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Document and Entity Information

v2.4.0.8
Document and Entity Information
9 Months Ended
Jan. 31, 2015
Mar. 16, 2015
Document And Entity Information    
Entity Registrant Name Petro River Oil Corp.  
Entity Central Index Key 0001172298  
Document Type 10-Q  
Document Period End Date Jan. 31, 2015  
Amendment Flag false  
Current Fiscal Year End Date --04-30  
Entity Filer Category Smaller Reporting Company  
Entity Common Stock, Shares Outstanding   818,567,746
Document Fiscal Period Focus Q3  
Document Fiscal Year Focus 2015  

Condensed Consolidated Balance Sheets

v2.4.0.8
Condensed Consolidated Balance Sheets (USD $)
Jan. 31, 2015
Apr. 30, 2014
Current Assets:    
Cash and cash equivalents $ 1,501,387 $ 8,352,949
Certificate of deposit - restricted 125,000   
Accounts receivable 134,851 51,979
Prepaid expenses and other current assets 59,574 40,297
Total Current Assets 1,820,812 8,445,225
Oil and gas assets, net 17,145,352 8,941,592
Property, plant and equipment, net of accumulated depreciation of $309,550 and $302,275 64,911 930
Other assets 27,922 6,000
Total Other Assets 17,238,184 8,948,522
Total Assets 19,058,996 17,393,747
Current Liabilities:    
Accounts payable and accrued expenses 288,479 480,637
Asset retirement obligations, current portion 460,778 481,658
Total Current Liabilities 749,257 962,295
Long-term liabilities:    
Asset retirement obligations, net of current portion 447,806 336,352
Total Liabilities 1,197,063 1,298,647
Stockholders' Equity:    
Preferred Shares - 5,000,000 authorized; par value $0.00001 per share; Preferred B shares - 29,500 authorized; 0 issued with a $100 stated value, par value $0.00001 per share      
Common shares - 2,250,000,000 authorized; par value $0.00001 per share; Issued and outstanding; 818,567,746 and 818,567,746, respectively 8,186 8,186
Additional paid-in capital 28,650,374 27,748,045
Accumulated deficit (15,185,307) (11,661,131)
Total Stockholders' Equity 13,473,253 16,095,100
Non-controlling interests 4,388,680   
Total Stockholders' Equity 17,861,933 16,095,100
Total Liabilities and Stockholders' Equity $ 19,058,996 $ 17,393,747

Condensed Consolidated Balance Sheets (Parenthetical)

v2.4.0.8
Condensed Consolidated Balance Sheets (Parenthetical) (USD $)
Jan. 31, 2015
Apr. 30, 2014
Accumulated depreciation of Property, plant and equipment $ 309,550 $ 302,275
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, par value $ 0.00001 $ 0.00001
Preferred stock, shares issued      
Common stock, shares authorized 2,250,000,000 2,250,000,000
Common stock, par value $ 0.00001 $ 0.00001
Common stock, shares issued 818,567,746 818,567,746
Common stock, shares outstanding 818,567,746 818,567,746
Preferred B Shares [Member]
   
Preferred stock, shares authorized 29,500 29,500
Preferred stock, par value $ 0.00001 $ 0.00001
Preferred stock, shares issued 0 0
Preferred shares, stated value per share   $ 100

Condensed Consolidated Statements of Operations

v2.4.0.8
Condensed Consolidated Statements of Operations (USD $)
3 Months Ended 9 Months Ended
Jan. 31, 2015
Jan. 31, 2014
Jan. 31, 2015
Jan. 31, 2014
Operations Revenue        
Oil and natural gas sales $ 488,273 $ 117,713 $ 1,912,034 $ 309,806
Total Revenues 488,273 117,713 1,912,034 309,806
Operating Expenses        
Operating 832,458 85,983 1,619,955 232,694
General and administrative 806,283 1,634,241 3,858,315 3,351,460
Depreciation, depletion and accretion 168,001 27,251 568,834 80,279
Total Expenses 1,806,742 1,747,475 6,047,104 3,664,433
Operating loss (1,318,469) (1,629,762) (4,135,070) (3,354,627)
Interest (expense) income, net (459)    (426) 3,240
Net loss (1,318,928) (1,629,762) (4,135,496) (3,351,387)
Net loss attributable to non-controlling interest (264,289)    (611,320)   
Net loss attributable to Petro River Oil Corp. and Subsidiaries $ (1,054,639) $ (1,629,762) $ (3,524,176) $ (3,351,387)
Net loss per Common Share Basic and Diluted $ 0 $ 0 $ (0.01) $ 0
Weighted Average Number of Common Shares Outstanding - Basic and Diluted 818,567,746 781,475,355 818,567,746 752,034,775

Condensed Consolidated Statements of Cash Flows (Unaudited)

v2.4.0.8
Condensed Consolidated Statements of Cash Flows (Unaudited) (USD $)
9 Months Ended
Jan. 31, 2015
Jan. 31, 2014
CASH FLOWS FROM OPERATING ACTIVITIES:    
Net loss $ (4,135,496) $ (3,351,387)
Adjustments to reconcile net loss to net cash used in operating activities    
Stock-based compensation 902,329 1,315,349
Depreciation, depletion and amortization 530,774 39,294
Accretion of asset retirement obligation 38,060 40,985
Changes in operating assets and liabilities:    
Accounts receivable (82,872) (12,454)
Prepaid expenses and other assets (19,277) 18,415
Other assets (21,922)   
Accounts payable and accrued expenses (192,158) (113,106)
Net Cash Used in Operating Activities (2,980,562) (2,062,904)
Cash Flows From Investing Activities:    
Capitalized expenditures on oil and gas assets (8,674,744) (285,383)
Purchase of fixed assets (39,756)   
Purchase of certificate of deposit (125,000)   
Net Cash Used in Investing Activities (8,839,500) (285,383)
Cash Flows From Financing Activities:    
Proceeds from the issuance of common stock and warrants    6,500,000
Stock issuance costs    (650,000)
Payments of note payable (31,500)   
Cash received from non-controlling interest contribution 5,000,000   
Net Cash Provided by Financing Activities 4,968,500 5,850,000
Change in cash and cash equivalents (6,851,562) 3,501,713
Cash and cash equivalents, beginning of period 8,352,949 5,703,082
Cash and cash equivalents, end of period 1,501,387 9,204,795
Cash paid during the period for:    
Income taxes 7,975   
Interest paid 308   
Non-cash investing and financing activities:    
Conversion of accrued settlement liability into common stock    80,000
Acquisition of oil and gas assets 52,514   
Issuance of note payable for purchase of fixed assets $ 31,500   

Organization

v2.4.0.8
Organization
9 Months Ended
Jan. 31, 2015
Organization And Liquidity  
Organization

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of January 31, 2015, the Company had a stockholders’ deficiency of $15,185,307.  The Company has not generated any significant revenues from ongoing operations and incurred net losses since inception. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company’s primary source of operating funds since inception has been equity financings.

 

The Company is currently focused on developing its core position in the Mississippi Lime, specifically in the Pearsonia West Concession in Osage County recently acquired during the Bandolier Acquisition and Bandolier’s acquisition of Spyglass. Management’s current plans in the Mississippi Lime play are focused on Pearsonia West, but Petro River also owns additional Mississippi Lime acreage in Kansas. Over the last 12 months the Company has continued to build out its leadership and technical team with individuals with extensive experience in the Mississippi Lime play. Additionally, the Company has been in discussions with industry partners to capitalize and develop additional acreage in the Mississippi Lime. The Company continues to seek out joint venture partners and acquisition targets.

 

The Company continues to evaluate its non-core projects related to its legacy heavy oil reservoirs.  While still in technical review, the Company is engaged in a series of pilot tests related to certain theories, technologies and processes on the Missouri heavy oil assets. In Missouri, the Company has continued to analyze reservoir data and testing results to determine if any of these technologies or processes may lead to a viable and economic development plan for the understanding and test phases to develop an economic heavy oil production reserve base. The Company is leveraging executive vice president Luis Vierma’s experience in heavy oil, which he acquired during his time as Vice President of Exploration and Production at Petrуleos de Venezuela, S.A.

 

Management’s principal objective is to maximize shareholder value by, among other things, increasing production by developing its acreage, increasing profit margins by evaluating and optimizing its production, and executing its business plan to increase property values, prove its reserves, and expand its asset base. In addition, management is focused on developing Petro Spring, its technology focused business, which recently acquired Havelide Assets and Coalthane Assets.  While management currently has no plans to discontinue or revise its business plan, recent volatility and decrease in crude oil prices may cause management to cut back on its development or acquisition plans, or otherwise revisit its business and/or its capital expenditure plan.  Continued volatility and decreases in crude oil prices may accelerate such cut back or revisions.  To combat price volatility in crude oil process and further diversify the business, management has increased its focus on the development of Petro Spring.

 

At January 31, 2015, the Company had working capital of approximately $1.1 million.  As a result of the utilization of cash in its operating activities, and the development of its assets, the Company has incurred losses since it commenced operations. In addition, Petro has a limited operating history prior to acquisition of Bandolier.  At January 31, 2015, the Company had cash and cash equivalents of approximately $1.5 million.  While management believes that the current level of working capital is sufficient to maintain current operations in Kansas, Oklahoma and Missouri as well as the planned added operations for the next twelve months, additional capital will be necessary for management to execute its business plan, develop the Havelide and Coalthane Assets, and to further expand the Company’s exploration and development programs beyond such period.  To address the Company’s working capital requirements and execute its business plan, management intends to continue to raise capital through the issuance of debt and equity securities. In addition, and to address the recent volatility and decreases in crude oil prices, the Company has initiated cost-cutting measures commencing November 1, 2014. No assurances can be provided that the Company will be successful in its efforts to raise additional required capital, which efforts may be more difficult given the recent volatility and decrease in the price of crude oil.  Furthermore, inability to maintain capital may damage the Company’s reputation and credibility with industry participants. The Company’s inability to raise additional funds when required may have a negative impact on its consolidated results of operations and financial condition.

Going Concern and Management’s Plan

v2.4.0.8
Going Concern and Management’s Plan
9 Months Ended
Jan. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Going Concern and Management’s Plan:

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. As of January 31, 2015, the Company had a stockholders’ deficiency of $15,185,307.  The Company has not generated any significant revenues from ongoing operations and incurred net losses since inception. These matters raise substantial doubt about the Company’s ability to continue as a going concern. The condensed consolidated financial statements do not include any adjustments relating to the recoverability and classification of asset amounts or the classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

The Company’s primary source of operating funds since inception has been equity financings.

 

The Company is currently focused on developing its core position in the Mississippi Lime, specifically in the Pearsonia West Concession in Osage County recently acquired during the Bandolier Acquisition and Bandolier’s acquisition of Spyglass. Management’s current plans in the Mississippi Lime play are focused on Pearsonia West, but Petro River also owns additional Mississippi Lime acreage in Kansas. Over the last 12 months the Company has continued to build out its leadership and technical team with individuals with extensive experience in the Mississippi Lime play. Additionally, the Company has been in discussions with industry partners to capitalize and develop additional acreage in the Mississippi Lime. The Company continues to seek out joint venture partners and acquisition targets.

 

The Company continues to evaluate its non-core projects related to its legacy heavy oil reservoirs.  While still in technical review, the Company is engaged in a series of pilot tests related to certain theories, technologies and processes on the Missouri heavy oil assets. In Missouri, the Company has continued to analyze reservoir data and testing results to determine if any of these technologies or processes may lead to a viable and economic development plan for the understanding and test phases to develop an economic heavy oil production reserve base. The Company is leveraging executive vice president Luis Vierma’s experience in heavy oil, which he acquired during his time as Vice President of Exploration and Production at Petrуleos de Venezuela, S.A.

 

Management’s principal objective is to maximize shareholder value by, among other things, increasing production by developing its acreage, increasing profit margins by evaluating and optimizing its production, and executing its business plan to increase property values, prove its reserves, and expand its asset base. In addition, management is focused on developing Petro Spring, its technology focused business, which recently acquired Havelide Assets and Coalthane Assets.  While management currently has no plans to discontinue or revise its business plan, recent volatility and decrease in crude oil prices may cause management to cut back on its development or acquisition plans, or otherwise revisit its business and/or its capital expenditure plan.  Continued volatility and decreases in crude oil prices may accelerate such cut back or revisions.  To combat price volatility in crude oil process and further diversify the business, management has increased its focus on the development of Petro Spring.

 

At January 31, 2015, the Company had working capital of approximately $1.1 million.  As a result of the utilization of cash in its operating activities, and the development of its assets, the Company has incurred losses since it commenced operations. In addition, Petro has a limited operating history prior to acquisition of Bandolier.  At January 31, 2015, the Company had cash and cash equivalents of approximately $1.5 million.  While management believes that the current level of working capital is sufficient to maintain current operations in Kansas, Oklahoma and Missouri as well as the planned added operations for the next twelve months, additional capital will be necessary for management to execute its business plan, develop the Havelide and Coalthane Assets, and to further expand the Company’s exploration and development programs beyond such period.  To address the Company’s working capital requirements and execute its business plan, management intends to continue to raise capital through the issuance of debt and equity securities. In addition, and to address the recent volatility and decreases in crude oil prices, the Company has initiated cost-cutting measures commencing November 1, 2014. No assurances can be provided that the Company will be successful in its efforts to raise additional required capital, which efforts may be more difficult given the recent volatility and decrease in the price of crude oil.  Furthermore, inability to maintain capital may damage the Company’s reputation and credibility with industry participants. The Company’s inability to raise additional funds when required may have a negative impact on its consolidated results of operations and financial condition.

Basis of Preparation

v2.4.0.8
Basis of Preparation
9 Months Ended
Jan. 31, 2015
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Basis of Preparation

The condensed consolidated financial statements and accompanying footnotes are prepared in accordance with U.S. GAAP and include the accounts of the Company and its wholly owned subsidiaries. All material intercompany balances and transactions have been eliminated in consolidation. Non–controlling interest represents the minority equity investment in the Company’s subsidiaries, plus the minority investors’ share of the net operating results and other components of equity relating to the non–controlling interest.

 

These condensed consolidated financial statements include the below subsidiaries:

 

Petro River Oil LLC, Petro Spring, LLC, PO1, LLC and MegaWest Energy USA Corp. and its wholly owned subsidiaries:

 

MegaWest Energy Texas Corp.

MegaWest Energy Kentucky Corp.

MegaWest Energy Missouri Corp.

MegaWest Energy Kansas Corp.

MegaWest Energy Montana Corp.

 

Also contained in the condensed consolidated financial statements is the financial information of the Company’s 50% owned subsidiary, Bandolier Energy LLC.

 

The unaudited condensed consolidated financial information furnished herein reflects all adjustments, consisting solely of normal recurring items, which in the opinion of management are necessary to fairly state the financial position of the Company and the results of its operations for the periods presented. This report should be read in conjunction with the Company’s consolidated financial statements and notes thereto included in the Company’s Form 10-K for the year ended April 30, 2014 filed with the Securities and Exchange Commission (the “SEC”) on August 13, 2014. The Company assumes that the users of the interim financial information herein have read or have access to the audited financial statements for the preceding fiscal year and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. Accordingly, footnote disclosure, which would substantially duplicate the disclosure contained in the Company’s Form 10-K for the year ended April 30, 2014 has been omitted. The results of operations for the interim periods presented are not necessarily indicative of results for the entire year ending April 30, 2015.

Significant Accounting Policies

v2.4.0.8
Significant Accounting Policies
9 Months Ended
Jan. 31, 2015
Accounting Policies [Abstract]  
Significant Accounting Policies

 

(a)   Use of Estimates:

 

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include volumes of oil and natural gas reserves, abandonment obligations, impairment of oil and natural gas properties, depreciation and accretion, income taxes, fair value of financial instruments, and contingencies.

 

Oil and gas proven reserve estimates, which are the basis for unit-of-production depletion and the full cost ceiling test, have a number of inherent uncertainties. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities of oil and gas that are ultimately recovered. In addition, reserve estimates are vulnerable to changes in prices of crude oil and gas. Such prices have been volatile in the past and can be expected to be volatile in the future. As of January 31, 2015, the Company had proven reserves in Oklahoma in relation to the Bandolier transaction.

 

(b)   Cash and Cash Equivalents:

 

Cash and cash equivalents include all highly liquid monetary instruments with original maturities of three months or less when purchased. These investments are carried at cost, which approximates fair value. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, the Company’s cash and cash equivalent balances may be uninsured or in amounts that exceed the FDIC insurance limits.

 

(c)   Oil and Gas Operations:

 

Oil and Gas Properties: The Company uses the full-cost method of accounting for its exploration and development activities. Under this method of accounting, the costs of both successful and unsuccessful exploration and development activities are capitalized as oil and gas property and equipment. Proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country, in which case a gain or loss would be recognized in the condensed consolidated statements of operations. All of the Company’s oil and gas properties are located within the continental United States, its sole cost center.

 

Oil and gas properties may include costs that are excluded from costs being depleted. Oil and gas costs excluded represent investments in unproved properties and major development projects in which the Company owns a direct interest. These unproved property costs include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and in process exploration drilling costs. All costs excluded are reviewed at least annually to determine if impairment has occurred.

 

The Company accounts for its unproven long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. As of April 30, 2014, management engaged a third party to perform an independent study of the oil and gas assets. Management concluded that the Montana assets were impaired by $75,000 and the Kansas assets were impaired by $4,638,973. The Company recorded $4,713,973 impairment to the consolidated statement of operations for the year ended April 30, 2014.

  

Proved Oil and Gas Reserves: In accordance with Rule 4-10 of SEC Regulation S-X, proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. All of the Company’s oil and gas properties with proven reserves were impaired to the salvage value prior to the Bandolier transaction. The price used to establish economic producibility is the average price during the 12-month period preceding the end of the entity’s fiscal year and calculated as the un-weighted arithmetic average of the first-day-of-the-month price for each month within such 12-month period. Upon completion of the Bandolier transaction, the Company acquired $2,460,632 in proved developed oil and gas assets and $5,921,641 in proven undeveloped oil and gas assets.

 

Depletion, Depreciation and Amortization: Depletion, depreciation and amortization is provided using the unit-of-production method based upon estimates of proved oil and gas reserves with oil and gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and, where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value.

 

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expenses. There have been no material changes in the methodology used by the Company in calculating depletion, depreciation and amortization of oil and gas properties under the full cost method during the three and nine months ended January 31, 2015 and 2014.

 

(d)   Asset Retirement Obligations:

 

The Company recognizes a liability for the estimated fair value of site restoration and abandonment costs when the obligations are legally incurred and the fair value can be reasonably estimated. The fair value of the obligations is based on the estimated cash flow required to settle the obligations discounted using the Company’s credit adjusted risk-free interest rate. The obligation is recorded as a liability with a corresponding increase in the carrying amount of the oil and gas assets. The capitalized amount will be depleted on a unit-of-production method. The liability is increased each period, or accretes, due to the passage of time and a corresponding amount is recorded in the condensed consolidated statements of operations.

 

Revisions to the estimated fair value would result in an adjustment to the liability and the capitalized amount in oil and gas assets.

 

(e)   Oil and Gas Revenue:

 

Sales of oil and gas, net of any royalties, are recognized when oil has been delivered to a custody transfer point, persuasive evidence of a sales arrangement exists, the rights and responsibility of ownership pass to the purchaser upon delivery, collection of revenue from the sale is reasonably assured, and the sales price is fixed or determinable. The Company sells oil and gas on a monthly basis. Virtually all of its contracts’ pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, the quality of the oil and gas, and prevailing supply and demand conditions, so that the price of the oil and gas fluctuates to remain competitive with other available oil supplies.

 

(f)   Stock-based Compensation:

 

Generally, all forms of stock-based compensation, including stock option grants, warrants, and restricted stock grants are measured at their fair value utilizing an option pricing model on the award’s grant date, based on the estimated number of awards that are ultimately expected to vest.

 

The Company recognizes compensation expense for all equity–based payments in accordance with ASC 718 “Share–based payments". Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

  

The fair value of option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the option’s expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s common stock over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its common stock and does not intend to pay dividends on the common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from our estimate, the equity–based compensation expense could be significantly different from what the Company has recorded in the current period.

 

The Company accounts for share–based payments granted to non–employees in accordance with ASC 505, “Equity Based Payments to Non–Employees”. The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

 

The expenses resulting from stock-based compensation are recorded as general and administrative expenses in the consolidated statement of operations, depending on the nature of the services provided.

 

(g)   Per Share Amounts:

 

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the three and nine months ended January 31, 2015 and 2014 presented in these condensed consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

 

The Company had the following common stock equivalents at January 31, 2015 and 2014:

 

As at   January 31, 2015     January 31, 2014  
Stock Options     108,938,281       88,228,281  
Stock Purchase Warrants     40,625,000       40,625,000  
Compensation Warrants     -       230,000  
      149,563,281       129,083,281  

 

(h)   Fair Value of Financial Instruments:

 

All financial instruments, including cash and cash equivalents, accounts receivable and accounts payable and accrued expenses are recognized on the condensed consolidated balance sheet initially at carrying value. The carrying value of these assets approximates their fair value due to their short-term maturities.

 

At each balance sheet date, the Company assesses financial assets for impairment with any impairment recorded in the condensed consolidated statement of operations. To assess loans and receivables for impairment, the Company evaluates the probability of collection of accounts receivable and records an allowance for doubtful accounts, which reduces loans and receivables to the amount management reasonably believes will be collected. In determining the amount of the allowance, the following factors are considered: the length of the time the receivable has been outstanding, specific knowledge of each customer’s financial condition and historical experience.

 

Market risk is the risk that changes in commodity prices will affect the Company’s oil sales, cash flows or the value of its financial instruments. The objective of commodity price risk management is to manage and control market risk exposures within acceptable limits while maximizing returns.

 

The Company is exposed to changes in oil prices which impact its revenues and to changes in natural gas process which impact its operating expenses.

 

The Company does not utilize financial derivatives or other contracts to manage commodity price risks.

 

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 are categorized using a valuation hierarchy for disclosure of the inputs used to measure fair value, which prioritize the inputs into three broad levels:

 

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

 

Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date, and include those financial instruments that are valued using models or other valuation methodologies.

 

Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

 

(i)   Subsequent Events:

 

The Company evaluates subsequent events through the date the condensed consolidated financial statements are issued.

 

(j)   Recent Accounting Pronouncements:

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014–09, Revenue from Contracts with Customers. Amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry–specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605–35, Revenue Recognition—Construction–Type and Production–Type Contracts, and create new Subtopic 340–40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2011–230—Revenue Recognition (Topic 605) and Proposed Accounting Standards Update 2011–250—Revenue Recognition (Topic 605): Codification Amendments, both of which have been deleted. Accounting Standards Update 2014–09. The amendments in this Update are effective for the Company for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of ASU 2014–09 on the condensed consolidated financial statements.

 

In June 2014, FASB issued Accounting Standards Update 2014–12, Compensation – Stock Compensation (Topic 718), which clarifies accounting for share–based payments for which the terms of an award provide that a performance target could be achieved after the requisite service period. That is the case when an employee is eligible to retire or otherwise terminate employment before the end of the period in which a performance target could be achieved and still be eligible to vest in the award if and when the performance target is achieved. The updated guidance clarifies that such a term should be treated as a performance condition that affects vesting. As such, the performance target should not be reflected in estimating the grant–date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The guidance will be effective for the annual periods (and interim periods therein) ending after December 15, 2015. Early application is permitted. The Company is currently evaluating the effects of ASU 2014–12 on the condensed consolidated financial statements.

 

In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014–15, Presentation of Financial Statements – Going Concern.  The Update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued.  This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2013–300—Presentation of Financial Statements (Topic 205): Disclosure of Uncertainties about an Entity’s Going Concern Presumption, which has been deleted. The Company is currently evaluating the effects of ASU 2014–15 on the condensed consolidated financial statements.

 

In November 2014, the FASB issued Accounting Standards Update No. 2014-16 (ASU 2014-16), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effects of ASU 2014–16 on the condensed consolidated financial statements.

 

In November 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-17 Business Combinations (Topic 805), Pushdown Accounting. The amendment provides that acquired entities have the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of an acquired entity. The acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period and would be treated as a change in accounting principle. Additional disclosures are required to enable the users of the financial statements to evaluate the effect of pushdown accounting. The Company is currently evaluating the effects of ASU 2014–17 on the condensed consolidated financial statements.

 

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.

 

Restricted Cash

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Restricted Cash
9 Months Ended
Jan. 31, 2015
Restricted Cash  
Restricted Cash

Restricted cash as of January 31, 2015 consists of a certificate of deposit with one of the Company’s financial institutions. The certificate of deposit, which matures on August 7, 2015, was purchased pursuant to a cooperative agreement with a regional utility provider in Oklahoma.

Oil and Gas Assets

v2.4.0.8
Oil and Gas Assets
9 Months Ended
Jan. 31, 2015
Extractive Industries [Abstract]  
Oil and Gas Assets

The following table summarizes the oil and gas assets by project:

 

Cost   Oklahoma     Kansas     Missouri     Other     Total  
Balance May 1, 2014   $ -     $ 7,922,601     $ 918,991     $ 100,000     $ 8,941,592  
Additions     8,725,512       1,747       -       -       8,727,259  
Depreciation, depletion and amortization     (431,858 )     (91,641 )     -       -       (523,499 )
                                         
Balance January 31, 2015   $ 8,296,654     $ 7,832,707     $ 918,991     $ 100,000     $ 17,145,352  

 

Oklahoma

 

On May 30, 2014, the Company, entered into a Subscription Agreement, pursuant to which the Company purchased a 50% interest in Bandolier. Bandolier’s oil and gas assets are located in in Osage County, Oklahoma and comprise a significant contiguous oil and gas acreage position in Northeastern Oklahoma, approximately 106,000 acres, with substantial original oil in place, stacked reservoirs, as well as exploratory and development opportunities that can be accessed through both horizontal and vertical drilling. Significant infrastructure is already in place including 32 square miles of 3D seismic, 3 phase power, a dedicated sub-station as well as multiple oil producing horizontal wells. As a result of this transaction, the Company capitalized $2,460,632 in proved developed oil and gas assets and $5,921,641 in proven undeveloped oil and gas assets. No impairment was recorded on these assets during the three and nine months ended January 31, 2015. During the three months ended January 31, 2015, Bandolier purchased additional oil and gas assets totaling $343,239.

 

Kansas

 

Through proceeds received from the issuance of various promissory notes, on February 1, 2012 Petro purchased various interests in oil and gas leases, wells, records, data and related personal property located along the Mississippi Lime play in the state of Kansas from Metro, a Louisiana company and other interrelated entities through a court approved order as Metro was undergoing Chapter 11 Bankruptcy proceedings as a Debtor-In-Possession of these various oil and gas assets. Petro purchased these assets for cash considerations of $2.0 million as well as a 25% non-managing membership interest in the Company. During the nine months ended January 31, 2015, the Company engaged Energy Source Advisors to renew a number of the leases acquired in the Metro purchase and to lease additional acreage. As a result of the asset purchase from Metro and the completion of the additional lease renewals and additional acreage purchases, the Company obtained a total of 115,000 gross (85,000 net acres) of leases, having unproven reserves at the time of acquisition, in the Mississippi Lime play in Southeast Kansas for total cost of $12.2 million. The Company also acquired over 60 square miles of proprietary 3D seismic data over prospective Mississippi Lime acreage in the same area. During the year ended April 30, 2014, management engaged an independent third party to test the Kansas assets for impairment. Throughout the year, management was not aware of any impairment indicators, but during the annual impairment test, the third party specialist concluded that the Kansas assets were impaired by $4,638,973, principally due to comparable acreage values. No further impairment was recorded on these assets during the three and nine months ended January 31, 2015.

 

 

Missouri

 

At January 31, 2015, the Company’s Missouri lease holdings totaled 1,272 gross acres with 98.4% working interest.

 

On separate pilot projects at Deerfield, the Company built two 500 barrel of oil per day steam drive production facilities (Marmaton River and Grassy Creek) comprised of 116 production wells, 39 steam injection wells and 14 service and observation wells. Throughout the Deerfield area, the Company has drilled 73 exploration/delineation wells with a 67% success rate.

 

As of January 31, 2015 and April 30, 2014, all Missouri assets were carried at salvage value, since the Company’s current business plans do not contemplate raising the necessary capital to develop these properties. The Company is in current discussions with third parties to use the acreage as a testing site for heavy oil solutions with contemplated profit sharing opportunities.

   

Other

 

The Company’s primary additional asset is Petro Spring, a wholly owned technology focused subsidiary of the Company. It was launched with an intentionally broad mandate to acquire and commercialize cutting edge technologies with the intent to capitalize on the significant technological experience of its leadership team and network of industry relationships within the energy sector.

 

Other property consists primarily of four used steam generators and related equipment that will be assigned to future projects. As of January 31, 2015, management concluded that impairment was not necessary as all other assets were carried at salvage value.

Asset Retirement Obligations

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Asset Retirement Obligations
9 Months Ended
Jan. 31, 2015
Asset Retirement Obligation Disclosure [Abstract]  
Asset Retirement Obligations

The total future asset retirement obligation was estimated based on the Company’s ownership interest in all wells and facilities, the estimated legal obligations required to retire, dismantle, abandon and reclaim the wells and facilities and the estimated timing of such payments. The Company estimated the present value of its asset retirement obligations at both January 31, 2015 and April 30, 2014, based on a future undiscounted liability of $1,142,723 and $1,087,292, respectively. These costs are expected to be incurred within one to 24 years. A credit-adjusted risk-free discount rate of 10% and an inflation rate of 2% were used to calculate the present value.

 

Changes to the asset retirement obligation were as follows:

 

    January 31, 2015     April 30, 2014  
Balance, beginning of period   $ 818,010     $ 763,036  
Additions     52,514       -  
Disposition     -       -  
Revisions     -       -  
Accretion     38,060       54,974  
      908,584       818,010  
Less: Current portion for cash flows expected to be incurred within one year     (460,778 )     (481,658 )
Long-term portion, end of period   $ 447,806     $ 336,352  

 

Expected timing of asset retirement obligations:

 

Year Ending April 30,      
2015   460,778  
2016     81,181  
2017     212,000  
2018     -  
2019     -  
Thereafter     388,764  
      1,142,723  
Effect of discount     (234,139 )
Total   $ 908,584  

 

As of January 31, 2015 and April 30, 2014, the Company has $0 of reclamation deposits with authorities to secure certain abandonment liabilities.

Stockholders' Equity

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Stockholders' Equity
9 Months Ended
Jan. 31, 2015
Stockholders' Equity Note [Abstract]  
Stockholders' Equity

As of January 31, 2015 and April 30, 2014, the Company had 5,000,000 shares of blank check preferred stock authorized with a par value of $0.00001 per share. None of the blank check preferred shares were issued or outstanding.

 

As of January 31, 2015 and April 30, 2014, the Company had 29,500 shares of preferred B shares authorized with a par value of $0.00001 per share. No preferred B shares are issued or outstanding.

Stock Options

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Stock Options
9 Months Ended
Jan. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Stock Options

As of January 31, 2015, the Company has one equity incentive plan. The number of shares reserved for issuance in aggregate under the plan is limited to 120 million shares. The exercise price, term and vesting schedule of stock options granted are set by the Board of Directors at the time of grant. Stock options granted under the plan may be exercised on a cashless basis, if such exercise is approved by the Board. In a cashless exercise, the employee receives a lesser amount of shares in lieu of paying the exercise price based on the quoted market price of the shares on the trading day immediately preceding the exercise date.

 

As of April 30, 2014, the Company had a total of 88,038,281 options outstanding and 24,204,947 exercisable with a weighted average exercise price of $0.06.

 

As of January 31, 2015, the Company had a total of 108,938,281 options outstanding and 30,438,280 exercisable with a weighted average exercise price of $0.06.

 

The following table summarizes information about the options outstanding and exercisable at January 31, 2015:

 

    Options    

Weighted Average

Exercise Prices

 
             
Outstanding – April 30, 2014     88,038,281     $ 0.06  
Exercisable – April 30, 2014     24,204,947     $ 0.06  
Granted     21,000,000     $ 0.06  
Exercised     -     $ -  
Forfeited/Cancelled     (100,000 )   $ -  
Outstanding January 31, 2015     108,938,281     $ 0.06  
Exercisable – January 31, 2015     30,438,280     $ 0.06  
                 
Outstanding - Aggregate Intrinsic Value           $ -  
                 
Exercisable - Aggregate Intrinsic Value           $ -  

 

The following table summarizes information about the options outstanding and exercisable at October 31, 2014:

 

      Options Outstanding     Options Exercisable  
  Exercise Price   Options  

Weighted Avg.

Life Remaining

 

Weighted Avg.

Exercise Price

    Options    

Weighted Avg.

Exercise Price

 
 $ 0.22     465,116   0.01 years   $ 0.22       465,116     $ 0.22  
 $ 0.06     108,473,165   8.79 years   $ 0.06       29,973,164     $ 0.06  
        108,938,281                  29,973,164           
Aggregate Intrinsic Value             $ -             $ -  

 

During the three months ended January 31, 2015 and 2014, the Company expensed an aggregate $228,075 and $841,052 to general and administrative expenses for stock based compensation pursuant to employment and consulting agreements.

 

For the nine months ended January 31, 2015 and 2014, the Company recorded stock-based compensation of $902,329 and $1,315,349, respectively, which is included in general and administrative expenses.

 

As of January 31, 2015, no intrinsic value was attributable to stock-based compensation.

 

Other than the issuances disclosed in Note 7 and below, during the three and nine months ended January 31, 2015, the Company had no other stock based compensation expense.

 

As of January 31, 2015, the Company has $2,891,201 in unrecognized stock based compensation expense which will be amortized over a weighted average exercise period of 2.04 years.

 

Advisor Grants:

 

On September 24, 2014, the Board of Directors authorized the grant of 19,000,000 fair value options to five consultants. The option grants have an exercise price equal to the closing price of shares of the Company’s common stock as of the date of the grant.  One consultant was granted 5,000,000 fair value options and the second consultant was granted 2,500,000 fair value options, the third consultant was granted 3,000,000 fair value options and the fourth was granted 6,500,000 fair value stock options. All options granted vested over 4 years with 20 percent vested immediately upon grant.  Additionally, one consultant was granted 2,000,000 fair value options that vest over one year with one-twelfth vesting immediately.  All options granted mature in ten years.

 

The Company computed the economic benefit of the above grant as of the date of grant utilizing a Black-Scholes option-pricing model. The Company utilized the following assumptions: common share value based on the fair value of the Company’s common stock as quoted on the Over the Counter Bulletin Board, $0.057; Exercise price of $0.057; expected volatility of 174%; and a discount rate of 2.57%. The grant date fair value of the awards was $1,075,072. For the three and nine months ended January 31, 2015, the Company expensed $28,706 and $325,494, respectively, to general and administrative expenses as part of stock-based compensation.

 

On January 23, 2015, one consultant was granted 2,000,000 fair value options that vest over a six month period with 20 percent vesting immediately.  The option grants have an exercise price equal to the closing price of shares of the Company’s common stock as of the date of the grant and mature in ten years.

 

The Company computed the economic benefit of the above grant as of the date of grant utilizing a Black-Scholes option-pricing model. The Company utilized the following assumptions: common share value based on the fair value of the Company’s common stock as quoted on the Over the Counter Bulletin Board, $0.028; Exercise price of $0.028; expected volatility of 178%; and a discount rate of 1.81%. The grant date fair value of the award was $55,746. For the three and nine months ended January 31, 2015, the Company expensed $11,149, respectively, to general and administrative expenses as part of stock-based compensation.

 

On November 20, 2013, the Board of Directors authorized the grant of fair value options to two consultants. The option grants have an exercise price equal to the closing price of shares of the Company’s common stock as of the date of the grant. One consultant was granted 2,333,333 fair value options and the second consultant was granted 1,833,333 fair value options. All options granted vested immediately upon grant and mature in ten years.

 

Warrants:

 

   

Number of

Warrants

   

Weighted

Average

Exercise Price

   

Weighted

Average Life

Remaining

 
Outstanding and exercisable – April 30, 2014     40,625,000       0.14       1.62  
Forfeited     -       -       -  
Granted     -       -       -  
Outstanding and exercisable – January 31, 2015     40,625,000       0.14       0.86  

 

The aggregate intrinsic value of the warrants was $0.

Contingency and Contractual Obligations

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Contingency and Contractual Obligations
9 Months Ended
Jan. 31, 2015
Commitments and Contingencies Disclosure [Abstract]  
Contingency and Contractual Obligations

As a result of the Share Exchange, the Company inherited the following contingencies:

 

(a) In January 2010, the Company experienced a flood in its Calgary office premises as a result of a broken water pipe. There was significant damage to the premises rendering them unusable until the landlord had completed remediation. Pursuant to the lease contract, the Company has asserted that rent should be abated during the remediation process and accordingly, the Company has not paid rent since December 2009. During the remediation process, the Company engaged an independent environmental testing company to test for air quality and for the existence of other potentially hazardous conditions. The testing revealed the existence of potentially hazardous mold and the consultant provided specific written instructions for the effective remediation of the premises. During the remediation process, the landlord did not follow the consultant’s instructions and correct the potentially hazardous mold situation and subsequently in June 2010 gave notice and declared the premises to be ready for occupancy. The Company re-engaged the consultant to re-test the premises and the testing results again revealed the presence of potentially hazardous mold. The Company has determined that the premises are not fit for re-occupancy and considers the landlord to be in default of the lease and the lease terminated.

 

The landlord disputes the Company’s position and has given notice that it considers the Company to be in default of the lease for failure to re-occupy the premises.

  

In addition, the landlord has previously claimed that the Company owes monthly rent for the premises from January 2010 to June 30, 2010 in the amount of $247,348 and has claimed that, as a result of the alleged default, pursuant to the terms of the lease, the Company owes three months accelerated rent in the amount of $114,837. The landlord has previously also asserted that the Company would be liable for an amount up to the full lease obligation of $1,596,329 which otherwise would have been due as follows:

 

Year Ended April 30        
2011     $ 473,055  
2012       473,055  
2013       473,055  
2014       177,164  
Total     $ 1,596,329  

 

On January 30, 2014, the landlord filed a Statement of Claim against the Company in the amount aggregating approximately $759,000. On October 20, 2014, the Company filed a summary judgment application stating that landlord’s claim is barred as it was commenced outside the 2-year statute of limitation period under the Alberta Limitations Act. If the landlord contests the Company’s summary judgment application, the court will schedule a hearing expected no earlier than June 2015.

 

(b) In September 2013, the Company was notified by the Railroad Commission of Texas (the “Commission”) that the Company was not in compliance with regulations promulgated by the Commission. The Company was therefore deemed to have lost its corporate privileges within the State of Texas and as a result, all wells within the state would have to be plugged. The Commission therefore collected $25,000 from the Company, which was originally deposited with the Commission, to cover a portion of the estimated costs of $88,960 to plug the wells. In addition to the above, the Commission also reserved its right to separately seek any remedies against the Company resulting from its noncompliance.

 

(c) On July 3, 2014, the Company entered into a memorandum of understanding with Sichuan Renzhi Oilfield Technology Services Co. Ltd., a corporation incorporated under the laws of the People’s Republic of China and traded on the Shenzhen Stock Exchange (“Renzhi”), which is memorialized in a Framework Agreement for Acquisition and Cooperation (the “MOU”). The MOU sets forth a framework for (i) the sale by the Company, and the purchase by Renzhi, of PO1, LLC (“PO1”), a wholly-owned subsidiary of the Company which owns 51% of the issued and outstanding membership interests of Spyglass, the owner of oil and gas leases, leaseholds, lands, and options and concessions thereto, located in Osage County, Oklahoma; and (ii) the joint development by the Company and Renzhi of oil and gas technology and properties (collectively, the “Transactions”), with an aggregate investment by Renzhi to the Company in the amount of $87.5 million. 

 

The Company and Renzhi intend to enter into one or more definitive agreements to effectuate the terms of the MOU. The execution of definitive documentation with respect to the Transactions remains subject to additional negotiations between the parties, further due diligence, Renzhi obtaining financing in order to comply with its obligations, and applicable Chinese regulatory approvals. There can be no assurance that definitive documentation for the Transactions will be entered into by the parties or that the Transactions will close.

 

(d) On August 11, 2014, Martha Donelson and John Friend amended their complaint in an existing lawsuit by filing a class action complaint styled: Martha Donelson and John Friend, et al. v. United States of America, Department of the Interior, Bureau of Indian Affairs and Devon Energy Production, LP, et al., Case No. 14-CV-316-JHP-TLW, United States District Court for the Northern District of Oklahoma (the “Proceeding”).  The plaintiffs added as defendants twenty-seven (27) specifically named operators, including the Company, as well as all Osage County lessees and operators who have obtained a concession agreement, lease or drilling permit approved by the Bureau of Indian Affairs (“BIA”) in Osage County allegedly in violation of National Environmental Policy Act (“NEPA”).  Plaintiffs seek a declaratory judgment that the BIA improperly approved oil and gas leases, concession agreements and drilling permits prior to August 12, 2014, without satisfying the BIA’s obligations under federal regulations or NEPA, and seek a determination that such oil and gas leases, concession agreements and drilling permits are void ab initio.  Plaintiffs are seeking damages against the defendants for alleged nuisance, trespass, negligence and unjust enrichment.

 

On October 7, 2014 Spyglass, along with other defendants, filed a motion to dismiss the August 11, 2104 Proceeding on various procedural and legal arguments.  Plaintiffs filed their response to the motion to dismiss on October 27, 2014.  Spyglass filed its reply brief on November 10, 2014 and the plaintiffs were granted leave until November 19, 2014 to file a surreply to Splyglass’s reply brief.  Once the briefing cycle concluded on November 19, 2014, the motion to dismiss became ripe for determination by the court.  Oral arguments may be ordered by the court.  There is no specific timeline by which the court must render a ruling.

 

(e) Mega West Energy Missouri Corp. (“Mega West”), a wholly owned subsidiary of the Company, is involved in two cases related to oil leases in West Central, Missouri.  The first case (James Long and Jodeane Long v. Mega West Energy Missouri and Petro River Oil Corp., case number 13B4-CV00019) is a case for unlawful detainer, pursuant to which the plaintiffs contend that Mega West oil and gas lease has expired and Mega West is unlawfully possessing the plaintiffs real property by asserting that the leases remain in effect.  The case was originally filed in Vernon County, Missouri on September 20, 2013.  Mega West filed

an Answer and Counterclaims on November 26, 2013 and the plaintiffs filed a motion to dismiss the counterclaims. Mega West filed a motion for Change of Judge and Change of Venue and the case was transferred to Barton County.  The court granted the motion to dismiss the counterclaims on February 3, 2014.  As to the other allegations in the complaint, the matter is still pending.

 

Mega West filed a second case on October 14, 2014 (Mega West Energy Missouri Corp. v. James Long, Jodeane Long, and Arrow Mines LLC, case number 14VE-CV00599).  This case is pending in Vernon County, Missouri.  Although the two cases are separate, they are interrelated.  In the Vernon County case, Mega West has made claims for: (1) replevin for personal property; (2) conversion of personal property; (3) breach of the covenant of quiet enjoyment regarding the lease; (4) constructive eviction of the lease; (5) breach of fiduciary obligation against James Long; (6) declaratory judgment that the oil and gas lease did not terminate; and (7) injunctive relief to enjoin the action pending in Barton County, Missouri.  The plaintiffs filed a motion to dismiss on November 4, 2014, and Arrow Mines, LLC filed a motion to dismiss on November 13, 2014.  Both motions remain pending, and Mega West will file an opposition to the motions in the near future. 

 

(f) The Company is from time to time involved in legal proceedings in the ordinary course of business. It does not believe that any of these claims and proceedings against it is likely to have, individually or in the aggregate, a material adverse effect on its financial condition or results of operations.

Subsequent Events

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Subsequent Events
9 Months Ended
Jan. 31, 2015
Subsequent Events [Abstract]  
SUBSEQUENT EVENTS

Acquisition of Havelide Assets.  On February 18, 2015, Petro Spring I entered into the Havelide Purchase Agreement to purchase the Havelide Assets from Havelide.  The purchase of the Havelide Assets was consummated on February 27, 2015. Under the terms of the Havelide Purchase Agreement, in consideration for the Havelide Assets, the Company issued to Havelide 13,333,333 shares of common stock of the Company and a warrant to purchase an additional 26,666,667 shares of common stock at an exercise price of $0.25 per share.

 

Acquisition of Coalthane Assets.  On February 18, 2015, Petro Spring II entered into the Coalthane Purchase Agreement to purchase the Coalthane Assets.  Under the terms of the Coalthane Purchase Agreement, in consideration for the Coalthane Assets, the Company issued to Coalthane 20,000,000 shares of common stock of the Company.

 

The Havelide Assets and the Coalthane Assets are in the development stage, and the acquisition thereof is consistent with the Company’s business objective of acquiring leading edge technologies, which the Board of Directors deemed important in light of the current softness in the price of oil and gas.  Management currently intends to seek financing or a development partner in order to fully develop the Havelide Assets and Coalthane Assets.

 

Significant Accounting Policies (Policies)

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Significant Accounting Policies (Policies)
9 Months Ended
Jan. 31, 2015
Accounting Policies [Abstract]  
Use of Estimates

The preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include volumes of oil and natural gas reserves, abandonment obligations, impairment of oil and natural gas properties, depreciation and accretion, income taxes, fair value of financial instruments, and contingencies.

 

Oil and gas proven reserve estimates, which are the basis for unit-of-production depletion and the full cost ceiling test, have a number of inherent uncertainties. The accuracy of any reserve estimate is a function of the quality of available data and of engineering and geological interpretation and judgment. Results of drilling, testing, and production subsequent to the date of the estimate may justify revision of such estimate. Accordingly, reserve estimates are often different from the quantities of oil and gas that are ultimately recovered. In addition, reserve estimates are vulnerable to changes in prices of crude oil and gas. Such prices have been volatile in the past and can be expected to be volatile in the future. As of January 31, 2015, the Company had proven reserves in Oklahoma in relation to the Bandolier transaction.

Cash and Cash Equivalents

Cash and cash equivalents include all highly liquid monetary instruments with original maturities of three months or less when purchased. These investments are carried at cost, which approximates fair value. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash deposits. The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (“FDIC”). At times, the Company’s cash and cash equivalent balances may be uninsured or in amounts that exceed the FDIC insurance limits.

Oil and Gas Operations

Oil and Gas Properties: The Company uses the full-cost method of accounting for its exploration and development activities. Under this method of accounting, the costs of both successful and unsuccessful exploration and development activities are capitalized as oil and gas property and equipment. Proceeds from the sale or disposition of oil and gas properties are accounted for as a reduction to capitalized costs unless the gain or loss would significantly alter the relationship between capitalized costs and proved reserves of oil and natural gas attributable to a country, in which case a gain or loss would be recognized in the condensed consolidated statements of operations. All of the Company’s oil and gas properties are located within the continental United States, its sole cost center.

 

Oil and gas properties may include costs that are excluded from costs being depleted. Oil and gas costs excluded represent investments in unproved properties and major development projects in which the Company owns a direct interest. These unproved property costs include non-producing leasehold, geological and geophysical costs associated with leasehold or drilling interests and in process exploration drilling costs. All costs excluded are reviewed at least annually to determine if impairment has occurred.

 

The Company accounts for its unproven long-lived assets in accordance with Accounting Standards Codification (“ASC”) Topic 360-10-05, “Accounting for the Impairment or Disposal of Long-Lived Assets.” ASC Topic 360-10-05 requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost carrying value of an asset may no longer be appropriate. As of April 30, 2014, management engaged a third party to perform an independent study of the oil and gas assets. Management concluded that the Montana assets were impaired by $75,000 and the Kansas assets were impaired by $4,638,973. The Company recorded $4,713,973 impairment to the consolidated statement of operations for the year ended April 30, 2014.

  

Proved Oil and Gas Reserves: In accordance with Rule 4-10 of SEC Regulation S-X, proved oil and gas reserves are the estimated quantities of crude oil, natural gas and natural gas liquids which geological and engineering data demonstrate with reasonable certainty to be recoverable in future years from known reservoirs under existing economic and operating conditions. All of the Company’s oil and gas properties with proven reserves were impaired to the salvage value prior to the Bandolier transaction. The price used to establish economic producibility is the average price during the 12-month period preceding the end of the entity’s fiscal year and calculated as the un-weighted arithmetic average of the first-day-of-the-month price for each month within such 12-month period. Upon completion of the Bandolier transaction, the Company acquired $2,460,632 in proved developed oil and gas assets and $5,921,641 in proven undeveloped oil and gas assets.

 

Depletion, Depreciation and Amortization: Depletion, depreciation and amortization is provided using the unit-of-production method based upon estimates of proved oil and gas reserves with oil and gas production being converted to a common unit of measure based upon their relative energy content. Investments in unproved properties and major development projects are not amortized until proved reserves associated with the projects can be determined or until impairment occurs. If the results of an assessment indicate that the properties are impaired, the amount of the impairment is deducted from the capitalized costs to be amortized. Once the assessment of unproved properties is complete and when major development projects are evaluated, the costs previously excluded from amortization are transferred to the full cost pool and amortization begins. The amortizable base includes estimated future development costs and, where significant, dismantlement, restoration and abandonment costs, net of estimated salvage value.

 

In arriving at rates under the unit-of-production method, the quantities of recoverable oil and natural gas reserves are established based on estimates made by the Company’s geologists and engineers which require significant judgment, as does the projection of future production volumes and levels of future costs, including future development costs. In addition, considerable judgment is necessary in determining when unproved properties become impaired and in determining the existence of proved reserves once a well has been drilled. All of these judgments may have significant impact on the calculation of depletion expenses. There have been no material changes in the methodology used by the Company in calculating depletion, depreciation and amortization of oil and gas properties under the full cost method during the three and nine months ended January 31, 2015 and 2014.

Asset Retirement Obligations

The Company recognizes a liability for the estimated fair value of site restoration and abandonment costs when the obligations are legally incurred and the fair value can be reasonably estimated. The fair value of the obligations is based on the estimated cash flow required to settle the obligations discounted using the Company’s credit adjusted risk-free interest rate. The obligation is recorded as a liability with a corresponding increase in the carrying amount of the oil and gas assets. The capitalized amount will be depleted on a unit-of-production method. The liability is increased each period, or accretes, due to the passage of time and a corresponding amount is recorded in the condensed consolidated statements of operations.

 

Revisions to the estimated fair value would result in an adjustment to the liability and the capitalized amount in oil and gas assets

Oil and Gas Revenue

Sales of oil and gas, net of any royalties, are recognized when oil has been delivered to a custody transfer point, persuasive evidence of a sales arrangement exists, the rights and responsibility of ownership pass to the purchaser upon delivery, collection of revenue from the sale is reasonably assured, and the sales price is fixed or determinable. The Company sells oil and gas on a monthly basis. Virtually all of its contracts’ pricing provisions are tied to a market index, with certain adjustments based on, among other factors, whether a well delivers to a gathering or transmission line, the quality of the oil and gas, and prevailing supply and demand conditions, so that the price of the oil and gas fluctuates to remain competitive with other available oil supplies.

Stock-based Compensation

Generally, all forms of stock-based compensation, including stock option grants, warrants, and restricted stock grants are measured at their fair value utilizing an option pricing model on the award’s grant date, based on the estimated number of awards that are ultimately expected to vest.

 

The Company recognizes compensation expense for all equity–based payments in accordance with ASC 718 “Share–based payments". Under fair value recognition provisions, the Company recognizes equity–based compensation net of an estimated forfeiture rate and recognizes compensation cost only for those shares expected to vest over the requisite service period of the award.

  

The fair value of option award is estimated on the date of grant using the Black–Scholes option valuation model. The Black–Scholes option valuation model requires the development of assumptions that are input into the model. These assumptions are the expected stock volatility, the risk–free interest rate, the option’s expected life, the dividend yield on the underlying stock and the expected forfeiture rate. Expected volatility is calculated based on the historical volatility of the Company’s common stock over the expected option life and other appropriate factors. Risk–free interest rates are calculated based on continuously compounded risk–free rates for the appropriate term. The dividend yield is assumed to be zero as the Company has never paid or declared any cash dividends on its common stock and does not intend to pay dividends on the common stock in the foreseeable future. The expected forfeiture rate is estimated based on historical experience.

 

Determining the appropriate fair value model and calculating the fair value of equity–based payment awards requires the input of the subjective assumptions described above. The assumptions used in calculating the fair value of equity–based payment awards represent management’s best estimates, which involve inherent uncertainties and the application of management’s judgment. As a result, if factors change and the Company uses different assumptions, the equity–based compensation expense could be materially different in the future. In addition, the Company is required to estimate the expected forfeiture rate and recognize expense only for those shares expected to vest. If the actual forfeiture rate is materially different from our estimate, the equity–based compensation expense could be significantly different from what the Company has recorded in the current period.

 

The Company accounts for share–based payments granted to non–employees in accordance with ASC 505, “Equity Based Payments to Non–Employees”. The Company determines the fair value of the stock–based payment as either the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  If the fair value of the equity instruments issued is used, it is measured using the stock price and other measurement assumptions as of the earlier of either (1) the date at which a commitment for performance by the counterparty to earn the equity instruments is reached, or (2) the date at which the counterparty’s performance is complete.

 

The expenses resulting from stock-based compensation are recorded as general and administrative expenses in the consolidated statement of operations, depending on the nature of the services provided.

Per Share Amounts

Basic net loss per common share is computed by dividing net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net loss per common share is determined using the weighted-average number of common shares outstanding during the period, adjusted for the dilutive effect of common stock equivalents. In periods when losses are reported, which is the case for the three and nine months ended January 31, 2015 and 2014 presented in these condensed consolidated financial statements, the weighted-average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive.

 

The Company had the following common stock equivalents at January 31, 2015 and 2014:

 

As at   January 31, 2015     January 31, 2014  
Stock Options     108,938,281       88,228,281  
Stock Purchase Warrants     40,625,000       40,625,000  
Compensation Warrants     -       230,000  
      149,563,281       129,083,281  
Fair Value of Financial Instruments

All financial instruments, including cash and cash equivalents, accounts receivable and accounts payable and accrued expenses are recognized on the condensed consolidated balance sheet initially at carrying value. The carrying value of these assets approximates their fair value due to their short-term maturities.

 

At each balance sheet date, the Company assesses financial assets for impairment with any impairment recorded in the condensed consolidated statement of operations. To assess loans and receivables for impairment, the Company evaluates the probability of collection of accounts receivable and records an allowance for doubtful accounts, which reduces loans and receivables to the amount management reasonably believes will be collected. In determining the amount of the allowance, the following factors are considered: the length of the time the receivable has been outstanding, specific knowledge of each customer’s financial condition and historical experience.

 

Market risk is the risk that changes in commodity prices will affect the Company’s oil sales, cash flows or the value of its financial instruments. The objective of commodity price risk management is to manage and control market risk exposures within acceptable limits while maximizing returns.

 

The Company is exposed to changes in oil prices which impact its revenues and to changes in natural gas process which impact its operating expenses.

 

The Company does not utilize financial derivatives or other contracts to manage commodity price risks.

 

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 are categorized using a valuation hierarchy for disclosure of the inputs used to measure fair value, which prioritize the inputs into three broad levels:

 

Level 1 - Quoted prices are available in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

 

Level 2 - Pricing inputs are other than quoted prices in active markets included in level 1, which are either directly or indirectly observable as of the reported date, and include those financial instruments that are valued using models or other valuation methodologies.

 

Level 3 - Pricing inputs include significant inputs that are generally less observable from objective sources. These inputs may be used with internally developed methodologies that result in management’s best estimate of fair value.

Subsequent Events

The Company evaluates subsequent events through the date the condensed consolidated financial statements are issued.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014–09, Revenue from Contracts with Customers. Amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry–specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605–35, Revenue Recognition—Construction–Type and Production–Type Contracts, and create new Subtopic 340–40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2011–230—Revenue Recognition (Topic 605) and Proposed Accounting Standards Update 2011–250—Revenue Recognition (Topic 605): Codification Amendments, both of which have been deleted. Accounting Standards Update 2014–09. The amendments in this Update are effective for the Company for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of ASU 2014–09 on the condensed consolidated financial statements.

 

In June 2014, FASB issued Accounting Standards Update 2014–12, Compensation – Stock Compensation (Topic 718), which clarifies accounting for share–based payments for which the terms of an award provide that a performance target could be achieved after the requisite service period. That is the case when an employee is eligible to retire or otherwise terminate employment before the end of the period in which a performance target could be achieved and still be eligible to vest in the award if and when the performance target is achieved. The updated guidance clarifies that such a term should be treated as a performance condition that affects vesting. As such, the performance target should not be reflected in estimating the grant–date fair value of the award. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. The guidance will be effective for the annual periods (and interim periods therein) ending after December 15, 2015. Early application is permitted. The Company is currently evaluating the effects of ASU 2014–12 on the condensed consolidated financial statements.

 

In August 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014–15, Presentation of Financial Statements – Going Concern.  The Update provides U.S. GAAP guidance on management’s responsibility in evaluating whether there is substantial doubt about a company’s ability to continue as a going concern and about related footnote disclosures. For each reporting period, management will be required to evaluate whether there are conditions or events that raise substantial doubt about a company’s ability to continue as a going concern within one year from the date the financial statements are issued.  This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2013–300—Presentation of Financial Statements (Topic 205): Disclosure of Uncertainties about an Entity’s Going Concern Presumption, which has been deleted. The Company is currently evaluating the effects of ASU 2014–15 on the condensed consolidated financial statements.

 

In November 2014, the FASB issued Accounting Standards Update No. 2014-16 (ASU 2014-16), Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity. The amendments in this ASU do not change the current criteria in U.S. GAAP for determining when separation of certain embedded derivative features in a hybrid financial instrument is required. The amendments clarify that an entity should consider all relevant terms and features, including the embedded derivative feature being evaluated for bifurcation, in evaluating the nature of the host contract. The ASU applies to all entities that are issuers of, or investors in, hybrid financial instruments that are issued in the form of a share and is effective for public business entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company is currently evaluating the effects of ASU 2014–16 on the condensed consolidated financial statements.

 

In November 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-17 Business Combinations (Topic 805), Pushdown Accounting. The amendment provides that acquired entities have the option to apply pushdown accounting in its separate financial statements upon occurrence of an event in which an acquirer obtains control of an acquired entity. The acquired entity will have the option to elect to apply pushdown accounting in a subsequent reporting period and would be treated as a change in accounting principle. Additional disclosures are required to enable the users of the financial statements to evaluate the effect of pushdown accounting. The Company is currently evaluating the effects of ASU 2014–17 on the condensed consolidated financial statements.

 

Management does not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect on the accompanying condensed consolidated financial statements.

 

Organization (Tables)

v2.4.0.8
Organization (Tables)
9 Months Ended
Jan. 31, 2015
Organization And Liquidity Tables  
Summary of Fair Values of Net Liabilities Assumed

 

 

Purchase consideration:        
Net cash provided   $ 8,329,759  
Liabilities assumed     52,514  
Total Purchase Consideration     8,382,273  
         
Purchase price allocation:        
Oil and gas assets – proved developed – estimated     2,460,632  
Oil and gas assets – proved undeveloped – estimated     5,921,641  
Asset retirement obligations – estimated     (52,514 )

 

Schedule of Pro Forma Basis, Results of Operations

 

 

    For the Three Months Ended     For the Nine Months Ended  
    January 31, 2015     January 31, 2014     January 31, 2015     January 31, 2014  
Revenues   $ 488,273     $ 1,924,078     $ 2,697,446     $ 5,728,901  
Net loss     (1,318,469 )     (624,129 )     (3,560,883 )     (353,928
Loss per share of common share - Basic and diluted     (0.00 )     (0.00 )     (0.00 )     (0.00 )
Weighted average number of common shares Outstanding - Basic and diluted     818,567,746       781,475,355       818,567,746       752,034,775  

   

Schedule of Non-controlling Interest

 

 

 

At January 31, 2015 the non–controlling interest in Bandolier was as follows:

 

Non–controlling interest at April 30, 2014   $ -  
Acquisition of non–controlling interest in Bandolier     5,000,000  
Non–controlling share of net loss     (611,320 )
Non–controlling interest at January 31, 2015   $ 4,388,680  

  

Significant Accounting Policies (Tables)

v2.4.0.8
Significant Accounting Policies (Tables)
9 Months Ended
Jan. 31, 2015
Accounting Policies [Abstract]  
Schedule of Common Stock Equivalents
As at   January 31, 2015     January 31, 2014  
Stock Options     108,938,281       88,228,281  
Stock Purchase Warrants     40,625,000       40,625,000  
Compensation Warrants     -       230,000  
      149,563,281       129,083,281  

Oil and Gas Assets (Tables)

v2.4.0.8
Oil and Gas Assets (Tables)
9 Months Ended
Jan. 31, 2015
Extractive Industries [Abstract]  
Schedule of Oil and Gas Assets
Cost   Oklahoma     Kansas     Missouri     Other     Total  
Balance May 1, 2014   $ -     $ 7,922,601     $ 918,991     $ 100,000     $ 8,941,592  
Additions     8,725,512       1,747       -       -       8,727,259  
Depreciation, depletion and amortization     (431,858 )     (91,641 )     -       -       (523,499 )
                                         
Balance January 31, 2015   $ 8,296,654     $ 7,832,707     $ 918,991     $ 100,000     $ 17,145,352  

Asset Retirement Obligations (Tables)

v2.4.0.8
Asset Retirement Obligations (Tables)
9 Months Ended
Jan. 31, 2015
Asset Retirement Obligation Disclosure [Abstract]  
Schedule of Changes to Asset Retirement Obligation

Changes to the asset retirement obligation were as follows:

 

    January 31, 2015     April 30, 2014  
Balance, beginning of period   $ 818,010     $ 763,036  
Additions     52,514       -  
Disposition     -       -  
Revisions     -       -  
Accretion     38,060       54,974  
      908,584       818,010  
Less: Current portion for cash flows expected to be incurred within one year     (460,778 )     (481,658 )
Long-term portion, end of period   $ 447,806     $ 336,352  

 

Schedule of Expected Timing of Asset Retirement Obligations

Expected timing of asset retirement obligations:

 

Year Ending April 30,      
2015   460,778  
2016     81,181  
2017     212,000  
2018     -  
2019     -  
Thereafter     388,764  
      1,142,723  
Effect of discount     (234,139 )
Total   $ 908,584  

 

Stock Options (Tables)

v2.4.0.8
Stock Options (Tables)
9 Months Ended
Jan. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Schedule of Changes in Stock Options

he following table summarizes information about the options outstanding and exercisable at January 31, 2015:

 

    Options    

Weighted Average

Exercise Prices

 
             
Outstanding – April 30, 2014     88,038,281     $ 0.06  
Exercisable – April 30, 2014     24,204,947     $ 0.06  
Granted     21,000,000     $ 0.06  
Exercised     -     $ -  
Forfeited/Cancelled     (100,000 )   $ -  
Outstanding January 31, 2015     108,938,281     $ 0.06  
Exercisable – January 31, 2015     30,438,280     $ 0.06  
                 
Outstanding - Aggregate Intrinsic Value           $ -  
                 
Exercisable - Aggregate Intrinsic Value           $ -  

 

Summary of Options Outstanding and Exercisable

The following table summarizes information about the options outstanding and exercisable at October 31, 2014:

 

      Options Outstanding     Options Exercisable  
  Exercise Price   Options  

Weighted Avg.

Life Remaining

 

Weighted Avg.

Exercise Price

    Options    

Weighted Avg.

Exercise Price

 
 $ 0.22     465,116   0.01 years   $ 0.22       465,116     $ 0.22  
 $ 0.06     108,473,165   8.79 years   $ 0.06       29,973,164     $ 0.06  
        108,938,281                  29,973,164           
Aggregate Intrinsic Value             $ -             $ -  
Summary of Warrants Outstanding and Exercisable

Warrants:

 

   

Number of

Warrants

   

Weighted

Average

Exercise Price

   

Weighted

Average Life

Remaining

 
Outstanding and exercisable – April 30, 2014     40,625,000       0.14       1.62  
Forfeited     -       -       -  
Granted     -       -       -  
Outstanding and exercisable – January 31, 2015     40,625,000       0.14       0.86  

 

Contingency and Contractual Obligations (Tables)

v2.4.0.8
Contingency and Contractual Obligations (Tables)
9 Months Ended
Jan. 31, 2015
Organization And Liquidity  
Schedule of Contractual Lease Obligations for Fiscal Years
Year Ended April 30        
2011     $ 473,055  
2012       473,055  
2013       473,055  
2014       177,164  
Total     $ 1,596,329  

Organization (Details)

v2.4.0.8
Organization (Details) (USD $)
9 Months Ended
Jan. 31, 2015
Organization And Liquidity Tables  
Net cash provided $ 8,329,759
Liabilities assumed 52,514
Total Purchase Consideration 8,382,273
Oil and gas assets - proved developed - estimated 2,460,632
Oil and gas assets - proved undeveloped - estimated 5,921,641
Asset retirement obligations - estimated $ (52,514)

Organization (Details 1)

v2.4.0.8
Organization (Details 1) (USD $)
3 Months Ended 9 Months Ended
Jan. 31, 2015
Jan. 31, 2014
Jan. 31, 2015
Jan. 31, 2014
Organization Details 1        
Revenues $ 488,273 $ 1,924,078 $ 2,697,446 $ 5,728,901
Net loss $ (1,318,469) $ (624,129) $ (3,560,883) $ (353,928)
Loss per share of common share - Basic and diluted $ 0.00 $ 0.00 $ 0.00 $ 0.00
Weighted average number of common shares Outstanding - Basic and diluted 818,567,746 781,475,355 818,567,746 752,034,775

Organization (Details 2)

v2.4.0.8
Organization (Details 2) (USD $)
3 Months Ended 9 Months Ended
Jan. 31, 2015
Jan. 31, 2014
Jan. 31, 2015
Jan. 31, 2014
Organization And Liquidity Tables        
Non-controlling interest at beginning balance         
Acquisition of non-controlling interest in Bandolier     5,000,000   
Non-controlling share of net loss (264,289)    (611,320)   
Non-controlling interest at Ending balance $ 4,388,680   $ 4,388,680  

Organization (Details Narrative)

v2.4.0.8
Organization (Details Narrative) (USD $)
9 Months Ended 1 Months Ended 0 Months Ended 1 Months Ended 1 Months Ended
Jan. 31, 2015
acre
Jan. 31, 2014
Apr. 30, 2014
Apr. 30, 2013
May 30, 2014
Ranger Station [Member]
Jan. 31, 2015
Petro's Former's Holder [Member]
Jan. 31, 2015
Petro [Member]
May 30, 2014
PWIG [Member]
May 30, 2014
Bandolier Energy LLC. [Member]
May 31, 2014
Clawback [Member]
May 30, 2014
Spyglass Energy Group, LLC [Member]
acre
Feb. 18, 2015
Havelide [Member]
Feb. 18, 2015
Coalthane [Member]
Cash paid for purchase assets $ 2,000,000                        
Non-Managing membership interest 25.00%                        
Land subject to leases, gross 115,000                        
Land subject to leases, net 85,000                        
Value of leased land 12,200,000                        
Number of stock newly issued during the period 591,021,011                        
Percentage of ownership interest           80.00% 100.00%            
Percentage of minority ownership interest by parents         6.00%     44.00% 50.00%        
Exchange for capital contribution 5,000,000                5,000,000        
Cash consideration payment amount         600,000     400,000          
Option exercisable date               May 30, 2017          
Common stock price per share               $ 0.08          
Number of shares grants during period 21,000,000             55,000,000          
Business acquisition for purchase price of issued and outstanding equity                 8,712,893 407,161 8,712,893    
Area of land for oil and gas                     106,000    
Working capital deficiency 1,100,000                        
Cash and cash equivalents 1,501,387 9,204,795 8,352,949 5,703,082                  
Stockholders' deficiency 13,473,253   16,095,100                    
Shares issued upon acquisition of business                       13,333,333 20,000,000
Warrants issued upon acquisition                       26,666,667  
Warrants issued upon acquisition, exercise price per share                       $ 0.25  
Fair value of common stock issued                       520,000 780,000
Warrant grant, fair value per share price                       $ 0.039  
Warrant grant, fair value exercise price                       $ 0.025  
Warrant grant, fair value volatility                       176.00%  
Warrant grant, fair value discount rate                       1.50%  
Grant date fair value                       $ 923,685  

Going Concern and Management’s Plan (Details Narrative)

v2.4.0.8
Going Concern and Management’s Plan (Details Narrative) (USD $)
Jan. 31, 2015
Apr. 30, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract]    
Stockholders deficiency $ 13,473,253 $ 16,095,100

Significant Accounting Policies - Schedule of Common Stock Equivalents (Details)

v2.4.0.8
Significant Accounting Policies - Schedule of Common Stock Equivalents (Details)
9 Months Ended
Jan. 31, 2015
Jan. 31, 2014
Common stock equivalent shares 149,563,281 129,083,281
Stock Options [Member]
   
Common stock equivalent shares 108,938,281 88,228,281
Stock Purchase Warrant [Member]
   
Common stock equivalent shares 40,625,000 40,625,000
Compensation Warrants [Member]
   
Common stock equivalent shares    230,000

Significant Accounting Policies (Details Narrative)

v2.4.0.8
Significant Accounting Policies (Details Narrative) (USD $)
12 Months Ended
Apr. 30, 2014
Impairment of oil and gas assets $ 4,713,973
Montana [Member]
 
Impairment of oil and gas assets 75,000
Kansas [Member]
 
Impairment of oil and gas assets 4,638,973
Bandolier Energy LLC. [Member]
 
Proved developed oil and gas assets 2,460,632
Proven undeveloped oil and gas assets $ 5,921,641

Oil and Gas Assets (Details)

v2.4.0.8
Oil and Gas Assets (Details) (USD $)
9 Months Ended
Jan. 31, 2015
Balance at beginning $ 8,941,592
Additions 8,727,259
Depreciation, depletion and amortization (523,499)
Balance at ending 17,145,352
Oklahoma [Member]
 
Balance at beginning   
Additions 8,725,512
Depreciation, depletion and amortization (431,858)
Balance at ending 8,296,654
Kansas [Member]
 
Balance at beginning 7,922,601
Additions 1,747
Depreciation, depletion and amortization (91,641)
Balance at ending 7,832,707
Missouri [Member]
 
Balance at beginning 918,991
Additions   
Depreciation, depletion and amortization   
Balance at ending 918,991
Other [Member]
 
Balance at beginning 100,000
Additions   
Depreciation, depletion and amortization   
Balance at ending $ 100,000

Oil and Gas Assets (Details Narrative)

v2.4.0.8
Oil and Gas Assets (Details Narrative) (USD $)
9 Months Ended 12 Months Ended 3 Months Ended
Jan. 31, 2015
acre
Apr. 30, 2014
Apr. 30, 2014
Kansas [Member]
Jan. 31, 2015
Kansas [Member]
acre
Jan. 31, 2015
Oklahoma [Member]
May 30, 2014
Oklahoma [Member]
Jan. 31, 2015
Missouri [Member]
Boe
wells
acre
May 30, 2014
Bandolier Energy LLC. [Member]
Oklahoma [Member]
acre
May 30, 2014
Spyglass Energy Group, LLC [Member]
acre
Percentage of acquisition of ownership interest               50.00%  
Area of land for oil and gas               106,000 106,000
Proved developed oil and gas assets           $ 2,460,632      
Proven undeveloped oil and gas assets           5,921,641      
Cash paid for purchase assets 2,000,000   2,000,000            
Assets purchased         343,239        
Non-Managing membership interest 25.00%   25.00%            
Gross acres of oil and gas leases 115,000     115,000     1,272    
Land subject to leases, net 85,000     85,000          
Value of leased land 12,200,000     12,200,000          
Impairment of oil and gas assets   $ 4,713,973 $ 4,638,973            
Percentage of working interest             98.40%    
Number of barrel of oil built per day             1,000    
Number of production wells             116    
Number of steam injection wells             39    
Number of service and observation wells             14    
Number of drilled exploration or delineation wells             73    
Percentage of success rate             67.00%    

Asset Retirement Obligations (Details)

v2.4.0.8
Asset Retirement Obligations (Details) (USD $)
9 Months Ended 12 Months Ended
Jan. 31, 2015
Jan. 31, 2014
Apr. 30, 2014
Asset Retirement Obligation Disclosure [Abstract]      
Asset Retirement Obligations, beginning of period $ 908,584 $ 763,036 $ 763,036
Additions 52,514     
Disposition        
Revisions        
Accretion 38,060 40,985 (234,139)
Asset Retirement Obligations 908,584   908,584
Less: Current portion for cash flows expected to be incurred within one year 460,778   481,658
Long-term portion, end of period $ 447,806   $ 336,352

Asset Retirement Obligations (Details 1)

v2.4.0.8
Asset Retirement Obligations (Details 1) (USD $)
9 Months Ended 12 Months Ended
Jan. 31, 2015
Jan. 31, 2014
Apr. 30, 2014
Apr. 30, 2013
Asset Retirement Obligation Disclosure [Abstract]        
2015     $ 460,778  
2016     81,181  
2017     212,000  
2018         
2019         
Thereafter     388,764  
Total, before discount     1,142,723  
Effect of discount 38,060 40,985 (234,139)  
Asset Retirement Obligations $ 908,584   $ 908,584 $ 763,036

Asset Retirement Obligations (Details Narrative)

v2.4.0.8
Asset Retirement Obligations (Details Narrative) (USD $)
9 Months Ended
Jan. 31, 2015
Apr. 30, 2014
Asset Retirement Obligation, future liability $ 1,142,723 $ 1,087,292
Costs are expected to be incurred, minimum period 1 year  
Credit-adjusted risk-free discount rate 10.00%  
Percentage of inflation rate 2.00%  
Reclamation deposits $ 0 $ 0
Minimum [Member]
   
Costs are expected to be incurred, minimum period 1 year  
Maximum [Member]
   
Costs are expected to be incurred, minimum period 24 years  

Stockholders' Equity (Details Narrative)

v2.4.0.8
Stockholders' Equity (Details Narrative) (USD $)
Jan. 31, 2015
Apr. 30, 2014
Preferred stock, shares authorized 5,000,000 5,000,000
Preferred stock, par value $ 0.00001 $ 0.00001
Preferred stock, shares issued      
Preferred stock, shares outstanding      
Preferred B Shares [Member]
   
Preferred stock, shares authorized 29,500 29,500
Preferred stock, par value $ 0.00001 $ 0.00001
Preferred stock, shares issued 0 0
Preferred stock, shares outstanding 0 0

Stock Options - Schedule of Changes in Stock Options (Details)

v2.4.0.8
Stock Options - Schedule of Changes in Stock Options (Details) (USD $)
9 Months Ended
Jan. 31, 2015
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]  
Number of Options, Outstanding, beginning balance 88,038,281
Number of Options, Exercisable, beginning balance 24,204,947
Number of Options, Granted 21,000,000
Number of Options, Exercised   
Number of Options, Forfeited/Cancelled (100,000)
Number of Options, Outstanding, ending balance 108,938,281
Number of Options, Exercisable, ending balance 30,438,280
Weighted Avg. Exercise Price, Outstanding $ 0.06
Weighted Avg. Exercise Price, Exercisable $ 0.06
Weighted Avg. Exercise Price, Granted $ (0.06)
Weighted Avg. Exercise Price, Exercised   
Weighted Avg. Exercise Price, Forfeited/Cancelled   
Weighted Avg. Exercise Price, Outstanding $ 0.06
Weighted Avg. Exercise Price, Exercisable $ 0.06
Outstanding - Aggregate Intrinsic Value   
Exercisable - Aggregate Intrinsic Value   

Stock Options (Details 1)

v2.4.0.8
Stock Options (Details 1) (USD $)
9 Months Ended
Jan. 31, 2015
Options Outstanding 108,938,281
Options Exercisable 29,973,164
Options Outstanding - Aggregate Intrinsic Value   
Options Exercisable - Aggregate Intrinsic Value   
Exercise Price Range One [Member]
 
Exercise Price $ 0.22
Options Outstanding 465,116
Options Outstanding, Weighted Avg. Life Remaining 0 years 0 months 4 days
Options Outstanding, Weighted Avg. Exercise Price $ 0.22</