Property and Equipment, Net of Depreciation, Depletion, and Amortization

12 Months Ended

Jun. 30, 2021

Property, Plant and Equipment [Abstract]

Property and Equipment, Net of Depreciation, Depletion, and Amortization


	June 30, 2021		June 30, 2020
Oil and natural gas properties:
Property costs subject to amortization	$	129,123,227	$	107,390,379
Less: Accumulated depreciation, depletion, and amortization and impairment (a)	(70,607,367)		(40,878,098)
Unproved properties not subject to amortization	—		—
Oil and natural gas properties, net	58,515,860		66,512,281
Other property and equipment:
Furniture, fixtures, and office equipment, at cost	154,731		154,731
Less: Accumulated depreciation (b)	(144,092)		(137,092)
Other property and equipment, net	$	10,639	$	17,639

(a) Depletion on oil and natural gas properties was $4,901,969 for fiscal 2021 and $5,592,651 for fiscal 2020. Impairment on oil and natural gas properties was $24,792,079 for fiscal 2021, and there was no impairment in fiscal 2020.

(b) Depreciation was $7,000 for fiscal 2021 and $8,779 for fiscal 2020.

As of June 30, 2021 and 2020, all oil and gas property costs were being amortized.

During the years ended June 30, 2021 and 2020, the Company incurred capital expenditures of $0.6 million and $1.5 million, respectively.

On May 7, 2021, the Company acquired an approximate 17% working interest and a 14% revenue interest in non-operated oil and gas assets in the Barnett Shale from Tokyo Gas Americas for $18.3 million, net of preliminary purchase price adjustments, and also recognized $2.8 million in non-cash asset retirement obligations. The Company accounted for this transaction as an asset acquisition with an effective of January 1, 2021.

On November 1, 2019, the Company acquired a 23.5% non-operated working interest and a 19.7% revenue interest in the Hamilton Dome unitized field located in Hot Springs County, Wyoming, from the Merit Energy Company. As a result of this cash purchase combined with its subsequent purchase adjustments, the Company recorded a purchase cost of $9.3 million, net of purchase price adjustments, and also recognized $0.9 million in non-cash asset retirement obligations. The Company accounted for this transaction as an asset acquisition.

In accordance with the Financial Accounting Standards Board’s authoritative guidance on asset acquisitions, the Company allocated the cost of the acquisition to the assets acquired and liabilities assumed based on a relative fair value basis of the assets acquired and liabilities assumed, with no recognition of goodwill or bargain purchase gain recorded. Incremental legal and professional fees related directly to the Acquisition were capitalized as part of the Acquisition cost. The fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). Fair value measurements also utilize market assumptions of market participants.

The Company uses the full cost method of accounting for its investments in oil and natural gas properties. All costs of acquisition, exploration, and development of oil and natural gas reserves are capitalized as the cost of oil and natural gas and properties when incurred. To the extent capitalized costs of evaluated oil and natural gas properties, net of accumulated depletion, exceed the discounted future net revenues of proved oil and natural gas reserves, net of deferred taxes, such excess capitalized costs result in an impairment charge.

At June 30, 2021, the ceiling test value of the Company’s reserves was calculated based on the first-day-of-the-month average for the 12-months ended June 30, 2021 of the West Texas Intermediate (WTI) oil spot price of $49.72 per barrel and Henry Hub natural gas spot price of $2.46 per MMBtu, adjusted by market differentials by field. The net price per barrel of NGLs was $19.81, which does not have any single comparable reference index price. The NGL price was based on historical prices received. Using these prices, the Company’s net book value of oil and natural gas properties at June 30, 2021 did not exceed the current ceiling.

At December 31, 2020 and September 30, 2020, the Company recorded ceiling test impairment charges of $15.2 million and $9.6 million, respectively. The ceiling test impairments were driven by decreases in the first-day-of-the-month average for oil used in the ceiling test calculation, from $47.37 per barrel at June 30, 2020 to $43.63 per barrel at September 30, 2020 to $39.54 per barrel at December 31, 2020.