) entered into an exchange agreement to purchase 100% of the outstanding interests of Prairie West Oil & Gas, Ltd. (Canada)(“Prairie Canada”) in exchange for 5,000,000 common shares of Prairie Nevada stock. Prairie Canada is now a wholly-owned subsidiary of Prairie Nevada and Prairie Nevada has acquired the business and operations of Prairie Canada. The Exchange Agreement contains customary representations, warranties, and conditions. The Exchange Agreement is attached hereto as Exhibit 99.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
Anthony Sarvucci –Director and President
A results driven professional with vast industry experience in both the energy and investment banking sector Mr. Sarvucci has a proven track record of success.
Mr. Sarvucci brings to Prairie West a wealth of worldwide contacts and relationships established over years as the CEO of a public energy service company and more recently as a highly sought after consultant. Mr. Sarvucci works every day towards making sure the goals of Prairie West are achieved both on time and on budget.
Previous Experience:
2009-Present
Anthony co-founded Prairie West Oil and Gas Ltd. He currently serves as the company's president and is a member of the board of directors. Prairie West is a producing Alberta based oil and gas company that is well diversified in Heavy Oil, Light Oil and Natural gas. Moving forward, Anthony is focused on continually increasing operational efficiency in regards to the company's current undiscounted asset base valued at $22,957,000 (CDN). With an eye to the future and a strong desire to lower overall risk, Anthony is looking to expand Prairie West into the US oil and gas sector as soon as a deal can be found that is favorable to both the company and its shareholders.
2004-2009
During this period Anthony acted as a highly sought after freelance consultant. Working hand in hand with several Public companies, Anthony was successful in providing strategic financing options through the global market place. With a focus on Europe and South America, Anthony broadened the financial possibilities for these North American based companies and in each case was able to increase their access to capital with the goal of securing the necessary funds for growth.
2001-2004
In 2001 Anthony founded Prelude Ventures. Prelude was an oil and gas service company that was publicly traded on a US exchange . From 2001 to 2004 Anthony guided Prelude Ventures in the purchase several Canadian and US based Petroleum Service and Petroleum product related companies. In 2004 Anthony stepped down from the position of President and CEO and handed the company off to Alliance Petroleum, based out of Chicago Illinois.
1996-2001
Acted as a consultant to private companies wanting to raise money and go public on the various US exchanges. During this time Anthony worked with numerous companies that spanned all sectors of the market. These sectors include; entertainment, mining, petroleum, textile and numerous others. Near the end of this period is when Anthony developed a passion for energy service and production companies..
1993-1996
Anthony worked with a private equity group based group out of the Newport Beach California. At his time with the group his primarily duties revolved around the investment of capital in commodities and currencies on the CME (Chicago Mercantile Exchange) on a daily basis.
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1991-93
Anthony started work as a brokers assistant with Brentwood National and the Camden Group. Located in Newport Beach California Anthony sold Investments in RTC (Resolution Trust Corporation Properties).
Garry Pearce – Chairman of Board of directors – Advisor
A seasoned business veteran Mr. Pearce brings to Prairie West over 35 years of experience in the areas of both asset and operations management.
A former Vice President of Business Development for Investicare Group and a former Executive Director of the United Way he is fully in his comfort zone being at the helm of large scale companies and capital intense projects.
Garry has been involved in several Junior Oil & Gas companies in the role of a venture capitalist and adviser over the past 10 years.
Always looking to give back to the community in his free time Garry continues to provide consultation for the Salvation Army, the United Way, and the Baptist Church with the goal of streamlining their Social and Development programs.
Previous Experience:
2008- 2012
Garry is the co-founder and current chairman of Prairie West Oil and Gas. As the former President of the company, Mr. Pearce guided the company since its inception and helped to grow the company's asset base to over $22,957,000 (Undiscounted) in just three short years. Still an active member of Team Prairie West Garry will continue to adivse and provide his expertise in the years moving forward.
2000-2008
Realtor –An active member of the Calgary Real Estate Board
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Worked as an associate with Premiere Realty
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Specialized in Condo and single family residential in North West Calgary
2002 – 2005
Connecting Care – Partner and V. P. Business development
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Established the strategic plan and direction for growth of the company
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Worked with owners/developers to negotiate management contracts both for existing facilities and proposed senior assisted living facilities
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Assisted with design and set-up of operations
1998 – 2001
Regional Manager – Origin Adult Communities, Calgary
Responsible for three senior retirement living communities in Calgary – Trinity Lodge, The Lodge at Valley Ridge, and Lake Bonavista Village.
This role encompassed:
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Management and direction of the activities of the Regional Office staff
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Responsibility for the day to day operations of the Calgary Origin Adult Communities through the Lodge managers
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Responsibility for all senior level Human Resource functions
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Oversaw accounting functions including operating and capital budgets, inventory, accounts receivable and accounts payable
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Ensured that Origin policies were implemented on a consistent basis throughout the region
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1996 – 2000
General Manager – Trinity Lodge, Calgary
Provided leadership, direction and guidance based on the organization's strategic plan and philosphy.
Duties Included
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Budgeting, revenue and expenditures;
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Provision of high quality housing services and long term operational planning to ensure the viability of the organization;
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Provides visible leadership in the daily operation of the lodge;
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An effective team player, motivating the senior management group;
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External representation, communication, and liaison for the organization’s goals, and objectives.
1990 – 1996
Director of Development - The Baptist Union of Western Canada, Calgary
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Served as field staff for the Baptist Union Foundation Fund
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Staff member of the Finance Committee of The Baptist Union of Western Canada
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Established the denominational Development Office
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Provided support services to The Baptist Leadership School Development Committees
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Established the major gift and planned giving program
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Co-ordinated capital funding campaigns for BUWC churches
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Provided leadership in the area of stewardship education
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Lead money management seminars
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Lead and coordinated planned giving seminars
1987 -1990
Executive Director – The United Way of Regina
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Implemented policies established by The Board of Directors
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Assisted in establishing goals, objectives and program development of The United Way
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Provided leadership in the areas of fund-raising, agency relations, public relations, and community planning
•
Managed, staffed and administered the organization in accordance with accepted practices
Paula Pearce---Treasurer, Secretary - Director
A Top shelf individual, Ms. Pearce has extensive experience and success in making companies run as smoothly as possible. A firm believer that only an efficient company can reach their full potential, Ms. Pearce is both diligent and forceful when it comes to corporate organization and inner communication. She is a Prairie west co-founder and has been a driving force behind Prairie West's continued success.
Previous Experience:
2008-present
In 2008 Paula helped to form Prairie West Oil and Gas Ltd with her Husband Anthony and her Father Garry. With years assisting other oil and gas companies on a public level this was a natural progression moving forward. Paula has been instrumental in the day to day activities of Prairie West. Paula currently serves as Prairie West's corporate secretary and sits on the company's board of directors.
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2001-2008
Ms. Pearce spent seven years with Optima Capital as an Administrative Assistant during a period of rapid growth. Working with both public and private companies, her duties included keeping accurate records to assist in the public filings and making sure that they were filled both on time and on schedule. Paula's attention to detail and high level or organization was instrumental in helping to take the company to new heights and great achievements.
1994-2001
Paula worked as a surgical assistant in Oral Maxillofacial surgeries at the Mission Viejo Hospital Professional Center where she assisted in reconstructive facial and Dental surgeries. Additionally, Paula was responsible for pre / post operative care, scheduling patients and making sure all surgical supplier were in order and fully stocked.
1994
Graduated Orange Coast College after completing her studies as a member of Alpha Gamma Sigma (California Honors Society).
Exhibits
No. | Exhibits |
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3. | Exchange Agreement |
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated June 14, 2013
Prairie West Oil & Gas, Ltd.
By: /s/ Anthony Sarvucci
Anthony Sarvucci
President and Chief Executive Officer
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EXHIBIT INDEX
No. | Exhibits |
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3. | Exchange Agreement |
9