[X]
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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[ ]
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Nevada
(State or other jurisdiction
of incorporation or organization)
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98-0388682
(IRS Employer
Identification No.)
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Large accelerated filer [ ]
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Accelerated filer [ ]
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Non-accelerated filer [ ]
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Smaller reporting company [x]
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Page
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PART I.
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FINANCIAL INFORMATION
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Item 1.
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Financial Statements
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3
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Balance Sheets
April 30, 2013 (unaudited) and October 31, 2012
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4
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Statements of Comprehensive Income/(Loss) (unaudited)
Three and Six months Ended April 30, 2013 and 2012
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5
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Statements of Cash Flows (unaudited)
Six months Ended April 30, 2013 and 2012
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6
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Notes to Financial Statements (unaudited)
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7
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Item 2.
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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18
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Item 3.
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Quantitative and Qualitative Disclosures About Market Risk
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24
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Item 4.
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Controls and Procedures
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24
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PART II.
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OTHER INFORMATION
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Item 1.
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Legal Proceedings
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25
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Item 1A.
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Risk Factors
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25
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Item 2.
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Unregistered Sales of Equity Securities and Use of Proceeds
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25
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Item 3.
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Defaults Upon Senior Securities
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25
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Item 4.
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Mine Safety Disclosures
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25
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Item 5.
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Other Information
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25
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Item 6.
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Exhibits
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26
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Signatures
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27
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BRINX RESOURCES LTD.
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||||||||
BALANCE SHEETS
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||||||||
April 30,
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OCTOBER 31,
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|||||||
2013
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2012
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|||||||
(Unaudited)
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(Audited)
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|||||||
ASSETS
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||||||
Current assets
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||||||||
Cash and cash equivalents
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$ | 242,300 | $ | 540,512 | ||||
Investment - Certificate of deposit
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400,000 | 400,000 | ||||||
Marketable securities
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96,000 | 96,000 | ||||||
Accounts receivable
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31,973 | 38,485 | ||||||
Prepaid expenses and deposit
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71,324 | 44,594 | ||||||
Total current assets
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841,597 | 1,119,591 | ||||||
Undeveloped mineral interests, at cost
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3,101 | 3,101 | ||||||
Oil and gas interests, full cost method of accounting,
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||||||||
net of accumulated depletion
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1,448,417 | 1,450,330 | ||||||
Property, plant and equipment(net)
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2,128 | - | ||||||
Total assets
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$ | 2,295,243 | $ | 2,573,022 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY
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||||||||
Current liabilities
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||||||||
Accounts payable and accrued liabilities
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$ | 2,723 | $ | 6,332 | ||||
Total current liabilities
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2,723 | 6,332 | ||||||
Asset retirement obligations
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29,208 | 27,554 | ||||||
Total liabilities
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31,931 | 33,886 | ||||||
Stockholders' equity
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||||||||
Preferred stock - $0.001 par value; authorized - 25,000,000 shares
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||||||||
Series A Preferred stock - $0.001 par value; authorized - 1,000,000 shares
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||||||||
Issued and outstanding - 500,001 shares
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500 | 500 | ||||||
Common stock - $0.001 par value; authorized - 100,000,000 shares
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||||||||
Issued and outstanding - 24,629,832 shares
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24,630 | 24,630 | ||||||
Capital in excess of par value
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2,868,057 | 2,868,057 | ||||||
Accumulative other comprehensive loss
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(176,000 | ) | (176,000 | ) | ||||
Retained earnings
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(453,875 | ) | (178,051 | ) | ||||
Total stockholders' equity
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2,263,312 | 2,539,136 | ||||||
Total liabilities and stockholders' equity
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$ | 2,295,243 | $ | 2,573,022 |
BRINX RESOURCES LTD.
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||||||||||||||||
STATEMENTS OF COMPREHENSIVE INCOME/(LOSS)
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||||||||||||||||
(UNAUDITED)
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||||||||||||||||
FOR THE THREE MONTHS ENDED |
FOR THE SIX MONTHS ENDED
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|||||||||||||||
APRIL 30,
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APRIL 30,
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|||||||||||||||
2013
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2012
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2013
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2012
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|||||||||||||
REVENUES
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||||||||||||||||
Natural gas and oil sales
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$ | 58,182 | $ | 158,730 | $ | 122,558 | $ | 346,759 | ||||||||
DIRECT COSTS
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||||||||||||||||
Production costs
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5,345 | 30,190 | 19,250 | 53,175 | ||||||||||||
Depreciation, depletion and accretion
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39,894 | 50,181 | 65,910 | 106,085 | ||||||||||||
General and administrative
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149,159 | 165,511 | 311,578 | 320,388 | ||||||||||||
Writedown of natural gas and oil properties
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- | - | 2,039 | - | ||||||||||||
Total Expenses
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(194,398 | ) | (245,882 | ) | (398,777 | ) | (479,648 | ) | ||||||||
OPERATING (LOSS)
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(136,216 | ) | (87,152 | ) | (276,219 | ) | (132,889 | ) | ||||||||
OTHER INCOME
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||||||||||||||||
Interest income
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197 | (540 | ) | 395 | (190 | ) | ||||||||||
Other Income
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- | - | - | 20,000 | ||||||||||||
NET(LOSS)
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(136,019 | ) | (87,692 | ) | (275,824 | ) | (113,079 | ) | ||||||||
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX
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||||||||||||||||
Unrealized gain/(loss) on held for sale marketable security
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56,000 | (100,000 | ) | - | (100,000 | ) | ||||||||||
COMPREHENSIVE (LOSS) FOR THE PERIODS
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$ | (80,019 | ) | $ | (187,692 | ) | $ | (275,824 | ) | $ | (213,079 | ) | ||||
Net Income/(Loss) Per Common Share
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||||||||||||||||
- Basic
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$ | (0.01 | ) | $ | (0.004 | ) | $ | (0.01 | ) | $ | (0.005 | ) | ||||
- Diluted
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$ | (0.01 | ) | $ | (0.004 | ) | $ | (0.01 | ) | $ | (0.005 | ) | ||||
Weighted average number of common shares outstanding
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||||||||||||||||
- Basic
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24,629,832 | 24,629,832 | 24,629,832 | 24,629,832 | ||||||||||||
- Diluted
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24,629,832 | 24,629,832 | 24,629,832 | 24,629,832 |
BRINX RESOURCES LTD.
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||||||||
STATEMENTS OF CASH FLOWS
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||||||||
(UNAUDITED)
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||||||||
FOR THE SIX MONTHS ENDED | ||||||||
APRIL 30,
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||||||||
2013
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2012
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|||||||
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES
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||||||||
Net (loss)
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$ | (275,824 | ) | $ | (113,079 | ) | ||
Adjustments to reconcile net income to net cash provided by
|
||||||||
operating activities:
|
||||||||
Depreciation, depletion and accretion
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65,910 | 106,085 | ||||||
Writedown of natural gas and oil properties
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2,039 | - | ||||||
Changes in working capital:
|
||||||||
Decrease in accounts receivable
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6,512 | 23,956 | ||||||
(Increase)/ Decrease in prepaid expenses and deposit
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(26,730 | ) | 2,444 | |||||
Increase/(Decrease) in accounts payable and accrued liabilities
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(9,893 | ) | 3,361 | |||||
Net cash provided by /(used in) operating activities
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(237,986 | ) | 22,767 | |||||
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES
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||||||||
Purchase of equipment
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(2,322 | ) | - | |||||
Sale proceeds of natural gas and oil working interests
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- | 200,000 | ||||||
Payments on oil and gas interests
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(57,904 | ) | (180,253 | ) | ||||
Net cash provided by /(used in) investing activities
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(60,226 | ) | 19,747 | |||||
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES
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||||||||
Net cash provided by /(used in) financing activities
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- | - | ||||||
Net increase/(decrease) in cash
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(298,212 | ) | 42,514 | |||||
Cash and cash equivalents, beginning of periods
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540,512 | 401,047 | ||||||
Cash and cash equivalents, end of periods
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$ | 242,300 | $ | 443,561 | ||||
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
||||||||
Assets retirement costs incurred
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$ | (1,654 | ) | $ | (1,580 | ) | ||
Investment in natural oil and gas working interests included in
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$ | 6,283 | $ | - | ||||
accounts payable
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1.
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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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1.
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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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April 30, 2013
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April 30, 2012
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|||||||||
Basic earnings per share computation: | ||||||||||
(Loss) from continuing operations
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$ | (275,824 | ) | $ | (113,079 | ) | ||||
Basic shares outstanding
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24,629,832 | 24,629,832 | ||||||||
Basic earnings per share
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$ | (0.01 | ) | $ | (0.005 | ) |
1.
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ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
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2.
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MARKETABLE SECURITIES
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3.
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ACCOUNTS RECEIVABLE
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April 30, 2013
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October 31, 2012
|
|||||||
Accounts receivable
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$ | 31,973 | $ | 38,485 | ||||
Less: allowance for doubtful account
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- | - | ||||||
$ | 31,973 | $ | 38,485 |
4.
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OIL AND GAS INTERESTS
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April 30, 2013 | October 31, 2012 | |||||||
2008-3 Drilling Program, Oklahoma
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$ | 309,152 | $ | 309,152 | ||||
2009-2 Drilling Program, Oklahoma
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114,420 | 114,420 | ||||||
2009-3 Drilling Program, Oklahoma
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338,470 | 337,749 | ||||||
2009-4 Drilling Program, Oklahoma
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190,182 | 190,182 | ||||||
2010-1 Drilling Program, Oklahoma
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264,298 | 254,817 | ||||||
Washita Bend 3D, Oklahoma
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581,456 | 537,361 | ||||||
Double T Ranch #1 SWDW, Oklahoma
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50,324 | 43,078 | ||||||
Kings City Prospect, California
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406,766 | 404,121 | ||||||
South Wayne Prospect, Oklahoma
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61,085 | 61,085 | ||||||
PP F-12-2, PP F-12-3, PP F-12-4 and PP F-52, Mississippi
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(222,123 | ) | (222,123 | ) | ||||
Three Sands Project, Oklahoma
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555,715 | 555,715 | ||||||
Asset retirement cost
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2,593 | 2,593 | ||||||
Less: Accumulated depletion and impairment
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(1,203,921 | ) | (1,137,820 | ) | ||||
$ | 1,448,417 | $ | 1,450,330 |
4.
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OIL AND GAS INTERESTS (continued)
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April 30, 2013
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October 31, 2012
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|||||||
Proved properties
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$ | 2,020,558 | $ | 1,603,590 | ||||
Unproved properties
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631,780 | 984,560 | ||||||
Total Proved and Unproved properties
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2,652,338 | 2,588,150 | ||||||
Accumulated depletion expense
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(798,760 | ) | (734,698 | ) | ||||
Impairment
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(405,161 | ) | (403,122 | ) | ||||
Net capitalized cost
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$ | 1,448,417 | $ | 1,450,330 |
April 30, 2013
|
April 30, 2012
|
||||||||
Revenues
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$ | 122,558 | $ | 346,759 | |||||
Production costs
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(19,250 | ) | (53,175 | ) | |||||
Depletion and accretion
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(65,716 | ) | (106,085 | ) | |||||
Results of operations (excluding corporate overhead)
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$ | 37,592 | $ | 187,499 |
April 30, 2013
|
October 31, 2012
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|||||||
Balance, beginning of periods
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$ | 27,554 | $ | 26,335 | ||||
Liabilities assumed
|
- | - | ||||||
Revisions | - | (1,941 | ) | |||||
Accretion expense
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1,654 | 3,160 | ||||||
Balance, end of periods
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$ | 29,208 | $ | 27,554 |
·
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The holders of the Series A preferred stock can redeem their stock at a predetermined redemption price.
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·
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The holders of the Series A Preferred Stock shall be entitled to elect one director of the Company in connection with each annual election of directors who shall be the designated “Series A Director”. With respect to any other matter submitted for a vote (or a written consent in lieu
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thereof) by the stockholders of the Company (except as to which the Series A Preferred Stock will be entitled to vote separately as a class), the holders of Series A Preferred Stock and the holders of the common stock, $0.001 par value of the Company (“Common Stock”) shall vote together as a single class and not as separate series.
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·
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The Company shall not without first obtaining the approval (by vote or written consent, as provided by law) of the holders of a majority of the Series A Preferred Stock do any of the following:
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7.
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RELATED PARTY TRANSACTIONS
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a)
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The Company paid $42,000 (2012 - $36,000) to a related entity, for administration services.
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b)
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The Company paid $81,000 (2012 - $51,000) in management fees to the director and current President of the Company.
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c)
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The Company paid $39,853 (2012 - $39,194) in consulting and accounting fees to the Chief Financial Officer of the Company.
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d)
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The Company paid $3,000 (2012 - $nil) in consulting fee to the director of the Company.
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April 30, 2013
|
October 31, 2012
|
|||||||
Balance, beginning of periods
|
$ | 27,554 | $ | 26,335 | ||||
Liabilities assumed
|
- | - | ||||||
Revisions | - | (1,941 | ) | |||||
Accretion expense
|
1,654 | 3,160 | ||||||
Balance, end of periods
|
$ | 29,208 | $ | 27,554 |
·
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We relied on external consultants for the preparation of our financial statements and reports. As a result, it was possible that our officers were not able to identify errors and irregularities in the financial statements and reports.
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·
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We had an officer who was also a director. Our board of directors consisted of only two members. Therefore, there was an inherent lack of segregation of duties and a limited independent governing board.
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·
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We relied on an external consultant for administration functions, some of which do not have standard procedures in place for formal review by our officers.
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Regulation
S-K Number
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Exhibit
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3.1
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Articles of Incorporation (1)
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3.2
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Certificate of Change Pursuant to NRS 78.209 (2)
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3.3
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Amendment to the Articles of Incorporation (3)
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3.4
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Amended and Restated Bylaws (4)
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3.5
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Amendment to Amended and Restated Bylaws (5)
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4.1
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Certificate of Designation of Rights, Preferences, and Privileges for Series A Preferred Stock (4)
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10.1
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Management Consulting Agreement dated February 10, 2012 (5)
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31.1
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Rule 15d-14(a) Certification of Principal Executive Officer
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31.2
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Rule 15d-14(a) Certification of Principal Financial Officer
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32.1
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Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Executive Officer
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32.2
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Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 of Principal Financial Officer
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101*
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Financial statements from the Quarterly Report on Form 10-Q of Brinx Resources Ltd. for the quarter ended April 30, 2013, formatted in XBRL: (i) the Balance Sheets; (ii) the Statements of Operations; (iii) the Statements of Cash Flows; and (iv) the Notes to Financial Statements.
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(1)
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Incorporated by reference to the exhibits to the registrant’s registration statement on Form SB-1, file number 333-102441.
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(2)
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Incorporated by reference to the exhibits to the registrant’s current report on Form 8-K dated September 26, 2004, filed September 27, 2004.
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(3)
|
Incorporated by reference to the exhibits to the registrant’s current report on Form 8-K dated December 3, 2008, filed January 13, 2009.
|
(4)
|
Incorporated by reference to the exhibits to the registrant’s current report on Form 8-K dated December 11, 2009, filed December 15, 2009.
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(5)
|
Incorporated by reference to the exhibits to the registrant’s annual report on Form 10-K dated October 31, 2011, filed February 14, 2012.
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SIGNATURES
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BRINX RESOURCES LTD. | |||
(Registrant) | |||
June 11, 2013
|
By:
|
/s/ Ken Cabianca | |
Ken Cabianca | |||
Acting President | |||
(principal executive officer) | |||
June 11, 2013
|
By:
|
/s/ Kulwant Sandher | |
Kulwant Sandher | |||
Chief Financial Officer | |||
(principal financial and accounting officer) |
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
June 11, 2013
|
|
/s/ Ken Cabianca | |
Ken Cabianca, President | |||
(principal executive officer) |
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
|
a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
|
b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
|
c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
|
d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):
|
|
a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
|
b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
June 11, 2013
|
|
/s/ Kulwant Sandher | |
Kulwant Sandher, Chief Financial Officer | |||
(principal financial officer) |
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Apr. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation Of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | The table below presents the computation of basic and diluted earnings per share for the six-month periods ended April 30, 2013 and 2012:
|
STATEMENTS OF COMPREHENSIVE INCOME/(LOSS) (USD $)
|
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Apr. 30, 2013
|
Apr. 30, 2012
|
Apr. 30, 2013
|
Apr. 30, 2012
|
|
REVENUES | ||||
Natural gas and oil sales | $ 58,182 | $ 158,730 | $ 122,558 | $ 346,759 |
DIRECT COSTS | ||||
Production costs | 5,345 | 30,190 | 19,250 | 53,175 |
Depreciation, depletion and accretion | 39,894 | 50,181 | 65,910 | 106,085 |
General and administrative | 149,159 | 165,511 | 311,578 | 320,388 |
Writedown of natural gas and oil properties | 0 | 0 | 2,039 | 0 |
Total Expenses | (194,398) | (245,882) | (398,777) | (479,648) |
OPERATING (LOSS) | (136,216) | (87,152) | (276,219) | (132,889) |
OTHER INCOME | ||||
Interest income | 197 | (540) | 395 | (190) |
Other Income | 0 | 0 | 0 | 20,000 |
NET(LOSS) | (136,019) | (87,692) | (275,824) | (113,079) |
OTHER COMPREHENSIVE INCOME/(LOSS), NET OF TAX | ||||
Unrealized gain/(loss) on held for sale marketable security | 56,000 | (100,000) | 0 | (100,000) |
COMPREHENSIVE (LOSS) FOR THE PERIODS | $ (80,019) | $ (187,692) | $ (275,824) | $ (213,079) |
Net Income/(Loss) Per Common Share | ||||
- Basic (in dollars per share) | $ (0.01) | $ (0.004) | $ (0.01) | $ (0.005) |
- Diluted (in dollars per share) | $ (0.01) | $ (0.004) | $ (0.01) | $ (0.005) |
Weighted average number of common shares outstanding | ||||
- Basic (in shares) | 24,629,832 | 24,629,832 | 24,629,832 | 24,629,832 |
- Diluted (in shares) | 24,629,832 | 24,629,832 | 24,629,832 | 24,629,832 |
ASSET RETIREMENT OBLIGATIONS
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Asset Retirement Obligation Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Asset Retirement Obligation Disclosure [Text Block] | 5. ASSET RETIREMENT OBLIGATIONS The Company follows FASB ASC 410-20 “Accounting for Asset Retirement Obligations,” which addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This policy requires recognition of the present value of obligations associated with the retirement of tangible long-lived assets in the period in which it is incurred. As of April 30, 2013 and October 31, 2012, the Company recognized the future cost to plug and abandon the gas wells over the estimated useful lives of the wells in accordance with “Accounting for Asset Retirement Obligations.” The liability for the fair value of an asset retirement obligation with a corresponding increase in the carrying value of the related long-lived asset is recorded at the time a well is completed and ready for production. The Company amortizes the amount added to the oil and gas properties and recognizes accretion expense in connection with the discounted liability over the remaining life of the respective well. The estimated liability is based on historical experience in plugging and abandoning wells, estimated useful lives based on engineering studies, external estimates as to the cost to plug and abandon wells in the future and federal and state regulatory requirements. The liability is a discounted liability using a credit-adjusted risk-free rate of 12%. Revisions to the liability could occur due to changes in plugging and abandonment costs, well useful lives or if federal or state regulators enact new guidance on the plugging and abandonment of wells. The Company amortizes the amount added to oil and gas properties and recognizes accretion expense in connection with the discounted liability over the remaining useful lives of the respective wells. The information below reflects the change in the asset retirement obligations during the six-month period ended April 30, 2013 and the year ended October 31, 2012:
The reclamation obligation relates to the Ard#1-36, Bagwell#1-20, Bagwell#2-20, Jackson#1-18, Miss Gracie#1-18, Joe Murray Farm, Gehrke#1-24 and Miss Jenny#1-8 wells at Oklahoma Properties, and McPherson#1-1 well at South Wayne Prospect. The present value of the reclamation liability may be subject to change based
on management’s current estimates, changes in remediation technology or changes in applicable laws and regulations. Such changes will be recorded in the accounts of the Company as they occur. |
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ACCOUNTS RECEIVABLE (Details) (USD $)
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Apr. 30, 2013
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Oct. 31, 2012
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Accounts receivable | $ 31,973 | $ 38,485 |
Less: allowance for doubtful account | 0 | 0 |
Accounts Receivable, Net, Current | $ 31,973 | $ 38,485 |
ACCOUNTS RECEIVABLE (Tables)
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6 Months Ended | ||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block] |
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OIL AND GAS INTERESTS (Details 2) (USD $)
|
3 Months Ended | 6 Months Ended | ||
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Apr. 30, 2013
|
Apr. 30, 2012
|
Apr. 30, 2013
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Apr. 30, 2012
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Revenues | $ 58,182 | $ 158,730 | $ 122,558 | $ 346,759 |
Production costs | (5,345) | (30,190) | (19,250) | (53,175) |
Depletion and accretion | (65,716) | (106,085) | ||
Results of operations (excluding corporate overhead) | $ 37,592 | $ 187,499 |
OIL AND GAS INTERESTS (Details 1) (USD $)
|
Apr. 30, 2013
|
Oct. 31, 2012
|
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Proved properties | $ 2,020,558 | $ 1,603,590 |
Unproved properties | 631,780 | 984,560 |
Total Proved and Unproved properties | 2,652,338 | 2,588,150 |
Accumulated depletion expense | (798,760) | (734,698) |
Impairment | (405,161) | (403,122) |
Net capitalized cost | $ 1,448,417 | $ 1,450,330 |
CONTINGENCIES (Details Textual) (USD $)
|
3 Months Ended | 6 Months Ended | 12 Months Ended | 6 Months Ended | ||||
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Apr. 30, 2013
|
Apr. 30, 2012
|
Apr. 30, 2013
|
Apr. 30, 2012
|
Apr. 30, 2013
Drilling Program Oklahoma Three [Member]
|
Oct. 31, 2012
Drilling Program Oklahoma Three [Member]
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Apr. 30, 2013
Drilling Program Oklahoma Three [Member]
Before Casing Point Interest Percentage [Member]
|
Apr. 30, 2013
Drilling Program Oklahoma Three [Member]
After Casing Point Interest Percentage [Member]
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Cost Method Investment Ownership Percentage (in percentage) | 6.25% | 5.00% | ||||||
Percentage Of Pending Outcome Of Legal Proceedings (in percentage) | 50.00% | |||||||
Oil and Gas Revenue | $ 58,182 | $ 158,730 | $ 122,558 | $ 346,759 | $ 10,515 | $ 51,276 | ||
Oil and Gas Revenue Unrecognized | $ 181,086 |
COMMON STOCK (Details Textual) (USD $)
|
6 Months Ended | ||
---|---|---|---|
Apr. 30, 2013
|
Oct. 31, 2012
|
Feb. 10, 2012
|
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Preferred Stock, Shares Authorized (in shares) | 25,000,000 | 25,000,000 | |
Preferred Stock, Par Or Stated Value Per Share (in dollars per share) | $ 0.001 | $ 0.001 | |
Series A Preferred Stock [Member]
|
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Preferred Stock, Shares Authorized (in shares) | 1,000,000 | 1,000,000 | |
Preferred Stock, Shares Issued (in shares) | 500,001 | 500,001 | 500,001 |
Preferred Stock, Par Or Stated Value Per Share (in dollars per share) | $ 0.001 | $ 0.001 | |
Common Stock, Dividend Rate, Percentage, Maximum | 10.00% | ||
Related Party Transaction Maximum Amounts Of Transaction | $ 100,000 |
OIL AND GAS INTERESTS (Details) (USD $)
|
Apr. 30, 2013
|
Oct. 31, 2012
|
---|---|---|
Asset retirement cost | $ 2,593 | $ 2,593 |
Less: Accumulated depletion and impairment | (1,203,921) | (1,137,820) |
Oil and Gas Property, Full Cost Method, Net | 1,448,417 | 1,450,330 |
2008-3 Drilling Program, Oklahoma [Member]
|
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Oil and Gas Property, Full Cost Method, Gross | 309,152 | 309,152 |
2009-2 Drilling Program, Oklahoma [Member]
|
||
Oil and Gas Property, Full Cost Method, Gross | 114,420 | 114,420 |
2009-3 Drilling Program, Oklahoma [Member]
|
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Oil and Gas Property, Full Cost Method, Gross | 338,470 | 337,749 |
2009-4 Drilling Program, Oklahoma [Member]
|
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Oil and Gas Property, Full Cost Method, Gross | 190,182 | 190,182 |
2010-1 Drilling Program, Oklahoma [Member]
|
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Oil and Gas Property, Full Cost Method, Gross | 264,298 | 254,817 |
Washita Bend 3D, Oklahoma [Member]
|
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Oil and Gas Property, Full Cost Method, Gross | 581,456 | 537,361 |
Double T Ranch 1 Swdw, Oklahoma [Member]
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Oil and Gas Property, Full Cost Method, Gross | 50,324 | 43,078 |
Kings City Prospect California [Member]
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Oil and Gas Property, Full Cost Method, Gross | 406,766 | 404,121 |
South Wayne Prospect, Oklahoma [Member]
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Oil and Gas Property, Full Cost Method, Gross | 61,085 | 61,085 |
PP F-12-2, PP F-12-3, PP F-12-4 and PP F-52, Mississippi [Member]
|
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Oil and Gas Property, Full Cost Method, Gross | (222,123) | (222,123) |
Three Sands Project, Oklahoma [Member]
|
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Oil and Gas Property, Full Cost Method, Gross | $ 555,715 | $ 555,715 |
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Organization, Consolidation and Presentation Of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements Disclosure and Significant Accounting Policies [Text Block] | 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Brinx Resources Ltd. (the “Company”) was incorporated under the laws of the State of Nevada on December 23, 1998, and issued its initial common stock in February 2001. The Company holds undeveloped mineral interests in New Mexico and oil and gas interests in Oklahoma and California. In 2006, the Company commenced oil and gas production and started earning revenues.
The accompanying financial statements of the Company are unaudited. In the opinion of management, the financial statements include all adjustments, consisting only of normal recurring adjustments, necessary for fair presentation. The results of operations for the six-month period ended April 30, 2013 are not necessarily indicative of the operating results for the entire year. These financial statements should be read in conjunction with the financial statements and notes included in the Company’s Form 10-K for the year ended October 31, 2012.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
The oil and gas industry is subject, by its nature, to environmental hazards and clean-up costs. At this time, management knows of no substantial costs from environmental accidents or events for which the Company may be currently liable. In addition, the Company’s oil and gas business makes it vulnerable to changes in prices of crude oil and natural gas. Such prices have been volatile in the past and can be expected to be volatile in the future. By definition, proved reserves are based on current oil and gas prices and estimated reserves. Price declines reduce the estimated quantity of proved reserves and increase annual depletion expense (which is based on proved reserves).
OIL AND GAS INTERESTS
The Company utilizes the full cost method of accounting for oil and gas activities. Under this method, subject to a limitation based on estimated value, all costs associated with property acquisition, exploration and development, including costs of unsuccessful exploration, are capitalized within a cost center. No gain or loss is recognized upon the sale or abandonment of undeveloped or producing oil and gas interests unless the sale represents a significant portion of oil and gas interests and the gain significantly alters the relationship between capitalized costs and proved oil and gas reserves of the cost center. Depreciation, depletion and amortization of oil and gas interests are computed on the units of production method based on proved reserves. Amortizable costs include estimates of future development costs of proved undeveloped reserves.
Capitalized costs of oil and gas interests may not exceed an amount equal to the present value, discounted at 10%, of the estimated future net cash flows from proved oil and gas reserves plus the cost, or estimated fair market value, if lower, of unproved interests. Should capitalized costs exceed this ceiling, an impairment is recognized. The present value of estimated future net cash flows is computed by applying average prices, in the preceding twelve months, of oil and gas to estimated future production of proved oil and gas reserves as of year ends, less estimated future expenditures to be incurred in developing and producing the proved reserves and assuming continuation of existing economic conditions.
REVENUE RECOGNITION
Revenue from sales of crude oil, natural gas and refined petroleum products are recorded when deliveries have occurred and legal ownership of the commodity transfers to the customers. Title transfers for crude oil, natural gas and bulk refined products generally occur at pipeline custody points or when a tanker lifting has occurred. Revenues from the production of oil and natural gas properties in which the Company shares an undivided interest with other producers are recognized based on the actual volumes sold by the Company during the period. Gas imbalances occur when the Company’s actual sales differ from its entitlement under existing working interests. The Company records a liability for gas imbalances when it has sold more than its working interest of gas production and the estimated remaining reserves make it doubtful that the partners can recoup their share of production from the field. At April 30, 2013 and 2012, the Company had no overproduced imbalances.
ACCOUNTS RECEIVABLE
Accounts receivable are carried at net receivable amounts less an estimate for doubtful accounts. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history, and current economic conditions. Trade receivables are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received.
OTHER EQUIPMENT
Computer equipment is stated at cost. Provision for depreciation on computer equipment is calculated using the straight-line method over the estimated useful life of three years.
IMPAIRMENT OF LONG-LIVED ASSETS
The Company has adopted FASB ASC 360 “Accounting for the Impairment or Disposal of Long-Lived Assets," which requires that long-lived assets to be held and used be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Oil and gas interests accounted for under the full cost method are subject to a ceiling test, described above, and are excluded from this requirement.
ASSET RETIREMENT OBLIGATIONS
The Company follows FASB ASC 410-20 "Accounting for Asset Retirement Obligations," that addresses financial accounting and reporting for obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs.
FASB ASC 410-20 requires recognition of the present value of obligations associated with the retirement of tangible long-lived assets in the period in which it is incurred. The liability is capitalized as part of the related long-lived asset's carrying amount.
Over time, accretion of the liability is recognized as an operating expense and the capitalized cost is depreciated over the expected useful life of the related asset. The Company's asset retirement obligations are related to the plugging, dismantlement, removal, site reclamation and similar activities of its oil and gas exploration activities.
INCOME / (LOSS) PER SHARE
Basic income/(loss) per share is computed based on the weighted average number of common shares outstanding during each year. The computation of diluted earnings per share assumes the conversion, exercise or contingent issuance of securities only when such conversion, exercise or issuance would have the dilutive effect on income/(loss) per share. The dilutive effect of outstanding options was nil as of April 30, 2013 and 2012.
The table below presents the computation of basic and diluted earnings per share for the six-month periods ended April 30, 2013 and 2012:
INCOME TAXES
Deferred tax assets and liabilities are recognized for temporary differences between the financial reporting and tax bases of the firm’s assets and liabilities. Valuation allowances are established to reduce deferred tax assets to the amount that more likely than not will be realized. The firm’s tax assets and liabilities, if any, are presented as a component of “Other assets” and “Other liabilities and accrued expenses,” respectively, in the balance sheet. Tax provisions are computed in accordance with FASB ASC 740, “Accounting for Income Taxes.”
The Company applies the provisions of FASB ASC 740-10 “Accounting for Uncertainty in Income Taxes — an Interpretation.” A tax position can be recognized in the financial statements only when it is more likely than not that the position will be sustained upon examination by the relevant taxing authority based on the technical merits of the position. A position that meets this standard is measured at the largest amount of benefit that will more likely than not be realized upon settlement. A liability is established for differences between positions taken in a tax return and amounts recognized in the financial statements. FASB ASC 740-10 also provides guidance on de-recognition, classification, interim period accounting and accounting for interest and penalties.
CASH EQUIVALENTS
For purposes of reporting cash flows, the Company considers as cash equivalents all highly liquid investments with a maturity of three months or less at the time of purchase. On occasion, the Company may have cash balances in excess of federally insured amounts.
MARKETABLE SECURITIES AND INVESTMENTS
All equity investments are classified as available for sale and any subsequent changes in the fair value are recorded in comprehensive income. If, in the opinion of management, there has been a decline in the value of the investment below the carrying value that is considered to be other than temporary, the valuation adjustment is recorded in net earnings in the period of determination. The fair value of the investments is based on the quoted market price on the closing date of the period.
FAIR VALUE
The Company adopted FASB ASC 820-10-50, “Fair Value Measurements.” This guidance defines fair value, establishes a three-level valuation hierarchy for disclosures of fair value measurement and enhances disclosure requirements for fair value measures. The three levels are defined as follows:
Level 1 inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2 inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
Level 3 inputs to valuation methodology are unobservable and significant to the fair measurement.
The carrying amounts reported in the balance sheets for the cash and cash equivalents, investments in certificates of deposits, receivables and current liabilities each qualify as financial instruments and are a reasonable estimate of fair value because of the short period of time between the origination of such instruments and their expected realization and their current market rate of interest. Marketable securities are valued using Level 1 inputs.
CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to concentrations of credit risk consist of cash and cash equivalents, investments in certificates of deposit and accounts receivable. The Company maintains cash at one financial institution. The Company periodically evaluates the credit worthiness of financial institutions, and maintains cash accounts only in large high quality financial institutions, thereby minimizing exposure for deposits in excess of federally insured amounts. The Company believes credit risk associated with cash and cash equivalents to be minimal.
The Company has recorded trade accounts receivable from the business operations. Management periodically evaluates the collectability of the trade receivables and believes that the Company’s receivables are fully collectable and that the risk of loss is minimal.
EQUITY BASED COMPENSATION
The Company adopted the fair value recognition provisions of FASB ASC 718 “Share Based Payment.” |
ACCOUNTS RECEIVABLE
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6 Months Ended | ||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Receivables [Abstract] | |||||||||||||||||||||||||||||||||||||||
Loans, Notes, Trade and Other Receivables Disclosure [Text Block] |
Accounts receivable consists of revenues receivable, interest receivable and other receivable. The revenue receivable are from the operators of the oil and gas projects for the sale of oil and gas by the operators on the Company’s behalf and are carried at net receivable amounts less an estimate for doubtful accounts. Management considers all accounts receivable to be fully collectible at April 30, 2013 and October 31, 2012. Accordingly, no allowance for doubtful accounts or bad debt expense has been recorded.
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COMMON STOCK
|
6 Months Ended | ||||||||
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Apr. 30, 2013
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Stockholders' Equity Note [Abstract] | |||||||||
Stockholders' Equity Note Disclosure [Text Block] | 6. COMMON STOCK
PREFERRED STOCK
The Company has authorized 25,000,000 shares of preferred stock. On February 10, 2012, the Company issued 500,001 shares of Series A preferred stock at par value. The rights attached to these Series A preferred stock include:
(a) amend, alter, or repeal any provision of the Articles of Incorporation or the Bylaws of the Company (including any filing of a Certificate of Designation) that alters or changes the voting powers, preferences, or other special rights or privileges, or restrictions of the Series A Preferred Stock;
(b) increase or decrease the total number of authorized shares of Series A Preferred Stock;
(c) authorize or issue, or obligate itself to issue, any other equity security, including any other security convertible into or exercisable for any other equity security, which has a preference over the Series A Preferred Stock with respect to voting, or authorize any increase in the authorized or designated number of any such security;
(d) purchase or otherwise acquire any share or shares of Preferred Stock or Common Stock (or pay into or set aside for a sinking fund for such purpose); provided, however, that this restriction shall not apply to the repurchase of shares of Common Stock from employees, officers, directors, consultants or other persons performing services for the Company or any subsidiary pursuant to agreements under which the Company has the option to repurchase such shares at cost or at cost upon the occurrence of certain events, such as the termination of employment;
(e) authorize the voluntary or involuntary dissolution, liquidation or winding-up of the Company;
(f) pay any dividend or other distribution other than (i) in the case of the Common Stock, a dividend or distribution payable solely in Common Stock and (ii) any dividend or distribution the fair market value of which does not exceed 10% of the Company's aggregate net profits for the fiscal year of the Company in which such dividend is declared and the immediately preceding fiscal year;
(g) cause the Company to enter into or engage, directly or indirectly, in any material respect any line of business other than the other than the business anticipated to be conducted by the Company as of the date of the first issuance of the Series A Preferred Stock; or
(h) enter into any transaction with any officer, director or stockholder of the Company or any "affiliate" or "associate" (as such terms are defined in the regulations promulgated by the Securities and Exchange Commission under the Securities Exchange Act of 1940) of any such person or entity, other than normal employment arrangements and benefit programs on reasonable terms and other than any transaction (or series of related transactions) involving not more than $100,000 in the aggregate that has been approved by a majority of the Board of Directors (excluding any director who is interested in such transaction, either directly or through one of his affiliates or associates) after full disclosure of the terms thereof to the Board of Directors and after the determination by such majority of the Board of Directors. |
OIL AND GAS INTERESTS
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Apr. 30, 2013
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Oil and Gas Interests [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Interests [Text Block] |
The Company holds the following oil and natural gas interests:
2008-3 Drilling Program, Oklahoma On January 12, 2009, the Company acquired a 5% working interest in the Ranken Energy Corporation’s 2008-3 Drilling Program. The Company agreed to participate in the drilling operations to casing point in the initial test well of each prospect. The Before Casing Point Interest (“BCP”) is 6.25% and the After Casing Point Interest (“ACP”) is 5.00%. At April 30, 2013, the total cost of the 2008-3 Drilling Program was $309,152. The interests are located in Garvin County, Oklahoma.
2009-2 Drilling Program, Oklahoma
On June 19, 2009, the Company acquired a 5% working interest in the Ranken Energy Corporation’s 2009-2 Drilling Program. The Company agreed to participate in the drilling operations to casing point in the initial test well of each prospect. The BCP Interest is 6.25% and the ACP Interest is 5.00%. At April 30, 2013, the total cost of the 2009-2 Drilling Program was $114,420. The interests are located in Garvin County, Oklahoma.
2009-3 Drilling Program, Oklahoma
On August 12, 2009, the Company acquired a 5.00% working interest in Ranken Energy Corporation’s 2009-3 Drilling Program. The Company agreed to participate in the drilling operations to casing point in the initial test well of each prospect. The BCP Interest is 6.25% and the ACP is 5.00%. At April 30, 2013, the total cost of the 2009-3 Drilling Program was $338,470. The interests are located in Garvin County, Oklahoma.
2009-4 Drilling Program, Oklahoma
On December 19, 2009, the Company acquired a 5.00% working interest in Ranken Energy Corporation’s 2009-4 Drilling Program. The Company agreed to participate in the drilling operations to casing point in the initial test well of each prospect. The BCP Interest is 6.25% and the ACP Interest is 5.00%. At April 30, 2013, the total cost of the 2009-4 Drilling Program was $190,182. The interests are located in Garvin County, Oklahoma.
2010-1 Drilling Program, Oklahoma
On April 23, 2010, the Company acquired a 5.00% working interest in Ranken Energy Corporation’s 2010-1 Drilling Program. The Company agreed to participate in the drilling operations to casing point in the initial test well of each prospect. The BCP Interest is 6.25% and the ACP Interest is 5.00%. At April 30, 2013, the total cost of the 2010-1 Drilling Program was $264,298. The interests are located in Garvin County, Oklahoma.
Washita Bend 3D Exploration Project, Oklahoma
On March 1, 2010, the Company acquired a 5.00% working interest in Ranken Energy Corporation’s Washita Bend 3D Exploration Project. The BCP Interest is 5.625% and the ACP Interest is 5.00% on the first eight wells and then 5% before and after casing point on succeeding wells. At April 30, 2013, the total cost, including seismic costs, was $581,456.
Double T Ranch#1 SWDW, Oklahoma
On July 17, 2012, the Company acquired a 3.00% working interest in the drilling, completion and operations of the Double T Ranch#1 SWDW located in Garvin County from Ranken Energy Corporation. At April 30, 2013, the cost of the Double T Ranch#1 SWDW was $50,324.
Kings City Prospect, California
A Farmout agreement was made effective on May 25, 2009 between the Company and Sunset Exploration, Inc., to explore for oil and natural gas on 10,000 acres located in west central California. The Company paid $100,000 (50% pro rata share of $200,000) to earn a 20% working interest in project by funding a maximum of 50% of a $200,000 geophysical survey composed of gravity and seismic surveys and carrying Sunset Exploration for 33.33% of dry hole cost of the first well. Completions and drilling of this first well and completion of subsequent wells on the 10,000 acres will be proportionate to each party’s working interest. The total cost of the King City Prospect as at April 30, 2013 was $406,766. On April 15, 2013, the Company elected to plug and abandon this well. All costs associated with this well have been moved to the proved property pool for depletion.
Three Sands Project, Oklahoma
On October 6, 2005, the Company acquired a 40% working interest in Vector Exploration Inc.’s Three Sands Project.
On September 10, 2012, the Company signed an asset purchase agreement with GLM Energy Inc., to sell the oil and gas assets effective June 1, 2012 for a total of $352,144. The disposed reserves represented more than 25% of the total reserves which the Company considered to represent a significant alteration between capitalized costs and proved reserves and hence a loss on the sale was recognized in the Statement of Comprehensive Income/(Loss) in the amount of $96,491 for the year ended October 31, 2012.
South Wayne Prospect, Oklahoma
On March 14, 2010, the Company acquired a 5.00% working interest in McPherson#1-1 well for a payment for leasehold, prospect and geophysical fees of $5,000, and dry hole costs of $32,370. The Company agreed to participate in the drilling operations to casing point in the initial test well of each prospect. The BCP Interest is 6.25% and the ACP Interest is 5.00%. The interests are located in McClain County, Oklahoma. The total cost of the South Wayne Prospect as at April 30, 2013 was $61,085.
Impairment
Under the full cost method, the Company is subject to a ceiling test. This ceiling test determines whether there is an impairment to the proved properties. The impairment amount represents the excess of capitalized costs over the present value, discounted at 10%, of the estimated future net cash flows from the proven oil and gas reserves plus the cost, or estimated fair market value. There was impairment cost of $2,039 and nil for the six-month periods ended April 30, 2013 and 2012, respectively.
Depletion
Under the full cost method, depletion is computed on the units of production method based on proved reserves. Depletion expense recognized was $64,062 and $104,505 for the six-month periods ended April 30, 2013 and 2012, respectively.
Capitalized Costs
Results of Operations
Results of operations for oil and gas producing activities during the six-month periods ended are as follows:
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OIL AND GAS INTERESTS (Details Textual) (USD $)
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3 Months Ended | 6 Months Ended | 12 Months Ended | 12 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||
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Apr. 30, 2013
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Apr. 30, 2012
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Apr. 30, 2013
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Apr. 30, 2012
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Oct. 31, 2009
Kings City Prospect California [Member]
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Apr. 30, 2013
Kings City Prospect California [Member]
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Oct. 31, 2012
Kings City Prospect California [Member]
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May 25, 2009
Kings City Prospect California [Member]
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Apr. 30, 2013
Three Sands Project Oklahoma [Member]
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Oct. 31, 2012
Three Sands Project Oklahoma [Member]
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Oct. 06, 2005
Three Sands Project Oklahoma [Member]
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Oct. 31, 2012
Three Sands Project Oklahoma [Member]
Glm Energy Inc [Member]
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Oct. 31, 2010
South Wayne Prospect Oklahoma [Member]
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Apr. 30, 2013
South Wayne Prospect Oklahoma [Member]
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Oct. 31, 2012
South Wayne Prospect Oklahoma [Member]
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Mar. 14, 2010
South Wayne Prospect Oklahoma [Member]
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Oct. 31, 2010
South Wayne Prospect Oklahoma [Member]
After Casing Point [Member]
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Oct. 31, 2010
South Wayne Prospect Oklahoma [Member]
Before Casing Point [Member]
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Apr. 30, 2013
Drilling Program Oklahoma One [Member]
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Oct. 31, 2012
Drilling Program Oklahoma One [Member]
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Jan. 12, 2009
Drilling Program Oklahoma One [Member]
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Jan. 31, 2009
Drilling Program Oklahoma One [Member]
After Casing Point [Member]
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Jan. 31, 2009
Drilling Program Oklahoma One [Member]
Before Casing Point [Member]
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Apr. 30, 2013
Drilling Program Oklahoma Two [Member]
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Oct. 31, 2012
Drilling Program Oklahoma Two [Member]
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Jun. 19, 2009
Drilling Program Oklahoma Two [Member]
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Jul. 31, 2009
Drilling Program Oklahoma Two [Member]
After Casing Point [Member]
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Jul. 31, 2009
Drilling Program Oklahoma Two [Member]
Before Casing Point [Member]
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Apr. 30, 2013
Drilling Program Oklahoma Three [Member]
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Oct. 31, 2012
Drilling Program Oklahoma Three [Member]
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Aug. 12, 2009
Drilling Program Oklahoma Three [Member]
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Oct. 31, 2009
Drilling Program Oklahoma Three [Member]
After Casing Point [Member]
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Oct. 31, 2009
Drilling Program Oklahoma Three [Member]
Before Casing Point [Member]
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Apr. 30, 2013
Drilling Program Oklahoma Four [Member]
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Oct. 31, 2012
Drilling Program Oklahoma Four [Member]
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Dec. 19, 2009
Drilling Program Oklahoma Four [Member]
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Jan. 31, 2010
Drilling Program Oklahoma Four [Member]
After Casing Point [Member]
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Jan. 31, 2010
Drilling Program Oklahoma Four [Member]
Before Casing Point [Member]
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Apr. 30, 2013
Drilling Program Oklahoma Five [Member]
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Oct. 31, 2012
Drilling Program Oklahoma Five [Member]
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Apr. 23, 2010
Drilling Program Oklahoma Five [Member]
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Apr. 30, 2010
Drilling Program Oklahoma Five [Member]
After Casing Point [Member]
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Apr. 30, 2010
Drilling Program Oklahoma Five [Member]
Before Casing Point [Member]
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Apr. 30, 2013
Washita Bend Oklahoma [Member]
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Oct. 31, 2012
Washita Bend Oklahoma [Member]
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Mar. 01, 2010
Washita Bend Oklahoma [Member]
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Apr. 30, 2010
Washita Bend Oklahoma [Member]
After Casing Point [Member]
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Apr. 30, 2010
Washita Bend Oklahoma [Member]
Before Casing Point [Member]
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Apr. 30, 2013
Double T Ranch 1 Swdw, Oklahoma [Member]
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Oct. 31, 2012
Double T Ranch 1 Swdw, Oklahoma [Member]
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Jul. 17, 2012
Double T Ranch 1 Swdw, Oklahoma [Member]
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Business Acquisition, Percentage Of Voting Interests Acquired | 20.00% | 40.00% | 5.00% | 5.00% | 6.25% | 5.00% | 5.00% | 6.25% | 5.00% | 5.00% | 6.25% | 5.00% | 5.00% | 6.25% | 5.00% | 5.00% | 6.25% | 5.00% | 5.00% | 6.25% | 5.00% | 5.00% | 5.625% | 3.00% | |||||||||||||||||||||||||||
Oil and Gas Property, Full Cost Method, Gross | $ 406,766 | $ 404,121 | $ 555,715 | $ 555,715 | $ 61,085 | $ 61,085 | $ 309,152 | $ 309,152 | $ 114,420 | $ 114,420 | $ 338,470 | $ 337,749 | $ 190,182 | $ 190,182 | $ 264,298 | $ 254,817 | $ 581,456 | $ 537,361 | $ 50,324 | $ 43,078 | |||||||||||||||||||||||||||||||
Description Of Land Allocated For Exploration | 10,000 acres located in west central California | ||||||||||||||||||||||||||||||||||||||||||||||||||
Percentage Of Costs Incurred To Explore and Develop Oil and Gas Properties | 50.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Costs Incurred To Explore and Develop Oil and Gas Properties | 200,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dry Hole Cost Of Exploration Projects | 32,370 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Dry Hole Cost Of Exploration Projects, Percentage | 33.33% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Payment For Lease Hold Prospect and Geophysical Fees | 5,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Gain (Loss) On Sale Of Oil and Gas Property | (96,491) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Payments To Explore and Develop Oil and Gas Properties | 100,000 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Depletion | 64,062 | 104,505 | |||||||||||||||||||||||||||||||||||||||||||||||||
Impairment Of Proved Properties Discounted Rate | 10.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Oil and Gas Properties Sale Agreement Amount | 352,144 | ||||||||||||||||||||||||||||||||||||||||||||||||||
Disposed Reserves Oil and Gas Properties Percentage | 25.00% | ||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment of Oil and Gas Properties | $ 0 | $ 0 | $ 2,039 | $ 0 |
RELATED PARTY TRANSACTIONS (Details Textual) (USD $)
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6 Months Ended | |
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Apr. 30, 2013
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Apr. 30, 2012
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Affiliated Entity [Member]
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Administrative Fees, Amount Paid | $ 42,000 | $ 36,000 |
Director [Member]
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Administrative Fees, Amount Paid | 81,000 | 51,000 |
Professional Fees | 3,000 | 0 |
Chief Financial Officer [Member]
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Professional Fees | $ 39,853 | $ 39,194 |
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