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Property
 9 Months Ended
Sep. 30, 2022
Property, Plant and Equipment [Abstract]  
Property

Note 3 – Property

 

The Company follows the successful efforts method of accounting for its oil and natural gas properties. Under this method, costs to acquire oil and natural gas properties and costs incurred to drill and equip development and exploratory wells are capitalized. Exploration costs are charged to operations as incurred. Upon sale or retirement of oil and natural gas properties, the costs and related accumulated depreciation, depletion and amortization are eliminated from the accounts and the resulting gain or loss is recognized.

 

Costs incurred to maintain wells and related equipment and lease and well operating costs are charged to expense as incurred.

 

Depletion is calculated on a units-of-production basis at the field level based on total proved developed reserves.

 

Proved Properties and Impairments

 

Proved oil and natural gas properties are reviewed for impairment at least annually, or as indicators of impairment arise. There have been no indicators of impairment in any period disclosed in these financial statements.

 

In May 2021, the Company purchased oil and natural gas properties in New Mexico (see Note 4).

 

In April 2022, the Company purchased working interests of oil and natural gas properties primarily located in the Landa field in North Dakota through its wholly owned subsidiary Empire NDA and assumed the role of operator. The Company paid approximately $1.4 million for eight producing properties, two properties with behind-pipe reserves, and related lease and well equipment. The Company allocated 80% of the acquisition cost to leasehold costs and the remaining 20% to related lease and well equipment. Non-cash asset retirement obligations were assumed of $233,659. The acquisition was accounted for as an asset acquisition.

 

Aggregate capitalized costs of oil and natural gas properties are as follows:

   September 30, 2022   December 31, 2021 
Proved producing wells  $23,294,453   $20,689,548 
Proved undeveloped   2,865,584    2,724,966 
Lease and well equipment   6,707,792    5,311,779 
Asset retirement obligation   18,268,308    18,188,033 
Wells in progress   1,928,201    — 
Gross capitalized costs   53,064,338    46,914,326 
Accumulated depreciation, depletion, amortization          
   and impairment   (18,703,073)   (17,525,918)
Net capitalized costs  $34,361,265   $29,388,408 

 

 

Wells in progress consist of recompletions and sidetrack wells being drilled in the Starbuck field in North Dakota at September 30, 2022.

 

Depletion and amortization expense for the nine months ended September 30, 2022 and 2021 was approximately $1.3 million and $2.0 million, respectively.

 

Other property and equipment consists of operating lease assets, vehicles, office furniture, and equipment with lives ranging from three to five years.

 

   September 30, 2022   December 31, 2021 
Other property and equipment, at cost  $2,030,593   $1,547,325 
Less: accumulated depreciation   (494,828)   (258,714)
Other property and equipment, net  $1,535,765   $1,288,611 

 

Depreciation expense for the nine months ended September 30, 2022 and 2021 was approximately $99,000 and $50,000, respectively.