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Supplemental Disclosures about Oil and Natural Gas Producing Properties (unaudited) | 12 Months Ended
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Jun. 30, 2016
Oil and Gas Exploration and Production Industries Disclosures [Abstract] |
Supplemental Disclosures about Oil and Natural Gas Producing Properties (unaudited) | Supplemental Disclosures about Oil and Natural Gas Producing Properties (unaudited) Costs incurred for oil and natural gas property acquisition, exploration and development activities The following table summarizes costs incurred and capitalized in oil and natural gas property acquisition, exploration and development activities. Property acquisition costs are those costs incurred to lease property, including both undeveloped leasehold and the purchase of reserves in place. Exploration costs include costs of identifying areas that may warrant examination and examining specific areas that are considered to have prospects containing oil and natural gas reserves, including costs of drilling exploratory wells, geological and geophysical costs and carrying costs on undeveloped properties. Development costs are incurred to obtain access to proved reserves, including the cost of drilling. Exploration and development costs also include amounts incurred due to the recognition of asset retirement obligations of $140,151, $576,039 and $66,976 during the years ended June 30, 2016, 2015, and 2014, respectively.
| For the Years Ended June 30,
| 2016 |  | 2015 |  | 2014
Oil and Natural Gas Activities |  |  |  |  |
Property acquisition costs: |  |  |  |  |
Proved property | $ | — |  |  | $ | — |  |  | $ | — |
Unproved property (a) | 596,500 |  |  | — |  |  | 47,344 |
Exploration costs | — |  |  | — |  |  | 757,423 |
Development costs | 19,093,200 |  |  | 10,975,637 |  |  | 18,566 |
Total costs incurred for oil and natural gas activities | $ | 19,689,700 |  |  | $ | 10,975,637 |  |  | $ | 823,333 |
(a) As described in Note 3 — Delhi Field Litigation Settlement, we received a 23.9% working interest in the non-producing Mengel Interval with an estimated fair value of $596,500. This cost is included in properties subject to amortization. Estimated Net Quantities of Proved Oil and Natural Gas Reserves The following estimates of the net proved oil and natural gas reserves of our oil and gas properties located entirely within the United States of America are based on evaluations prepared by third-party reservoir engineers. Reserve volumes and values were determined under the method prescribed by the SEC for our fiscal years ended June 30, 2016, 2015, and 2014, which requires the application of the previous 12 months unweighted arithmetic average first-day-of-the-month price, and current costs held constant throughout the projected reserve life, when estimating whether reserve quantities are economical to produce. Proved oil and natural gas reserves are estimated quantities of crude oil, natural gas and natural gas liquids that geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. Proved developed oil and natural gas reserves are reserves that can be expected to be recovered through existing wells with existing equipment and operating methods. There are uncertainties inherent in estimating quantities of proved oil and natural gas reserves, projecting future production rates, and timing of development expenditures. Accordingly, reserve estimates often differ from the quantities of oil and natural gas that are ultimately recovered. Estimated quantities of proved oil and natural gas reserves and changes in quantities of proved developed and undeveloped reserves for each of the periods indicated were as follows:
| Crude Oil (Bbls) |  | Natural Gas Liquids (Bbls) |  | Natural Gas (Mcf) |  | BOE
Proved developed and undeveloped reserves: |  |  |  |  |  |  |
June 30, 2013 | 12,782,755 |  |  | 979,885 |  |  | 22,797 |  |  | 13,766,440 |
Revisions of previous estimates (a) | (1,919,052 | ) |  | 1,269,588 |  |  | 2,412,677 |  |  | (247,350 | )
Improved recovery, extensions and discoveries | 17,146 |  |  | 32,731 |  |  | 498,044 |  |  | 132,884 |
Sales of minerals in place | (184,722 | ) |  | — |  |  | — |  |  | (184,722 | )
Production (sales volumes) | (169,783 | ) |  | (3,516 | ) |  | (26,655 | ) |  | (177,742 | )
June 30, 2014 | 10,526,344 |  |  | 2,278,688 |  |  | 2,906,863 |  |  | 13,289,510 |
Revisions of previous estimates (b) | (64,074 | ) |  | 156,195 |  |  | (2,894,703 | ) |  | (390,330 | )
Improved recovery, extensions and discoveries | — |  |  | — |  |  | — |  |  | — |
Sales of minerals in place | — |  |  | — |  |  | — |  |  | — |
Production (sales volumes) | (450,294 | ) |  | (1,288 | ) |  | (7,221 | ) |  | (452,786 | )
June 30, 2015 | 10,011,976 |  |  | 2,433,595 |  |  | 4,939 |  |  | 12,446,394 |
Revisions of previous estimates (c) | (765,385 | ) |  | (198,233 | ) |  | (3,319 | ) |  | (964,171 | )
Improved recovery, extensions and discoveries | — |  |  | — |  |  | — |  |  | — |
Sales of minerals in place | — |  |  | — |  |  | — |  |  | — |
Production (sales volumes) | (658,041 | ) |  | (491 | ) |  | (1,620 | ) |  | (658,802 | )
June 30, 2016 | 8,588,550 |  |  | 2,234,871 |  |  | — |  |  | 10,823,421 |
Proved developed reserves: |  |  |  |  |  |  |
June 30, 2013 | 10,077,522 |  |  | 8,539 |  |  | 22,797 |  |  | 10,089,861 |
June 30, 2014 | 7,858,224 |  |  | 32,164 |  |  | 481,042 |  |  | 7,970,562 |
June 30, 2015 | 7,347,231 |  |  | 1,572 |  |  | 4,939 |  |  | 7,349,626 |
June 30, 2016 | 7,168,249 |  |  | — |  |  | — |  |  | 7,168,249 |
Proved undeveloped reserves: |  |  |  |  |  |  |
June 30, 2013 | 2,705,233 |  |  | 971,346 |  |  | — |  |  | 3,676,579 |
June 30, 2014 | 2,668,120 |  |  | 2,246,524 |  |  | 2,425,821 |  |  | 5,318,948 |
June 30, 2015 | 2,664,745 |  |  | 2,432,023 |  |  | — |  |  | 5,096,768 |
June 30, 2016 | 1,420,301 |  |  | 2,234,871 |  |  | — |  |  | 3,655,172 |
(a) Significant reserve revisions occurred in the Delhi field during fiscal 2014. As a result of a fluid release event in the field, 1,817,224 BBLs of oil reserves were reclassified from proved to probable category based on the operator's decision to defer CO 2 injections in certain parts of the field. There was a positive revision of 1,679,481 BOE, which was comprised of 1,275,178 BBLs of natural gas liquids and 2,425,821 MCF of natural gas as a result of an improved design for the NGL plant in the Delhi field. The plant was expected to significantly increase recoveries of these products, particularly natural gas, which were not previously planned to be extracted from the injection volumes. (b) The 2,894,703 negative fiscal 2015 revision for natural gas primarily reflects a 2,246,524 MCF negative revision for the Delhi field NGL plant together with a 452,786 MCF negative revision at the Giddings Field for a well that was lost due to mechanical issues. The NGL plant revision resulted from a decision during the current fiscal year to use the methane production internally to reduce field operating costs rather than selling it into the market. The 156,195 BBL positive natural gas liquids revision primarily reflects 185,499 BBL positive revision for better recovery from the redesigned NGL plant, partly offset by a 29,304 BBL negative revision due to the lost Giddings well. (c) The negative revision results primarily from the removal of proved undeveloped reserves in the far eastern part of the Delhi field, referred to as Test Site 6, which were deemed uneconomic under the lower SEC price case utilized at the end of the period. Standardized Measure of Discounted Future Net Cash Flows Future oil and natural gas sales and production and development costs have been estimated using prices and costs in effect at the end of the years indicated, as required by ASC 932, Extractive Activities - Oil and Gas ("ASC 932"). ASC 932 requires that net cash flow amounts be discounted at 10%. Future production and development costs are computed by estimating the expenditures to be incurred in developing and producing our proved oil and natural gas reserves assuming continuation of existing economic conditions. Future income tax expenses are computed by applying the appropriate period-end statutory tax rates to the future pretax net cash flow relating to our proved oil and natural gas reserves, less the tax basis of the related properties. The future income tax expenses do not give effect to tax credits, allowances, or the impact of general and administrative costs of ongoing operations relating to the Company's proved oil and natural gas reserves. Changes in the demand for oil and natural gas, inflation, and other factors make such estimates inherently imprecise and subject to substantial revision. The table below should not be construed to be an estimate of the current market value of our proved reserves. The standardized measure of discounted future net cash flows related to proved oil and natural gas reserves as of June 30, 2016, 2015, and 2014 are as follows:
| For the Years Ended June 30,
| 2016 |  | 2015 |  | 2014
Future cash inflows | $ | 383,491,193 |  |  | $ | 807,030,282 |  |  | $ | 1,193,515,075 |
Future production costs and severance taxes | (179,182,565 | ) |  | (309,225,333 | ) |  | (475,387,931 | )
Future development costs | (16,595,047 | ) |  | (49,691,006 | ) |  | (46,154,178 | )
Future income tax expenses | (45,713,438 | ) |  | (123,888,665 | ) |  | (195,581,510 | )
Future net cash flows | 142,000,143 |  |  | 324,225,278 |  |  | 476,391,456 |
10% annual discount for estimated timing of cash flows | (64,042,824 | ) |  | (165,028,739 | ) |  | (250,313,784 | )
Standardized measure of discounted future net cash flows | $ | 77,957,319 |  |  | $ | 159,196,539 |  |  | $ | 226,077,672 |
Future cash inflows represent expected revenues from production of period-end quantities of proved reserves based on the previous 12 months unweighted arithmetic average first-day-of-the-month commodity prices for each year and reflect adjustments for lease quality, transportation fees, energy content and regional price differentials.
| Year Ended June 30,
| 2016 |  | 2015 |  | 2014
| Oil (Bbl) |  | Gas (MMBtu) |  | Oil (Bbl) |  | Gas (MMBtu) |  | Oil (Bbl) |  | Gas (MMBtu)
NYMEX prices used in determining future cash flows | $ | 42.91 |  |  | n/a |  | $ | 71.88 |  |  | $ | 3.44 |  |  | $ | 100.37 |  |  | $ | 4.10 |
There were no natural gas reserves in 2016. The NGL prices utilized for future cash inflows were based on historical prices received, where available. For the Delhi NGL plant, we utilized historical prices for the expected mix and net pricing of natural gas liquid products projected to be produced by the plant. A summary of the changes in the standardized measure of discounted future net cash flows applicable to proved crude oil, natural gas liquids, and natural gas reserves is as follows:
| For the Years Ended June 30,
| 2016 |  | 2015 |  | 2014
Balance, beginning of year | $ | 159,196,539 |  |  | $ | 226,077,672 |  |  | $ | 307,220,699 |
Net changes in sales prices and production costs related to future production | (120,832,747 | ) |  | (88,043,095 | ) |  | (73,439,526 | )
Changes in estimated future development costs | 74,991 |  |  | (9,585,405 | ) |  | 9,848,614 |
Sales of oil and gas produced during the period, net of production costs | (17,079,363 | ) |  | (18,538,016 | ) |  | (16,479,934 | )
Net change due to extensions, discoveries, and improved recovery | — |  |  | — |  |  | 775,574 |
Net change due to revisions in quantity estimates | (18,821,014 | ) |  | (9,391,321 | ) |  | (23,757,788 | )
Net change due to sales of minerals in place | — |  |  | — |  |  | (3,150,277 | )
Development costs incurred during the period | 16,327,883 |  |  | 7,785,095 |  |  | — |
Accretion of discount | 21,870,650 |  |  | 31,974,540 |  |  | 45,896,187 |
Net change in discounted income taxes | 36,598,239 |  |  | 34,157,767 |  |  | 58,073,450 |
Net changes in timing of production and other (a) | 622,141 |  |  | (15,240,698 | ) |  | (78,909,327 | )
Balance, end of year | $ | 77,957,319 |  |  | $ | 159,196,539 |  |  | $ | 226,077,672 |
(a) Due to the June 2013 fluid release event in the Delhi field, the operator expressed plans to produce the Delhi field at lower production rates. The decision to produce these reserves at lower rates over a longer period of time did not materially change the total quantities expected to be recovered, but resulted in a significant reduction in the discounted value of these reserves as of June 30, 2014.

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