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5. OIL AND GAS PROPERTIES | 12 Months Ended
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Dec. 31, 2016
Extractive Industries [Abstract] |
OIL AND GAS PROPERTIES | The following tables summarize the Company’s oil and gas activities by classification for the years ended December 31, 2016 and 2015 (in thousands):
|  | January 1, 2016 |  |  | Additions |  |  | Disposals |  |  | Transfers |  |  | December 31, 2016 |
Oil and gas properties subject to amortization |  | $ | 64,655 |  |  | $ | 3,651 |  |  | $ | - |  |  | $ | - |  |  | $ | 68,306 |
Oil and gas properties not subject to amortization |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |
Asset retirement costs |  |  | 137 |  |  |  | 26 |  |  |  | - |  |  |  | - |  |  |  | 163 |
Accumulated depreciation, depletion and impairment |  |  | (6,025 | ) |  |  | (5,049 | ) |  |  | - |  |  |  | - |  |  |  | (11,074 | )
Total oil and gas properties, net |  | $ | 58,767 |  |  | $ | (1,372 | ) |  | $ | - |  |  | $ | - |  |  | $ | 57,395 |
|  | January 1, 2015 |  |  | Additions |  |  | Disposals |  |  | Transfers |  |  | December 31, 2015 |
Oil and gas properties subject to amortization |  | $ | 24,057 |  |  | $ | 47,561 |  |  | $ | (7,252 | ) |  | $ | 289 |  |  | $ | 64,655 |
Oil and gas properties not subject to amortization |  |  | 8,159 |  |  |  | - |  |  |  | (7,870 | ) |  |  | (289 | ) |  |  | - |
Asset retirement costs |  |  | 76 |  |  |  | 63 |  |  |  | (2 | ) |  |  | - |  |  |  | 137 |
Accumulated depreciation, depletion and impairment |  |  | (10,237 | ) |  |  | (6,441 | ) |  |  | 10,653 |  |  |  | - |  |  |  | (6,025 | )
Total oil and gas properties, net |  | $ | 22,055 |  |  | $ | 41,183 |  |  | $ | (4,471 | ) |  | $ | - |  |  | $ | 58,767 |
The depletion recorded for production on properties subject to amortization for the years ended December 31, 2016 and 2015 amounted to $5,049,000 and $5,104,000, respectively. The Company recorded impairment of leases for the years ended December 31, 2016 and 2015 of $-0- and $1,337,000, respectively, for lease acreage that expired during the year due to non-renewals or non-utilization of leases. The Company did not record any impairment of properties subject to amortization for the years ended December 31, 2016 and 2015. During the year ended December 31, 2016, net additions to oil and gas properties subject to amortization were $3,651,000, comprised of the development of the Company’s oil and gas properties of $83,000 and drilling and completion costs related to the acquisition of oil and gas properties of $3,568,000 with respect to eight non-operated wells drilled and completed by a third party operator. During the year ended December 31, 2015, additions to oil and gas properties subject to amortization consisted of completion costs of $235,000 primarily related to the operated wells in the DJ Basin, the acquisition of oil and gas properties and interests in 53 gross wells located in the DenverJulesburg Basin, Colorado from Golden Globe Energy (US), LLC (“GGE”) in February 2015 valued at $43,562,000 (see below for more details), and $3,851,000 of nonoperating well development costs were incurred on eight wells drilled by third party operators during the year ended December 31, 2015 which was subsequently assigned to Dome Energy (see below). Upon completion of the three Loomis wells, the Company assessed its unproved properties, and determined that $289,000 of costs had been proved through these drilling operations. As a result, the Company reclassified these costs to proved property as of December 31, 2015. Acquisition of Properties from Dome Energy, Inc. On November 19, 2015, the Company entered into a Letter Agreement with certain parties including Dome Energy AB and its wholly-owned subsidiary Dome Energy, Inc. (collectively “Dome Energy”), pursuant to which Dome Energy agreed to acquire the Company’s interests in eight wells and fully fund the Company’s proportionate share of all the corresponding working interest owner expenses with respect to these eight wells. The Company assigned its interests in these wells to Dome Energy effective November 18, 2015, and Dome Energy assumed all amounts owed for the drilling and completion costs corresponding to these interests acquired from the Company. On March 29, 2016, the Company entered into a Settlement Agreement with Dome Energy, pursuant to which Dome Energy re-conveyed to the Company the interests in these eight wells assigned to Dome Energy by the Company on November 18, 2015, with the Company becoming responsible for its proportionate share of all the working interest owner expenses, and having the right to receive all corresponding revenues with respect to these eight wells, from the initial production date of the wells. As part of this transaction, the Company also settled $659,000 of outstanding payables due from the Company to Dome Energy that was accounted for as a purchase price adjustment to the value of the oil and gas properties acquired. The transaction was closed on May 12, 2016. The following table summarizes the purchase price and allocation of the purchase price to the net assets acquired in May 2016 (in thousands):
|  | Assets Acquired |
Accounts receivable – oil and gas |  | $ | 793 |
Oil and gas properties, subject to amortization |  |  | 3,587 |
Total assets |  | $ | 4,380 |
|  | Liabilities Assumed |
Accounts payable |  | $ | (4,361 | )
Asset retirement obligation |  |  | (19 | )
Total liabilities |  |  | (4,380 | )
Net purchase price |  | $ | - |
Acquisition of Properties from Golden Globe Energy (US) LLC On February 23, 2015 (the “Closing”), the Company’s wholly-owned subsidiary, Red Hawk, completed the acquisition of approximately 12,977 net acres of oil and gas properties and interests in 53 gross wells located in the Denver-Julesburg Basin, Colorado (the “GGE Acquired Assets”) from Golden Globe Energy (US), LLC (“GGE”). As consideration for the acquisition of the GGE Acquired Assets, the Company (i) issued to GGE 3,375,000 restricted shares of the Company’s common stock and 66,625 restricted shares of the Company’s then newly-designated Series A Convertible Preferred Stock (the “Series A Preferred”) (see Note 11), (ii) assumed approximately $8.35 million of subordinated notes payable from GGE, and (iii) provided GGE with a one-year option to acquire the Company’s interest in its Kazakhstan opportunity for $100,000 payable upon exercise of the option pursuant to a Call Option Agreement. The effective date of the transaction was January 1, 2015, with the exception of all revenues and refunds attributable to GGE’s approximate 49.7% interest in each of the Loomis 2-1H, Loomis 2-3H and Loomis 2-6H wells, which revenues and refunds the Company owned from the date of first production, and which totaled approximately $467,000 through January 1, 2015. The following tables summarize the purchase price and allocation of the purchase price to the net assets acquired (in thousands):
Purchase price on February 23, 2015 |  |  |
Fair value of common stock issued |  | $ | 2,734 |
Fair value of Series A Preferred stock issued |  |  | 28,402 |
Assumption of subordinated notes payable |  |  | 8,353 |
Kazakhstan option issued |  |  | 5,000 |
Total purchase price |  | $ | 44,489 |
Fair value of net assets at February 23, 2015 |  |  |
Accounts receivable – oil and gas |  | $ | 1,578 |
Oil and gas properties, subject to amortization |  |  | 43,562 |
Prepaid expenses and other assets |  |  | 100 |
Total assets |  |  | 45,240 |
Accounts payable |  |  | (664 | )
Asset retirement obligations |  |  | (87 | )
Total liabilities |  |  | (751 | )
Net assets acquired |  | $ | 44,489 |
The following table presents the Company’s supplemental consolidated pro forma total revenues, lease operating costs, net income (loss) and net loss per common share as if the GGE Acquisition completed in February 2015 had occurred on January 1, 2015.
|  | For the Year Ended |
|  | December 31, 2015 |
|  | PEDEVCO |  |  | Net Acquisitions/Dispositions |  |  | Pro Forma Combined |
Revenue |  | $ | 5,326 |  |  | $ | 780 |  |  | $ | 6,106 |
Lease operating costs |  | $ | (1,830 | ) |  | $ | (275 | ) |  | $ | (2,105 | )
Net income (loss) |  | $ | (20,484 | ) |  | $ | 505 |  |  | $ | (19,979 | )
Net income (loss) per common share |  | $ | (0.49 | ) |  | $ | 0.01 |  |  | $ | (0.48 | )
Disposition of Oil and Gas Properties In February 2015, the Company sold to MIE Jurassic Energy Corporation (“MIEJ”), an affiliate of MIE Holdings, all of the direct interests in approximately 945 net acres and interests in three wells owned by the Company with a recorded net book value of $620,000 resulting in a gain on sale of oil and gas properties of $275,000.

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- Definition The entire disclosure for oil and gas enterprises that follow the full cost method of accounting for investments in oil and gas properties. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 932 -SubTopic 10 -Section S99 -Paragraph 1 -Subparagraph (SX 210.4-10.(c)(7)) -URI http://asc.fasb.org/extlink&oid=50486907&loc=d3e511914-122862 + Details
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