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Acquisition and Development Agreement | 12 Months Ended
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Dec. 31, 2013
Acquisition and Development Agreement [Text Block] |
10. | Acquisition and Development Agreement:
| During November of 2013, the Company executed definitive agreements for the acquisition and development of the Kansas Mississippi-Osage Project (the "Kansas Project"), a 15,000 acre Mississippi Lime package located in Rice and Reno Counties, Kansas (the "Agreement").
| The expenditure commitment and obligation for the Kansas Project totals $5.4 million to the benefit of the seller, which we expected to be fully paid after drilling approximately 10 wells. The acreage, if fully developed on a 640-acre unit basis, could potentially support the drilling of a minimum of 23 wells, however, we expected down spacing will increase the number of drilling locations upon development of the assets. The Company will earn its 80% working interest on each 640-acre unit drilled, until it ultimately will have ownership of 15,000 gross, or 12,000 net acres. The play carries an overall 81.25% Net Revenue Interest (N.R.I.). The Company and the seller have structured a timely development of a new well every ninety (90) days, allowing sufficient time to drill, complete and evaluate the well prior to proceeding to the next planned location. Under the terms of the Agreement, the Company will not be required to provide the seller any upfront funds, however, the Company will be obligated to drill a minimum of three (3) initial horizontal wells to earn its interest in each 640 acre parcel per well. The Company estimates that for the first ten (10) wells, the Agreement requires the Company to fund 100% of the drilling and completion costs including installation of storage tanks on horizontal Mississippi- Osage wells for the Company to earn its 80% Working Interest (W.I.). The Company was required to begin the permitting of the first well within thirty days (30). The well must be spudded prior to March 15 2014. Each well was estimated to cost $2.5 million to drill and complete.
| As of the date of this filing, the Company has not been able to raise the funds to complete its commitments under the agreement and has decided not to pursue this agreement any further.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References No definition available. + Details
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